International Tax Newsletter - Europe & African region

Europe and Africa regions

July 2018

This e-newsletter gives you an overview of international tax developments being reported globally by KPMG member firms in the Europe and Africa regions between 1 July and 31 July 2018.

Czech republic	Denmark	European Union	Germany
Italy	Kenya	Luxembourg	Malta
Mauritius	Netherlands	Nigeria	Poland
Romania	Serbia	South Africa	Spain
United Kingdom

For a full summary of global tax developments, visit kpmg.com/TaxNewsFlash.

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Czech Republic

Tax legislation approved and regulatory update

Corporate income tax - 12 July 2018

The Chamber of Deputies passed legislation that would amend, for income tax purposes, the definition of a “basic investment fund.”

Proposed legislation

VAT 12 - July 2018

A draft of legislative changes to the VAT law for 2019 has been submitted to the Chamber of Deputies.

Denmark

Administrative and case law

Corporate income tax / Loss relief - 4 July 2018

The Court of Justice of the European Union published its decision concerning the compatibility with EU law of the Danish rules on the deductibility of losses from a Danish permanent establishment whose head office is not tax resident in Denmark. The case is: NN A/S case (C-28/17).

European Union

Administrative and case law

Various tax areas - July 2018

The EU Tax Centre prepared a summary of EU tax developments that can have both a domestic and a cross-border impact.

Germany

Proposed legislation

VAT - 1 January 2019

The German Ministry of Finance published a draft bill of annual tax legislation for 2018 that includes certain VAT measures or amendments.

VAT / Digital economy - 1 January 2019

Germany moves closer towards implementing new legislation that would affect the VAT treatment of online trading platforms (marketplaces).

Italy

Tax legislation approved and regulatory update

E-Invoices / VAT - 2 July 2018

The Italian tax authority published a circular to clarify certain issues related to the mandatory requirements for “e-invoices” as introduced by the 2018 budget law.

R&D incentives - 6 July 2018

The Italian tax authority issued guidance to clarify application of the R&D tax credit. The clarifications on the R&D tax credit include guidance that focuses on the eligibility of software development costs and on the application of the tax credit in the event of business restructurings.

Various tax areas - 14 July 2018

Law Decree no. 87 was published in the Official Gazette. Among other, it provides that the R&D tax credit regime is limited with respect to purchases or licenses of certain intellectual property if the seller or licensor belongs to the same corporate group as the taxpayer.

Kenya

Tax legislation approved and regulatory update

Finance Bill - 1 July 2018 / 1 January 2019

Kenya’s Finance Bill, 2018 was published. Changes include:

the introduction of a presumptive tax targeting the “informal sector”
overhaul of the “compensating tax regime” (that is, the tax on dividends paid out of untaxed profits)
a doubling of the late-payment interest charges

Luxembourg

Tax legislation approved and regulatory update

VAT - 1 August 2018

KPMG in Luxembourg prepared a report on the new VAT group regime in Luxembourg.

Tax treaties

Multilateral Instrument (MLI) - 11 July 2018

The Luxembourg government released a bill for the ratification of the MLI into Luxembourg domestic law.
Luxembourg would include all its tax treaties in force in the MLI.

Malta

Tax legislation approved and regulatory update

Tax credits - June 2018

Persons in possession of a permit to accept construction waste and demolition material in their quarries in Malta can claim a tax credit.

Employment income - July 2018

Individuals holding certain key positions with undertakings operating in the Maritime industry or involved in servicing the Offshore Oil and Gas industry may benefit from a special tax status in Malta.

Mauritius

Proposed legislation

Finance Bill - July 2018

KPMG in Mauritius prepared a report on the tax measures contained in the Finance Bill 2018, the dates they become effective, and their views on the measures.

Netherlands

Tax legislation approved and regulatory update

Unemployment contributions - 2020

The Cabinet approved the Labor Market Improved Equilibrium Act that, beginning 2020, would replace sector-specific unemployment contributions with contributions differentiated according to the type of employment contract.

Nigeria

Tax legislation approved and regulatory update

Tax compliance - 3 September 2018

The Federal Ministry of Interior announced that its online processing of applications will now begin 3 September 2018.

Administrative and case law

Tax disputes and controversies - July 2018

The Tax Appeal Tribunal has been reorganized to reflect the six geopolitical zones in Nigeria.

Poland

Proposed legislation

Exit tax - July 2018

The Ministry of Finance is working on the introduction of exit taxation regulations.

Romania

Tax legislation approved and regulatory update

VAT - 2019

A reduced VAT rate of 9 percent will apply to water supply and sewerage services as well as to the supply of water for irrigation in agriculture.

Serbia

Tax legislation approved and regulatory update

Custom duties / VAT - June 2018

Changes made by “rulebooks” concerning VAT law and the customs duties on imports of equipment were published in the Official Gazette.

Administrative and case law

Employment income / Social security contributions - June 2018

The Ministry of Finance’s position is that individual income tax and social security contributions must be remitted with respect to certain unpaid corporate directors.

South Africa

Tax legislation approved and regulatory update

Corporate income tax / Tax incentive - 6 July 2018

Six special economic zones (SEZs) were approved by the Ministry of Trade and Industry. Companies operating in SEZs may be eligible for a corporate tax rate of 15 percent.

Proposed legislation

Corporate income tax - 16 July 2018

Draft tax law legislation, released for public comment, appears to reflect an understanding that a rule introduced in 2017 to address the income tax implications of debt reductions may have an unanticipated consequence when a company enters into certain debt subordination agreements.

Controlled foreign company rules - 17 July 2018

Proposed changes to the CFC rules would address instances when a South African resident individual has an indirect interest in a foreign company through a foreign trust.

Corporate income tax - 24 July 2018

Under current law, the Commissioner has the authority to grant an allowance of an amount of any debt due to the taxpayer that is considered to be doubtful. The latest set of proposed changes seeks to remove Commissioner's discretion.

Administrative and case law

Employment income - 2 July 2018

A recent tax court judgment reached a conclusion that is contrary to prior case law holdings that the source of employment income is located at the place where the services are rendered.

Tax audits - 20 July 2018

A high court decision concerns the ability of the South African Revenue Service to gather information from taxpayers.

Spain

Administrative and case law

State aid - 25 July 2018

The CJEU issued a judgment that sets aside a decision of the General Court concerning the Spanish tax lease system. The General Court had annulled a determination by the European Commission that the system as applied to ships constructed in Spanish shipyards constituted state aid. The case is: Spanish tax lease system’ (STLS) case (C-128/16 P).

United Kingdom

Tax legislation approved and regulatory update

CFC rules - 6 July 2018

HMRC are updating the CFCs section of their International Manual.

Corporate governance - 1 January 2019

The Financial Reporting Council published the 2018 UK Corporate Governance Code. The new Code should be considered in relation to current changes to remuneration policy.

Proposed legislation

Corporate interest restriction - 13 July 2018

The Government has published proposed amendments to the corporate interest restriction rules, including extending the deadline for appointing a reporting company.

Anti-avoidance / Diverted profits - 13 July 2018

Draft Finance Bill 2018/19 introduces new anti-avoidance legislation targeting business diverting profits to overseas territories.

Other

Brexit / Customs - 12 July 2018

Following an eventful month for Brexit, the Government published their Brexit White Paper and debated the Customs Trade Bills in the House of Commons.

Administrative and case law

VAT - 20 July 2018

HMRC have issued guidance on the requirements for businesses to keep digital records and submit returns using functional compatible software.

Corporate income tax - 20 July 2018

The First-tier Tribunal has found for the taxpayer in a case which considered whether three loans advanced to a company and which were impaired in the same period as the advance were loan relationships. The case is: C J Wildbird Foods Ltd v Commissioners for HMRC.

CFC rules - 25 July 2018

The latest CFC and Dividend GLO decision was released, concerning tax on overseas portfolio dividends and compound interest. The case is: Prudential Assurance Company Ltd (Respondent) v Commissioners for Her Majesty’s Revenue and Customs Appellant.

KPMG publication

Financial Bill - 13 July 2018

Insights on the key measures included in Draft Finance Bill 2018/19 are available on KPMG UK's dedicated site.