June 27, 2017

New Proposal for Swiss Corporate Tax Reform

June 27, 2017/ Ruchelman P.L.L.C.

Through the first ten days of February, Swiss tax advisers were contemplating life after the adoption of the Corporate Tax Reform III (“C.T.R. III”). Then, the bottom dropped out from under their feet as Swiss voters defeated the tax reform package by an almost 60-40 majority. Now, a Steering Committee representing the cantons and Swiss Federation has issued T.P. 17, recommending a modified version of corporate tax reform. Peter von Burg and Dr. Natalie Peter of Staiger Attorneys, Zurich, compare the provisions in T.P. 17 with those in C.T.R. III.

June 27, 2017

High-Speed Tax Reform: The U.K. Diverted Profits Tax & Restrictions on Corporate Interest Deductions

June 27, 2017/ Ruchelman P.L.L.C.

Among the most notable changes made to U.K. corporate tax over the past 24 months are the introduction of the diverted profits tax (“D.P.T.”) and the reduction of tax relief for corporate interest payments. D.P.T. is aimed at multinationals operating in the U.K. that try to avoid maintaining a permanent establishment in order to escape U.K. corporate tax. D.P.T. is imposed at the rate of 25% and treaty relief is not available. The reduction in relief for corporate interest payments implements the recommendations of B.E.P.S. Action 4. Eloise Walker and Penny Simmons of Pinsent Masons, London, explain the working of these provisions.

May 23, 2017

Corporate Matters: Five Steps for Leveraging your Start-Up’s Emerging Intellectual Property

May 23, 2017/ Ruchelman P.L.L.C.

For an emerging business, intellectual property (“I.P.”) can be the business’s most important asset and the difference between its success and failure. That is why steps must be taken early on to protect those “jewels.” Barry Lewin of Gottlieb, Rackman & Reisman, P.C. in New York explains five important actions designed to protect and enhance value.

May 23, 2017

Economic Nexus Through Ownership and Use of Intellectual Property

May 23, 2017/ Ruchelman P.L.L.C.

For many tax advisers outside the U.S., state corporate income tax is viewed simply as an add-on to the Federal tax. This relatively simplistic view ignores the requirements of U.S. Federal and Constitutional law that an activity must have a connection – called a nexus – to a state before tax can be imposed on profits allocated to the state. Alvan L. Bobrow of Akerman LLP in New York explains the concept of “economic nexus,” a way by which digital activity within a state may trigger exposure to state tax. Companies that license marketing intangibles should be particularly wary.

April 28, 2017

U.K. Drops Changes to Non-Domicile Regime, But Likely Not for Long

April 28, 2017/ Ruchelman P.L.L.C.

After months of H.M.R.C. consultation, a new regime was put in place for non-domiciled U.K.-resident individuals (“Non-Doms”) on April 6, 2017, only to see the legislation pulled from Finance Bill 2017 on April 25. The snap election in the U.K. put consideration of Non-Dom taxation on hold when 72 of the 135 clauses were removed from the bill. This allowed Parliament to approve the legislation in two hours. Gary Ashford of Harbottle Lewis, London, summarizes the short-lived provisions and those that failed to be enacted on April 6. The proposed regime remains a work in process, and enacting legislation could be back on the table as early as this fall.

March 27, 2017

Pre-Immigration Planning: Drop-Off Trusts + Private Placement Life Insurance – If the Tools Fit, Use Them

March 27, 2017/ Ruchelman P.L.L.C.

Wealthy persons moving to the U.S. often engage a tax adviser to craft a pre-immigration plan. Typically, the plans focus on harvesting gains, stepping up the basis in appreciated assets that cannot be sold, and simplifying structures to ensure that future gains will benefit from favorable long-term capital gains rates. However, the truly sophisticated client may wish to take a long-range approach that maximizes the accumulation of wealth during life. John F. McLaughlin and Shelly Meerovitch of Bernstein’s Wealth Planning and Analysis Group, New York, explain the benefits of forming a pre-immigration drop-off trust to invest in a private placement life insurance (“P.P.L.I.”) policy. In optimal circumstances, the P.P.L.I. investment portfolio can maximize the accumulation of wealth, provided the client obtains timely and competent legal advice in the country of residence and the U.S.

March 27, 2017

India Budget 2017-18

March 27, 2017/ Ruchelman P.L.L.C.

Provisions in Budget 2017-18 announced by the Finance Minister that relate to infrastructure, the financial sector, accountability, prudent fiscal management, and tax administration reflect a view that times are changing in India. The government appears to remain steadfast in its efforts to bring the Indian tax and regulatory environment up to global standards. Jairaj Purandare of JPM Advisors Pvt Ltd, Mumbai, explains the focus of the budget

February 21, 2017

Proposed Directive on the E.U. Common (Consolidated) Corporate Tax Base – A Primer

February 21, 2017/ Ruchelman P.L.L.C.

For decades, European bureaucrats looked with disdain at the way the various states within the U.S. compute state tax. The arm’s length principle within Europe trumped state apportionment. Now, however, the European Commission has issued three proposal directives that deal with (i) the Common Corporate Tax Base (“C.C.T.B.”) and the Common Consolidated Corporate Tax Base (“C.C.C.T.B.”), (ii) resolution of double tax disputes, and (iii) mismatches with non-E.U. countries. To the surprise of many, the C.C.C.T.B. includes a three-factor apportionment rule for the sharing of global income by the members of a corporate group operating throughout the E.U. Stefano Grilli of Gianni, Origoni, Grippo, Cappelli & Partners, Milan, explains proposals that have been introduced.

February 21, 2017

Italy Introduces a 15-Year Preferential Tax Regime for Wealthy Individuals Taking Up Tax Residence in Italy

February 21, 2017/ Ruchelman P.L.L.C.

As non-domiciled (“Non-Dom”) residents of the U.K. scramble to restructure in light of the new rules for persons holding Non-Dom status for more than 15 years, Italy has adopted new measures to attract high net worth individuals. The rules are clearly derived from the Non-Dom rules in the U.K., but the weather is better. Fabio Chiarenza of Gianni, Origoni, Grippo, Cappelli & Partners explains the new provisions.

February 21, 2017

Swiss Corporate Tax Reform Postponed

February 21, 2017/ Ruchelman P.L.L.C.

Through the first ten days of February, Swiss tax advisers were contemplating life after the adoption of the Corporate Tax Reform III (“C.T.R. III”). Then, the bottom dropped out from under their feet as Swiss voters defeated the tax reform package by an almost 60-40 majority. Peter von Burg and Dr. Natalie Peter of Staiger Attorneys at Law in Zurich explain the benefits that were contemplated under C.T.R. III and ponder about what will be adopted in its place. Switzerland must act promptly to cobble together a replacement package that will appease opponents of C.T.R. III and meet the deadline under its agreement with the E.U. for eliminating existing special benefits allowed to base companies. How much of C.T.R. III can be salvaged?

February 21, 2017

India – Guidelines Issued for Determining Place of Effective Management

February 21, 2017/ Ruchelman P.L.L.C.

In Circular No. 6/2017, dated January 24, 2017, the Central Board of Direct Taxes issued final guidelines regarding the factors that will be looked to under Indian income tax treaties when determining the place of effective management (“P.O.E.M.”) of a foreign company that is part of an Indian-based group. Almost as important as the substantive rules, the Circular establishes the procedure that must be followed before a tax officer may determine that the P.O.E.M. of a foreign company is in India. There are winners and there are losers in the Circular. Ashutosh Dixit, Parul Jain, and Kaushik Saranjame of BMR & Associates L.L.P. explain the new rules.

January 26, 2017

New Zealand Foreign Trust Disclosure Regime

January 26, 2017/ Ruchelman P.L.L.C.

In April 2016, the New Zealand government convened an independent inquiry into the use of New Zealand foreign trusts. Following this inquiry, a new foreign trust disclosure regime was proposed to obtain information on ultimate beneficial ownership. Heather Howell, who heads the office of Trident Trust Group in Auckland, New Zealand, explains.

January 26, 2017

Income Taxation of Trusts in Belgium

January 26, 2017/ Ruchelman P.L.L.C.

How are foreign trusts, Belgian beneficiaries, and Belgian settlors taxed in Belgium when Belgian law civil law generally does not recognize the existence of trusts? Depending on facts and circumstances, the so-called Cayman Tax Law will tax either the settlor or the beneficiary. Gerd D. Goyvaerts of Tiberghien, Brussels explains.

January 26, 2017

U.K. Criminal Penalties for Improper Tax Planning – Could You Be Effected?

January 26, 2017/ Ruchelman P.L.L.C.

New powers have been given to H.M.R.C. in recent legislation, and new criminal and civil penalties have been enacted as part of a massive legislative program designed to stop U.K. residents from participating in offshore tax avoidance and evasion schemes. Several criminal penalties are directed to advisory firms that facilitated tax offenses. In certain circumstances, advisory firms based outside the U.K. will be at risk of prosecution. Gary Ashford of Harbottle and Lewis L.L.P., London, and Stanley C. Ruchelman examine the new provisions.

December 22, 2016

A Year of Guest Features

December 22, 2016/ Ruchelman P.L.L.C.

This month, we reminisce on the best of 2016, with articles contributed by guest authors from around the world.

December 22, 2016

U.K. Tax Residency Rules for Individuals and Companies

December 22, 2016/ Ruchelman P.L.L.C.

Richard Holme and Simon Tadman of Creaseys, U.K., explain the wonderfully complex set of rules that are applied to determine whether an individual is a resident of the U.K. for income tax purposes and whether a company is a tax resident for corporation tax purposes. Can the new Statutory Residence Test bring certainty to the determination in light of the increase in complexity?

November 30, 2016

European Commission Rocking the Boat at Arm's Length

November 30, 2016/ Ruchelman P.L.L.C.

This month, transfer pricing economists Theo Elshof, Olaf Smits, and Mark van Mil of Quantera Global, Amsterdam, explore the European Commission’s definition of the term “arm’s length” in recent State Aid cases. Tax advisers with experience in transfer pricing matters will be surprised to find that reliance on practices of global competitors in the same or similar industry is not relevant when the matter relates to tax rulings comprising State Aid.

November 30, 2016

Goods and Services Tax: A Game Changer

November 30, 2016/ Ruchelman P.L.L.C.

The passage of the Constitution Act, 2016, has brought India one step closer to adopting a national G.S.T. as its new indirect tax structure. The G.S.T. will replace central and state levies with a goal of eliminating multiple taxation of the same transaction. Sakate Khaitan of Khaitan Legal Associates, Mumbai, explains the rates, the coordination among jurisdictions, and the anticipated effect on business. A paradigm shift in the Indian economy is anticipated at both the micro and the macro levels.

October 26, 2016

Spanish Tax Implications of Nonresident Private Investment in Spanish Real Estate

October 26, 2016/ Ruchelman P.L.L.C.

Spanish real estate has become an attractive investment opportunity for those in search of high-quality real property at reasonable prices. Local knowledge of taxes is key for an unsuspecting, nonresident investor to avoid various tax traps. María Manzano, a partner specializing in tax at Altalex in Madrid, Spain, explains the main Spanish tax consequences that arise during the investment cycle of nonresident private investment in Spanish real estate.

September 29, 2016

Further Developments for U.K. Non-Dom Individuals

September 29, 2016/ Ruchelman P.L.L.C.

A significant claw back of benefits for individuals with Non-Dom status was first announced in the Summer Budget of 2015. In August, H.M.R.C. proposed implementing legislation in a follow-up consultation document. Specific benefits covered included inheritance tax for shares of envelope companies owning U.K. residential real property, deemed domicile rules for long-term U.K. residents, and several provisions to lessen the impact of these changes. Gary Ashford of Harbottle & Lewis, London explains.