Bulletin 30

Printable Version

CITIZENSHIP: European Commission warns Member States on ‘golden visas’

The European Commission’s Justice Commissioner has warned that EU Member States need to be more cautious when granting citizenship in exchange for investment. Such ‘golden passports’ schemes represent an ‘extremely concerning’ security threat, Vera Jourova said.

BVI: Amended rules allow digital identity verification without labelling client ‘high-risk’

The BVI Financial Services Commission has amended s.23 of the Anti-Money Laundering and Terrorist Financing Code of Practice 2008 to allow financial institutions to verify individual customers’ identity by electronic and digital means. The amendments clarify that where identity is verified digitally in a transaction not conducted face-to-face, a BVI institution need not automatically treat an applicant for business or a customer as ‘high risk’.

US: Taxpayers must consider restructuring controlled foreign corporations

The US Tax Cuts & Jobs Act 2017‘s transition tax on deferred foreign income, the new global intangible low taxed income (GILTI) tax regime, and other changes to the rules governing controlled foreign corporations will dramatically affect the taxation of US individuals who own closely held foreign companies, say experts at US law firm Day Pitney. The changes will force re-examination of many existing tax structures, including succession planning structures set up by non-US individuals for US beneficiaries.

CITIZENSHIP: Golden visas are not a security threat to Europe, say migration advisors

In response to the EU Justice Commissioner Vera Jourova’s plans to issue stricter guidelines on the so called ‘Golden Visas’, the investor immigration industry is insisting that the citizenship-by-investment programmes operated by Austria, Malta and Cyprus are not a security threat to the European Union, given the strict due-diligence procedures and background checks performed on applicants. The Investment Migration Council noted that the programmes process only 700 to 1,000 applications a year – about 0.1 per cent of new EU citizenships.

CANADA: Ontario dairy farming company is taxable in Canada despite Dutch holding company

Canada’s Tax Court has decided that the Dutch company Landbouwbedrijf Backx BV is tax-resident in Canada, even though its sole director is resident in the Netherlands. The court ruled that the company’s ‘central management and control’ was exercised by its two Canadian-resident shareholders. The company is a dairy farming business actually located in Ontario, and is owned indirectly by a Dutch couple who moved to Canada twenty years ago.

GUERNSEY: Significance of Liang money laundering ruling

Further comment has appeared on the Guernsey Royal Court’s important decision in Liang v RBC Trustees, in which the court supported a trustee’s decision not to agree to wind up a trust and transfer the funds to the beneficiary because it could not establish the true source of the funds. Instead, it was incumbent on the asset owner to establish on the balance of probability that the suspicion was unfounded.

TAX AGREEMENTS: Switzerland amends double taxation agreement with UK

The Swiss Federal Council has adopted an amendment to its double taxation agreement with the UK, to make it compliant with the minimum standards of the OECD Base Erosion and Profit Shifting project. The treaty now includes a general anti-abuse clause.

DENMARK: Litigation begins to recover non-residents’ dividend tax fraud

The Danish Tax Agency has opened 388 civil cases against firms or individuals in several countries, including England, in an attempt to recover DKK12.7 billion (USD2 billion) it paid out in fraudulently claimed tax refunds between 2012 and 2015. The claims were made by non-residents for refunds of withholding tax deducted from Danish stock dividends.

POLAND: Exit tax planned for wealthy individuals and companies

Poland’s finance ministry has drafted legislation imposing a 19 per cent exit tax on companies and wealthy individuals who move their permanent residence abroad. It is due to come into force in 2019 on individuals with financial assets worth at least PLN2 million (USD533k), and will tax the value of any capital gains that could have been realised if the transfer had not taken place. The levy is permitted under the Council Directive (EU) 2016/1164, known as the ‘Anti Tax Avoidance Directive’ or ‘ATAD’.

BELGIUM: Beneficial ownership disclosure rules gazetted

A new obligation for Belgian entities comes into force on 31 October 2018, requiring them to gather information about their ultimate beneficial owners by 30 November and enter it in a central register maintained by the Federal Public Service for Finance. The regulation transposes the Fourth and Fifth EU Anti-Money Laundering Directives into Belgian law. Only restricted parts of the register will be made accessible to the general public, who will have to pay an as yet undetermined fee.

INDIA: Less than two weeks to beneficial ownership disclosure deadline

Indian companies must file details of their significant beneficial owners within the next two weeks under the Companies (Significant Beneficial Owners) Rules 2018. Significant beneficial owners (SBOs) themselves must file a Form BEN-1 to the relevant company by Tuesday 11 September 2018, and within 30 days of any future change in ownership.

Sources: STEP | IFC Review

Please contact David Marinelli should you wish to discuss any matter relating to jurisdiction & compliance risk management or asset protection pertaining to your business or your clients.