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

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

EU: Anti-Tax Avoidance Directive II (“ATAD II”)

On February 21, 2017, the 28 European Union (EU) Finance Ministers in the ECOFIN Council meeting reached political agreement on the Council Directive amending Directive (EU) 2016/1164 regarding hybrid mismatches with third countries with a view to adopting it (subject to receiving European Parliament’s opinion and legal-linguistic revision).

ATAD II basically adds to the existing ATAD I (adopted in 2016 and effective as of 2019) rules on mismatches with third countries and basically extends the hybrid mismatch definition to also include mismatches resulting from arrangements involving PEs, hybrid transfers, imported mismatches, and reverse hybrid entities. In addition, ATAD II includes rules on tax residency mismatches.

ATAD II still needs to be submitted for formal adoption at a next ECOFIN Council meeting after the European Parliament has formally issued its opinion on the EC proposal, which is currently scheduled for 26 April 2017.

Once formally adopted, EU Member States will need to transpose the provisions by 31 December 2019 and apply them per 1 January 2020. By way of derogation, the specific reverse hybrid entity rule would need to be transposed by 31 December 2021 and applied per 1 January 2022, however payments to reverse hybrids would not be deductible anymore from 1 January 2020.

The further developments in the EU in this regard should be closely monitored as they may potentially have implications for Swiss Finance Branches and Principal Companies.

For more information please find below the newsletter from our EUDTG network.

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EUDTG Newsletter November – December 2016

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 opportunities.

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

CJEU Cases

  • Belgium: AG’s Opinion on the Belgian fairness tax: X
  • Denmark: CJEU Judgment on the Danish thin capitalisation rules: Masco Denmark ApS
  • Portugal: CJEU Judgment on the taxation of profits distributed by entities in third countries: SECIL
  • United Kingdom: AG’s Opinion regarding UK trust exit taxation: Trustees of the P Panayi Accumulation & Maintenance Settlements v HMRC
  • United Kingdom: AG’s Opinion on UK FID regime: The Trustees of the BT Pension Scheme v HMRC

National Developments

  • Netherlands: Dutch AG’s Opinion regarding Dutch dividend withholding tax on foreign investment funds
  • Spain: National High Court of Justice upholds insurance company claims
  • United Kingdom: Court of Appeal judgment on remedies in the franked investment income (FII) group litigation

EU Developments

  • EU: ECOFIN Council of 8 November 2016 adopts criteria for screening of third country jurisdictions
  • EU: ECOFIN Council of 6 December 2016 – results
  • EU: European Commission’s public CBCR proposal’s legal basis challenged
  • EU: European Commission welcomes the entry into force of new transparency rules for tax rulings

Fiscal State aid

  • Hungary: European Commission publishes its final decision on the Hungarian advertisement tax
  • Ireland: Non-confidential version of the European Commission’s final State aid Decision on Apple
  • Spain: CJEU Judgments on the Spanish financial goodwill amortisation scheme: Autogrill v Commission and Banco Santander and Santusa v Commission

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

Read the full newsletter here.

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

Court decision: Transparent treatment of foreign Fund for Swiss withholding tax purposes

Whether a Swiss investor of a foreign fund is entitled to claim back Swiss withholding tax on the underlying investment (see chart 1) has often been subject to discussions within the Swiss Federal Tax Administration (hereinafter “SFTA”) over the last few years. SFTA has denied a refund of Swiss withholding tax to Swiss investors of a foreign fund ever since 2011. This practice has been criticized by the doctrine as it results in an unequal treatment of the Swiss investor compared to a foreign investor, who can potentially apply a double tax treaty for the full or partial refund of the Swiss withholding tax. In a recently published decision (2C_404/2015), the Swiss Federal Supreme Court ruled that a Swiss pension fund is entitled to reclaim Swiss withholding tax from an indirect investment.

Chart 1: Investment structure

Read more…

 

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Benjamin De Zordi
Partner
Tax and Legal Services
+41 58 792 4317
benjamin.de.zordi@ch.pwc.com

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

EUDTG Newsletter September – October 2016

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 opportunities.

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

CJEU Cases

  • Belgium: CJEU Judgment on the compatibility of the Belgian Net Asset Tax on foreign investment funds with EU law: NN (L) International SA
  • Belgium: CJEU Judgment on the different tax treatment between and third country dividends: Riskin and Timmermans
  • Belgium: AG’s Opinion on the subject-to-tax requirement of the Parent-Subsidiary Directive: Wereldhave Belgium and Others
  • Germany: CJEU referral on the German anti-treaty/anti-directive shopping rule: Deister Holding

National Developments

  • Belgium: Introduction of Transfer Pricing documentation obligations in Belgium
  • Belgium: Tate & Lyle reduced withholding tax rate: subject-to-tax requirement introduced
  • Belgium: Cayman Tax applicable to privately managed investment companies
  • Belgium: Implementation of the Parent-Subsidiary Directive anti-hybrid measure and GAAR
  • Belgium: Introduction of exit taxation
  • Finland: Foreign pension insurance company entitled to tax deduction based on technical reserve provision
  • Finland: Central Tax Board decision on the tax treatment of dividends from third country subsidiaries
  • Finland: Central Tax Board decision on the tax treatment of dividends received by foreign investment fund
  • Finland: Supreme Administrative Court Judgment on the tax exemption of German Real Estate Fund on Finnish real estate income
  • Norway: ESA reasoned opinion on the Norwegian interest limitation rules
  • Poland: Proposed amendments to the tax exemption of investment funds
  • Spain: Positive Regional Tax Court decision on Fokus Bank claims of a Finnish public pension fund
  • Spain: General Tax Directorate decision on the application of the Spanish regional wealth, inheritance and gift tax laws
  • United Kingdom: Application of the FII GLO CJEU Judgment where no foreign tax charged on profits underlying dividends: High Court judgment

EU Developments

  • EU: European Commission proposes Corporate Tax Package
  • EU: ECOFIN Council adopts Council Conclusions on new transparency rules and next steps to tackle terrorism financing, money laundering, and tax avoidance
  • EU: European Commission announces start of work to create first common EU list of “non-cooperative tax jurisdictions”
  • EU: European Commission President Juncker’s 2016 State of the (European) Union

Fiscal State aid

  • Sweden: European Commission approves Swedish tonnage tax regime

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

Read the full newsletter here.

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

EUDTG Newsletter July – August 2016

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 opportunities.

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

CJEU Cases

  • Denmark: CJEU referrals on the concept of beneficial ownership and abuse in the Parent-Subsidiary and Interest and Royalty Directives
  • Finland: CJEU referral on the compatibility of the tax treatment of transfers of assets with EU law: A Oy
  • Germany: CJEU referral on the German cross-border arm’s length legislation in light of the SGI case
  • Netherlands: CJEU referral on the compatibility of the Dutch fiscal unity regime with EU law

National Developments

  • Austria: Austrian Ministry of Finance Opinion on access to goodwill amortization for EU/EEA group members
    PwC EU Tax News 2
  • Germany: Final Fiscal Court judgment on the German gift and inheritance tax allowance: Hünnebeck
  • Hungary: Amendments to Hungarian corporate income tax legislation
  • Norway: EFTA Surveillance Authority letter of formal notice on Norwegian interest cap rules
  • United Kingdom: First Tier Tribunal finds that manufactured overseas dividend rules do not breach EU law

EU Developments

  • EU: ECOFIN Council adoption of ATAD on 12 July 2016
  • EU: European Commission proposes new transparency rules and next steps to tackle terrorism financing, money laundering, and tax avoidance
  • EU: European Parliament’s TAXE II report adopted
  • EU: European Parliament’s Panama Papers Inquiry Committee

Fiscal State aid

  • Belgium: European Commission decides Belgian Diamond Tax Regime does not constitute State aid
  • EU: US Treasury White Paper on European Commission’s State aid investigations into transfer pricing rulings
  • Gibraltar: European Commission publishes its Oct. 2014 Decision to extend Gibraltar State aid investigation to include rulings
  • Hungary: European Commission finds Hungarian food chain inspection fee and tobacco sales tax in breach of EU State aid rules
  • Ireland: European Commission finds Ireland has granted unlawful State aid to Apple
  • Luxembourg: European Commission opens formal State aid investigation into Luxembourg’s tax treatment of GDF Suez (now Engie)
  • Norway: EFTA Surveillance Authority approves accelerated tax depreciation rules for wind power plants
  • Poland: European Commission opens formal State aid investigation into Poland’s tax on the retail sector
  • Spain: European Commission’s final Decisions on State aid to certain Spanish professional football clubs

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

Read the full newsletter here.

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

EC final decision on State aid granted to Apple in Ireland

On 30 August 2016 the European Commission (EC) announced its final decision in the formal State aid investigation of Apple in Ireland. It has concluded that Apple benefitted from unlawful State aid granted by Ireland, and it orders full recovery of the aid in an amount of up to €13 billion plus compound interest.

The EC’s investigation related to two rulings issued by Ireland, relating to the attribution of profits to the Irish branches of two Irish incorporated, non-resident companies ultimately owned by Apple Inc. According to the EC such rulings do not reflect economic reality, namely they endorsed an artificial allocation of Apple’s sales profits to their “head offices”, enabling Apple to pay substantially less tax than other companies. The full reasoning of the EC will only be apparent when the detailed non-confidential decision is published, which can take several months. Once the decision is publicly available it can be analysed to what extent it interacts with OECD guidelines on branch profit attribution.

The Irish Government has publicly announced that it will challenge this decision before the European Courts. Under EU State aid law, both the company (Apple) and the Irish Government can challenge the decision before the EU’s General Court, the judgment of which can be appealed before the EU’s Court of Justice (CJEU) which will have the final say on the case. Such a process can take several years, however an appeal does not suspend recovery procedures. As Commissioner Vestager mentioned, the amount of the aid could be paid into an escrow account pending the outcome of any appeal.

Read the full newsletter here.

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

 

EUDTG Newsletter May – June 2016

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 opportunities.

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

CJEU Cases

  • Greece: CJEU Judgment on inheritance tax exemption for
    primary residence: Commission v Greece
  • Sweden: CJEU Judgment on withholding tax levied on nonresident
    pension funds: Pensioenfonds Metaal en
    Techniek
  • United Kingdom: CJEU referral on the compatibility of an exit charge on
    trust migration with EU Law

National Developments

  • Netherlands: Court of Appeal judgment on the compatibility of the
    Dutch fiscal unity regime with Israel-Netherlands DTT
    non-discrimination provision
  • Switzerland: Switzerland adopts the final corporate tax reform III
    package
  • United Kingdom: UK votes to leave the EU
  • United Kingdom: Ignatius Fessal v The commissioners for HMRC [2016]
    UKFTT 0285 (TC)

EU Developments

  • EU: ECOFIN political agreement on the Anti-Tax Avoidance
    Directive
  • EU: ECOFIN Council 25 May 2016 conclusions on an
    external taxation strategy and measures against tax
    treaty abuse
  • EU: European Parliament Press Release on corporate
    taxation
  • EU: ECOFIN adopts the 4th Directive on Administrative
    Cooperation (DAC4)

Fiscal State aid

  • EU: DG Competition Working Paper on State aid and tax
    rulings
  • EU: European Commission Notice on the notion of State aid
  • Luxembourg: European Commission non-confidential State aid
    opening Decision in McDonald’s
  • Luxembourg: European Commission non-confidential final State aid
    Decision on the Fiat case
  • Netherlands: European Commission non-confidential final State aid
    Decision on the Starbucks case

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

Read the full newsletter here.

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

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