Bulletin 45

Printable Version

SPAIN: European Commission demands equal treatment for non-resident landlords

The European Commission has requested Spain to impose equal taxes on rental income received by resident and non-resident individuals. Landlords receive a 60 per cent tax exemption for renting their properties out as a tenant’s main residence, but non-resident individuals with real estate properties in Spain are not eligible for this reduction, which the Commission considers a restriction on the free movement of capital.

INDIA: Key consultation on profit attribution to permanent establishments

The Indian Central Board of Direct Taxes has published a plan to change the rules on attribution of profits to permanent establishments in India. A 30-day consultation has been launched on the proposals, which depart from the OECD standard profit attribution methodology based on functions, assets and risks, because India considers them harmful to developing countries.

JERSEY: Economic substance bill to be amended to meet OECD demands

Jersey’s Minister for External Relations Ian Gorst has tabled amendments to the Economic Substance Act, enacted at the end of 2018. The amendments fulfil undertakings made by Jersey in March, when the EU Council agreed to classify Jersey as a cooperative tax jurisdiction. They also address the demands of the OECD Forum for Harmful Tax Practice regarding preferential regimes of no-tax or nominal tax jurisdictions, and the amending law is expected to be passed by the States Assembly before the Forum’s June 2019 meeting, said Gorst.

MACAU: Offshore company tax regime is being phased out

Macau’s government is legislating to encourage the development of a financial leasing industry to replace its offshore companies industry, whose special tax regime is being revoked under Law 15/2018, enacted in December 2018. All unexpired offshore activity authorisations will expire on 1 January 2021, and until then, the offshore regime’s exemption from income and industrial tax and stamp duty will apply only to economic activities relating to foreign markets, performed exclusively by non-resident institutions authorised to operate in Macau, or using transactions in foreign currencies.

CORPORATE TAXATION: India’s reform of profit attribution rules aims to shift power to developing countries

Further comment and analysis is now available on the Indian government’s plan to introduce special rules for attributing profits to Indian permanent establishments. India objects to the standard OECD rules, which it claims are favourable to countries that are net exporters of capital and technology, but can have a significant adverse impact on developing economies.

CORPORATE TAXATION: US multinationals lead the field in UK tax avoidance

The UK’s tax authority believes that US-based multinational businesses may have underpaid GBP4.6 billion of UK tax last year, according to law firm Pinsent Masons. This is 35 per cent higher than the 2017 figure, and represented 17 per cent of the total GBP27.8 billion of UK tax possibly underpaid by large corporates in 2018. Swiss-based businesses came second with 6 per cent, followed by Ireland at 3 per cent and France at 2 per cent.

CROWN DEPENDENCIES: Guidance on economic substance regulations released

Guidance just released jointly by the Crown Dependency governments confirms that companies within the scope of the new economic substance legislation must perform core income-generating activities in any relevant sector in the relevant Crown Dependency. It also confirms that pure equity-holding companies can passively hold investments and receive income or gains from them without being regarded as a commercial activity, although it does not clarify the meaning of the term ‘adequate’ used in some key requirements in their economic substance legislation.

UKRAINE: Foreign shell companies barred from operating bank accounts

Ukraine’s National Bank has issued regulations for the operation of current accounts by foreign companies in Ukrainian banks, which became possible under the foreign currency rules that came into effect in February 2019. Banks must ensure that current accounts cannot be operated by a shell company, which is defined as a non-resident legal entity that does not conduct any actual business in the country of its registration, or has an ownership structure that prevents identification of its ultimate beneficial owners.

CITIZENSHIP BY INVESTMENT: CBI schemes do not increase risk of tax evasion, says report

A report by law firm Smith & Williamson concludes that citizenship-by-investment (CBI) programmes do not risk the facilitation of tax evasion, as citizenship alone is insufficient to secure tax residency of a country, and individuals are only liable to tax in countries where they are tax resident, subject to an existing double taxation treaty. Moreover, the international rules for automatic exchange of account information are explicit in not using citizenship or right to reside as a test.

Source: STEP

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.