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Bulletin 38Printable Version
UK: Provisions for European nationals arriving after ‘no-deal’ Brexit
The UK government has set out its plans for EU, EEA and Swiss nationals arriving in the UK after a ‘no-deal’ UK exit from the EU on 29 March. In the event, free movement will end immediately, although there will be a transition period until 31 December 2020 during which EEA nationals will be able to enter the UK with automatic permission to work or study for three months. Those who want to stay for longer will need to apply for a new status called European Temporary Leave to Remain, allowing them to remain, work and study for a non-extendable period of 36 months.
MONEY LAUNDERING: France escalates Danske Bank investigation
The French authorities have revived their investigation into the money-laundering scandal at Danske Bank, in which organised criminals laundered EUR200 billion of tax evasion proceeds through Danske’s Estonian branch between 2007 and 2015. This month, a French judge told the bank the scope of the investigation had been expanded to include transactions amounting to EUR28 million between 2007 and 2014. Criminal charges have already been brought against the bank in Denmark.
EU: Commission investigates Netherlands’ tax treatment of Nike
The European Commission has begun investigating the Dutch tax authorities’ grant of five tax rulings to Nike between 2006 and 2015, which it suspects amounted to unfair state aid. Nike group companies obtained intellectual property licenses in return for a tax-deductible royalty payment from connected companies deemed to be not taxable in the Netherlands, and which had no employees and did not carry out any economic activity.
EU: European Commission proposes to bypass Member States’ vetoes on tax evasion measures
The European Commission has published its consultation proposals to remove EU Member States’ veto on certain tax matters by the end of 2025, so that tax proposals would only need the support of 16 countries to become EU law.
NORWAY: Flat income tax rate for short-term non-residents
Norway has introduced a new flat tax regime for non-residents and first-year residents, with effect from January 2019. Foreign employees earning less than NOK617,500 (USD72,000) a year will have the option of paying a fixed 25 per cent rate including social security tax, with no deductions allowed. The regime could be beneficial for non-resident individuals on a short-term assignment, foreign board members, and business travellers, provided their taxable capital income is under a certain threshold.
TAX POLICY: Corporate taxation remains key revenue source for governments, despite falling tax rates
Corporate tax revenues in 2016 accounted for 13.3 per cent of the total tax revenues across the 88 jurisdictions for which data is available, according to the OECD. The percentage has increased from 12 per cent in 2000, despite a worldwide trend of falling corporate tax rates over the past two decades. The average total statutory corporate tax rate fell from 28.6 per cent in 2000 to 21.4 per cent in 2018, and less than a fifth of jurisdictions had statutory tax rates above 30 per cent in 2018.
LUXEMBOURG: Beneficial ownership register regime enacted
Luxembourg has gazetted a law establishing the compulsory public register of company beneficial owners, as required by article 30 of the EU Fourth Anti-Money Laundering Directive. Entities falling within its scope will have until 1 September 2019 to comply. Members of the public will not have access to the beneficial owners’ private residential, professional address or tax identification number, and beneficial owners may, in exceptional circumstances, request that access to their records be restricted to national authorities, financial institutions, bailiffs and notaries.
BRAZIL: Beneficial ownership disclosure deadline extended by six months
The deadline for non-resident entities to disclose their ultimate beneficial owners to Brazil’s tax authority has been extended by 180 days, to 26 June 2019.
China extends foreigners’ tax exemption but shelves anti-avoidance guidance
The People’s Republic of China government made some significant concessions in the final version of its personal income tax reform programme, extending the tax exemption period for non-domiciled residents from five years to six. Detailed guidance on the anti-avoidance rules was removed from the final regulations.
UK: Asset recovery and freezing order regulations issued for ‘no-deal’ Brexit
Technical regulations on policing and criminal justice in the event of a ‘no-deal’ Brexit have been published, notably dealing with the removal of the provisions introduced under EU legislation on mutual recognition of asset freezing and confiscation orders. Part 20 of the Law Enforcement and Security (Amendment) (EU exit) Regulations 2019 makes amendments to deal with the fact that the UK will no longer be party to specific EU instruments and deals arising in relation to proceeds of crime legislation, primarily the Proceeds of Crime Act 2002 as amended by the Criminal Finances Act 2017. There is a separate instrument dealing specifically with money laundering and terrorist financing.
EUROPE: Regulations now in force on marital property regimes
New rules governing the resolution of international couples’ property disputes came into force in January in 18 EU Member States. They establish the competent court and national laws that apply on divorce or death, avoiding parallel, and possibly conflicting, proceedings in different Member States, and support the recognition and enforcement of a judgment given in one Member State on property matters in another.
INTERNATIONAL TAXATION: OECD proposes solutions to taxing the digital economy
The OECD has proposed a way forward on the ‘fair taxation’ of highly digitalised multinational businesses, as requested last year by the G20 group of developed countries. Its proposal consists of three alternative options for reform of nexus and profit attribution, together with additional rules for minimum levels of taxation in the source and residence jurisdictions, similar to the US’ new global intangible low-taxed income (GILTI) regime. The next step is a public consultation, to open on 11 or 12 February, followed by a meeting in Paris in mid-March.
FRANCE: Exit tax reporting obligations made less onerous
France’s social security, finance and income tax Bills, enacted as the 2019 Finance Bill, reduce the yearly reporting obligations for taxpayers who leave France from the current eight or 15 years to two years, for the purpose of assessing exit tax on capital gains. Also, from 1 January 2019, a non-resident’s sale of a former principal residence in France is exempt from capital gains tax under certain circumstances. The Bills also remove the social surtaxes for non-resident taxpayers who remain covered by the social security system of another EU or EEA country or Switzerland.