Death Tax and double tax on international estates

By Robert Worthington, Shea Nerland Calnan LLP

High net-worth individuals often have peripatetic lifestyles, being domiciled in one country, with assets in that country and elsewhere, and possibly family members residing in other countries for work, education, or lifestyle reasons. The tax that is imposed on the death of such people can be quite harsh to their estate or heirs. The harsh results are due to differences in the legal and taxation systems with imperfect, or a complete lack of, credit mechanisms or other means to eliminate double taxation. Most major countries have a network of tax treaties to prevent double taxation, but unfortunately most of these treaties only apply income taxes and not the types of taxes exacted on death.

Disput Resolution arising out of Base Erosion and Profit Sharing

By Aditya Kumar, Ashwani & Associates 

Base Erosion in Profit Sharing (BEPS) is a Package, negotiated in just over two years, which includes reports on fifteen “actions” ranging from countering harmful tax practices and treaty shopping to addressing transfer pricing, interest deductibility, and transparency in exploring the tax implications of the digital economy.

Double taxation hampers the single European market

An excessive tax burden due to ongoing double taxation for companies and citizens engaging in cross-border activities constitutes a serious obstacle for the internal European market. The EU Commission wants to eliminate this obstacle in order to further ease investments and business activity in the EU. In this regard Algirdas Šemeta, EU Commissioner for Taxation and Customs Union, stated: "We have to send a signal to all citizens, companies and trade partners: there is no double taxation in the EU."

Dual Citizens - Filing obligations of United States Citizens Residing Outside of U.S. and Dual Citizens

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By Steven A. Braun and Reena Prabhakar, Drucker & Scaccetti, P.C.

Recent publicity regarding the efforts of the United States tax authorities to crack down on U.S. persons with undisclosed foreign bank accounts has caused great concern for U.S. citizens who reside outside the U.S. or are dual citizens of both U.S. and another country. They should now be aware of the fact that they are required to file tax returns and disclose certain information that could be subject to substantial penalties, in many cases.

Encouraging innovation in the UK – the new Patent Box

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By Julie Bryant, Haines Watts

In April 2013, the UK Government introduced a new incentive for innovative high-tech companies to invest in the UK. In addition to the generous tax credits already available for qualifying research and development expenditure, there is now a "Patent Box" which allows companies to benefit from a reduced corporation tax rate of 10% on profits generated from qualifying patents. This new incentive further demonstrates the UK Government's desire to make the UK an attractive place to do business, and builds on other recent initiatives such as the dividend exemption, the reformed controlled foreign company rules and the reducing main rate of corporation tax.

EU Decides on VAT Concessions

The EU Commission considers the reduced VAT rate of seven percent on objects of art and collectors' items, which currently applies in Germany, to be in breach of European Law. However, cross-party resistance is stirring against the increase in the VAT rate of 19 percent, which is standard in Germany. In this regard, Germany has already lost a similar case before the European Court of Justice.

EU member states to receive new weapon against VAT fraud

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Member states of the European Union suddenly affected by large-scale VAT fraud expect to be in a position to take action against missing trader intra-community fraud within a month with the so-called reverse-charge provision. If this regulation were used as an emergency measure, VAT would no longer be due from the supplier but payable by the buyer. This fast response mechanism is intended to become part of the new VAT strategy as proposed by the EU Commission on 31 May 2012.

EU Parliament in favor of common corporate tax base

On April 19, 2012, the members of the European Parliament voted in favor of the compulsory introduction of a common corporate tax base with a clear majority of 452 against 172 votes at first reading of the consultation procedure. With this decision, the Parliament goes beyond the draft legislation of the European Commission, which only provides for a voluntary system.

EU VAT Legislation Update

By Raluca Tutu, Mirus Consultanta Fiscala

"The complexity of the current EU VAT system is an obstacle to doing business the single market. The One Stop Shop will greatly facilitate cross border expansion of European start-ups. This turn will help to generate growth and jobs." – Algirdas Semeta, Commissioner for Taxation, Customs, Anti-Fraud and Audit said on the press release regarding developing the One Stop Shop for Cross border VAT compliance.

Expo Milano 2015 — tax implications for participants

By Matteo Bedogna, Studio Baldi

From 1 May 2015, Milan will be hosting Expo 2015. In addition to enjoying the numerous interesting themes presented, foreign participants will also have to deal with questions of a tax nature. Both Official Participants (countries and international organisations) or Non-Official Participants (private entities and non-governmental institutions) will be able to conduct non-commercial and commercial institutional activities in their pavilions, including the sale of products, catering and paid performances, for example.

Foreign companies in Switzerland

By Abdullah Demir, Walser & Partner AG

Any persons operating a business with a commercial activity and acting externally  under their own name are liable for taxation. This also applies to companies who have their registered office abroad but are active in Switzerland.

Foreign Exchange Gains and Losses: Timing and Other Tax Issues

By Robert R. Worthington, Shea Nerland LLP

Any cross-border transaction that involves a currency conversion may involve tax issues from foreign exchange (FX) gains and losses. Taxpayers may be subject to unfavourable double taxation risks – or alternatively, “double non-taxation” planning opportunities. Complex FX tax issues can be triggered by the most commonplace transactions, a few examples of which are provided below.

German fiscal unity taxation: with a sub-subsidiary

By Bernhard Schwechel, FACT GmbH

Multinational groups often hold their domestic and foreign sub-subsidiaries by an intermediary holding company, which is resident in a different country (e.g. Luxembourg) to its parent company (Germany). In this case, a tax-optimised profit repatriation from the sub-subsidiaries to their grandparent company depends on the conditions of the double tax treaties (DTA). But often, due to anti-treaty shopping rules, the foreign intermediary holding is not able to benefit from a reduced withholding tax rate stipulated in the DTA.

German regulation on international partnership investments

By Klaus Küspert, Munkert & Partner GbR

Despite the forthcoming BEPS discussion and its implications, including some international in nature, I would like to take this opportunity to introduce you to a typical German approach to treaty overriding. Unfortunately, the Federal Constitutional Court of Germany recently accepted such overriding in cases of “white” income derived by German residents from foreign countries. It is very likely that this approach will also cover inbound transactions, as described below.

German Tax Regulations on Hidden Reserves come before the EuGH

The German tax regulations that govern the reinvestment of hidden reserves cannot be reconciled with European law. This at least is the opinion of the European Commission, which has therefore sued Germany in the European Court of Justice (EuGH). The suit filed before the EuGH is the final step in treaty violation proceedings.

German VAT groups: detailed specification of organisational integration

By Olga Selmer, Nörenberg • Schröder

On 7 March 2013, the German Ministry of Finance issued guidance notes in which it specified organisational integration as one of the requirements for the existence of a VAT group, in addition to financial and economic integration. The new definitions are being embraced by professional circles as, prior to these changes, the question as to whether organisational integration should be a requirement in establishing a VAT group was the one that most divided opinion.

German-French tax harmonization should not disadvantage companies

Germany and France are planning a shared corporation tax, including a harmonized basis for assessment and tax rates. The results of a proposal, which is to be developed jointly, should be implemented from 2013. In any case, this is what what decided by German Federal Chancellor Dr. Angela Merkel and the French President Nicolas Sarkozy at their summit meeting in August 2011.

Germany on its way to an anti-patent-box provision

By Bernhard Schwechel, FACT GmbH

In January 2017, the German Cabinet proposed a new draft bill against harmful practices in connection with transfers of rights and licensing of intellectual property rights (so called licence barrier). It will have a material impact on the tax deductibility of royalties and licence fees owed to related persons.

GoBD Requirements Regarding Accounting Obligations and Annual Audits

By Bernhard Schwechel, FACT GmbH Steuerberatungsgesellschaft, Wirtschaftsprüfungsgesellschaft

The fact that corporate operations are increasingly recorded electronically and all records legally requiring preservation are in fact preserved prompted fiscal authorities to issue a letter from the Federal Ministry of Finance (BMF) on 14 November 2014, which articulates proper accounting requirements for ITbased accounting systems (principles regarding the proper keeping and preservation of books, records and documents in electronic format and regarding data access (GoBD)).

Good news for REITs investing in non-US real estate

By Elizabeth V. Zanet and Philip R. Hirschfeld, Ruchelman P.L.L.C.

A real estate investment trust (REIT) is a tax-favourable entity used for investment in real estate and real estate mortgages. One advantage of the REIT is that, unlike a typical corporation, an REIT generally is not subject to entity-level taxation if it distributes its earnings and profits as dividends to its shareholders, since an REIT can claim deduction for such dividends. As a result, an REIT generally may avoid the double taxation that applies to corporations.

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The Legal Disclaimer and the Privacy Statement indicated above shall be governed by and are construed in accordance with Swiss substantive laws (excluding the rules of the conflict of laws) and the courts of Zurich, Switzerland shall have exclusive jurisdiction in any possible dispute.

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