October 24, 2017

Double Dutch: Dividend Tax Reform Extends Exemption, Yet Tackles Abuse

October 24, 2017/ Ruchelman P.L.L.C.

This year’s budget in the Netherlands contains a legislative proposal that introduces a unilateral exemption applicable to corporate shareholders based in treaty countries, such as the U.S., subject to stringent anti-abuse rules. In addition, it proposes to bring cooperatives used as holding vehicles within the scope of the dividend withholding tax rules. Soon after the proposals were announced, a coalition government was formed and announced a complete elimination of dividend withholding tax. Paul Kraan of Van Campen Liem in Amsterdam explains.

October 24, 2017

An American In London: Due Diligence Observations

October 24, 2017/ Ruchelman P.L.L.C.

Performing due diligence on private companies for a potential merger or acquisition has been described as an exercise in educated guessing. The quality of the target’s financial information, potential hidden liabilities, financing, and similar deficiencies may result in a valuation that is neither straightforward nor reliable. When the target is abroad, the culture, language, and business norms may cause the educated guess to be more guess and less educated. Knowing how to overcome this dilemma is a skill set that can be obtained only through experience. Nick Magone, founder of Magone & Company, P.C., in Roseland, New Jersey, shares his experiences in performing due diligence on potential target companies in the U.K. His advice? Numbers are only the beginning.

September 20, 2017

India: Legal and Practical Strategies for Managing Tax Disputes

September 20, 2017/ Ruchelman P.L.L.C.

Most readers of this journal are front-end tax planners, proposing plans to be implemented by clients. Regrettably, not all plans escape examination by the tax inspector, and in India, that number is on the rise. Sanjay Sanghvi of Attorneys Khaitan & Co., Mumbai explains how to prepare for a tax examination in India and provides practical insights into the examination, appeals, and judicial review processes.

September 20, 2017

Spontaneous Exchange of Tax Rulings – The Swiss Angle

September 20, 2017/ Ruchelman P.L.L.C.

Most – but not all – global tax advisers know that the tax planning universe has changed. The few holdouts hoping that the old ways may yet be available were disappointed, again, when Switzerland announced procedures for the spontaneous exchange of tax rulings. Rulings issued on and after January 1, 2010, will be exchanged beginning January 1, 2018. Michael Fischer and Marc Buchmann of Attorneys Fischer Ramp Partner AG, Zurich, explain the new procedures and how taxpayers may take steps to stop the spontaneous exchange of existing rulings.

August 15, 2017

Pancake Day – End to Permanent Non-Domicile Status and Charging Non-Doms I.H.T. on U.K. Residential Property

August 15, 2017/ Ruchelman P.L.L.C.

In July, the U.K. government announced that proposals removed from the Finance Bill that was announced in March would be reproposed with a retroactive effective date, as if adopted when originally proposed. This is bad news for non-domiciled individuals (“Non-Doms”) in general and for the estates of Non-Doms who died between March and the ultimate date of enactment. If retroactive effective dates remain in the bill, rights granted by the European Convention for the Protection of Human Rights and Fundamental Freedoms, which were incorporated into U.K. law by the Human Rights Act 1998, could be violated. William Hancock and Daniel Simon of Collyer Bristow L.L.P. explain that Non-Doms should expect “too little jam and too little cream” on their pancakes if the provisions are enacted retroactively.

August 15, 2017

Circular Letter No. 17/E Clarifies Special Tax Regime for Italian “New Residents”

August 15, 2017/ Ruchelman P.L.L.C.

Late last year, the Italian government enacted a new regime designed to entice wealthy individuals into becoming tax residents. In late May, operating rules for the new tax regime were announced. In broad terms, the regime imposes an annual tax charge of €100,000 in lieu of tax imposed at standard rates and an exclusion from inheritance and gift tax on foreign assets. Andrea Tavecchio and Riccardo Barone of Tavecchio Caldara & Associati in Milan, Italy explain the details of the new regime.

August 15, 2017

Caveat Dominus: A Comparison of Post-Employment Entitlements in the U.S. and Italy When Executive Employment is Terminated Without Cause

August 15, 2017/ Ruchelman P.L.L.C.

When companies expand business operations across the Atlantic Ocean, various cultural differences between the U.S. and Europe come to the fore. The most noticeable are found in the area of employment, and among those are expectations of the rights of employers, employees, and executives at the time of termination of employment. George Birnbaum of the Law Offices of George Birnbaum P.L.L.C. and Ariane Rauber and Fabio Tavecchia of Palmer Studio Legale compare and contrast employee rights in the U.S. and Italy.

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.