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

BEPS update: Changes and reactions following the BEPS final reports’ release

As we enter the second phase of the OECD-led BEPS project, which covers clarifications (and work left to complete), implementation and monitoring, we reflect on the changes and tax authority reactions following the 5 October 2015 release of the BEPS final reports. Governments and tax authorities have been very active, from both a behavioural and a legislative basis. This includes tax authorities in such countries as the United Kingdom, Australia, China and the United States, among others. Undoubtedly, the BEPS project has already had, and will continue to have, a profound impact for most taxpayers.

As part of extending the reach of the BEPS project, a ‘framework’ is to be agreed early in 2016 with involvement — on an equal footing — of interested countries and jurisdictions other than OECD members and G20 members. This will include input from supranational organisations like the UN, IMF and World Bank Group. The OECD and relevant working groups are currently addressing this action, along with other actions that were identified in the BEPS final reports presentation. We consider the framework and also look ahead to what likely will happen throughout 2016 and beyond. Finally, on an individual action-by-action basis, we add insights regarding the various stakeholders’ intentions and commitments.

Read more.

Time is of essence
Since notwithstanding the overall timeframe, implementation is in process (and well advanced in some areas) and tax authorities are already taking a more aggressive stance, your business should consider how the BEPS project will impact your entity and which concrete action should be taken now.

Write an e-mail to Benjamin Koch
CLICK HERE

New Luxembourg income tax law and its consequences for Swiss companies

This newsletter addresses the few points we would like to highlight with respect to the new corporate tax measures of the Luxembourg income tax law (“LITL”) enacted in Luxembourg for years 2015 and 2016. For a complete overview of the amendments, please refer to PwC Luxembourg newsletter.

We will focus on two specific measures, which are especially relevant for companies having a presence in Luxembourg:

  1. the new Luxembourg domestic participation exemption regime (art. 147 and 166 LITL), and
  2. the transitional rules in relation to the abolishment of the Luxembourg IP regime (art. 50bis LITL)

Read our newsletter to know more about the consequences for Swiss companies and our recommendations for the future.

For further questions, you may contact Michael Frigo from PwC Luxembourg and Daniel Gremaud from PwC Switzerland.

Michael Frigo
PwC | Partner
Office: +352 49 48 48 3332
Email: m.frigo@lu.pwc.com
PricewaterhouseCoopers, Société coopérative
2, rue Gerhard Mercator B.P. 1443 L-1014 Luxembourg
www.pwc.lu
Daniel Gremaud
PwC | Partner, Leader Tax & Legal Romandie
Office: +41 58 792 81 23
E-mail: daniel.gremaud@ch.pwc.com
PricewaterhouseCoopers AG
Birchstrasse 160 | P.O. Box | CH-8050 Zurich
www.pwc.ch

New TIEA signed between Switzerland and Brazil – meanwhile Dutch holding companies back on “gray list” of privileged tax regimes

TIEA_BildOn 23 November 2015, Switzerland and Brazil have signed a new tax information exchange agreement (TIEA). The new TIEA does not only foster the bilateral relationships between the two countries and ensures compliance with OECD international fiscal transparency standards, but also underlines Switzerland’s removal of the Brazilian blacklist in June 2014 permanently. Before entering into force, the TIEA however needs to be ratified by the countries’ parliaments and is subject to an optional referendum in Switzerland.

While the newly signed TIEA provides more legal and economic certainty, it may also be a first step in direction of a deeper collaboration in tax matters, particularly building a corner stone for a future double taxation treaty.

For further information regarding the aforementioned topic read our latest publication here.

Release of BEPS deliverable: Making Dispute Resolution Mechanisms More Effective

On 5 October 2015, the Organisation for Economic Co-operation and Development (OECD) released its deliverable on Base Erosion and Profit Shifting (BEPS) Action 14: 2015 Final Report, Making Dispute Resolution Mechanisms More Effective (the “Report”).

According to the Report, countries will commit to develop a minimum standard in the context of treaty-related disputes and will ensure effective and efficient implementation of this standard through the establishment of a peer-based monitoring process.

This minimum standard, which is complemented by a number of recommended best practices, is designed to meet the following objectives:

  • Ensuring that treaty obligations relating to the mutual agreement procedure (MAP) are fully implemented in good faith and that MAP cases are resolved in a timely manner;
  • Ensuring the implementation of administrative processes that promote the prevention and timely resolution of treaty-related disputes; and
  • Ensuring that taxpayers can access MAP when eligible.

Read more.

For more information on the topic discussed above, including what it means in practice or for other tax questions, contact your local PwC engagement team or me.

 

Aligning transfer pricing outcomes with value creation – revised Chapters I, II, VI, and VII of the OECD Transfer Pricing Guidelines

On 5 October 2015, the OECD presented its final package of measures for a comprehensive, coherent, and co-ordinated reform of the international tax rules.  The package was endorsed by the G20 Finance Ministers at their meeting on 8 October 2015, in Lima, Peru.  This final package (referred to below as the “Final Report”) includes the work undertaken by the OECD in relation to Aligning Transfer Pricing Outcomes with Value Creation, Actions 8 to 10 of its Base Erosion and Profit Shifting (BEPS) Action Plan, which focuses on ensuring that transfer pricing outcomes are aligned with value creation.

The OECD work in the context of Actions 8 to 10 of the Final Report includes guidance on several key transfer pricing areas.  These include: (1) the accurate delineation of intercompany transactions; (2) future work to be completed on the transactional profit split method; (3) transactions involving intangibles; (4) commodity transactions; (5) “low-value adding intra-group services” transactions; and (6) cost contribution arrangements (CCAs).

Read more.

For more information on the topic discussed above, including what it means in practice or for other tax questions, contact your local PwC engagement team or me.

German business becomes simpler for Swiss banks

The Swiss Financial Market Supervisory Authority (FINMA) and Germany’s Federal Financial Supervisory Authority (BaFin) recently agreed to a ‘simplified exemption procedure’ and the corresponding measures. This accord makes it easier for Swiss banks to gain entry to the German market.

Get some details and find out more in our attached summary.

German business becomes simpler for Swiss banks

OECD Public Consultation on BEPS Actions 8 through 10 reveals planned revisions to transfer pricing drafts

In brief

During the July 6-7, 2015 public consultation on BEPS Actions 8 through 10, the OECD Working Party 6 announced planned revisions to its proposed changes to the Transfer Pricing Guidelines, including its December 2015 papers on Risk, Recharacterisation and Special Measures and Use of Profit Split Methods and its 2014 draft on Intangibles. The OECD also received feedback from speakers who had submitted written comments to the drafts on Cost Contribution Arrangements and Hard to Value Intangibles (proposed changes to Chapter VI of the Transfer Pricing Guidelines on Intangibles). In providing the updated status of the various transfer pricing workstreams, the OECD also confirmed the delivery timetable for the transfer pricing work.

The extent of potential changes to the Transfer Pricing Guidelines has been scaled back and appears to be more aligned with the arm’s-length principle of the Guidelines. This follows previous public consultations and the hundreds of pages of comments and feedback received from industry and representatives. Further, this scaling back may be attributable to an effort to reach consensus among the various taxing authorities participating in the Working Party 6.

Read more…