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Approved Changes (1)

United States

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U.S. Final Regulations on Additional First Year Depreciation Deduction Under Section 168 and Additional Proposed Regulations

The U.S. IRS announced the release on 13 September 2019 of final regulations and additional proposed regulations on the additional first year depreciation deduction under Section 168, which was introduced as part of the Tax Cuts and Jobs Act. The regulations are scheduled to be published in the Federal Register on 24 September 2019.

Treasury, IRS release final and proposed regulations on new 100% depreciation

WASHINGTON — The Treasury Department and the Internal Revenue Service today released final regulations and additional proposed regulations under section 168(k) of the Internal Revenue Code on the new 100% additional first year depreciation deduction that allows businesses to write off most depreciable business assets in the year they are placed in service by the business.

The regulations released today on have been submitted to the Federal Register and may vary slightly from the published documents due to minor editorial changes. The documents published in the Federal Register will be the official documents.

The final regulations finalize the proposed regulations issued in August 2018 which implement several provisions included in the Tax Cuts and Jobs Act (TCJA). The proposed regulations contain new provisions not addressed previously.

The 100% additional first year depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

The deduction applies to qualifying property acquired and placed in service after Sept. 27, 2017. The final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property. The final regulations also provide rules for qualified film, television and live theatrical productions.

Additionally, in the proposed regulations, the Treasury Department and IRS propose rules regarding (i) certain property not eligible for the additional first year depreciation deduction, (ii) a de minimis use rule for determining whether a taxpayer previously used property; (iii) components acquired after Sept. 27, 2017, of larger property for which construction began before Sept. 28, 2017; and (iv) other aspects not dealt with in the previous August 2018 proposed regulations. The proposed regulations also withdraw and repropose rules regarding application of the used property acquisition requirements (i) to consolidated groups, and (ii) to a series of related transactions.

For details on claiming the deduction or electing out of claiming it, see the final regulations or the instructions to Form 4562, Depreciation and Amortization (Including Information on Listed Property). For tax years that include Sept. 28, 2017, see Rev. Proc. 2019-33 for further information about making a late election or revoking an election.

Taxpayers who elect out of the 100% depreciation deduction must do so on a timely-filed return. Those who have already timely filed their 2018 return and did not elect out but still wish to do so have six months from the original deadline, without an extension, to file an amended return.

For more information about this and other TCJA provisions, visit

Proposed Changes (3)


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Denmark Consulting on Draft Bill to Comply with ATAD CFC Rules and Other Measures

Denmark's Ministry of Taxation is currently consulting on a draft bill that provides for the amendment of existing controlled foreign company (CFC) rules to comply with the EU Anti-Tax Avoidance Directive (ATAD) as well as certain other measures.

The CFC amendments include a reduction in the CFC (passive) income test from half of total income to 1/3 of total income and the removal of the CFC financial asset test (greater than 10% of total assets). The amendments also include adjustments to the types of income considered CFC income, which is expanded to include other income generated from intangible assets, including income from the sale of goods and services where the sales price includes a return based on intangible assets.  Lastly, the CFC rules regarding the determination of a CFC are amended in line with ATAD to include that a foreign company will be considered a CFC of a Danish company where a Danish company itself or together with associated persons directly or indirectly controls more than 50% of the voting rights, capital, or rights to profit of the foreign company. For this purpose, persons are considered associated where there is 25% direct or indirect control.

Other measures of the draft bill include amendments to current permanent establishment rules to implement the OECD recommendations developed as part of BEPS Action 7 regarding the avoidance of permanent establishment status.

Measures are also included to amend Denmark's loss restriction rules in relation to non-resident establishments, which were found to violate the EU freedom of establishment principle in a 12 June 2018 judgment of the Court of Justice of the European Union (previous coverage). This includes that losses of non-resident establishments may be claimed subject to certain conditions, including that there is no possibility for the loss to be utilized outside Denmark.

And lastly, measures are included to confirm the tax authorities right to make estimated assessments when transfer pricing documentation has not been prepared by the tax return deadline and to introduce the requirement that transfer pricing documentation must be prepared on an ongoing basis and submitted at the same time as the tax return.

As drafted, the measures would apply from 1 January 2020.

Click the following link for the consultation page. The consultation period ends on 10 October 2019.



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German Federal Ministry of Labour and Social Affairs Issues Draft Ordinance for Maximum Income Basis for Social Security Contributions for 2020

Germany's Federal Ministry of Labour and Social Affairs has issued the draft ordinance for setting the maximum annual income basis for social security contributions for 2020. For general pension insurance and unemployment insurance, the maximum basis is:

  • EUR 82,800 for Western Federal States (old States); and
  • EUR 77,400 for Eastern Federal States (new States).

For health insurance and nursing insurance for disability and old age, the maximum annual basis is EUR 56,250 for all Federal States.

Pending final approval from the German Federal Cabinet and the German Federal Council (upper house of parliament - Bundesrat), the changes will apply from 1 January 2020.



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Sweden Announces Presentation of the Budget Bill for 2020

The Swedish Government has announced the presentation of the Budget Bill for 2020 to the Riksdag (parliament) on 18 September 2019. According to a release from the Ministry of Finance, the proposed tax changes in the Budget Bill aim to contribute to higher employment, an increased number of hours worked, and to attaining climate and environmental goals and include the following:

  • The upper bracket for central government income tax (‘austerity tax’) is abolished
  • Tax for people over 65 will be cut
  • A requirement for electronic payment should be introduced regarding tax rebate for domestic and home renovation services
  • A tax reduction should be introduced for residents in certain sparsely populated areas
  • Funds for further tax reductions on employment and enterprise within the scope of the green tax shift is allocated for 2021
  • A financial definition of ‘worker’ should be introduced
  • A labour market entry deduction should be introduced
  • A reinforced deduction for research and development should be introduced
  • The ceiling for deferred capital gains when selling a home should be raised
  • A tax on the financial sector should be introduced from 2022
  • A tax on waste incineration should be introduced
  • The fuel tax should be reduced
  • A tax on plastic carrier bags should be introduced

Treaty Changes (5)


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Azerbaijan and Turkey to Negotiate Tax Treaty Revisions

Officials from Azerbaijan and Tukey reportedly met on 16 September 2019 to discuss bilateral relations and agreed to begin negotiations for the revision of the 1994 income tax treaty between the two countries. It is uncertain whether the two sides are planning to revise the treaty through an amending protocol or through the signing of a new treaty. Further details will be published once available.



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Brazil and Germany to Resume Tax Treaty Negotiations

During the Brazil-Germany Economic Meeting held 15 to 17 September 2019, officials from the two sides reportedly agreed to resume negotiations for a new income tax treaty. The 1975 tax treaty between the two countries was terminated with effect from 1 January 2006. Any resulting treaty from the negotiations will need to be finalized, signed, and ratified before entering force.


Indonesia-San Marino

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TIEA between Indonesia and San Marino has Entered into Force

The tax information exchange agreement between Indonesia and San Marino entered into force on 30 August 2019. The agreement, signed 25 September 2013, is the first of its kind between the two countries and applies for criminal tax matters on the date of its entry into force and for other matters in respect of taxable periods beginning on or after that date.


Ireland-Kenya-Kosovo-Guernsey-Germany-Isle Of Man

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Ireland Concludes Tax Treaty and Protocol Negotiations with Kenya, Kosovo, Germany, Guernsey, and the Isle of Man

According to a recent update from Irish Revenue, negotiations have concluded for new income tax treaties with Kenya and Kosovo. The treaties will be the first of their kind between Ireland and the respective countries and must be signed and ratified before entering into force.

The update also includes that negotiations have concluded for amending protocols to Ireland's existing tax treaties with Germany, Guernsey, and the Isle of Man. The protocols will be the first to amend the treaties with Guernsey and the Isle of Man and the second to amend the treaty with Germany and must be signed and ratified before entering into force.



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Ukraine Parliament Approves Pending Protocol to Tax Treaty with Switzerland

According to a release from Ukraine's Ministry of Finance, the Ukraine Parliament approved the ratification of the pending protocol to the 2000 income and capital tax treaty with Switzerland on 18 September 2019. The protocol, signed 24 January 2019 (previous coverage), is the first to amend the treaty and will enter into force once the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.


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