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Approved Changes (6)

Belgium

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CJEU Rules Belgium's Differing Tax Treatment of Interest on Securities Violates Freedom to Provide Services under EU Law

On 29 October 2015, the Court of Justice of the European Union (CJEU) issued its decision on a case brought before the CJEU by the EU Commission concerning Belgium's tax treatment of interest on debts represented by securities originating in Belgium. The issue is that Belgium provides an exemption from tax on interest from such securities when deposited or credited to a Belgian bank account, but does not provide an exemption when such securities are deposited or credited to an account with a financial institution established in another EU/EEA Member State.

In its decision, the CJEU ruled that such differing treatment constitutes a failure by Belgium to fulfill its obligations under Article 56 of the Treaty on the Functioning of the EU and Article 36 of the Agreement on the EEA, which concern the freedom to provide services between Member States without restriction.

Belgium has drafted a royal decree to make its regulations in question compliant, although this was not considered in the CJEU's decision because the decree came after the deadline set in the reasoned opinion.

Click the following link for the full text of the CJEU decision (Case C-589/14 - French language).

Ireland

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Ireland Publishes eBrief on Clarification of Circumstances where CGT Clearance Certificate not Required

On 27 October 2015, Irish Revenue published eBrief No. 105/15, which provides clarification on when section 980 of the Taxes Consolidation Act 1997 does not apply to the disposal/sale of assets. Section 980 requires the purchaser of certain assets to deduct and pay 15% capital gains tax unless the vendor produces a clearance certificate.

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Clarification of circumstances where CGT clearance certificate not required

Arising from a number of requests for clarification from tax practitioners and legal offices, the purpose of this eBrief is to set out particular circumstances in which the provisions of section 980 Taxes Consolidation Act 1997 (TCA) will not be applicable to disposals/sales of assets that are referred to in subsection (2) of that section.

Disposals of assets by bodies which carry an exemption from capital gains tax (CGT)

The section will not apply to a disposal of an asset by a person where any gain accruing on the disposal would not be a chargeable gain. Examples of such disposals in the TCA are:

  • A disposal by a pension fund or arrangement carrying an exemption from CGT under section 608(2) or (2A).
  • A disposal by an investment undertaking within section 739C.
  • A disposal by a charity to which section 609(1) would be applicable.
  • A disposal by the National Asset Management Agency (NAMA) or by any other body specified in Schedule 15.

Sales by financial institutions of loans secured on land in the State

The section will not apply to the sale by a financial institution of loans secured on land in the State where the sale arises in the ordinary course of the carrying out of its trading activities. In other words, the section will not apply to the sale of such a loan by a financial institution in circumstances where any profit on the sale would be treated as a trading receipt of its trade.

However, in regard to loans secured on land in the State, Revenue wishes to make clear its view that:

  • In general, such loans are interests in land for the purposes of section 980, and
  • In general, such loans are securities for the purposes of that section.

It follows, therefore, that the provisions of section 980 will have application where the sale of such a loan would be a disposal for CGT purposes.

For full details see Tax and Duty Manual Part 42-03-01 (PDF, 108KB).

OECD-Antigua-Barbados-Belize-Bulgaria-Cook Isl-Grenada-Japan-Marshall Isl-Niue-Panama-Saint Lucia-St. Vincent-Sint Maarten-Samoa

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OECD Agreement on Automatic Exchange of Financial Information Signed by 13 Countries during Recent Global Forum on Tax Transparency Meeting

The OECD has announced the signing of the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information by 13 additional countries during the recent Global Forum on Tax Transparency Meeting held 29 to 30 October 2015. The new signatories include Antigua and Barbuda, Barbados, Belize, Bulgaria, Cook Islands, Grenada, Japan, Marshall Islands, Niue, Saint Lucia, Saint Vincent and the Grenadines, Sint Maarten and Samoa.

The OECD has also announced that Panama and the Cook Islands committed during the meeting to begin automatic exchange of information in 2018.

Click the following links for the multilateral agreement, the list of the signatories to date, and the list of countries that have committed to the automatic exchange of information.

Singapore

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Singapore Publishes Corporate Tax Filing Season 2015: 3 Filing Mistakes Companies Should Avoid

On 29 October 2015, the Inland Revenue Authority published Corporate Tax Filing Season 2015: 3 Filing Mistakes Companies Should Avoid. The publication provides an overview of the following common filing mistakes:

  • Failure to keep proper records and accounts;
  • Wrongful claim of tax deduction on private expenses, or inflated payments to related parties; and
  • Wrongful claim of tax deduction under the Productivity and Innovation Credit (PIC) Scheme

The deadline for filing the corporate tax return for a tax year is 30 November of the following year, or 15 December if filing electronically.

Click the following link for Corporate Tax Filing Season 2015: 3 Filing Mistakes Companies Should Avoid.

United Kingdom

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UK Publishes Updated Guidance on Requirement to Pay Corporation Tax in Installments

On 28 October 2015, the UK HMRC published updated guidance on determining if corporation tax must be paid in installments for accounting periods ending on or after 1 April 2015.

In general, taxpayers are considered large taxpayers and are required to pay corporation tax in 4 quarterly installments if annual profits exceeds GBP 1.5 million (GBP 10 million if certain conditions are met). However, this threshold is lowered based on the number of associated companies a taxpayer has (threshold is divided by the number of associated companies plus one). For accounting periods ending on or after 1 April 2015, the test to determine the annual threshold is changed to a 51% group test.

Under the new test, if a taxpayer has related 51% group companies, the GBP 1.5 million and GBP 10 million thresholds are reduced by dividing the annual threshold by the number of related 51% group companies plus one. The result is the annual threshold for the taxpayer.

A company (A) is considered a related 51% group company of another company (B) if:

  • A is a 51% subsidiary of B;
  • B is a 51% subsidiary of A; or
  • A and B are 51% subsidiaries of the same company.

In addition, A is a 51% subsidiary of B if more than 50% of its ordinary share capital is beneficially owned (directly or indirectly) by B.

Click the following link for the full guidance Corporation Tax: paying in installments on the Gov.UK website.

United States

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U.S. IRS Issues 2015-2016 Priority Guidance Plan First Quarter Update

The U.S. Internal Revenue Service issued the first quarter update of the 2015-2016 Priority Guidance Plan on 23 October 2015. The guidance covers the 12-month period beginning July 2015 through June 2016 (the plan year).

The U.S. Treasury Department's Office of Tax Policy and the IRS use the Priority Guidance Plan to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance. It also sets out the schedule for routine publications for each month of the plan year. The first quarter updates include seven additional projects that have become priorities in addition to the 277 projects included in the initial plan (previous coverage). The updated version also contains the guidance published during the period beginning 16 July 2015 through 30 September 2015.

Both the initial and updated 2015-2016 Priority Guidance Plan versions and prior years' plans can be found on the IRS Priority Guidance Plan webpage.

Treaty Changes (1)

Argentina-Switzerland

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Tax Treaty between Argentina and Switzerland to Enter into Force

According to an announcement from the Swiss government, the 2014 income and capital tax treaty between Argentina and Switzerland will enter into force on 27 November 2015. The treaty, signed 20 March 2014, is the second between the two countries. A treaty signed in 1997 was provisionally applied from 2001 and terminated in 2012.

Taxes Covered

The treaty covers Argentine income tax, presumptive minimum income tax and personal assets tax. It covers Swiss federal, cantonal and communal taxes on income and capital.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected projects for a period or periods aggregating more than 6 months within any 12-month period.

Withholding Tax Rates

  • Dividends - 10% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 15%
  • Interest - 0% if paid in connection with the sale of industrial machinery or equipment on credit, or in connection with a development loan granted at a preferential rate by a bank to an unrelated party provided the period of such loan is no less than three years; otherwise 12%
  • Royalties -
    • 3% for the use of, or right to use, news;
    • 5% for the use of, or the right to use, a copyright of literary dramatic, musical or other artistic work (excluding film and television royalties);
    • 10% for the use of, or the right to use, industrial, commercial or scientific equipment; or any patent, trademark, design or model, plan, secret formula or process, or computer software; or for industrial or scientific information, including payments for the rendering of technical assistance;
    • Otherwise 15%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State;
  • Gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other State, with an exemption for shares listed on a stock exchange in either Contracting State and an exemption if the company caries on its business in the property; and
  • Gains from the alienation of shares or securities representing the capital of a company resident in the other State, unless the provisions above apply - The rate is limited to 10% when the gain is realized on a direct participation of 25% or more of the capital, otherwise 15%.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Argentina applies the credit method for the elimination of double taxation, while Switzerland generally applies the exemption method. However, in respect of income covered by Articles 10 (Dividend), 11 (Interest) and 12 (royalties), Switzerland may apply the credit method.

Effective Date

The treaty applies from 1 January 2015 in respect of withholding taxes, and otherwise applies from 1 January 2016.

The 1950 agreement between the two countries for the avoidance of double taxation on income derived from shipping and air transport is suspended while the new tax treaty is in effect.

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