Poland removes Liechtenstein from its black list

On 9 June 2017 the Government of the Principality of Liechtenstein issued a press release stating that Liechtenstein has been removed from the Polish black list of low-tax countries.

Removing Liechtenstein from the black list is a consequence of the signing of the agreement between Liechtenstein and the EU Member States to exchange information on tax matters automatically and upon request. This agreement is in force since 1 January 2016.

The removal from the Polish black list further contributes to strengthening Liechtenstein as a business location. In particular, it helps Liechtenstein based companies in the areas of transfer pricing documentation and controlled-foreign-company regulation. Liechtenstein based companies no longer automatically fall within the scope of these anti-abuse rules. Thus, anti-abuse rules only apply if the specific preconditions based on Polish legislation are fulfilled.

Contacts

Martin_Meyer_09723
Martin Meyer
PwC | Director
Office: +41 58 792 42 96
Mobile: +41 79 348 36 13
Email
PricewaterhouseCoopers GmbH
Austrasse 52 | Postfach | FL-9490 Vaduz

 

 

Bieri_Ralph_70735
Ralph Bieri
PwC | Senior Manager
Office: +41 58 792 72 76
Mobile: +41 79 643 14 37
Email
PricewaterhouseCoopers AG
Vadianstrasse 25a | Neumarkt 5 | 9001 St. Gallen

Mandatory disclosure rules for intermediaries proposed by the European Commission

On 21 June 2017, the European Commission (EC) adopted a proposal for a Council Directive on the mandatory automatic exchange of information in the field of taxation in relation to so called “reportable cross-border arrangements”. The proposal accordingly provides for mandatory disclosure of cross-border arrangements by intermediaries or taxpayers to the tax authorities and mandating automatic exchange of this information among Member States. Its stated objective is to enhance transparency, reduce uncertainty over beneficial ownership and dissuade intermediaries from designing, marketing and implementing harmful tax structures.

Mandatory disclosure for cross-border arrangements

The proposal applies to cross-border arrangements, i.e. an arrangement or series of arrangements in either more than one Member State or a Member State and a third country.

Such arrangements become reportable by intermediaries (or in certain cases by the taxpayers themselves), if they bear at least one of certain generic or specific features (called “hallmarks” and including but not limited to the conversion of income into lower-taxed revenue streams, deductible cross-border payments between related parties where the recipient is resident in a zero or low tax jurisdiction, situations where the intermediary is entitled to receive a fee fixed by reference to e.g. the amount of tax advantage derived, the use of jurisdictions with weak regimes of enforcement of anti-money laundering legislation for identifying the beneficial ownership of legal entities et al).

An intermediary is any person being responsible vis-à-vis the taxpayer for designing, marketing, organising or managing the implementation of the tax aspects of a cross-border arrangement. An intermediary may also be a person who directly or indirectly provides material aid or advice with respect to any of the above activities. Intermediaries are covered by this proposal if incorporated/governed by the laws/resident/registered in an EU Member State.

Next steps

Timing-wise, Member States will need to take the necessary measures to require intermediaries and taxpayers to file information on reportable cross-border transactions that were implemented between the date of the formal adoption of the proposal by the Council and 31 December 2018. The provisions of the proposed measure are set to apply as per 1 January 2019 with the first information being disclosed by the end of the first quarter of 2019 (being 31 March 2019).

The Commission’s proposal will now be sent to the Council and the European Parliament. The Directive needs to be formally adopted by the Council by unanimous vote, after consultation of the European Parliament.

For more detailed information, please refer to the PwC Newsalert from our EUDTG network.

Cooperation between PwC and Noveras Tax Reporting for international Banking Clients

PwC and Noveras Services AG have agreed to cooperate in providing offshore tax reports for banks located in Switzerland and in foreign countries. This cooperation results in the following benefits:

Benefits for Banks:

  • Able to offer truly country-specific, high-quality tax reports to clients
  • No need to build up and maintain tax reporting infrastructure
  • No need to follow tax laws around the world
  • Tax reporting provided even for small numbers of clients
  • Flexible, cost-efficient cooperation

Benefits for Clients:

  • Client receives a high-quality tax report for their offshore account
  • Reports deliver all of the necessary information for client’s tax return in their country
  • Overall lower costs for the client due to saving the expense of local tax support

Statement by the Leaders

  • This unique cooperation ensures several high-quality services (such as highly skilled tax reporting products).
  • The synergy between PwC as leading expert advisor in tax-related topics and a practice-oriented boutique with profound knowledge of wealth management / cross-border banking, IT and international tax law creates a unique market solution.

Find out more

Contact

Dieter Wirth
Partner
+41 58 792 4488
dieter.wirth@ch.pwc.com

Michael Taschner
Senior Manager
+41 58 792 1087
michael.taschner@ch.pwc.com

Swiss Federal Council Adopts Dispatch on AEOI with 41 Jurisdictions

On 16 June 2017, the Swiss Federal Council agreed to adopt the dispatch on the introduction of the Automatic Exchange of Information (“AEOI”) with 41 states and territories. Switzerland will activate the AEOI with each individual state/territory via specific federal decrees within the framework of this dispatch.

This dispatch strengthens Switzerland’s international position, as its AEOI network has extended to most of the G20 and OECD states, in addition to the already existing agreements with 38 states and territories, including all EU member states.

As part of this dispatch, collection of information will begin in 2018 for a first data exchange in 2019. Brazil, China, Liechtenstein, and Russia are notable states included within the list of 41 states and territories.

Please refer to the following link for the Swiss Federal Council’s official media release:

Englishhttps://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-67079.html
Germanhttps://www.admin.ch/gov/de/start/dokumentation/medienmitteilungen.msg-id-67079.html

OECD BEPS: Multilateral Instrument signed by Switzerland and 67 other countries

On 7 June 2017, officials from more than 70 countries participated in the signing of the multilateral instrument (“MLI”), which is a result of negotiations of more than 100 jurisdictions. The Organization for Economic Cooperation and Development (“OECD”) aims for a swift implementation of a series of tax treaty measures to update international tax rules and reduce the opportunity for tax avoidance. Impacts for Swiss companies are mainly expected in the field of dispute resolutions.

The MLI is one of the outcomes of the OECD/G20 Project to tackle Base Erosion and Profit Shifting (“BEPS”) and has the goal to enable countries to swiftly modify bilateral tax treaties (more than 3’000 worldwide) to include the measures developed in the course of the BEPS work. In this respect, an ad hoc group, consisting of 99 countries, four non-state jurisdictions and seven international or regional organizations participating as observers, developed the MLI. In their negotiations, the ad hoc group focused on the following BEPS measures and how the MLI would need to modify the provisions of bilateral or regional tax agreements. Aiming to swiftly implement those measures, some of which are minimum standards and others representing best practice recommendations only:

  • Hybrid mismatch arrangements in accordance with BEPS Action 2 (best practice recommendation);
  • Granting of treaty benefits in inappropriate circumstances under BEPS Action 6 (minimum standard);
  • Amendments to the definition of “permanent establishment” as recommended under BEPS Action 7 (best practice recommendation);
  • Facilitating of access to and resolution of mutual agreement procedures consistent with BEPS Action 14 (minimum standard).

Continue to read in detail in our current newsletter.

If you have questions, please contact your usual PwC contact person or one of PwC Switzerland´s experts named below.

Contacts

Andreas Staubli
Partner
Leader TLS Schweiz
Tel. +41 58 792 44 72
Send E-mail
Armin Marti
Partner
Leader CT Schweiz
Tel. +41 58 792 43 43
Send E-mail
Stefan Schmid
Partner
Tax & Legal
+41 58 792 44 82
Send E-mail
Fabio Dell’Anna
Partner
Tax & Legal
+41 58 792 97 17
Send E-mail
Claude-Alain Barke
Partner
Tax & Legal
+41 58 792 83 17
Send E-mail
Michael Ruckstuhl
Senior Manager
Tax & Legal
+41 58 792 14 94
Send E-mail

EMEA ITS Permanent Establishment Webcast Series, Episode One

The Changing PE Threshold

Thursday, 8 June 2017, 3.00 – 3.45 pm CET

Preventing the artificial avoidance of Permanent Establishment (“PE”) status is one of the key topics addressed by the OECD’s Base Erosion and Profit Shifting (“BEPS”) package.

In this webcast series PwC specialists will address the practical implications that a reduction in the PE threshold will have for multinational corporations and will provide an insight, through examples, on the challenges and practical actions that can be taken to manage PE in the post-BEPS world.

The webcast series will provide a mix of technical updates and analysis, practical experience and local country expertise around topics such as profit attribution to a PE, direct tax consequences of a PE and the broader impact that the new rules will have on an increasingly global and mobile workforce. Critically, it will give you the chance to raise questions directly to our PE specialists.

The webcast series will start by setting the scene for the current PE landscape by considering the practical changes that have taken place to the PE threshold and the subsequently looking at the practical challenges associated with attributing profit to PE’s. The later sessions will focus on the practical implications of
these changes, providing guidance and experience of the challenges and risks that may be created.

  • Session 1 –The Changing PE Threshold – 8 June 2017
  • Session 2 –Profit Attribution to PE’s – 6 July 2017

After the summer break we will return recharged with further sessions covering topics such as

  • Broader implications of a PE beyond corporate tax
  • VAT and PE
  • Employee mobility and PE consequences

Episode 1, The Changing PE Threshold – 8 June 2017

This introductory episode will set the stage for our ongoing discussion of PE in the new tax environment and will work through practical examples being faced by multinational corporations, addressing questions such as:

  • What are the main developments in the definition of PE in the international environment?
  • Walk though practical examples to demonstrate how the changes related to: (1) fixed place of business, (2) auxiliary and preparatory exceptions, (3) independent and dependent agent, (4) antifragmentation and contract splitting are likely to work in practice and potential risk areas.
  • Assess how PE definition and interpretation may vary by local jurisdiction, taking Poland and Spain as examples to identify the impact this will have on a multinational’s approach to international business.
  • Provide an update on the multilateral instrument as it relates to PE.

Speakers for episode 1 are:

Monica Cohen-Dumani – EMEA ITS Leader
Guillaume Glon – PwC France
Mike Cooper – PwC UK
Agata Oktawiec – PwC Poland
Carlos Concha Carballido – PwC Spain
Please click on the below link to register for the WebEx session.

Registration Link

Complete the required registration fields and select “Submit”.
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: grasiele.neves@ch.pwc.com

We do hope that you will join us online!

Best regards
Monica Cohen-Dumani

PwC | Partner, International tax services, EMEA ITS Leader
Office: +41 58 792 9718 | Mobile: +41 79 652 14 77
Email: monica.cohen.dumani@ch.pwc.com
PricewaterhouseCoopers SA
Avenue Giuseppe-Motta 50 | Case postale | CH-1211 Genève 2, Switzerland
http://www.pwc.ch

Swiss Withholding Tax Refund on Equity Finance Transactions: New Decision of the Federal Supreme Court

On 5 April 2017, the Swiss Federal Supreme Court issued a new decision concerning the Swiss withholding tax refund right of an Italian bank that was engaged in a combination of buy-sell and derivatives transactions with shares of Swiss issuers around dividend payment dates. To a large extent, the decision of the Court concentrated on the evaluation of taxpayers’ compliance with the concept of beneficial ownership requirements aimed at assessing whether relevant transactions entered into by the taxpayer constituted the mere setup of a dividend stripping. Subsequently, the Court denied Swiss withholding tax refund claims due to the failure of the taxpayer to provide the Federal Tax Authorities (“FTA”) with the required information for the identification of the counterparties to the relevant trades, considering this a failure of the taxpayer to cooperate since such information is, in the view of the Court (and of the FTA), an essential element of proof within beneficial ownership testing.

Previous jurisprudence

The judgment represents the further evolution of previous cases delivered by the Federal Supreme Court in similar situations, and in particular, with regard to two Swiss withholding tax refund lead cases dealing with Danish Banks (for further details, please see the following blog posts).

Decision of the Federal Supreme Court of 5 April 2017

Relevant facts:

A bank incorporated in Italy entered into a number of buy/sell and derivatives transactions (futures) with Swiss shares. The bank acquired these securities shortly before the dividend payment date and sold them shortly after the dividend receipt. Further to the dividend payments, the Italian bank filed several withholding tax refund requests with the FTA regarding dividends distributions arising from securities held on ex-dividend dates. While the claims were under consideration, the FTA requested the bank provide additional information regarding the transactions, and in particular, to disclose information enabling the identification of the counterparties to the transactions with underlying securities prior and post the dividend payment event.

Because the Italian bank was unable to provide this information, the FTA and the Federal Administrative Court rejected its Swiss withholding tax refund claims.

Federal Supreme Court decision highlights:

In its decision, the Swiss Federal Supreme Court reiterated its jurisprudence regarding the concept of beneficial ownership, and provided the following arguments:

  • The Federal Supreme Court re-established that Swiss withholding tax refund claim eligibility in the context of the application of a double taxation treaty requires that the claimant be the beneficial owner of the underlying income.
  • To qualify as a beneficial owner of income (a dividend in the case in question), the recipient should be free in determining further faith of income received (this means that the taxpayer should not have any contractual or legal obligation to pass on such income to third parties). The notion of beneficial ownership should be considered while taking into account economic circumstances and not just pure tax reasons (such as the attempt of the recipient of the dividend to benefit from a double tax treaty withholding tax reduction). Consequently, the Court mentioned that although the tax savings is effectively not present, this is not relevant for the double tax treaty eligibility analysis, which precluded the line of reasoning that all counterparties involved in the transaction were residing in treaty countries with the same residual Swiss withholding tax rate under the relevant treaty with Switzerland.
  • Moreover, the Federal Supreme Court recalled that Swiss Tax Law imposes information-sharing and cooperation duty on taxpayers. This duty should apply both to resident and non-resident taxpayers, even if the double tax treaty does not have a specific provision in this respect. The Court stated that during the procedure, the FTA may request information and documentation enabling it to appropriately review and assess a Swiss WHT refund claim. The rules are that the requested evidence must not be obviously inappropriate to make the required assessment (i.e., it must be reasonable and offer suitable proof) and should not result in disproportionate costs for the claimant. The absence of cooperation cannot create a comparative benefit for the taxpayer, and will have negative consequences if the case cannot be properly reviewed and assessed by the authorities.
  • The Federal Supreme Court also stated that brokers used in equity finance transactions will not be recognized as counterparties but only as intermediaries, and that it is the claimant’s duty to provide proof of the effective counterparty behind the broker.

After analysing the facts of the case, the Court found that:

  • The taxpayer could not establish its compliance with Swiss beneficial ownership requirements for double tax treaty benefits application purposes just by providing the names of the counterparties effectively involved in the transactions.
  • The FTA may request information and documentation to make a proper assessment of the facts and circumstances of the transaction which resulted in a Swiss WHT claim. The claimant must provide reasonable documentation as part of his information and cooperation duties. These duties are limited by the principle of proportionality, which means that the requested information should neither be obviously inappropriate to make the required assessment nor result in disproportionate costs for the claimant. Of course, these principles are open for legal interpretation and subject to scrutiny.
  • Moreover, the Court ruled that, by not providing the requested information, the Italian bank deliberately hid essential elements of the facts required for the analysis of its transactions by the authorities, meaning non-cooperation was in fact established. Without the documentation by the claimant, the FTA was put in a position where it was impossible to understand the effective flows and structure, or to analyse the claim against the practice established by the Court. Hence, the claimant was forced to face the consequences of the missing proof of its tax mitigating elements.

Further to the above, the Federal Supreme Court concluded that the withholding tax refund should be denied to the Italian bank (only a non-material claim was sent back to the tax authorities for reassessment due to violation of the formal requirements of the procedure).

What does it mean for you?

The new Court decision clearly shows, in line with previous jurisprudence, an overall trend for assessing compliance with beneficial ownership requirements, and for the detailed review of relevant documentation when withholding tax refund claims are filed within the scope of financial services industry transactions. Market participants using brokers in similar transactions will be required to disclose the effective parties behind the broker, which will in practice make it difficult to establish proof.

The recent jurisprudence makes it clear that all cases should be analysed on the basis of individual facts and circumstances, and that outcomes may vary depending on the analysis of transactions.

We encourage you to review present and previous withholding tax claims filed for similar transactions to determine whether any risks are present, and to develop and implement risk mitigating strategies for the future.

Martin Büeler
Partner, Tax & Legal
martin.bueeler@ch.pwc.com
+41 58 792 43 92
Luca Poggioli
Director, Corporate Tax
luca.poggioli@ch.pwc.com
+41 58 792 44 51
Victor Meyer
Partner, Tax & Legal
victor.meyer@ch.pwc.com
+41 58 792 43 40
Dieter Wirth
Partner, Tax & Legal
dieter.wirth@ch.pwc.com
+41 58 792 44 88
Dmitri Deniskin
Director, Tax & Legal
dmitry.deniskin@ch.pwc.com
+41 58 792 8258

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