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Doing Business Post-Brexit: What to Expect in the United Kingdom

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Doing Business Post-Brexit: What to Expect in the United Kingdom

The U.K. is firmly on course to leave the E.U., with a target date of March 29, 2019.  After a difficult period of 18 months, agreements to address two important “divorce” issues – the exit payment and the status of Brits in the E.U. and Europeans in the U.K. on Brexit Day – have been reached, while a decision has been made to defer discussions regarding the border with Northern Ireland.  Graham Busch of Gerald Edelman, Chartered Accountants, London, addresses these and other settled issues as well as those for which a decision has been kicked down the road.

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Circular Letter No. 25/E Clarifies Italy’s New Carried Interest Regime

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Circular Letter No. 25/E Clarifies Italy’s New Carried Interest Regime

Early last year, the Italian government announced new rules regarding favorable taxation of carried interests.  Graduated tax rates and social charges would be replaced by a flat 26% tax on investment income.  Towards the end of the year, guidelines were published by the Italian tax authorities providing significant clarifications on the scope, requirements, and conditions under the new tax regime.  Andrea Tavecchio and Riccardo Barone of Tavecchio Caldara & Associati, Milan, examine how the new regime will work in practice.

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Austrian Guidance on Taxation of Bitcoin and Other Cryptocurrencies

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Austrian Guidance on Taxation of Bitcoin and Other Cryptocurrencies

While wild fluctuations in the value of Bitcoin are reported daily in global press and social media, the Austrian Ministry of Finance recently summarized its views on the tax consequences of investing in this relatively new asset class.  Niklas J.R.M. Schmidt and Eva Stadler of Wolf Theiss, Vienna, explain the real-life consequences of the transacting in virtual currencies.

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The U.K. Trust Registration Service: Impact for Trustees

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The U.K. Trust Registration Service: Impact for Trustees

The past few years have seen a steep increase in trust reporting obligations in the context of F.A.T.C.A. and the Common Reporting Standard.  Trustees must come to grips with a new set of record keeping and disclosure obligations introduced by the U.K. Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which came into force from June 26, 2017.  Jennifer Smithson and Isobel Morton of Macfarlanes LLP, London, explain the wide-ranging effect of the regulations and the dividing line between non-U.K. trustees that fall inside the regime and those who are outside.

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The New Transparency Register in Germany

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The New Transparency Register in Germany

October 1, 2017, was the due date for entering information on Germany’s beneficial owner registry.  The register brings transparency to all sorts of entities, including private law foundations and trusts, as data will be open to public inspection from December 27, 2017.  Dr. Andreas Richter of P+P Pöllath + Partners, Berlin, sheds light on the registration requirements.

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Brazil 2017: Tax Developments for Business Transactions

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Brazil 2017: Tax Developments for Business Transactions

In Brazil, the year 2017 saw many important developments regarding cross-border and intrastate business transactions.  These developments focus on the implemention of various B.E.P.S. actions, the categorization of software transactions, and subjecting certain intrastate transactions to competing levels of state and municipal tax, all done the Brazilian way by emphasizing gross basis taxation on consumption payments.  Erika Tukiama, Rogério Gaspari Coelho, and Nathália Fraga of Machado Associados, São Paulo, provide guidance on these developments.

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Swiss Federal Council Opens Consultation Process on Tax Proposal 17

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Swiss Federal Council Opens Consultation Process on Tax Proposal 17

When Swiss voters rejected the Corporate Tax Reform Act III (“C.T.R. III”) in a referendum on February 12, 2017, Swiss tax reform was not derailed, only delayed.  Events that took place in September have moved the process forward. Existing cantonal tax privileges will be abolished, as agreed with the E.U., and replaced by mandatory introduction of a patent box regime in all cantons, voluntary introduction of additional deductions for research and development (“R&D”) expense, and a step-up in basis of hidden reserves created under the old tax regimes or before immigration to Switzerland.  Reto Heuberger, Stefan Oesterhelt, and Martin Schenk of Homburger AG, Zurich, explain the most important aspects of these and other aspects of T.P. 17.

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

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

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.

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An American In London: Due Diligence Observations

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An American In London: Due Diligence Observations

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.

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India: Legal and Practical Strategies for Managing Tax Disputes

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India: Legal and Practical Strategies for Managing Tax Disputes

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.

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Spontaneous Exchange of Tax Rulings – The Swiss Angle

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Spontaneous Exchange of Tax Rulings – The Swiss Angle

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.

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

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

 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.

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

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

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.

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

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

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.

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New Proposal for Swiss Corporate Tax Reform

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New Proposal for Swiss Corporate Tax Reform

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.

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

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

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.

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

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

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.

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Economic Nexus Through Ownership and Use of Intellectual Property

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Economic Nexus Through Ownership and Use of Intellectual Property

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.

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

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

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.

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

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

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.  

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