Bulletin 23

Printable Version

SWITZERLAND: German bankers charged with bank secrecy violations

The Swiss authorities have charged three Germans with industrial espionage and violating bank secrecy, alleging the suspects passed Swiss account documents to German courts and authorities in 2015. The three are a Stuttgart-based attorney and two bank employees.

TAX AGREEMENTS: Treaty revision affects Luxembourg-based investors in French property

France and Luxembourg have signed a new double taxation treaty realigning the tax treatment of certain France–Luxembourg cross-border structures. It adopts a criterion of ‘place of effective management’ for tax residency, and adds a general anti-abuse rule based on the ‘principal purpose’ test, as well as incorporating OECD standards of information exchange. There could be a significant impact on French real estate investment structures held by investors based in Luxembourg.

US: Taxpayers warned to report virtual currency transactions

The US Internal Revenue Service (IRS) has warned taxpayers that virtual currency transactions are treated as property transactions for tax purposes, and must be declared on income tax returns, under IRS notice 2014-21. The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.

CORPORATE TAXATION: First five countries adopt BEPS treaty convention

The OECD’s multilateral convention to implement tax treaty-related measures against base erosion and profit shifting (BEPS) will enter into force on 1 July 2018 for Slovenia, Austria, the Isle of Man, Jersey and Poland. It allows the jurisdictions to transpose results from the OECD/G20 BEPS project into their existing bilateral tax treaties.

UK: MPs to examine role of CDOTs in tax avoidance and evasion

The UK Parliament’s Treasury Committee has launched an inquiry into the extent of tax avoidance and evasion, including the role of Britain’s Crown Dependencies and Overseas Territories.

UK: All company directors can now keep home addresses secret

New regulations will, from this summer, allow all UK company directors to remove their personal addresses from the Companies House registers, without having to show they are at serious risk of violence or intimidation. The Companies (Disclosure of Address) (Amendment) Regulations 2018 aim to protect directors from impersonation fraud, helping the UK ‘build its reputation as one of the best places in the world to start and grow a business’.

MONEY LAUNDERING: Beneficial ownership registers remain the stumbling block to 4AMLD

Several EU Member States have still not implemented the EU Fourth Anti-Money Laundering Directive, nine months after the implementation deadline of 26 June 2017, due to late amendments at EU level, and concerns over publicly available central registers. The states in question include Cyprus, the Netherlands, Poland, Romania, Luxembourg, Bulgaria, Greece and Ireland, the last of which has significant difficulties with the implementation of a beneficial ownership register. Meanwhile, further amendments under the Fifth Anti-Money Laundering Directive are likely to be implemented during 2019, including expansion of the beneficial ownership regime to a wider range of trusts and trust-like arrangements.

TAX TRANSPARENCY: OECD classifies Bahamas as ‘largely compliant’

A peer review from the OECD Global Tax Transparency Forum has rated the Bahamas as ‘largely compliant’. The assessment highlights the significant difference between the OECD’s rating system and that of the European Commission, which earlier this year blacklisted the Bahamas as a ‘non-cooperative jurisdiction’.

LUXEMBOURG: Parliament prepares to approve beneficial ownership register

The Luxembourg Parliament is reviewing a draft Bill implementing art.30 of the EU Fourth Money Laundering Directive, requiring corporate entities and trusts to maintain up-to-date beneficial ownership information at the registered office, and to submit it to a central register in Luxembourg. It will be available to national authorities on request, and to certain professional organisations and financial professionals on ‘motivated request’.

SWISS BANKING: HSBC whistleblower Falciani is again arrested in Spain

The Spanish police have arrested Hervé Falciani, the IT contractor who stole thousands of accountholders’ details from HSBC Suisse Private Bank in 2008. The information was subsequently seized by the French authorities and made available to tax authorities worldwide. Falciani is wanted on a Swiss extradition warrant for industrial espionage, for which he has already been convicted and sentenced to jail.

SANCTIONS: US freezes assets of seven Russian ‘oligarchs’ and their controlled companies

The US government has named 38 individuals and entities as Specially Designated Nationals, thereby blocking the assets of seven Russian ‘oligarchs’ and 12 prominent companies owned or controlled by them. US persons are prohibited from commercial activity with these persons, as well as with all entities majority-owned by them directly or indirectly, and are required to block the property and interests in property of the SDNs that come within their possession or control. US Treasury Secretary Steven Mnuchin said the individuals profit from the ‘corrupt’ Russian government’s ‘worldwide malign activity’. They include UK resident Oleg Deripaska; Kirill Shamalov; Viktor Vekselberg; Vladimir Bogdanov; Suleiman Kerimov; Igor Rotenberg; and Alexei Miller.

AUTOMATIC EXCHANGE OF INFORMATION: ‘Controlling persons’ formally identified with beneficial owners

The OECD has released the second edition of its handbook on automatic exchange of account information under the Common Reporting Standard. It clarifies that ‘controlling persons’ are the beneficial owners of the trust, and must be identified with the ‘natural persons who are in control of the accountholders, including through a chain of ownership or control.’

VIRTUAL CURRENCIES: Spain prepares assault on cryptocurrency gains

Spain’s tax agency Agencia Estatal de Administración Tributaria has requested cryptocurrency traders at 60 financial services companies to hand over their clients’ names and trading data, suggesting that an enforcement drive against virtual currency tax evasion is about to begin. Meanwhile, two partners at US law firm Chamberlain Hrdlicka have published an article advising Americans with unreported cryptocurrency income on how to defend themselves against Internal Revenue Service action.

Sources: STEP | IFC Review

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