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

EU Direct Tax Group

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

CJEU Cases

  • Finland – CJEU judgment on the compatibility of the Finnish legislation implementing Article 10(2) of the Merger Directive with EU law
  • Germany – CJEU judgment in Deister Holding and Juhler Holding
  • Germany – CJEU referral of German dividend withholding tax regime in the case of a Canadian pension fund
  • Germany – AG Opinion on the compatibility of German at arm’s length legislation with EU law

National Developments

  • Cyprus – Public consultation on the EU’s Anti-Tax Avoidance Directives (ATAD1 & ATAD2)
  • Finland – Central Tax Board advance ruling on taxation of income from Luxembourg SICAV (UCITS)
  • Finland – Central Tax Board advance ruling on tax treatment of Finnish source real estate income
  • Italy – Final approval of the 2018 Finance Bill
  • Lithuania – Increased investment tax relief measures
  • Spain – Appeal before the Spanish Supreme Court on the rules to eliminate international double taxation

EU Developments

  • EU – ECOFIN Council publishes EU list of third country non-cooperative jurisdictions in tax matters
  • EU – ECOFIN Council Report to the European Council on tax issues
  • EU – European Parliament Recommendation to the Council and the Commission following the inquiry into money laundering, tax avoidance and tax evasion (PANA)

Fiscal State aid

  • Italy – Italian Supreme Court decision on recovery of illegal State aid granted to multi-utilities owned by municipalities
  • Netherlands – European Commission opens formal investigation into the Netherlands’ tax treatment of Inter IKEA
  • United Kingdom – European Commission publishes detailed opening decision regarding its State aid investigation into the financing income exemption within the UK’s CFC regime

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

EMEA Webcast: EMEA ITS US Tax Reform Series – Practical Guidance for European Multinationals – Episode 4: State tax implications of federal tax reform

State tax implications of federal tax reform

Wednesday, 7 February 2018, 4.00 – 5.00 pm CET

While US tax reform is focused on measures at federal level, it will lead to a diverse and wide-ranging number of state tax implications as a result of how/whether states conform to the federal Internal Revenue Code provisions. There are accordingly a number of critical elements that have the potential to significantly affect state tax and financial statements, such as deemed repatriation toll charge; interest expense limitations; and the international provisions discussed on our previous calls, namely BEAT, GILTI and FDII.

Episode 4 of our webcast series will therefore look in more detail at the state tax implications, with particular focus on the international measures and the tax accounting implications.

We will be joined by our state tax and tax accounting specialists in order to provide an overview of the key areas you should be considering.

Please follow the link below to register for episode 4 and note that recordings will be available if you register and you cannot join the live session itself.

To register for Episode 4: Click Here

In case you were not able to join our previous episodes and would like to view the recording, find hereafter the required links (you will need to register to watch the recording):

Contact Us

Richard Brunt
Tel.+41 58 792 81 82
richard.brunt@ch.pwc.com

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

MIFID II requirements for direct electronic access (DEA)

Direct electronic access (“DEA”) enables a person to access a trading venue directly, using the trading code of an investment firm to do so, or directly placing an order with the Automated Order Routing (“AOR”) of the investment firm. This gives the client full control of the exact fraction of a second in which the order is placed and the lifetime of the order, as well as discretion as to which broker or trading venue the order is placed with.

Such discretion clashes with the objectives of MiFID II, which aims at increasing market transparency and oversight functions. Therefore, the regulation mandates the investment firm providing DEA to monitor the client closely.

Download full article

Contact Us

Dr. iur. Guenther Dobrauz
MBA | 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

Yari A. Iannelli
Assistant Manager | PwC Legal Services Switzerland
Office: +41 58 792 28 54 | Mobile: +41 79 742 39 04
Email: yari.iannelli@ch.pwc.com

Dr. iur. 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

MiFID II is live- What now?

Despite the launch of MiFID II early this year, there is still ongoing work to be completed and firms are expected to receive new information from the European Commission and the European Securities and Markets Authority (ESMA), even after the implementation deadline of 3 January 2018. Among other things, opinions for 700 pre-trade transparency waivers and for 110 commodity position limits have yet to be finalised by the regulators.

Therefore, firms should stay flexible to immediately implement new information by regulators and adapt and refine their compliance strategies to current regulatory updates regarding MiFID II.

The following key dates highlighted in a timeline shall give firms and their compliance specialists an overview over the current year and beyond.

View timeline

Contact Us

Dr. iur. 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, FS Regulatory & Compliance Services
Office: +41 58 792 10 87 | Mobile: +41 79 775 95 53
Email: michael.taschner@ch.pwc.com

Orkan Sahin
Assistant Manager | PwC Legal, FS Regulatory & Compliance Services
Office: +41 58 792 19 94 | Mobile: +41 79 238 65 69
Email: orkan.sahin@ch.pwc.com

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

Geneva International VAT Breakfast – New Year and new challenges in Indirect Taxes

International VAT Breakfast

In the fever of December’s last moment, many VAT topics such as the GST implementation in India or the change of the Swiss VAT rates across systems before New Year could have gone unspotted. For those who manage indirect taxes, it is clear that unnoticed changes can have significant consequences.

As a New Year’s resolution, during our next VAT Breakfast, we will look into recent topics that enable strategic development as well as those that are less game-changing but nevertheless require your attention in the start of 2018.

From a strategic perspective, we will address the latest progress in Brexit negotiations, the implementation of GST in India and the introduction of VAT in the GCC. We will also discuss the latest updates about the EU Commission initiatives and the upcoming end of the Cross Boarder Ruling pilot. Sharing feedback from various European countries, we will focus on reporting developments in 2017/2018 in Poland, Hungary and Serbia; the introduction of anti-fraud measures such as split payment in Romania, Poland and Italy; the reporting of imported e-services in Turkey as well as the Polish transport package.

Finally, we want to share with you the lessons learned and the biggest challenges faced in the first months after the Swiss VAT reform and the recent Swiss / EU case law. We hope to receive your views in return.

To register for this event: Click Here

Contact Us

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

EMEA Webcast: US Tax Reform practical guidance for European Multinationals – Episode 1: US Tax Reform and Tax Accounting Implications

Impact of US Tax Reform on European Multinationals

 Wednesday, 10 January, 4.00- 5.00 pm CET

On December 22 2017, President Trump signed the ‘Tax Cuts and Jobs Act of 2017’ (2017 Act) marking the completion of the U.S. tax reform legislative process.

The 2017 Act will have a significant impact for European multinationals. In a series of three webcast sessions we will focus on the areas of the 2017 Act likely to have the biggest impact on European Multinationals:

  • Episode 1: US Tax Reform and Tax Accounting Implications
  • Episode 2: US Tax Reform Base Erosion Measures, focus on interest deductibility and base erosion and anti-avoidance tax (BEAT)
  • Episode 3: US Tax Reform Outbound Measures, focus on CFC rules and participation exemption

PwC specialists will provide insights and practical guidance on these key topics, focusing on what they mean for European Multinationals.

The first session, on Wednesday 10 January, will focus on the tax accounting implications of the 2017 Act and we will be joined by specialists from our tax accounting and assurance teams to discuss the key considerations for European groups, including specific consideration for IFRS.

Speakers for this webcast will include:

  • Monica Cohen-Dumani – Partner, International Tax Services, EMEA ITS Leader, PwC Switzerland
  • Graham Partner – Director, Tax Reporting & Strategy, PwC UK
  • Steven Mendez – Director, US Desk Leader, PwC Switzerland
  • Tom Patten – Partner, US Tax, PwC UK
  • Bernard Moens – US International Inbound Tax Services Leader, PwC US

To register for the WebEx Session: Click Here 

Contact Us

Richard Brunt
Tel.+41 58 792 81 82
richard.brunt@ch.pwc.com

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

The EU’s Anti-Money Laundering Directive will in the future also include “virtual currencies”

In its press release of 21 December 2017, the Austrian Financial Market Authority (FMA) announced that it welcomed the European Union’s agreement to include “virtual currencies” in the provisions on the fight against money laundering. According to the FMA, this is “an important step so that in the future, these online service providers will also have to identify, check and monitor their customers in the same way as the financial institutions in accordance with the usual due diligence obligations and monitor the transactions on an ongoing basis”.

In accordance with the provisions of the new EU Anti-Money Laundering Directive, exchanges for “virtual currencies” and so-called “wallet providers” (electronic wallets) will henceforth also be subject to the provisions of the Anti-Money Laundering Directive. The changes are to be implemented as followed:

  • The Anti-Money Laundering Directive applies to virtual currency swap exchanges where they offer the exchange of virtual currencies for legal currency. However, the Directive does not cover the exchange of different virtual currencies.
  • Providers of electronic wallets (so-called “Wallet Providers”), which manage the respective cryptographic keys of the holders of virtual currencies, are without exception subject to the provisions of the Anti-Money Laundering Directive. Wallet providers are also obliged to register.
  • The Anti Money Laundering Directive introduces for the first time a legal definition of virtual currencies.

As soon as the European process is finalised, legislators are required to implement and transpose the new Anti-Money Laundering Directive into national laws within 18 months.

Contact Us

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

Tina Balzli
Director
Head Banking, 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

MiFID II: ESMA grants 6 months period of grace for LEI requirements

On December 20, 2017 the European Securities and Markets Authority (ESMA) has issued a statement to support the smooth implementation of Legal Entity Identifiers (LEI) requirements under the Markets in Financial Instruments Regulation (MiFIR).

Regulatory requirement

MiFIR obliges EU investment firms to identify their clients that are legal persons with LEIs for the purpose of MiFID II transaction reporting. Trading venues equally are obliged to identify each issuer of a financial instrument traded on their systems with an LEI code when making daily data submission to the Financial Instruments Reference data System (FIRDS).

Issues raised by market participants

In the last weeks, ESMA and national competent authorities (NCAs) learnt that not all investment firms will succeed in obtaining LEI codes from all their clients ahead of the entry-into-force of MiFIR on 3 January 2018. The same may be the case for trading venues’ non-EU issuers whose financial instruments are traded on European trading venues.

Six months grace period

In that context, and to support the smooth introduction of the LEI requirements, ESMA will allow for a temporary period of six months that:

  • Investment firms may provide a service triggering the obligation to submit a transaction report to the client, from which it did not previously obtain an LEI code. This is possible under the condition that before providing such service the investment firm obtains the necessary documentation from this client to apply for an LEI code on his behalf; and
  • Trading venues report their own LEI codes instead of LEI codes of non-EU issuers currently not having their own LEI codes.

ESMA statement

Read more

 

Contacts

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

Michael Taschner
Senior Manager
PwC Legal FS Regulatory & Compliance Services
+41 58 792 10 87
michael.taschner@ch.pwc.com

Peter Wueringer
Senior
PwC Legal FS Regulatory & Compliance Services
+41 58 792 17 48
peter.wueringer@ch.pwc.com

EU-black listed jurisdictions: what you need to know in a nutshell

On 5 December 2017, the ECOFIN Council published the conclusions on the EU common list of (third country) non-cooperative jurisdictions in tax matters, also referred to as the EU ‘blacklist’. In this blacklist 17 jurisdictions are included. For the blacklisted jurisdictions the Council proposes EU Member States to adopt certain non-tax and tax defensive measures. Among the proposed tax measures would be e.g. increased audits, disallowance of deductibility of costs, withholding tax measures, application of CFC rules, reversal of the burden of proof, limitation of participation exemptions and switch-over clauses among others.

Switzerland and Liechtenstein appear on a “grey list”

In addition to the black list there is a “grey” list where Switzerland and Liechtenstein are included. The grey list inclusion means, that such jurisdictions still have certain harmful tax regimes (e.g. Swiss cantonal tax regimes). However, these jurisdictions have been determined as cooperative and committed to amend or cancel such regimes.

Swiss Tax Proposal 17

From a timing perspective, the Council Conclusions mention, that these jurisdictions “are committed to amend or abolish the identified regimes by 2018”. In context of the Tax Proposal 17, the existing cantonal tax privileges for holding, domiciliary and mixed companies will be abolished, but realistically only the legislative process at federal level can be completed during 2018 (but this we consider to be the relevant step). The finalisation of the legislative process at cantonal level will take more time and go well into 2019.

In our view and since the EU acknowledges Switzerland’s efforts to abolish the mentioned regimes we do not expect that the EU Council will include Switzerland into the black list, after an updated dialogue and assuming due progress regarding the Tax Proposal 17 is made during 2018.

Please also refer to the PwC EUDTG newsletter in this respect which you can read here.

For more insights and to understand the implications for your organisation, please contact Armin Marti.