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Approved Changes (3)


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France Approves Additional Depreciation Allowance Incentive

The French Senate has reportedly approved measures allowing an additional depreciation allowance for investments in qualifying industrial assets for one year. The allowance is an additional 40% added to the depreciation basis for assets acquired between 15 April 2015 and 14 April 2016.


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Greece Issues Draft Decision Clarifying the Recently Introduced 26% Tax Prepayment for Certain Transactions

On 23 April 2015, the Greek Ministry of Finance released a draft Ministerial Decision concerning the new rules published in the Official Gazette on 21 March 2015. The new rules introduced a 26% tax on payments made to individuals or legal entities that:

  • Are resident in a jurisdiction that is non-cooperative in tax matters,
  • Are resident in a jurisdiction with a beneficial tax regime, i.e. a tax rate less than half of the Greek 26% tax rate,
  • Are an associated company and not in compliance with transfer pricing documentation requirements, or
  • Lack the organizational structure or substance to carry out the business activity required for which the payment is made

If the Greek taxpayer fails to withhold tax on the payment, the expense will not be deductible even it  otherwise would be.

The draft ministerial decision clarifies that:

  • Domestic transaction are excluded
  • The tax is not a withholding tax on the payment for the non-resident, but rather a prepayment of tax by the Greek payer to ensure that the deductibility requirements for tax purposes are met, i.e. an ordinary transaction conducted at market prices
  • If the expense payment does not meet deductibility requirements, the taxpayer may offset the 26% tax prepayment against their overall income tax liability (refundable if deductibility requirements are met)
  • Intra-group transaction are excluded as long as they are in compliance with Greece's transfer pricing rules

The draft also proposes a pre-approval process that will relieve taxpayer's from the obligation to make the 26% tax prepayment subject to certain conditions and filing requirements.

It is expected that the Ministerial Decision will apply for invoices issued after 1 September 2015.


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Russia Extends CFC Notification Deadline

Russian Federal Law No. 85-FZ (Law 85) entered into force on 7 April 2015, extending the deadline for the notification requirement introduced by Federal Law No. 376-FZ (Law 376).

Law 376 was signed into law on 14 November 2014, and generally applies from 1 January 2015 (previous coverage).

It introduced a number of changes to Russia's CFC rules, including the requirement that when a Russian resident is deemed to be a controlling person of a CFC, they must provide notification to the Russian tax authority within one month after the conditions for being deemed a controlling person arise (notification of participation).

Under Law 376, a controlling person had until 1 April 2015 to provide the initial notification, but this was extended by Law 85 to 15 June 2015. If the resident ceases its participation in the CFC or the CFC is liquidated up to 14 June 2015, no notification is required.

Proposed Changes (2)


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Portugal's Madeira International Business Centre Regime to be Extended to 2027

Following approval by the EU Commission, The Portuguese government has submitted a bill to parliament containing new proposed rules for the Madeira (Island) International Business Centre (MIBC) regime, including an extension of the regimes benefits to 2027 for companies licensed between 1 January 2015 and 31 December 2020 to operate in the MIBC.

The main benefit for MIBC licensed companies is a reduced corporate income tax (CIT) rate of 5% on qualifying taxable income. The amount of taxable income that qualifies for the reduced rate is limited based on the number jobs existing in the relevant tax year. Under the new rules proposed in the bill, the caps will be as follows:

  • 1 to 2 jobs - up to EUR 2.73 million qualifies
  • 3 to 5 jobs - up to EUR 3.55 million qualifies
  • 6 to 30 jobs - up to EUR 21.87 million qualifies
  • 31 to 50 jobs - up to EUR 35.54 million qualifies
  • 11 to 100 jobs - up to EUR 54.68 million qualifies
  • Over 100 jobs - up to EUR 205.5 million qualifies

Taxable income exceeding the caps is subject to the standard Portuguese CIT rate of 21% (2015). In addition an overall tax benefit cap will apply regardless of the number of jobs. This cap is equal to 15.1% of annual turnover, 20.1% of annual gross value-added, or 30.1% of the total annual labor costs.

In order to gain the reduced tax rate benefit, companies must create at least six new jobs in the first six months of operation, or create at least one to five new jobs in the first six months and invest at least EUR 75,000 in assets in the first two years.

Additional benefits include a tax exemption for dividend and interest payments to non-resident shareholders, as well as a capital gains tax exemption on gains from the disposal of shares in the MIBC company by non-residents. These benefits are restricted if the shareholder is resident in tax haven or blacklisted jurisdiction, and generally will not apply if the shareholder is directly indirectly controlled by a Portuguese resident.


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Sweden Developing New Interest Deduction Limitation Rules

The Swedish government is currently developing new rules for interest deduction limitations. The rules will likely be based on either an EBIT or EBITDA model instead of the financing allowance model proposed by the Swedish Committee on Corporate Taxation in June 2014. Under that proposal, the deduction of interest and other financial costs would be limited to such costs that have corresponding financial income, although a standard financing allowance of 25% of a company's taxable profit would apply. However, that approach is seen as difficult to implement.

The government will launch public consultations on new proposed rules based an EBIT or EBITDA model in the near future. New rules are not expected to take effect until 1 January 2017 at the earliest.

Treaty Changes (1)

Poland-Untd A Emirates

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Protocol to the Tax Treaty between Poland and the U.A.E to Enter into Force

The protocol amending the 1993 income and capital tax treaty between Poland and the United Arab Emirates will enter into force on 1 May 2015. The protocol was signed 11 December 2013, and includes the following key changes:

Article 12 (Royalties)

The definition of royalties is replaced, including a general rewording and the removal of the exclusion of payments in respect of the operation of mines or quarries or exploitation of natural recourses.

Article 13 (Capital Gains)

Article 13 is amended by adding the provision that capital gains derived by a resident of one Contracting State from the alienation of shares directly or indirectly deriving more than 50% of their value from immovable property situated in the other State may be taxed in that other State.

Article 19 (Director's Fees)

Article 19 is replaced, and includes the provision that director's fees and other similar payments of a resident of a Contracting State in the capacity as a member of the board of directors of a company resident in the other State may only be taxed in the first-mentioned State. In the original tax treaty, the State of residence of the company may also tax such fees.

Article 23A (Limitation on Benefits)

Article 23A is added. The article includes the provision that the benefits of the treaty will not be available where it might be considered that the main purpose or one of the main purposes for entering into arrangements was to obtain the benefits.

Article 24 (Methods of Elimination of Double Taxation)

For Poland, the method for eliminating double taxation is changed to the credit method for all income. Under the original tax treaty the exemption method generally applies, although the credit method applies for dividend, interest and royalty income.

Article 27 (Exchange of Information)

Article 27 is replaced in line with the OECD standard for information exchange.

Effective Date

The protocol applies from 1 January 2016.


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