How to ride the waves of EU tax developments

The EU tax developments panel discussed a selection of recent and upcoming tax developments at the EU level, including the following topics: the adoption of the OECD's Pillar Two rules in the EU; the ATAD 3/Unshell Directive proposal; the EU's debt-equity bias reduction allowance (DEBRA) proposal; the BEFIT (Business in Europe: Framework for Income Taxation); withholding tax (WHT) recoveries; practical experiences of DAC6; and the tax enablers consultation (SAFE).

Released on Mar 29, 2023

Emerging jurisprudence surrounding entitlement to treaty benefits in India

This article analyses the sufficiency of a tax residency certificate in claiming treaty benefits in light of the principal purpose test introduced under the OECD led multilateral instrument framework, domestic general anti-abuse rules and recent Indian judicial developments.

Released on Mar 29, 2023

Crypto, blockchain and FinTech – can tax keep pace with technology?

This session provided guidance on the tax treatment of gains and losses on cryptos, the issues arising in connection with the use of crypto funds, tax compliance matters in relation to crypto ownership and trading, and the tax treatment of staking (but not mining) in South Korea, Spain, Switzerland and the US.

Released on Mar 29, 2023

Internet services in exchange for user data: Facebook’s potential VAT sales tax bill in Italy of USD 925 million

Facebook’s parent company Meta has been requested by the Italian tax authorities to pay EUR 870 million (USD 925 million) in unpaid VAT sales tax from 2015 to 2021. Based on information provided by an Italian newspaper, the Italian tax authorities seem to be arguing that Facebook membership is granted upon a consideration in kind

Released on Mar 29, 2023

Specific considerations on the consequences resulting from Spanish income tax laws regarding transactions carried out with countries or territories that have recently been listed as ‘non-cooperative jurisdictions’

his article outlines the significant Spanish tax implications that could arise from transactions undertaken with, or by, persons resident or incorporated in non-cooperative jurisdictions, as enumerated in a recent ministerial order.

Released on Mar 27, 2023

Statutory limitation in Lithuania concerning historical tax losses

The utilisation of historical tax losses by Lithuanian companies might appear very attractive, as the Lithuanian Law on Corporate Income Tax provides that it is generally unlimited in time (for tax losses from general economic activities). The general statutory limitation term for the recalculation of taxes is also quite short, three years. Recent case law from the Supreme Administrative Court has provided the explanation that the statutory limitation term, however, does not apply to situations when the taxpayer wishes to utilise tax losses from earlier periods. Thus, the taxpayer should substantiate and the tax administration could challenge the historical tax losses incurred in the out-of-statutory limitation term periods, if the taxpayer wishes to use them within the open period.

Released on Mar 27, 2023

The recent public consultations on Pillar Two and BEFIT

The IBA Taxes Committee submitted contributions in response to two recent public consultations on Pillar Two – Tax Certainty for the GloBE Rules issued by the OECD's Inclusive Framework and on an EU common consolidated corporate tax base as part of the European Commission’s BEFIT (Business in Europe: Framework for Income Tax) initiative.

Released on Mar 27, 2023

Conversion of the Brazilian transfer pricing rules into the OECD framework

This article comments on the ongoing reform of the Brazilian transfer pricing rules, briefly describing the ‘fixed margin methodology’ as it was originally provided by Law 9,430/96 and the challenges facing the country and the Brazilian tax administration regarding the replacement of the old rules with new ones that converge with the OECD transfer pricing framework, via the enactment of Provisional Measure (PM) No 1,152/22. The new rules, which if eventually approved in Congress are expected to enter into force in 2024 going forward, though companies may elect to apply them from 2023, abandon the free choice of traditional transfer pricing methods with predetermined margins, while migrating to the so-called ‘best method approach’ to determine the arm’s length parameters, taking into consideration the dealignment of the controlled transaction and the comparability analysis for transactions contracted with unrelated parties.

Released on Mar 27, 2023

ATAD3 - The Unshell Directive: An overview of the latest developments as at 13 March 2023

The initial draft of the proposal for a directive laying down rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011/16/EU, otherwise known as the ‘ATAD3 directive’, was made public by the European Commission on 22 December 2021. On 17 January 2023, the European Parliament approved the European Commission’s draft ATAD3 directive, as amended by the Committee on Economic and Monetary Affairs. Between the technical and implementation date uncertainties, the discussions that follow attempt to synthesise the current state of affairs regarding the ambitious ATAD3 directive.

Released on Mar 27, 2023

The new Spanish tax regime on carried interest income earned by Spanish residents

Spanish Law 28/2022 of 21 December 2022, the so-called ‘Start-up Law’ includes, for the first time in Spanish tax history, a special tax regime applicable to the so-called carried interest income earned by directors, employees and/or managers of eligible closed-end alternative investment funds.

Released on Mar 27, 2023

New Mexican tax obligation: identification of beneficial owners

The Mexico Tax Reform of 2022 imposed new tax obligations regarding beneficial ownership. The new obligation is not only applicable to legal entities, but also to service providers, including lawyers and notaries.

Released on Mar 27, 2023

Why the sale of Austrian real estate by a company can trigger an exit tax at shareholder level

Asked to provide its view on a specific case, the Austrian Federal Ministry of Finance recently responded that the sale of real estate property by an Austrian company could trigger Austrian exit tax at the level of a non-resident shareholder and also stated at what time in the process such a tax would be triggered.

Released on Mar 27, 2023

Trends in transfer pricing (2023)

The topics covered in this session included: advance pricing agreements and mutual agreement procedure practice trends and experience; Covid-19 and extraordinary events; transfer of functions across borders; the International Compliance Assurance Programme, the European Trust and Cooperation Approach and tax rulings; intercompany financing: the HMRC v Blackrock and HMRC v Singtel cases; and data collection and sale by related companies.

Released on Mar 1, 2023

Pillar 2 implementation: latest updates and hot topics

The topics addressed by this panel were the recent Organisation for Economic Co-operation and Development (OECD) guidance and United Kingdom implementation update; an overview of United States transactional issues; and updates on the Pillar 2 implementation in Mexico, Spain and Switzerland.

Released on Mar 1, 2023

Permanent establishment (2023)

The topics addressed by the panel were the establishment of permanent establishments (PEs) by employees working from home, recent case law and administrative practice regarding PEs and evolving trends.

Released on Mar 1, 2023

Trends in private equity and credit funds (2023)

This panel addressed the question of whether private equity and venture capital structures are under siege in the respective jurisdictions of the panellists. The panel focused on the following topics: challenges and opportunities at portfolio company level; challenges and opportunities at holding company level; challenges and opportunities at fund structure level; challenges and opportunities at manager level; and carried interest.

Released on Mar 1, 2023

Decentralised finance: how blockchain-based finance works and how it is treated for tax purposes (2023)

This panel on decentralised finance discussed how blockchain-based finance works and how it may be treated for tax purposes for individuals in the respective jurisdictions of the panellists. The discussion focused on explaining how typical transactions work and possible interpretations of how such transactions could be treated for tax purposes in the case of individuals only.

Released on Mar 1, 2023

Hybrid instrument update (2023)

This panel provided an update on the treatment of hybrid instruments. The topics included issues relating to the distribution of dividends to non-EU funds, with a focus on the Anti-Tax Avoidance Directive, and anti-hybrid and pre-existing avoidance rules.

Released on Feb 28, 2023

Current developments affecting the securitisation and derivatives markets (2023)

A report on a session at the Taxation Section at the 12th Annual London Finance and Capital Markets Conference in London, covering Ireland, Italy, the Netherlands, the United Kingdom and the United States.

Released on Feb 28, 2023

Cross-border M&A tips and traps (2023)

The panel discussed a selection of developments and trends in cross-border M&A structures. The panel started with cross-border demergers, split-ups and spin-offs. Various Canadian, Irish and Swiss structures were presented. Then cross-border leveraged buyouts were discussed based on a German case study. The panel continued with cross-border joint ventures, zooming in on Pillar II complications and a recent Spanish case. The final developments presented were migrations and conversions, mainly focusing on European Union developments in this respect.

Released on Feb 28, 2023

Cross-border finance update (2023)

The panel discussed a selection of developments and trends in cross-border financing structures. The panel started with recent developments in exemptions from interest withholding tax, with a focus on Brazil and Italy, and then a broader consideration of beneficial ownership and the principal purpose test. The next topic was multijurisdictional co-borrower structures, mostly focusing on United States and United Kingdom rules, followed by debt pushdown structures in Spain, Brazil and the UK. The panel concluded with selected distressed debt considerations for distressed acquisitions, zooming in on structures with 'Irish Section 110 companies'.

Released on Feb 28, 2023

Future of holding companies (2023)

The topics covered by this session included: active and passive holding companies; the impact of European Union directives on these structures; substance requirements of Anti-Tax Avoidance Directive III and new domestic rules; the debt-equity bias reduction allowance proposal; and beneficial ownership rules, as well as their impact on financing and funds.

Released on Feb 28, 2023

Tax litigation (2023)

This panel provided an overview of the important tax cases in recent months, covering transactions in Austria, Denmark, Italy, Spain, Canada and the United States regarding the issues of cum-ex litigation, beneficial ownership identification, taxation of dividends and exchange of information.

Released on Feb 28, 2023

A landmark decision of the Italian Supreme Court might finally lead to a better tax environment for foreign investment funds

The Italian tax legislation has long been hostile, to a certain extent, to foreign investment funds. A recent decision of the Italian Supreme Court might be a pivotal turning point that could finally make Italy a better place to invest for foreign funds, including non-European Union ones.

Released on Oct 5, 2022

The new Italian rule about witness evidence in tax trials

The Italian Law No 130/2022 has modified the Legislative Decree No 546/1992, which contains the procedural provisions governing tax trials. Within this framework, it has introduced a rule about witness evidence, which reveals some systematic limits and issues, particularly in light of the European Convention on Human Rights.

Released on Oct 5, 2022

British Virgin Islands economic substance: investigation and enforcement procedures

This article discusses the approach being taken by the BVI International Tax Authority to monitor entities’ compliance with the BVI economic substance regime and related amendments to the International Tax Authority Act in 2022.

Released on Sep 27, 2022

Corporate income tax in Uruguay: is this the end of the so-called 'principle of the source'?

As a result of certain questioning from the European Union, a debate has begun in Uruguay in connection with the so-called 'principle of the source'. In accordance with such a principle, Uruguayan companies are only taxed on locally sourced income. Foreign-sourced income is, as a general rule, excluded from corporate income tax. The EU admits the validity of the above principle, though subject to certain substance requirements. The Uruguayan Executive Branch has recently made public a draft bill that would keep in force the principle of the source, provided that local companies were in compliance with such substance requirements.

Released on Sep 2, 2022

Updates on EU measures and developments

This panel, at the 11th Annual IBA Finance & Capital Markets Tax Virtual Conference, discussed a selection of European Union measures and developments, starting with the United Kingdom experience after Brexit, then discussing the recent European Commission proposal for a Directive regarding shell entities of 22 December 2021 (COM (2021) 565 final, expected to be implemented by June 2023 with effect from 1 January 2024, and some case studies on withholding tax challenges.

Released on May 17, 2022

The international tax aspects of 'de-SPACing'

A report on a conference session at the 11th Annual IBA Finance and Capital Markets Tax Virtual Conference 2022 on special purpose acquisition companies, specifically the ‘de-SPACing’ process, in which a private company is acquired, in respect of international tax.

Released on May 12, 2022

Tax litigation

This panel, at the 11th Annual IBA Finance and Capital Markets Tax Virtual Conference 2022, examined recent tax cases in the courts of various jurisdictions. The cases discussed covered a wide range of topics that impact cross-border finance and capital markets, including discussions on alleged treaty abuse, attorney–client privilege, financing transactions and beneficial ownership.

Released on May 12, 2022