Synopsis of the most important regulatory developments in the banking and asset management industry

Status as of 1 October 2015

The most important regulatory developments with comments to important aspects/changes and status:

  • Interdisciplinary issues
  • Banks/securities dealers
  • Fund management companies/investment funds/representatives of foreign collective investment schemes

You can find the full overview here.

EUDTG Newsletter 2015 – nr. 005 (July – August 2015)

This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG). If you would like to receive future editions of this newsletter, or wish to read previous editions, please refer to: www.pwc.com/eudtg.

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

CJEU Cases

  • France: CJEU judgment on cross-border dividend case: Groupe Steria SCA     
  • Germany: AG opinion on loss recapture and final losses: Timac Agro
  • United Kingdom: CJEU referral on the claims relating to foreign income dividends from UK resident companies

 National Developments

  • Greece: The 26% withholding tax as an additional condition for the deductibility of expenses abolished
  • Netherlands: Supreme Court rules that Luxembourg SICAV is not entitled to Dutch dividend withholding tax refund
  • United Kingdom: HMRC’s approach to Marks & Spencer claims

 EU Developments

  • EU: Adoption of the European Parliament’s common position on proposed amendments to the existing EU long-term shareholders directive

 Fiscal State Aid

  • France: European Commission orders France to recover € 1.37 billion as incompatible aid granted to EDF
  • Hungary: European Commission opens in-depth investigations into Hungary food chain inspection fee and tobacco sales tax and issues suspension injunctions
  • Italy: CJEU judgment on the calculation of interest due on the recovery of unlawful aid: A2A

Read the full newsletter here.

Should you have any questions, please contact your usual PwC contact or me.

 

 

The new regulations on OTC-derivatives entering into force on January 1, 2016 will affect all industries

We are all aware of the steady increase of regulations in the financial sector, but those who are not operative in the financial industry tend to think that they are in the clear as long as they do not operate what they assess to be financial businesses. Well, this happens to show wrong.

Legal provisions that appeared to be  relevant only for banks, insurers, asset managers and some other specific operators are now turning to be relevant for a broad range of persons and companies which had not thought they would even come close the financial regulator.  A whole range of industries – starting with the chemical sector and all the way down to consumer goods traders –  might well need to look in detail at the new Swiss Financial Market Infrastructure Act (FMIA). Martin Liebi has summarised in this issue of our Legal News the key issues which might well affect you – even if you are not operating business in any of those sectors traditionally understood as being the object of strict regulatory framework of the Swiss financial oversight authorities. I strongly recommend that you look at this. Martin would be happy to elaborate on any matter you might want to discuss with him in this regards.

Read more here.

Time to react: Recent developments regarding French cross-border dividend cases

(i) Inbound cross-border dividends

Under French tax law, dividends received by a French parent company from a qualifying subsidiary are basically tax exempt. However, 5% of the received dividends remain taxable, since this amount is deemed to represent tax-deductible expenses incurred for the management of the participation. This is not true with regard to pure domestic cases, i.e. dividend payments between French resident companies who meet the various conditions for the application of the French group tax regime. In these cases, the taxable portion of the dividends is “neutralised” for the computation of the group taxable result, which leads to a “full exemption” of dividend payments between French domiciled companies.

So far, dividend payments from a non-domestic subsidiary to a French parent company could not benefit from a full exemption since the French group tax regime is exclusively available to domestic companies. On 2 September 2015, the Court of Justice of the European Union (CJEU) ruled in the Groupe Steria case (C-386/14) that this unequal treatment between domestic and non-domestic cases is not compatible with the freedom of establishment.

Due to the CJEU’s decision it is likely that the French tax law will be amended so that French parent companies receiving dividends from their non-domestic subsidiaries could also benefit from a full exemption.

PwC observation

In the meantime, i.e. until the law has been adjusted, in cases where the conditions for the application of the French group regime would be met, it is recommended that a full exemption is claimed for dividend payments the French parent company receives from its non-domestic group companies.

(ii) Outbound cross-border dividends

Since 17 August 2012, certain dividend distributions as well as deemed dividend distributions made by companies subject to French CIT and French branches of non-European Union companies are subject to a 3% special tax. However, such tax is not applicable to dividend distributions made within a French tax group or dividend distributions made by small- or medium-sized enterprises as defined in the EU law.

Some French taxpayers have challenged this 3% special tax and claimed that it is not compliant with EU law. In response to these claims, the European Commission has introduced an infringement procedure against France and France may now respond to the objections raised by the Commission. The Commission may also request France to amend the 3% tax legislation and bring it in line with the EU law. In case France fails to comply with such a request, the Commission could refer the case to the CJEU.

PwC observation

However, in any case companies doing business in France should consider filing a “proactive” refund claim before year’s end (for companies closing their FY at 31 December) for any 3% tax they have already paid, this since contributions paid in 2013 will be statute bared.

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.

Automatic exchange of information of advance cross-border tax rulings between Tax Authorities and the EC within the EU from 1 January 2017

On 6 October 2015, the EU Finance Ministers reached political agreement in the Council to amend the existing Directive 2011/16/EU on administrative cooperation in the field of taxation (“the Directive”). The Directive will require the Member States to automatically exchange a basic set of information on advance cross-border tax rulings (“rulings”) and advance pricing arrangements (“APAs”).

The Directive will ensure that when one Member State issues such a ruling or APA, any other affected Member State is in a position to monitor the situation and the possible impact on its tax revenue. Member States receiving the basic set of information will be able to request further information, including the full text of the ruling or APA. The Commission will create a central directory, which is accessible to all Member States and where the exchanged information will be stored.

From 1 January 2017, the Member States have to submit information within three months following the end of the half of the calendar year during which the advance cross-border rulings or APAs have been issued, amended or renewed. For rulings and APAs issued before 1 January 2017, a five-year lookback period will apply.

For further information, read the EUDTG Newsalert – 7 October 2015 (political agreement EU Directive automatic exchange of tax rulings).

The implications of the initiatives are not yet fully assessable but it is clear that in the future tax rulings will be shared cross-border much more easily than today. We can help you develop an approach in this area. So please feel free to contact your local engagement team or me.

 

New compliance system to be introduced in Spain as from 1 January 2017

As per the draft bill of the Spanish VAT legislation the new VAT compliance system will be mandatory as from January 1st 2017.

The main features of this new VAT compliance system, according to the wording of the existing draft legislation, are as follows:

  • Bookkeeping of the VAT ledgers will be undertaken through the electronic site of the Spanish Tax Authorities –STA- (“Agencia Estatal de Administración Tributaria”);
  • The new system will be compulsory for those taxpayers obliged to submit their VAT returns (i.e. Form 303) on monthly basis because either: (i) they are larger taxpayers, (ii) they are included in the VAT Monthly Refund Register (“REDEME”), (iii) they apply the VAT group regime, or (iv) they opt for applying this new system;
  • The new system will oblige the above taxpayers to keep up to date VAT ledgers electronically through the STA website. Invoice-per-invoice and timely filing (see below) will guarantee immediate and online access to the information by the STA in real time.

Relevant deadlines

The entries of the outgoing invoices VAT ledger should be made within four calendar days (excluding Saturday, Sunday and National bank holidays) as from the invoice date and, in any case, prior to the 16th day of the month following that in which the VAT corresponding to the transaction becomes chargeable,

The entries of the incoming invoices VAT ledger should be made within four calendar days of the accounting record of the invoice and, in any case, prior to the 16th day of the month following the VAT period in which the relevant transactions are included.

The VAT filing deadlines regarding regular VAT returns (i.e. Form 303) will be moved from the 20th to the 30th of the following month.

Consequences of the new compliance system

The new system will replace some relevant existing monthly/annually tax reports, i.e. Form 347 (annual return for transactions with third parties) and Form 340 (VAT ledgers detailed info submitted by electronic means, nowadays compulsory only for taxpayers included in the VAT Monthly Refund Register -“REDEME”-).

Delays in keeping up to date VAT ledgers through the STA website will be fined with a proportional penalty of 0.5% on the amount of the invoice to be recorded, with a quarterly minimum of €300 and maximum of €6,000.

We note that this is still a draft and there might still be changes.

Impact for businesses

Affected businesses should use the time up until 1 January 2017 to determine which steps they need to undertake in order to ensure compliance with the above (i.e. what additional processes should be introduced for the purposes of being able to make the above information available within the deadlines set out above).

Thanks to a combination of tax and IT knowledge, PwC can offer a complex assistance with respect to all activities related to ensuring compliance with the new regulations and relevant compliance processed being accurately introduced.

Contacts

Know your international VAT specialists

 

 

Romania: VAT rates to be reduced from 2016

Romania decided to reduce its standard VAT rate from 24% to 20% with effect from 1 January 2016.

Also, the reduced VAT rate of 9% will be reduced to 5% for the supply of school manuals, books, newspapers and some magazines, as well as for the supply of services consisting in the allowance of access to castles, museums, and cinemas. The reduced rate of 5% VAT will also be applied for access to sportive events.

Further, Romania will introduce a reverse charge mechanism for the supply of mobile phones, devices that use integrated circuits, laptops, PC tablets and game consoles as from 1 of January 2016. This provision will be in force until 31 December 2018. Reverse charge will be also applicable to supplies of buildings, parts of buildings and land.

Recommendation for action

The above required the affected businesses to amend their systems accordingly in order to reflect the above changes. We recommend that the affected businesses undertake a review of their systems in order to ensure that the above changes are implemented correctly and on time in their accounting and invoicing systems.

PwC has a team specialized in the review of the accounting and invoicing systems for the purposes of ensuring compliance and will be happy to assist you.

For further information, please contact your usual PwC advisor.

Contacts 

Know your international VAT specialists

 

Transitional FATCA Rules Extended and US Signs First Competent Authority Agreements

Treasury and IRS provide additional extension to fully implement FATCA

With certain FATCA transitional and reporting deadlines set to expire on 30 September 2015, 31 December 2015, and 31 December 2016, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) published Notice 2015-66 announcing their intention to provide additional time for withholding agents and FFIs to comply with certain aspects of FATCA. In addition to extending certain transition rules, the Notice describes the compliance timeline for jurisdictions that have signed or agreed in substance to a Model 1 intergovernmental agreement (IGA), but have not yet brought the IGA into force.

For more information about the transitional rules and the new applicable dates, please see our recent PwC Tax Insight.

U.S. signs first Competent Authority Arrangements

In late September and early October 2015, the U.S. signed Competent Authority Arrangements (“CAAs”) with Australia, the Czech RepublicHungaryIndiaLiechtenstein, Mauritius and the U.K. in accordance with the IGAs previously signed with these jurisdictions. In general, a Competent Authority Agreement is a bilateral agreement between the U.S. and a treaty partner to clarify or interpret treaty provisions These CAAs establish the procedures for the automatic exchange obligations and for the exchange of information between these jurisdictions.

For more information on these CAAs, please see our recent PwC Tax Insight.

First non-US group request approved by Swiss FTA

The Swiss Federal Tax Administration (FTA) has recently approved a group request for administrative assistance in tax matters from the Netherlands. This is the first time the FTA has accepted a group request from a country other than the United States. The request is made possible by the revised Federal Act on International Administrative Assistance in Tax matters of 2014 which permits countries to submit requests based on a pattern of information instead of requiring specific client names.

The request of the Netherlands was originally received in July 2015 and concerns accounts with a balance of EUR 1.500 or more held by clients who were residents in the Netherlands between February 2013 and December 2014 and were not able or did not want to demonstrate their tax compliance to the bank.

This case raises the question of whether other states will start to hand in group requests as well. There are a total of 27 states which have a double tax treaty with an administrative assistance clause which permits group requests.

In addition to the notification from the SIF regarding this group request, you can also find an overview of the double tax treaty landscape and further information on the process of administrative assistance on the website of the State Secretariat for International Financial Matters.

We will continue to keep you updated on further developments as they occur.