Bulletin 4

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TAX POLICY: European Council agrees stance on beneficial ownership –

The European Council has agreed its negotiating stance on the rules to prevent money laundering and terrorist financing. Among the main changes to Directive 2015/849 (the Fourth Anti-Money Laundering Directive) is enhanced access to domestic beneficial ownership registers which improve transparency about the ownership of companies and trusts. The domestic registers will also be interconnected to facilitate cooperation between member states. Public access is foreseen on the basis of a legitimate interest for all types of companies and trusts.

CRS: Financial Institutions Falling Short on Common Reporting Standard Compliance –

Financial institutions impacted by the International Common Reporting Standard (CRS) regulations still have much work to do to meet with the initiative’s significant compliance challenges. That’s according to a new report from Big 4 accounting and advisory firm KPMG. According to the survey of 146 high-level tax and compliance professionals, 40 percent of financial institutions worldwide have either taken only preliminary steps or are just beginning to focus on what needs to be done to comply with the requirements of the CRS. In total, almost 100 jurisdictions committed to implement the CRS on or before Jan. 1, 2017.

ITALY: Talks with EU over possible 5-bln euro state bailout for Veneto banks-sources –

Italy is in talks with European authorities over a possible 5-billion euro ($5.3 billion) state bailout of two Veneto-based regional lenders. The discussions were at an embryonic stage and the final, combined capital shortfall of the two banks – Banca Popolare di Vicenza and Veneto Banca – had not been decided yet. The scheme being discussed would be a precautionary recapitalisation of the two banks, which allows Euro zone states to inject taxpayer money into lenders without violating state aid rules.

US: Foreign owners of single-member LLCs now forced to report to IRS –

The US Treasury Department has issued final regulations requiring foreign owners of single-member US limited liability corporations (LLCs) to report their interests on IRS Form 5472, as of 1 January 2017. The regulations put into practice the Obama administration’s undertaking to obtain beneficial ownership information on such ‘disregarded entities’, which have until now been ignored for US federal income tax purposes.

CANADA: Taxpayers applying for offshore amnesty will be forced to name their advisors –

Canadian taxpayers who use the Canada Revenue Agency’s offshore voluntary disclosures programme (OVDP) will soon have to disclose the identity of any advisors who helped them set up offshore accounts or structures, or otherwise assisted with their non-compliance. The recommendation is one of several made in a report of the Offshore Compliance Advisory Committee, set up in April to examine the OVDP. The report also considers the programme to be too generous to non-compliant taxpayers, and national revenue minister Diane Lebouthillier has agreed to limit its ‘repeated use by sophisticated taxpayers’.

FRANCE: Tax breaks for new residents –

Jean-Marc Tirard TEP highlights a number of tax breaks to persons moving to France – new residents are currently exempt from wealth tax on all their property situated outside France for five years, the impatriate regime means relocation bonuses and the portion of income earned in relation to work carried out outside France are tax-exempt for five years, and there is a 50 per cent exemption to capital gains tax on the sale of shares issued by non-French companies.

EUROPE: Directive could impose minimum penalties for money laundering –

The European Commission has proposed a new directive to establish minimum rules for the definition of a criminal offence of money laundering, and the associated penalties. It has also: tabled a regulation to prevent people entering or leaving the EU with EUR10,000 or more in cash; to allow the authorities to seize smaller amounts where criminal activity is suspected; and to allow customs authorities to examine cash sent in postal parcels or freight shipments, or as gold or prepaid payment cards. A new regulation will also provide for mutual recognition of criminal asset-freezing and confiscation orders.

CORPORATE TAXATION: Ireland and Apple challenge Commission tax ruling –

On 19 December the European Commission published the full version of its decision on Ireland’s alleged state aid to Apple. It states that Ireland granted undue tax benefits of up to EUR13 billion to Apple Computer Ltd, and that Apple must now pay that amount in full. Both Ireland and Apple say they will challenge the decision in court, while the US Treasury alleges the Commission is ‘retroactively applying a sweeping new state aid theory that is contrary to well-established legal principles, calls into question the tax rules of individual countries, threatens to undermine the overall business climate in Europe, and threatens to erode America’s corporate tax base.’

UK: Penalties now in force for ‘enablers’ of offshore tax evasion –

Regulations made in late December 2016 brought s162(1) and Schedule 20 of the UK Finance Act 2016 into force on 1 January, imposing civil penalties on persons who have enabled offshore tax evasion or non-compliance by another person.

SWISS BANKING: New Swiss guidelines on identification of discretionary trust beneficiaries –

The Swiss Bankers Association (SBA) has revised its guidance to Swiss banks on the identification of discretionary classes of beneficiaries of trusts and foundations. The revised CDB16 Commentary states that discretionary beneficiaries designated by class must now be individually identified unless their entitlement is purely prospective or subject to a date or timing requirement, says Lenz & Staehelin law firm.

BANKING: Deutsche Bank settles US tax fraud charges –

Deutsche Bank has agreed to pay the US Department of Justice USD95 million to drop charges that it used insolvent shell companies to hide tax liabilities from the Internal Revenue Service 16 years ago. The dispute arose from Deutsche Bank’s acquisition of Charter Corp in early 2000, and its subsequent sale of Charter to the shell companies in order to land them with the associated USD52 million capital gains tax liabilities which the shell companies were unable to settle.

ITALY: Tax amnesty reopens for domestic as well as offshore assets –

Italy’s re-launch of its tax amnesty began on 1 January, covering undeclared domestic assets such as cash and bearer bonds, as well as offshore assets. The disclosure window will remain open until 31 July.

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.