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

 

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

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

 

Swiss Withholding Tax: Relieved requirements for the notification procedure

On 1 February 2017, the Swiss Federal Tax Administration (“SFTA”) informed that the relieved requirements for the notification procedure will enter into force on 15 February 2017.

Companies which have paid late payment interest on delayed notification applications and meet below reflected further requirements are entitled to claim back such late payment interest within 1 year.

Background

On 30 September 2016, both chambers of the Swiss parliament approved an amendment of the Swiss Withholding Tax Act, for which no referendum was called. As a result of the amended Swiss Withholding Tax Act, the notification procedure for withholding tax on dividend distributions shall – even in case the 30-days-filing-deadline was/is not met – be granted by the Swiss Tax Authorities, if the relevant material conditions for the notification procedure are/were fulfilled at the due date of the distribution.

Based on the transition rules, the amended law will also be applicable to cases which occurred prior to the enactment of the law changes, unless (i) the tax liability or the late payment interest is/are time-barred or (ii) was/were already finally assessed prior to 1 January 2011.

Kindly note that – despite of the amended Withholding Tax Act – we continuously recommend to strictly adhere to the 30-days-deadline for filing the relevant forms (e.g. 102/103 and 106/108) to avoid potential fines.

In case you have refrained from paying a late payment interest claim and your case was either suspended by the SFTA or an appeal is currently pending, we recommend analysing what next steps shall be taken.

Next Steps / Call to Action

If your company had missed the 30-day-deadline for the notification procedure, we recommend that you contact your PwC tax adviser who will be happy to help you analyse whether your company may be entitled to a refund or how to best deal with your pending.

Our contacts:

Stefan Schmid
Partner, Tax & Legal Services
+41 58 792 44 82
stefan.schmid@ch.pwc.com

Dr. Remo Küttel
Partner, Tax Services
+41 58 792 68 69
remo.kuettel@ch.pwc.com

Dr. Sarah Dahinden
Senior Manager, Tax & Legal Services
+41 58 792 44 25
sarah.dahinden@ch.pwc.com

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…

 

 Contacts:

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

New Frontiers: The Exploitation of Big Data and Emerging Technologies in Transfer Pricing

The emergence of “Big Data” is disrupting our current way of thinking, causing us to re-examine everything we thought we knew. New analytical technologies and approaches to data management are enabling transfer pricing professionals to better solve traditional and emerging tax issues, and communicate impacts to executive leaders in a more insightful way. These insights include being able to better connect transactional-level activity (actual and forecast) to the strategic decision-making process, leading to higher quality planning and risk management.

The webcast will be led by leaders from PwC’s U.S. Transfer Pricing Analytics team and will provide a highly practical and relevant demonstration of how companies can transform their decision making process.

You’re invited to join the webcast: 

Date: Tuesday, November 8, 2016

Time: 12:00 PM (EDT) / 9:00 AM (PDT) / 5:00 PM (BST)

Duration: 60 minutes (including Q&A)

Register here

Moderator:

  • Horacio Peña, U.S. and Americas Transfer Pricing Practice Leader

Speakers:

  • David Nickson, End-to-End Transfer Pricing Execution Principal
  • Brian Burt, Transfer Pricing Analytics Principal
  • Stephen Curtis, Transfer Pricing Principal

Once you register, you will receive a confirmation email with a link and access instructions for joining the webcast.

Benefits from your participation:

  • Stay informed about changes in tax legislation
  • Hear from a range of PwC specialists who will discuss data analytics and visualization tools for solving traditional and emerging transfer pricing issues

Who should attend?

All multinational companies.

Presentation slides/recording

A recording of the webcast and the presentation slides will be available for playback and download after the live event, please check our website again. Please note that we are not able to offer CPE credit for the archive version.

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