Europe & African region International Tax Newsletter

PMG in Austria has prepared a report providing brief summaries of tax developments for August and September 2019.

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The ruling commission has communicated that pre-filing requests or ruling requests regarding transfer pricing or the innovation income deduction concerning the corporate tax return that will be filed by the end of September 2020 must be introduced on or before 31 January 2020.

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The tax authorities released a circular letter that addresses the “grandfather rule” for certain loans under the new earnings stripping regime.

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The European Commission announced the opening of “separate” in-depth investigations of whether Belgium’s “excess profit” tax rulings granted to 39 multinational companies were in breach of the EU state aid rules.

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The notional interest deduction rate for assessment year 2021 is expected to be 0% for large companies.

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Under the EU Anti-Tax Avoidance Directive as transposed in Cypriot income tax law, certain “excessive” borrowing costs are deductible in the tax period in which they are incurred but only up to 30% of the taxpayer’s earnings before interest, tax, depreciation and amortisation, as adjusted.

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The Ministry of Finance has prepared a digital service tax bill — one proposing a tax rate of 7 percent on selected digital services.

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The Ministry of Finance is taking steps to address the VAT rules and to respond to a judgment of the Court of Justice of the European Union (CJEU).

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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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According to a release from the European Commission, the statistics for the “VAT mini one stop shop” for the period from 2015 to 2018 show “a clear positive result in terms of VAT collection for all EU countries.”

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The European Commission is holding an open public consultation concerning its evaluation of tax breaks for rum produced in French overseas territories which intended to explore ways to update the tax regime supporting rum producers.

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The French finance bill project reflects the French government’s intention to make electronic invoices in business-to-business (B2B) relationships mandatory, effective January 2023.

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The German federal cabinet at the end of July 2019 approved the government’s draft bill that would implement EU “quick fixes” for the VAT treatment of chain transactions in the European Union, among other measures.

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The KPMG member firm in Germany has prepared a report that includes various tax developments.

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A new requirement for “real-time” invoice data reporting will be effective beginning 1 April 2020.

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Certain payments made to individuals on retirement or redundancy may be entitled to beneficial tax treatment.

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A decision from the UK Upper Tribunal in August 2019 may have implications with respect to Irish withholding tax on “trailing commissions”—for instance, payments made as “loyalty bonuses” and rebates of management fees—that are deemed to be “annual payments.”

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While the UK’s currently scheduled departure date from the European Union is 31 October 2019, it is impossible to predict with any reasonable certainty what outcome will eventually emerge. The possibilities range from “a deal” to an “extended Article 50” agreement to a “no deal” Brexit.

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Italy’s tax authorities issued a tax ruling in response to an application submitted by a Swiss bank concerning the tax treatment of interest payments made to the bank by Italian individuals.

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The Protocol to amend the income tax treaty between Luxembourg and the United States has been ratified.

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• eligibility for 80% participation exemption
• controlled foreign company (CFC) rules
• freeport operator or developer
• substance requirements. 

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The European Commission approved, under EU state aid rules, the extension and expansion of three amendments to the Dutch tonnage tax regime until 31 December 2028.

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The government presented the “2020 Tax Plan” to the Lower House. The proposed tax measures generally focus on lowering labour costs, addressing tax avoidance and tax evasion, providing an attractive business climate for economic activities of substance.

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Taxpayers with savings only would, in effect, no longer pay tax on their savings on amounts up to a threshold of approximately €440,000.

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Advocate General of the CJEU rendered his opinion in a case concerning the compatibility with EU law of the Dutch withholding tax on dividends distributed to non-resident investment funds. The case is: Köln-Aktienfonds Deka.

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A committee of the House of Representatives has launched an investigation about compliance with the rules requiring contributions to the Nigerian Social Insurance Fund.

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The Lagos State tax authority announced this week the launch of its enterprise tax administration system (eTax).

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The Federal Executive Council approved an increase in the VAT rate from 5 percent to 7.2 percent.

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Changes to Poland’s corporate income tax intended to counteract tax optimization using hybrid structures will be effective beginning 1 January 2020.

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Poland’s VAT law, as amended, provides the requirement to use the split-payment mechanism for selected transactions.

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The tax authorities have revised their position concerning the withholding tax treatment with respect to interest-rate swaps.

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Tax compliance services provided to employees—at the cost of the employer—will be subject to VAT by the employer if supplied to the employees in the course of business.

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The South African Revenue Service announced it will no longer be issuing printed tax clearance certificates replacing it with an electronic tax compliance status system.

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The 2019 Draft Taxation Laws Amendment Bill includes proposed amendments concerning special economic zones.

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Pending legislative proposals would impose caps on the amounts of investments made by natural persons and corporations that would be eligible for certain tax incentives.

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The government announced its plans for an “economic employer” concept for taxing workers who work temporarily in Sweden.

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The government submitted the 2020 budget bill that includes tax proposals and reflects certain reform initiatives.

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Zurich voters approved by a 55.95 percent majority a proposal adopted by the Zurich Cantonal Council for implementation of the tax reform plan in the canton of Zurich.

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The Swiss Parliament adopted an amendment to the “Equality Act” to add a new section related to equal pay requirements between female and male employees.

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The Federal Supreme Court of Switzerland released a long-awaited, key decision on the VAT treatment of “intermediary services” by Swiss institutions, and confirmed that a direct proxy is no longer mandatory under the new Swiss VAT law.

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The Swiss government issued a release that representatives of Switzerland and the United States exchanged the instruments of ratification of the Protocol to amend the existing Switzerland-United States income tax treaty.

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There are new regulations in the UK concerning the hybrid mismatch rules and implications for certain capital instruments and regulatory capital securities.

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HMRC published new and updated guidance to support implementation of the reformed “off-payroll working rules” from April 2020.

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HMRC published annual corporation tax statistics that show receipts and liabilities are increasing and highlight some trends.

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