Don’t be caught out by DAC6

The EU is introducing radical measures to tackle tax abuse and ensure fairer taxation by increasing the level of transparency another notch in order to detect potentially aggressive tax arrangements.

The amendment to Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC6 for short) will have far-reaching consequences for tax advisors, service providers and taxpayers – including organisations and individuals in Switzerland.

DAC6 imposes mandatory disclosure requirements for arrangements with an EU cross-border element where the arrangements fall within certain “hallmarks” mentioned in the directive and in certain instances where the main or expected benefit of the arrangement is a tax advantage. There will be a mandatory automatic exchange of information on such reportable cross-border schemes via the Common Communication Network (CCN) which will be set-up by the EU.

Although the directive is not effective until 1 July 2020, taxpayers and intermediaries need to monitor their cross-border arrangements already as of May 2018. Therefore the time to act is now.

DAC6 in a nutshell

Who? Intermediaries such as tax advisors, accountants, banks and lawyers, who design, market, organise, make available for implementation or manage the implementation of potentially aggressive tax-planning schemes with an EU cross-border element for their clients as well as those who provide assistance and advice

What? Mandatory reporting by tax intermediaries (or taxpayers) and the automatic exchange of information by the tax authorities of EU member states via the Common Communication Network (CCN) for a wide range of cross-border arrangements in relation to individuals and entities.

Why? The main purpose of DAC6 is to strengthen tax transparency and fight against aggressive tax planning. It broadly reflects the elements of action 12 of the BEPS project on the mandatory disclosure of potentially aggressive tax-planning arrangements.

How? The potentially aggressive tax planning arrangements with a cross-border element need to be reported by the intermediaries to the tax authorities in the country in which they are resident. The EU member states then will share the information with all other member states via the Common Communication Network (CCN) on a quarterly basis.
If the taxpayer develops the arrangement in-house, or is advised by a non-EU adviser, or if legal professional privilege applies, the taxpayer must notify the tax authorities directly.

Penalties will be imposed on intermediaries that do not comply with the transparency measures. EU member states to implement effective, proportionate and dissuasive penalties.

Find out more about DAC6 and if you are affected online and get in contact with our experts.

Contacts

Monica Cohen-Dumani
Partner
+41 58 792 97 18
monica.cohen.dumani@ch.pwc.com

Bruno Hollenstein
Partner
+41 58 792 43 72
bruno.hollenstein@ch.pwc.com

EMEA PE Webcast Series – Episode Four – VAT consequences of a corporate tax permanent establishment

Tuesday, 17 April 2018, 3.00 – 3.45 pm CET

After a short break, we are pleased to inform you that we will resume the PE Webcast Series, with Episode 4 – VAT consequences of a corporate tax permanent establishment.

In this webcast specialists from our international tax and VAT practice will compare the objectives and concepts of a corporate tax permanent establishment with a VAT fixed establishment (FE).

We will walk through practical examples to demonstrate the interaction of these rules, outlining the VAT consequences of creating a corporate tax PE, as well as the corporate tax position if you have a VAT FE.  As part of the discussion we will highlight trends in the application of PE and FE rules by tax authorities, leading in some cases to a blurring of the concepts.

You will have the chance to raise questions directly to our specialists.

Speakers for episode four will include:

  • Monica Cohen-Dumani – Partner, International Tax Services, EMEA ITS Leader – PwC Switzerland
  • Ine Lejeune – Partner Tax Policy, Dispute Resolution & Litigation – Law Square
  • Herman van Kesteren – Partner Indirect Taxes – PwC Netherlands

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

Contact

Monica Cohen-Dumani
Partner, EMEA ITS Central Cluster Leader
+41 58 792 97 18
monica.cohen.dumani@ch.pwc.com

Grasiele Teixeira Neves
International tax services
+41 58 792 98 25
grasiele.neves@ch.pwc.com

QI and CRS Updates

IRS opens QI portal for the Responsible Officer Certification and published new FAQs

On 4 April 2018, the Internal Revenue Service (“IRS”) has opened the QI portal and published new FAQs regarding the upcoming QI Responsible Officer certification. A new section titled “Periodic Certification” has been added to the existing FAQs.

Please refer to the following link for access to the updated FAQs.

Additionally, the IRS has updated the QI User Guide and made it available on its website (see “Publication 5262”). You can find the updated QI User Guide here.

OECD news regarding CRS

On 5 April 2018, the Organisation for Economic Co-operation and Development (“OECD”) published an updated list of all activated CRS agreements on its website.

Please refer to the following link for access to the updated list.

There are now more than 2700 bilateral agreements in place.

Additionally, the OECD published an updated version of the CRS Implementation Handbook, which can be accessed under the following link.

The Implementation Handbook is a guidance for governments to refer to in terms of their implementation of CRS rules into their local legislation and guidance, as well as a practical overview of CRS for the financial sector and the wider public.

We will continue to keep you updated as we follow and analyze these updates over the next few days. In the meantime, we are happy to answer any of your QI- and CRS-related questions.

Contact

Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72
bruno.hollenstein@ch.pwc.com

EU Direct Tax Group: January – February 2018

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

CJEU Cases

  • Germany – CJEU referral of German dividend withholding tax regime to in the case of a Canadian pension fund
  • Germany – AG Opinion on the compatibility of German Trade Tax exemption with EU law
  • Netherlands – CJEU judgment on compatibility of Dutch group taxation regime with EU fundamental freedoms
  • Spain – European Commission opens infringement procedure against Spanish state liability regime

National Developments

  • Italy – Italian court rules on incompatibility of presumption of abuse/tax evasion with EU freedom of establishment
  • Spain – Appeal at the Spanish Supreme Court against Andalusian tax on deposits on financial entities
  • Spain – Appeal at the Spanish Supreme Court on the rules to eliminate international double taxation

EU Developments

  • EU – European Commission publishes Roadmap on Evaluation of Administrative Cooperation in Direct Taxation
  • EU – European Commission announces comprehensive fitness check on public reporting by companies within the EU
  • EU – European Parliament sets up TAXE 3 Special Committee on financial crimes, tax evasion and tax avoidance

Read the full newsletter

This bi-monthly newsletter is prepared by members of PwC’s pan-European EU Direct Tax Group (EUDTG) network.

To receive this newsletter and our newsalerts automatically and free of charge, please send an e-mail to: eudtg@nl.pwc.com with “subscription EU Tax News”. For previous editions of PwC’s EU Tax News see: www.pwc.com/eudtg

Contact Us

Armin Marti
Partner Tax & Legal Services, Leader Tax Policy
+41 58 792 43 43
armin.marti@ch.pwc.com

Geneva International VAT Breakfast: E-invoicing & hot topics in indirect taxes

E-invoicing & hot topics in indirect taxes

So far, 2018 has been a very dense year for indirect tax professionals with various hot topics arising. In Switzerland, for instance, the recent clear rejection of the initiative “No Billag” will lead to changes in the scope of the radio-television fees that will be applicable to businesses as from 1 January 2019.

At the same time, compliance with e-invoicing and e-archiving obligations are being introduced in various jurisdictions such as Italy. During our upcoming event, we will go through the new rules and the compliance obligations across EU and Switzerland in terms of e-invoicing and e-archiving.

We will also follow up on the definition of fixed establishment providing insight on the recent developments particularly in Poland. The International VAT Breakfast will also feature recent hot topics that can impact businesses operating worldwide, such as the EU commission proposal for flexible VAT rates, the measures to strengthen VAT fraud prevention adopted by EU and non-EU countries and the introduction of the reverse charge mechanism for imports of goods in Portugal as from 1 March 2018.

Finally, as always, we will share with you the most significant developments with respect to the EU and Swiss case law.

To register for this event: Click here

Contact us

Patricia More
Tel.+41 58 792 95 07
patricia.more@ch.pwc.com

The new European rules for securitisations

The EU has enacted a new set of regulations applicable to securitisations, and a more specific framework for simple, transparent, and standardised securitisations (“the regulation”).

A securitisation is any transaction or scheme that tranches the credit risk associated with an exposure or pool of exposures. Payments in the transaction are dependent upon the performance of the exposure or of the pool of exposures and the subordination of tranches determines the distribution of losses. The regulation is the next building block in the ambitious capital market union (CMU) project and is directly applicable without transposition into national legislation of the EU member states beginning as of 1 January 2019.

The new EU rules on securitisations will affect originators, sponsors, original lenders, special purpose vehicles, institutional investors and anyone selling securitisations to retail investors without differentiation whether domiciled in the EU or in a third country such as Switzerland. There are general rules applicable to all securitisations. Other rules are only applicable to certain categories of securitisations called simple, transparent and standardised securitisations, and the sub-category asset backed commercial paper securitisations. Non-compliance with the rules can be sanctioned with fines of up to EUR 5m. or 10% of the total annual net turnover.

Download report

Contacts

Martin Liebi
PwC | Dr.iur., LL.M., Attorney-at-law
Legal FS Regulatory and Compliance Services | Head Capital Markets
Office: +41 58 792 2886 | Mobile: +41 76 341 6543
Email: martin.liebi@ch.pwc.com

Antonios Koumbarakis
PwC | Legal FS Regulatory and Compliance Services
Office: +41 58 792 4523 | Mobile: +41 79 267 8489
Email: antonios.koumbarakis@ch.pwc.com

OECD Issues Model for Mandatory Disclosure of CRS Avoidance Schemes

On 9 March 2018, the Organisation for Economic Co-operation and Development (“OECD”) issued new model disclosure rules that require the mandatory disclosure of OECD Common Reporting Standard (“CRS”) avoidance schemes. The model will require lawyers, accountants, financial advisors, banks and other service providers to inform tax authorities of any schemes they put in place for their clients to avoid reporting under the CRS. Additionally, under the model, reporting of structures that hide beneficial owners of offshore assets, companies and trusts is required. The OECD also hopes to deter the design, marketing and use of these arrangements and schemes and bolster the overall integrity of the CRS.

The document issued by the OECD provides background information regarding the CRS anti-avoidance topic, includes text of the model itself, as well as a commentary to explain the model. As a next step, the model disclosure rules will be submitted to the G7 presidency in an effort to adopt a wider strategy of monitoring and acting upon market tendencies to avoid CRS reporting and hide assets offshore. Within the scope of the CRS anti-avoidance work, the OECD is also addressing cases of abuse of golden visas and other schemes used to circumvent CRS reporting.

Please refer to the link for access to the OECD’s new model disclosure rules.

Additionally, please refer to the link for access to the OECD’s accompanying FAQs.

Contact

Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72
bruno.hollenstein@ch.pwc.com

FinTech Action Plan – European Commission launches measures for a more competitive and innovative financial marketplace

For many financial services companies, financial technology (short “FinTech”) and technological innovation in general offer tremendous opportunities in terms of access to finance, operational efficiency, cost savings and competition. On March 8th 2018 the European Commission presented an action plan with a total of 23 measures to make better use of the opportunities offered by technological innovations in the financial services sector. The EU wants to become a global hub for FinTech in the future.

The Action Plan has three main objectives:

  • to support innovative business models to scale up across the single market;
  • to encourage the uptake of new technologies in the financial sector; and
  • to increase cybersecurity and the integrity of the financial system.

The FinTech Action Plan

In order to achieve the above mentioned objectives, the following measures are planned, among others:

  • The Commission will operate a FinTech laboratory in which European and national authorities will be able to collaborate with technology providers in a neutral environment.
  • Continuation of the already opened EU Blockchain Observatory and Forum. The Forum will report on the opportunities and challenges of crypto assets later in 2018 and is already working on a comprehensive study of distributed ledger and blockchain technologies.
  • The use of innovative technologies to interconnect national databases is intended to promote the digitization of information published by listed companies in Europe. In the future, this will enable investors to access essential information in order to make their investment decisions easier.
  • In order to improve the exchange of information on cyber security, the Commission will organise regular workshops.
  • The Commission will present a best practice guide on regulatory sandboxes based on guidance from the European Supervisory Authorities. A sandbox is a safe and controlled space where FinTech companies can test innovations in the market, with or without regulatory relief.

Regulation on Crowdfunding

In the field of crowdfunding, the European Commission has put forward a comprehensive proposal for a regulation which will create a European legal framework for this form of financing for the first time. The European Commission wants to make it easier for start-ups and small businesses to raise funds from investors via the internet. Due to different regulations, it is currently difficult for platforms to expand into other EU countries. Crowdfunding should therefore be subject to uniform rules in the future and the ownership of the license of one country should be sufficient to operate the respective platform throughout Europe.

In contrast, investors should be protected by clear rules on disclosure of information, governance and risk management rules and a coherent approach to the oversight of crowdfunding platforms.

The EU member states and the European Parliament still have to approve the proposal.

Contact Us

Günther Dobrauz
Partner
Leader PwC Legal Switzerland
+41 58 792 14 97
guenther.dobrauz@ch.pwc.com

Tina Balzli
Head Banking
Director
Legal FS Regulatory & Compliance Services
+41 58 792 15 54
tina.balzli@ch.pwc.com

Mark A. Schrackmann
Assistant Manager
Legal FS Regulatory and Compliance Services
+41 58 792 25 60
mark.schrackmann@ch.pwc.com

EMIR II: The European Parliament’s (preliminary) answer to EMIR as we know it

EMIR II brings with it many simplifications for market participants, not just in the EU/EEA, but globally. The reporting duty being simplified will noticeably reduce the burden, particularly for non-financial counterparties.

Moreover, financial counterparties themselves can also look forward to benefits: the introduction of a small financial counterparty category will limit the scope of the clearing obligation, while intra-group transactions with non-financial counterparties will be fully exempt from the reporting obligation. The current exemption for pension schemes will be continued for at least another three years.

Only Securitisation Special Purpose Entities and Alternative Investment Funds registered under national law in the European Union are expected to be negatively impacted by EMIR II.

Read more

Contact Us

Guenther Dobrauz
Partner, Leader PwC Legal Services Switzerland
Office: +41 58 792 14 97 | Mobile: +41 79 894 58 73
Email: guenther.dobrauz@ch.pwc.com

Michael Taschner
Senior Manager | PwC Legal Services Switzerland
Office: +41 58 792 10 87 | Mobile: +41 79 775 95 53
Email: michael.taschner@ch.pwc.com

Alexandra G. Balmer
Consultant | PwC Legal Services Switzerland
Office: +41 58 792 14 24 | Mobile: +41 79 267 81 04
Email: alexandra.balmer@ch.pwc.com

Gregory Columbres
Assistant Consultant | PwC Legal Services Switzerland
Office: +41 58 792 18 41 | Mobile: +41 79 417 88 38
Email: gregory.columbres@ch.pwc.com

EU and the OECD considering TRACE / withholding tax simplification

On 30 January 2018, the European Commission held a public session to discuss the code of conduct issued by the Commission in late 2017 regarding increasing the efficiency of withholding tax (“WHT”) procedures. The code of conduct contains a list of measures for E.U. Member States to consider in terms of simplifying WHT procedures as regarding cross border income such as dividends, interest, and royalties. The code is a non-binding document which allows for voluntary commitment by E.U. Member States.

The measures considered includes, inter alia, (1) increased digitalization of WHT procedures, (2) provisions of refunds in a short period, and (3) relief at source. The tax relief at source suggestion includes the use of “authorized information agents and withholding agents” to facilitate the verification of entitlement to treaty relief, provision of pooled withholding tax rate information, and reporting of relevant information.

Such a tax relief at source solution resembles the OECD’s Treaty Relief and Compliance Enhancement (“TRACE”) project which started in 2009. TRACE envisages the use of Authorised Intermediaries to facilitate a more efficient and simpler application of treaty relief on cross border investments in a similar manner to the U.S. Qualified Intermediary regime. Although TRACE has not been implemented in any country as of yet, we understand that it may be reactivated soon especially given the work done at European Commission level in terms of the WHT topic.

Please refer to the following link for access to the European Commission Code of Conduct.

Contact

Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72
bruno.hollenstein@ch.pwc.com