EUDTG Newsletter March – April 2017

EU direct tax law is a fast developing area. This presents taxpayers, in particular groups and multinational corporations that have an EU or European Economic Area (EEA) presence, with various challenges.

The following topics are covered in this issue of EU Tax News:

CJEU Cases

  • Belgium: CJEU judgment on interpretation of the subject-to-tax requirement of the Parent-Subsidiary Directive: Wereldhave
  • Belgium: AG Opinion on interest deduction limitation in light of the Parent-Subsidiary Directive: Argenta
  • Germany: CJEU referral on the German CFC rules: X

National Developments

  • Belgium: Supreme Court does not allow withholding tax refunds for dividends received by investment companies before 12 June 2003
  • Belgium: CJEU referral by the Commission of Belgium over the discriminatory tax treatment of foreign real estate income
  • Finland: Supreme Administrative Court confirms tax treatment of dividend income from third countries to be in line with Articles 63 and 65 TFEU
  • Italy: Amendments to the NID and Patent Box Regime
  • Norway: Government’s response to ESA’s decision on the compatibility of the Norwegian interest limitation rules with the freedom of establishment
  • Poland: Supreme Administrative Court judgment on the settlement of foreign branch losses
  • Spain: Supreme Court judgment on State aid recovery procedure
  • United Kingdom: England and Wales High Court judgment regarding repayment of stamp duty reserve tax: Jazztel plc v The Commissioners for HMRC
  • United Kingdom: The Great Repeal Bill White Paper

EU Developments

  • EU: European Parliament clears way for formal adoption of ATAD II by the ECOFIN Council
  • EU: Update on EU proposal for public country-by-country reporting
  • EU: Council adopts conclusions on EU relations with the Swiss Confederation
  • EU: Informal ECOFIN Council held in Malta in early April

Fiscal State aid

  • Greece: CJEU judgment on State aid implemented by Greece: Ellinikos Chrysos AE
  • Italy: CJEU judgment on Italian bankruptcy procedure: Marco Identi

Read the full newsletter here.

This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG).

Further information about our service offerings in EU taxes: www.pwc.com/eudtg

Webinar: How US tax reform impacts Switzerland

Wednesday, 3 May 2017, 4–5pm CET

US tax reform is one of the key topics in the US under the Trump administration. Various proposals are being discussed and prepared − notably measures with the common goal of making the US corporate tax system more competitive. Given the potential magnitude of the proposed changes and the short timeframe within which legal changes are usually implemented in the US, it’s time to consider what US tax reform could mean for Switzerland and Swiss-based companies that do business in the US.

This webinar addresses questions such as:

  • How is the US tax system unique?
  • What’s involved in the process of transforming tax reform into US law?
  • What are the options for tax reform, and how do they compare and contrast (Camp plan, Trump proposal, Republican blueprint)?
  • What are the consequences for Swiss companies doing business in the US (e.g. interest deducibility, treatment of intangibles, state taxes and border adjustment tax)?
  • What impact will US tax reform have on the Swiss tax reform?

To register for the online event, please click on the link below.

WEBEX LINK

Once you have registered, you will receive the WebEx access details. The WebEx will be recorded and you will receive a link to the recording via e-mail after the event using the same details. There will be time for questions and answers with your speakers during the WebEx. Questions can also be sent in advance of the WebeX session to the following email address: rolf.j.roellin@us.pwc.com.

We do hope that you will join us online!

If you have questions, please contact your usual PwC contact person or one of our US tax experts named below.

Matina M. Walt
Partner
Swiss Tax Desk
PwC New York / Switzerland
martina.m.walt@us.pwc.com

Bernard Moens
Principal
PwC US
bernard.e.moens@us.pwc.com

 

Event series − VAT in ERP systems: how does it challenge IT, the Tax Administration and tax experts?

Register Online to our upcoming series of events on VAT in ERP systems: how does it challenge IT, the Tax Administration and tax experts?

ERP systems are often not equipped to handle the complex requirements of VAT correctly, flexibly and efficiently without extra work or manual intervention.

The legal requirements are constantly changing, and on the basis of the OECD guidelines many countries are exchanging data or demanding evermore detailed information from taxpayers. Organisations are well on the way to transparency.

At these events we’ll be discussing the views of our clients, looking at the different needs of the IT and tax functions, and finally sharing some insights from the Tax Administration.

The aim of the events is to talk about experiences and needs, learn from each other, and build ‘best practice’ together. If required this dialogue can be continued afterwards within our “ITX ERP Support Community”. In the beginning, the questions and the coordination of the same language in the cooperation of the tax and IT department are at the company’s disposal. Our discussions will revolve around the issues that organisations face and creating a common language enabling the tax and IT functions to work together.

Have we piqued your interest? We look forward to welcoming you to one of our discussions.

The dates are planned as follows:

Zurich

  • Wednesday, 31 May 2017, 4.30 pm registration / welcome drink
  • 5.00 pm start, 6.00 pm end, followed by an apéro and individual discussions and questions
  • PricewaterhouseCoopers AG, Birchstrasse 160, 8050 Zurich

Berne

  • Tuesday, 6 June 2017, 4.30 pm registration / welcome drink
  • 5.00 pm start, 6.00 pm end, followed by an apéro and individual discussions and questions
  • PricewaterhouseCoopers AG, Bahnhofplatz 10, 3001 Berne

Geneva

  • Thursday, 15 June 2017, 4.30 pm registration / welcome drink
  • 5.00 pm start, 6.00 pm end, followed by an apéro and individual discussions and questions
  • PricewaterhouseCoopers AG, Avenue Giuseppe-Motta 50, 1211 Geneva
  • This event takes place in English. To discuss your questions, local PwC colleagues will be at your disposal

Basel

  • Thursday, 22 June 2017, 4.30 pm registration / welcome drink
  • 5.00 pm start, 6.00 pm end, followed by an apéro and individual discussions and questions
  • PricewaterhouseCoopers AG, St.Jakobs-Strasse 25, 4002 Basel

The detailed programme has been published on our website www.pwc.ch/vat-erp. We are looking forward to your registration.

If you have any questions, please get in touch with your usual PwC contact person or one of the experts below

Your contacts

Ilona Paakkala
Director
ITX Technology Leader
Tel. +41 58 792 42 58
paakkala.ilona@ch.pwc.com

Sandra Wirz
Senior Manager
ITX ERP Support Responsible
Tel. +41 58 792 25 32
sandra.wirz@ch.pwc.com

EUDTG Newsletter January – February 2017

EU direct tax law is a fast developing area. This presents taxpayers, in particular groups and multinational corporations that have an EU or European Economic Area (EEA) presence, with various challenges.

The following topics are covered in this issue of EU Tax News:

CJEU Cases

  • Netherlands: CJEU judgment on pro-rata personal deductions for non-resident taxpayers: X
  • Netherlands:  CJEU judgment on the application of Article 64 (1) TFEU concerning the extended recovery period for foreign assets: X

    National Developments
  • Belgium: New Innovation Income Deduction replaces the Patent Income Deduction
  • Finland: Supreme Administrative Court confirms withholding tax treatment for non-UCITS and non-listed Maltese SICAV
  • Hungary:  Hungarian implementation of ATAD’s CFC rules
  • Italy: Italian Tax Court of First Instance judgment on the compatibility of withholding tax levied on dividends distributed to a US pension fund with EU law
  • Sweden: Swedish Supreme Administrative Court judgments on the denial of refund of Swedish withholding tax
  • Switzerland: Corporate Tax Reform III rejected by the Swiss voters
  • United Kingdom: Supreme Court judgment in R (on the application of Miller and another) v Secretary of State for Exiting the European Union

EU Developments

  • EU: ECOFIN Council agreement on ATAD II
  • EU: European Parliament Resolution of 14 February 2017 on the annual report on EU competition policy
  • EU: Public CBCR: European Parliament’s joint ECON & JURI Committee issues draft report
  • EU: EU Member States send letter to non-EU 92 countries in context of common EU list of non-cooperative tax jurisdictions
  • Spain European Commission requests Spain to amend its law implementing reporting obligations for certain assets located outside of Spain

Fiscal State aid

  • Luxembourg: Non-confidential version of the European Commission’s State aid opening decision in GDF Suez
  • Spain: AG Opinion on tax exemptions for Church-run schools

Read the full newsletter here.

This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG).

Further information about our service offerings in EU taxes: www.pwc.com/eudtg

Legal certainty concerning import value in Switzerland reestablished – Assessment of 100 million swiftly overruled by the Federal Supreme Court

In understanding of the business impacts, the Federal Supreme Court clarified the uncertainty on determination of the import VAT value for foreign companies involved in supplies of goods to Switzerland resulting from the recent decision of the Federal Administrative Court.
Click here to download the PDF

Background

A., a purchasing company of C. group established outside of Switzerland, however registered for Swiss VAT purposes, was acquiring goods from foreign third party suppliers. The goods were shipped to a Swiss warehouse of A. from where those were subsequently sold to C. (a Swiss established and VAT registered distribution company of the C. group), or other third party customers.

For customs clearance, the import value of the goods declared by A. was based on the price invoiced by the foreign suppliers to A. (i.e. on the purchase price). Further to their investigation, the Swiss Federal Customs Authorities (“SFCA”) claimed that A. underestimated the import VAT base, which should have been the sales price to C. minus 10%.
Click here to download the PDF
In the first instance, the Federal Administrative Court (“FAC”) also denied determination of the import VAT value of the goods based on the price paid by the (foreign) importer to its foreign suppliers and supported the post-assessment of the SFCA of 100 mio CHF import VAT and almost 1 mio late interests. The position of the Court was held on slightly different grounds than the one of SFCA. The FAC ruled that (i) the transaction with foreign suppliers occurred already abroad as the importer had the power to dispose of the goods abroad since he was in charge of the transport of goods to Switzerland and therefore the purchase price paid by A. should not have been determinant for the import value, and (ii) it should have then been the market value, which however in the view of FAC corresponded to the value paid by the final Swiss customer to third party suppliers minus 10%. Thus in practice, FAC actually accepted for the case at hand that the value should have been the sales price to C. minus 10%, which was the original position of SFCA.

Decision of the Federal Supreme Court

The Federal Supreme Court (“FSC”) overruled in its decision 2C_1079/2016 issued on 7. March 2017, the decision of the FAC. In this surprisingly short period after the first instance decision, FSC held that the transaction relevant for the determination of the import VAT value is the transaction which led to the import, i.e. the price paid by A. to its foreign suppliers and clearly not the market value related to the subsequent transaction with C, as at the moment of the import the contract with the final customer was not yet in place.

Click here to download the PDF

The FSC ruled that the fact who is the person in charge of the transport (i.e. supplier v. importer) has no impact on identifying the transaction relevant to determine the import VAT value of goods. Indeed, the FSC considered that the import value should be based on the agreement which gave rise to the transaction leading to import and that the transport is only a modality of the execution of the agreement.

The Court also considered that the characteristic feature of the purchase was the acquisition of goods abroad intended for sale in Switzerland and therefore the final destination was already known at the time of purchase from A to their suppliers. Consequently, based on article 54, al.1, let. a of the Swiss VAT law which provides that import value is the consideration where goods are imported under sales or commission agreement (and not the market value), the Court ruled that such consideration is the purchase price paid by A. to its foreign suppliers.

This decision removes the uncertainty resulting from the previous position of Customs Authorities in this case and following decision of the FAC, and confirms our standpoint on this subject matter. Fortunately, the Federal Supreme Court brought back the clarity into operations of many businesses, which is not only in line with the Swiss VAT law but also with the international standards. The FSC decision removes a certain inequality between foreign and Swiss based importers and gives necessary comfort to (foreign) companies involved in similar supply chain scenarios for the purpose of their customs reporting obligations. Companies importing goods in Switzerland for further sale via their local stock should ensure that their reporting is in line with this final decision of the FSC. The federal customs, as well as tax authorities will now need to review their practice and amend written guidelines in order to align with the legal grounds.

Download the PDF by clicking the image below:
Click here to download the PDF

 

Please contact our team for more details:
Patricia More, Partner, Indirect Tax, PwC Geneva
patricia.more@ch.pwc.com / +41 58 792 95 07

Christina Haas Bruni, Senior Manager Customs & VAT, PwC Basel
christina.haas.bruni@ch.pwc.com / +41 58 792 51 24

Kristyna Kaniova, Manager, Indirect Tax, PwC Geneva
kristyna.kaniova@ch.pwc.com / +41 58 792 92 34

Hans-Frederic Andersen, Senior Consultant, Indirect Tax, PwC Geneva
andersen.hans-frederic@ch.pwc.com / +41 58 792 91 97

Fixed establishment: Welmory – A never ending story

The Supreme Administrative Court in Poland ruled yesterday on the Welmory case. Even though the case went through Court of Justice of the European Union (CJEU, C-605/12) back to the final instance in Poland – nothing seems certain whatsoever. Many would have expected the court following CJEU argumentation and probably confirming existence of fixed establishment in Poland. This, however, turned out not to be the case.

Click here to download the PDF

Based on oral announcement of the court, both District Administrative Court’s judgement (previous instance) and tax authorities’ decision have been repealed. According to the Supreme Administrative Court the tax authorities must supplement the decision by factual evidences as to whether the technical infrastructure in Poland is actually allowing to claim creation of fixed establishment (FE). The dossier of the case does not include evidences proving existence of FE in Poland, as it seems the tax authorities did not bring forward sufficient investigation in this area. Therefore, in order to preserve the two-instance separation rule, the Supreme Administrative Court cannot judge upon it. In turn, the court decided to return the case back to tax authorities for further investigation.

Such outcome means for Welmory that the proceedings are not over yet. It raises a question of taxpayer’s rights in light of extensive timing of proceedings. As the original decision reaches as far as 2011 and the ultimate conclusion still being remote, one can question the quality of protection of taxpayer’s right to certainty of law.

Even though at first glance it may feel disappointing that the verdict was not rendered as per the principles of when a fixed establishment is being created, but focused on procedural deficiencies – it actually brings new perspective into the whole area. The aspect of evidences and proving existence of sufficient infrastructure.

In light of the developments in Poland it may be sensible to anticipate any potential fixed establishment discussions, by for instance preparing so-called defense file. Comprehensive documentation outlining factually the existing setup, aligned with global tax policy and drafted outside of hectic tax audit, can prove helpful. Especially as yesterday’s Welmory judgement brings more emphasis on the need for tax authorities to actually prove sufficient levels of infrastructure to claim existence of a fixed establishment. Such exercise may be particularly valid in industries being more and more part of the Digital Economy, where the brick and mortar physical aspects are taken over by the importance of significant digital presence, remote management and IT infrastructure.

We are looking forward to deeper analysis of our colleagues from PwC Poland, together with whom we are closely monitoring the developments in Poland.

We will keep you updated on the subject matter.

In the meantime, you can contact us for more details and download the PDF here:
Click here to download the PDF

 

Patricia More, Partner, Indirect Tax, PwC Geneva
patricia.more@ch.pwc.com / +41 58 792 95 07

Bozena Turek, Manager, Indirect Tax, PwC Geneva
bozena.turek@ch.pwc.com /+41 79 742 54 81

Financial services businesses may not be eligible for the European Cost Sharing exemption – opinion of the Advocate General in DNB Banka (C-326/15) and Aviva (C-605/15)

Summary

The Advocate General (“AG”) issued its opinion on the application of the cost-sharing exemption (“CSE”) provided by article 132(1)(f) of the VAT Directive in two cases regarding financial services providers (i.e. banks and insurance companies). The opinion of the AG is not in line with the position of the EU Commission and the discussions in various meetings of the VAT Committee in 2010, 2014 and 2015 and it also appears not to be in line with the pending infringement procedures of the EU Commission against Luxembourg (C-274/15) and Germany (C-616/15).

Cost Sharing Exemption

The CSE allows businesses to come together and pool resources as a means of sharing these resources between each other free of VAT (as opposed to procuring services externally with VAT) on the grounds that these resources are directly necessary for the activities of the members of the cost-sharing group. In order to benefit from this exemption, the group needs to consist of entities engaged in VAT-exempt or non-taxable activities and the supplies need to be made by the group to the members at cost.

Currently, the majority of the EU member states allow the application of the CSE to financial services businesses.

Position of the AG

  • The CSE should apply to services supplied by the group to its members and not vice versa (i.e., the contribution of resources by the members of the group to the group (to the pool) is not VAT-exempt).
  • The members eligible for the application of the CSE are companies/bodies acting in the public interest (this excludes financial services businesses).
  • The CSE is only applicable to services supplied between the group and its members established in the same EU member state (i.e., the CSE cannot apply on a cross-border basis).

Potential implications

We anticipate that the impact on the financial services sector will be significant if the Court of Justice of the European Union (“Court”) decides to follow the opinion of the AG. Specifically, the cost of the procurement of services for the benefit of the whole group will be higher (because of irrecoverable VAT). This would mean that financial services businesses would have to consider other available options to manage the VAT costs on the shared services and/or resources. One of the options could be a set-up of a cost-pooling arrangement (cost-contribution arrangement as per chapter VIII of the OECD guidance 2010) to pool resources that are mutually beneficial for all participants and to share the costs of the benefits that each participant derives from the pool. Another option could be to undertake a detailed review of the services supplied between the members to confirm whether they could benefit from the local VAT exemptions.

For the present, we must wait to see if, and to which extent, the Court agrees with the AG’s opinion. However, please do not hesitate to contact us if you would like to discuss the above.

Contacts:

Tobias Meier Kern
Director Indirect Taxes
tobias.meier.kern@ch.pwc.com
+41 58 792 4369

Marcella Dzienisik
Senior Manager Indirect Taxes
marcella.dzienisik@ch.pwc.com
+41 58 792 4938

 

Assessment of 100 million due to incorrect import value confirmed by the Swiss court

Companies involved in supplies of goods to Switzerland should check their Swiss customs reporting further to a recent case of the Federal Administrative Court on determination of the import VAT value.

Swiss Federal Court VAT Decision - March 2017

Background

A., a purchasing company of C. group established outside of Switzerland, however registered for Swiss VAT, was acquiring goods from foreign third party suppliers. The goods were shipped to a Swiss warehouse of A from where those were subsequently sold to C. (a Swiss established and VAT registereddistribution company of the C. group), or other third party customers.

Swiss Federal Court VAT Decision - March 2017

For customs clearance, the import value of the goods declared by A. was based on the price invoiced by the foreign suppliers to A. (i.e. on the purchase price). Further to their investigation, the Swiss Federal Customs Authorities (“SFCA”) claimed that A. underestimated the import VAT base, which should have been the sales price to C. minus 10%.

Position of the Federal Administrative Court

The Court held in its decision A-2675/2016 dated 25 October 2016, that the purchase price paid to the foreign suppliers by A. was not relevant to determine the import VAT value. This was due to the fact that the transport from abroad was partially supported by A., which means the latter already abroad had the power to dispose of the goods and therefore the transaction with the foreign suppliers should no longer be relevant to determine the import VAT value. The Court also held that the import value could not be the value of the sale from A. to C. since the transactions were occurring after the import, and storing the goods in the Swiss warehouse of A. The Court then, however concluded that the import value should be the market value that C. would pay.

According to article 54, al.1, let. g of the Swiss VAT law, the market value is the price to be paid to an independent supplier in the country of origin. A. was therefore convinced that the imported value declared was in line with the Swiss VAT law. However, the Court held that the price to be considered is not the one that A. paid to the supplier in the country of origin of the goods, but the price that C. would have paid to third-party suppliers in this country for similar goods. On this ground, and to the extent that the Court considered that it could not be determined which price would be paid by C. in the country of origin, it held that the SFCA were entitled to consider that indeed such price would be the price paid by C. to A. minus 10%, according to deductive method developed in the Swiss Federal Tax Authorities’ guidelines which however do not have binding character. Thus, the initial position of the SFCA was confirmed by the court even though based on different arguments.

This decision resulted in an adjustment of more than CHF 100 million and late payment interest of CHF 924,854 for A.

Swiss Federal Court VAT Decision - March 2017

Outcome

We are of the opinion that neither the position of the Court nor the deductive method developed by the Swiss Federal Tax Authorities in their guidelines are in line with the Swiss VAT law or with the Customs administrative guidelines which only refer to the price paid by the importer in such case.

It could also be inferred from the reasoning of the Court that the deductive method would not be applicable in case exclusively the foreign suppliers would be handling the transport of the goods up until the Swiss warehouse of the recipient.

As the company was fully entitled to deduct input VAT, and due to the fact that customs duties in Switzerland are calculated based on weight of the imported goods, the valuation of the VAT import value had no impact on A’s liability as such. The main impact of the decision is however the late payment interests arising from the adjustment performed by the SFCA which has been confirmed by the Court and do amount to a substansive cost for A.

An appeal has been lodged against the decision, and as the position held by the Federal Administrative Court could be considered as not in line with the Swiss VAT law, we can only hope that the Federal Supreme Court will not confirm this controversial judgement of the Federal Administrative Court.

Recommended action

Companies importing goods from abroad to their Swiss warehouses, from where subsequent sales to Swiss customers are carried out should review their practice in order to assess the potential risk and monitor further developments. Provided that the Federal Supreme Court confirms the position of the SFCA, such businesses would notably be impacted if they are involved in the transport of the goods.

Download the PDF by clicking the image below:

Swiss Federal Court VAT Decision - March 2017

Please contact our team for more details:

Patricia More
Partner, Indirect Tax, PwC Geneva
patricia.more@ch.pwc.com
+41 58 792 95 07

Kristyna Kaniova
Manager, Indirect Tax, PwC Geneva
kristyna.kaniova@ch.pwc.com
+41 58 792 92 34

Hans-Frederic Andersen
Senior Consultant, Indirect Tax, PwC Geneva
andersen.hans-frederic@ch.pwc.com
+41 58 792 91 97

Group financing: changes to the withholding tax ordinance designed to facilitate intragroup financing activities out of Switzerland

  1. Current group financing environment in Switzerland

Interest payments on bonds and client credit balances are generally subject to Swiss withholding tax at a rate of 35%. This may have far-reaching consequences on both the external and internal financing of Swiss-based groups and widely impedes both types of financing activity in Switzerland.

  • With respect to external financing, the withholding tax levied on interest payments makes the issuance of bonds in Switzerland rather unattractive. For this reason, groups established in Switzerland often carry out financing activities abroad.
  • With respect to intragroup financing, the crucial point is whether a particular intragroup obligation (note payable) qualifies as a bond/client credit balance or not. Generally, obligations qualify as bonds if they are issued by a Swiss obligor to more than 10 (if the terms are identical) or 20 (if the terms are similar) non-bank creditors and the total credit amount is at least CHF 500,000. Moreover, if a Swiss company has more than 100 non-bank creditors and a loan volume of at least CHF 5 million, such obligations are deemed to be a client credit balance with the corresponding withholding tax consequences for interest payments. These limitations are generally known as the 10/20/100 non-bank lender rules.

The legislator is aware of these disadvantages and introduced an exemption in the withholding tax ordinance in 2010. From that point on, intragroup obligations between fully consolidated group companies have not qualified either as bonds or client credit balances, provided that no Swiss group company guarantees a bond of a foreign group company by way of a downstream guarantee.

As a result of this constraint, the intragroup financing activities of Swiss groups with foreign-issued bonds outstanding and a Swiss downstream guarantee in place need to take account of the 10/20/100 non-bank rules, which substantially hinders the settlement of intragroup financing and treasury activities in Switzerland. If the 10/20/100 non-bank rule is not observed, there is a risk that interest payments to other group companies will be subject to Swiss WHT.

 

  1. Improved group financing opportunities due to changes to the withholding tax ordinance

In order to facilitate group financing in Switzerland, the federal council has decided to amend the Swiss withholding tax ordinance with effect 1 April 2017. Under this amendment, a downstream guarantee issued by a Swiss group company no longer automatically leads to a situation where the above-mentioned exemption for intragroup obligations is not applicable. The amended withholding tax ordinance states that the intercompany exemption introduced in 2010 shall also be applicable for groups with a foreign bond guaranteed through a downstream guarantee of a Swiss guarantor, provided that the funds that are forwarded by the foreign bond issuer to Swiss group companies do not exceed the equity of the foreign bond issuer.

In addition, the current provision under which the exemption is only applicable to fully consolidated group companies is to be extended to include partially consolidated group companies (for example a joint venture in which an interest of least 50% is held).

 

  1. Expected implications in practice

The amendment of the withholding tax ordinance is a step in the right direction, and will facilitate group financing activities in Switzerland. The main benefit of the change in the withholding tax ordinance is the fact that group of companies with bonds issued abroad with a Swiss downstream guarantee can also benefit from the intercompany exemption under the 10/20/100 non-bank rule. The fact that partially consolidated group companies also qualify for the exemption is helpful as well.

However, the general statement that the financing of Swiss entities from a foreign bond issued does not create a harmful flowback, provided that the financing does not exceed the foreign issuer’s equity, will hardly have a lasting positive impact on intragroup financing activities in Switzerland. This is mainly due to the fact that foreign bond issuing entities generally do not require substantial equity, so the permitted flowback to Switzerland will be minimal.

If the legislator is serious about fostering the settlement of intragroup financing activities in Switzerland, additional measures should be taken quickly.

Contacts:

Martin Bueeler
Partner
Tax and Legal Services
+41 58 792 4392
martin.bueeler@ch.pwc.com

Martin Burri
Manager
Tax and Legal Services
+41 58 792 4500
martin.burri@ch.pwc.com

 

ITSNewsalert: Disclosure of final beneficiaries in Brazilian corporate taxpayer register

On December 29, 2016, the Brazilian tax authorities issued Normative Instruction (NI) 1,684/2016 which postpones the starting date to disclose information related to final beneficiaries in the Brazilian corporate taxpayer register (“CNPJ”).

Background

In May 2016 the Brazilian tax authorities issued NI 1,634 establishing the obligation to disclose information related to final beneficiaries of Brazilian companies in the CNPJ.

According to NI 1,634, the term “final beneficiaries” refers to (i) an individual who ultimately, either directly or indirectly, holds, controls or significantly influences an entity; or (ii) an individual on whose behalf a transaction is undertaken. A shareholder is deemed to have significant influence if (i) owns more than direct or indirect 25% of the entity’s capital stock or (ii) has the ability to influence the decision-making and elect or appoint members of the entity’s management.

Please note that, among others, legal entities set up as listed companies in Brazil, or in jurisdictions which impose the public disclosure of information of relevant shareholders, as well as non-profit entities, were not required to comply with this obligation unless the entities were located in tax havens or privileged tax regimes under the Brazilian tax legislation.

The takeaway

Although the disclosure of the final beneficiaries was initially set to start on January 1, 2017, NI 1,684/2016 has postponed the general starting date to July 1, 2017. As an exception, companies registered in Brazil before July 1, 2017 will have time until December 31, 2018 to comply with the disclosure obligation (however, please note that if a Brazilian company updates its CNPJ before December 31, 2018 for any other reason, the disclosure obligation will arise at the date of such change).

Download PDF

Contacts

If you would like to discuss the implications for your organisation, please contact your usual PwC adviser or:

Daniel Gremaud
PwC | Senior Partner, Tax and Legal Services
Office: +41 58 792 81 23
Mobile: +41 79 213 5459
Email
PricewaterhouseCoopers GmbH
Avenue C.-F. Ramuz 45 | Case postale | 1001 Lausanne

 

 

Grasiele Teixeira Neves
PwC | International Tax Services
Office: +41 58 792 9825
Mobile: +41 79 350 5138
Email
PricewaterhouseCoopers AG
Avenue Giuseppe-Motta 50 | Case postale | 1211 Genève 2