June 14, 2018

O.E.C.D. and European Commission Unveil Proposals on Taxation of the Digital Economy

June 14, 2018/ Ruchelman P.L.L.C.

Following the release of the O.E.C.D.’s B.E.P.S. Action Plan and the E.U.’s approval of the Anti-Tax Avoidance Package, the taxation of the digital economy continues to be unfinished business in the international tax arena. New O.E.C.D. and the European Commission documents mark a milestone, especially the latter, which include two different approaches. They also highlight the difficulties in achieving a consensus, which seems desirable when implementing measures that increase the tax burden of digital activities. José Luis Gaudier of Cuatrecasas, Barcelona, delves into the O.E.C.D. and the European Commission approaches to taxing the digital economy.

June 14, 2018

Do India’s Amalgamation Revisions Prevent Misuse of Accumulated Losses?

June 14, 2018/ Ruchelman P.L.L.C.

India’s recent Finance Act addressed a tax planning device intended to reduce or eliminate the imposition of the Dividend Distribution Tax ("D.D.T") that applies when a corporation exercises the right to distribute dividends to shareholders. The statue targets plans involving an amalgamation between a profitable company and a loss company and prevents the reduction of earnings when the profitable company is the acquiring company. Does this mean that earnings can be reduced when the loss company is the acquiring company? Differing views have been expressed by Indian tax advisers. CA Anjali Kukreja of R.N. Marwah & Co L.L.P., New Delhi, examines both views and explains why one view is technically preferable.

May 09, 2018

New Tax Treaty Between France and Luxembourg: French Tax Implications for Investors

May 09, 2018/ Ruchelman P.L.L.C.

France and Luxembourg signed a new double tax treaty on income and capital in late March. Ratification by the end of the year is anticipated. The new treaty reflects the current post-B.E.P.S. environment. Among other things, the residence definition is tightened, the test for the existence of a permanent establishment is loosened, real estate funds face higher withholding tax, a credit method is adopted to avoid double taxation. Christophe Jolk, Attorney at Law, Paris, explains the implications for investors.

May 09, 2018

Failure to Prevent – The Future of Adviser Obligations

May 09, 2018/ Ruchelman P.L.L.C.

The concept of failure to prevent has grown from its roots in the U.S. Foreign Corrupt Practices Act and is making inroads into the responsibilities of tax advisers. The recent trend begs the question, do advisors have a duty to prevent the evasion or improper reduction of tax or to report the activity in advance? A team of international advisors looks at the evolution of obligations: Peter Utterström of Peter Utterström Advokat AB, Stockholm, looks at the origin of the concept. Gary Ashford of Harbottle & Lewis, London, looks at recently adopted legislation in the U.K. imposing strict liability on advisers to naughty clients. Lawrence Feld, Attorney at Law, New York, looks at its presence in the U.S. Swiss Bank Program of the Justice Department. Dick Barmentlo of Jaegers & Soons, Amsterdam, addresses a recent case in the Netherlands that imposes civil liability on a Netherlands trust company and its employees for lost taxes suffered by the Dutch tax administration.

April 01, 2018

India Budget 2018-19

April 01, 2018/ Ruchelman P.L.L.C.

The Indian government announced its plans for the 2018–2019 budget year. It is the last full budget before the 2019 Parliamentary elections and the first budget following the implementation of the landmark national G.S.T. regime. Tax is reduced to 25% for domestic companies generating income of approximately $40 million or less. The definition of the term “business connection,” the equivalent of a P.E. under domestic law, is broadened to cover agents having and habitually concluding contracts and circumstances where a nonresident has a significant economic presence. A 10% tax is imposed on certain stock market gains. Incentives are given to international financial services companies in the form tax exemptions for certain gains. These and other provisions are explored by Jairaj Purandare of JPM Advisors Pvt Ltd, Mumbai, India.

April 01, 2018

A New Definition of Permanent Establishment in Italian Domestic Income Tax Law

April 01, 2018/ Ruchelman P.L.L.C.

Italian domestic tax law has adopted the permanent establishment (“P.E.”) concept when determining whether business profits of a nonresident are taxable in the absence of an applicable income tax treaty. Earlier this year, changes to the definition of the term broadened the scope of activity constituting a P.E. Effective January 1, 2018, (i) a digital P.E. is treated as a fixed place P.E., (ii) the scope of the specific activity exemption has been scaled back, (iii) an anti-fragmentation rule has been adopted applicable to groups of companies, and (iv) the scope of an agency P.E. has been broadened. Stefano Loconte and Linda Favi of Loconte & Partners, Milan, explain the new rules.

February 28, 2018

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

February 28, 2018/ Ruchelman P.L.L.C.

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.

January 26, 2018

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

January 26, 2018/ Ruchelman P.L.L.C.

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.

December 27, 2017

Austrian Guidance on Taxation of Bitcoin and Other Cryptocurrencies

December 27, 2017/ Web Developer

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.

December 27, 2017

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

December 27, 2017/ Web Developer

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.

November 30, 2017

The New Transparency Register in Germany

November 30, 2017/ Web Developer

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.

November 30, 2017

Brazil 2017: Tax Developments for Business Transactions

November 30, 2017/ Web Developer

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.

October 24, 2017

Swiss Federal Council Opens Consultation Process on Tax Proposal 17

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

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.

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.