Meeting of the European tax institution Law & Numbers in Budapest
26.11.2014
Bohdana Pražská and Filip Dostál of KempHoogstad, attended a meeting of the European tax institution Law & Numbers in Budapest last week. The meeting was attended by tax lawyers from nine European jurisdictions. The main topic of the meeting was how individual countries prevent multinational groups from shifting profit among individual jurisdictions (BEPS - the base erosion and profit shifting) which is also a discussed topic of the current development of international taxation.
The specific steps taken by European countries in preventing BEPS are:
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France: a significant rise of information obligations of subjects trading with related persons based abroad. Other measures include for example an obligation to disclose without delay all accounting records in electronic form to the tax administrator upon request (and the tax administrator does not have to consider any of the information not included in the electronic form of accounting books when stipulating tax).
- Switzerland: planned abolition of the advantageous allowance regime for well-off foreigners living in Switzerland. Currently, the foreigners can determine the Swiss tax base in accordance with their living costs (which are often only a fraction of the income) and not according to the actual income. The regime should be abolished after the approval in all cantons in 2016 or 2017. It is suggested that persons who use the regime now will be allowed to use it for ten more years.
- Luxembourg: all VAT rates will rise in reaction to the fact that services provided electronically (e-commerce) will be taxed in the country of the recipient of the service, i. e. the final customer. The current situation is that the provider of the services chooses one jurisdiction (most often Luxembourg) where he pays VAT for the e-commerce provided to the whole EU. Another question is how Luxembourg will face the pressure of other EU countries and the European Commission towards the very advantageous tax regimes that were offered in the past to international companies in exchange for placing the companies' seats in Luxembourg.
We will monitor the situation in international taxation and further steps of Europeans countries preventing BEPS for you.
