Europe & African region International Tax Newsletter

The Africa Continental Free Trade Area agreement entered into force on 30 May 2019, having been ratified by 22 countries (the threshold requirement). At present, only three countries (Benin, Eritrea, and Nigeria) have not signed the agreement.

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KPMG in Austria has prepared a report providing brief summaries of tax developments, including:

• additional amendments on ultimate beneficial registry rules
• income tax treaty between Austria and Russia entered into force 20 June 2019

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The Austrian Ministry of Finance proposed in spring a draft bill that would introduce a tax on digital advertising. Due to changes in Austrian government (interim government), the status of the digital services tax proposal is uncertain at present.

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The federal law containing assent with the multilateral instrument was published in the Belgian official gazette. This publication completes the final step in the Belgian process of ratification of the MLI.

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Information published by the tax authority concerning a 2019 tax package (effective 1 April 2019) includes transitional rules for the research and development allowance.

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The Czech government on started the formal legislative process to introduce a digital services tax that would be imposed at a rate of 7%.

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Denmark’s high court in 2019 issued its decision in a case following the 2018 judgment of the Court of Justice of the European Union concerning the compatibility with EU law of the Danish withholding tax on dividends distributed to non-resident investment funds.

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KPMG's European Tax Centre summarizes the implementation of the new rules into Member States’ domestic legislation to date and the state of play at the level of the EU institutions.

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The European Commission issued a reminder that new dispute resolution EU rules are effective starting 1 July 2019.

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The General Court of the European Union annulled the European Commission's decision that a Hungarian advertisement tax was incompatible with EU state aid rules.

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The European Commission announced several actions or referrals to the CJEU, including steps to end “illegal tax breaks” in the yacht industries of Italy and Cyprus.

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

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The European Union and Mercosur member states—Argentina, Brazil, Paraguay and Uruguay— reached a political agreement for a trade agreement.

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The French government’s plan for a phase-down reduction of the rate of corporate income tax—ultimately to 25% in 2022— has been revised and enacted.

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The French digital services tax legislation was published in the official gazette. As enacted, the French digital services tax retroactively applies to digital services revenue as of 1 January 2019.

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Taxpayers are now allowed to prove expense receipts using a computerized version of the receipts for purposes of determining the tax base for tax and social security contributions, as of 1 July 2019.

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The German Ministry of Finance has presented the key features of the VAT group rules in line with the EU VAT Directive—that could replace the regulations concerning VAT groupings in Germany.

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The federal tax court has amended its position from prior decisions concerning the treatment of adjustments to income for the derecognition of an unsecured intragroup loan and now concludes such loss is not tax deductible.

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A commission of Hungary’s parliament has submitted proposals to amend a draft law that was previously submitted to the parliament by the Ministry of Finance in late June 2019.

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The Italian parliament amended and converted Law Decree no. 34/2019 into law. The new law decree includes tax incentives for the real estate and leasing sectors.

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Luxembourg’s Parliament ratified a new income tax treaty with France.

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The U.S. Senate approved Protocols amending the existing income tax treaties with Switzerland, Luxembourg, and Japan.

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Luxembourg’s government approved a bill for transposition of an EU Directive on administrative cooperation in the field of taxation (DAC 6).

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The Finance Act 2019 received the president’s assent. Measures include:

• “tax holidays” for companies engaged in certain activities
• extension of an 80% partial exemption regime
• consolidation of the anti-avoidance rules by including CF rules.

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A KPMG Tax Card gives a concise overview of taxes in Montenegro in 2019.

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A bill to implement an amendment to the EU Anti-Tax Avoidance Directive (ATAD2) was presented to the Dutch Lower House.

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A bill to implement the EU Directive on mandatory disclosure (DAC6) has been presented to the Lower House.

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The Dutch Supreme Court issued two judgments broadly interpreting the economic interdependence standard required when entities or persons seek to function as a single tax entity for VAT purposes.

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The Ministry of Finance in published a consultation paper concerning a proposal to repeal the exemption from VAT that applies for imports of “low-value goods”.

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South Africa’s government is considering a new tax on single-use plastics.

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The U.S. Senate approved a Protocol to amend the income tax treaty with Spain.

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The Swiss Federal Council released a circular on the revised federal withholding tax laws for individuals, providing a commentary and practical guide to these new rules.

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The U.S. Senate approved Protocols amending the existing income tax treaties with Switzerland, Luxembourg, and Japan.

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The UK Government published the draft legislation on the Digital Services Tax as part of the draft clauses for Finance Bill 2019-20.

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Capital losses offset restricted to 50 percent of gains from 1 April 2020.

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The UK government published draft clauses and supporting documents for Finance Bill 2019-2020. Measures include: a digital services tax; corporate capital loss restriction; off-payroll working rules effective April 2020; and the extension of stamp duty anti-avoidance to unlisted shares.

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