Newsletter Lexunion Nº11 – 3T 2017

Newsletter Lexunion Nº11 – 3T 2017


We are glad to let you know that the 11th edition of the Newsletter of our network LEXUNION is now available.

It’s a free quarterly newsletter that deals with legal and tax developments in member countries of the Lexunion network, with the purpose to help french compagnies and persons clients of our network.

It can be downloaded on this link: Newsletter client – Lexunion 11-2017_en-fr


Amendment of the Civil Code on Successions

The Law of 31 July 2017 “amending the Civil Code on successions and gifts and amending several other provisions on this matter” will enter into force on 1 September 2018. It essentially amends the provisions of Civil Code relating to (1) the collation of gifts; (2) the reserved portion of the estate and the abatement of gifts; and (3) future succession pacts.

  1. Collation of gifts

The new law provides that the legal presumption of collation is retained for descendants, but is replaced by a presumption of exemption from collation for other heirs.

In addition, the law provides that restitution is now effected by transfer of value, based on the real value of the assets given on the date of donation, but index-linked until the day of death. The current law distinguishes between the nature of the asset given: the collation of immovables is effected in kind, based on the value on the day of partition, while the restitution of movables is effected in principle by taking less (therefore by transfer of value), based on the value at the time of donation. This distinction leads to many problems in practice. The reform therefore proposes a standard valuation for the collation and abatement of gifts.

  1. The reserved portion and abatement of gifts

The new law retains the principle of a reserve for descendants and the surviving spouse, but removes the reserve for ascendants.

The overall reserve for descendants is reduced to half (a fixed, freely available portion of one half, regardless of the number of children).

  1. Future succession pacts

Legally authorised succession pacts have been extended. An important change is the introduction of a global succession pact between the parents and their children.

The global succession pact enables parents to set up a binding agreement on the allocation and partition of their estate, before their death and with their children. This reform gives parents peace of mind. It enables a settlement to be reached that is tailored to the specific family situation and prevents conflicts between children after the death of their parents.


Implementation of a register of beneficial owners – Anti-money laundering

Any company or entity registered with the Companies and Trade Register is required to submit information relating to its beneficial owners to the office of the commercial court (Decree no. 2017-1094 of 12 June 2017).

In this respect, they must provide the last names, customary name, pseudonym, first name, date and place of birth, nationality and personal address of the beneficiaries; the company or entity inspection procedures, and the date on which the individuals became the beneficial owners.

This formality is compulsory as of 1 August 2017 for all companies or entities who wish to register, while those that are already registered have until 1 April 2018 to comply with the new regulations.


Flat-rate tax

Article 1, paragraphs 152-159 of Law no. 232 of 11 December 2016, which entered into force on 1 January 2017 (the so-called Stability Law 2017), has amended the Income Tax Consolidation Act (Presidential Decree no. 918 of22 December 1986) by introducing Article 24-bis entitled “Substitutive tax regime for foreign income realized by individuals who transfer their tax residence to Italy”.

The aim of this law, which is in line with similar laws in the UK, Portugal and Malta, is to encourage individuals who receive high incomes outside Italy to make Italy their permanent country of residence and, where possible, to transfer their assets and even their work to Italy, so that they would pay a substitutive flat-rate tax of EUR 100,000 per annum, based on a specific regime which, chosen freely by them may be revoked and terminates after 15 years, after which it may be extended to one or more relatives.

This law provides, in particular, that:

1) individuals who change their residence to Italy may opt for the substitutive taxation of their foreign income, provided they have not resided in Italy for at least 9 years during the 10 years preceding election, which is the start of the validity period of the regime;

2) the substitutive tax does not apply to income referred to in Article 67 (“diverse incomes”), generated during the first five years of validity;

3) individuals opting for the substitutive tax must indicate the jurisdiction or jurisdictions of their most recent place of tax residence before exercising the regime;

4) the substitutive tax is levied in one payment by the deadline for payment of the balance of the income tax;

5) individuals opting for the substitutive tax may exercise their right to exemption from substitutive tax by attesting to foreign income generated in one or more given states or territories.

Pursuant to this law, the following rules have been decided, together with the Director of the Tax Revenue Office:

1) to ensure the substitutive tax regime is applied, the taxpayer may submit a specific preventive ruling to the tax authorities, indicating the existence of the items required for the compliance with the required conditions, by filling in the check list enacted by the tax authority;

2) preventive ruling to the tax administration may also be submitted in the event of the presumption of applicability referred to in Article 2, paragraph 2-bis of the Income Tax Consolidation Act;

3) the regime is tacitly renewed from one year to the next, except in the event of revocation or loss of the entitlement to the regime.

Furthermore, it must be noted that pursuant to paragraph 158 of this law, in the case of the opening of the succession and of donation during the validity period of the regime, the succession tax is due only for the assets existing in Italy (as defined in Article 3 of Legislative Decree 346/1990 on succession and donation tax), therefore with the exclusion of any other asset.


Spanish residence for international entrepreneurs

Following a change in Spanish law in 2015, many foreigners have requested a permit to work and live in this country.

This new framework law makes it much easier for foreign entrepreneurs to establish their business in Spain, under different categories:

  1. Entrepreneurs: one-year visa to live in Spain to obtain all the preparatory paperwork needed to start a business in the country, provided that the business is innovative and of economic interest for Spain.
  2. Highly qualified professionals: managers in strategic areas.
  3. Investors: more than EUR 1 million in Spanish company stocks or in Spanish bank accounts.
  4. Real Estate: purchase of real estate in Spain with a minimum investment of EUR 500,000 per applicant.
  5. Intra-company movement: foreign workers moving to Spain as part of their labour contract in a foreign country.
  6. Research and Development: for activities in public or private scientific research.

There are currently two options for anyone who would like to live in Spain for economic reasons:

  1. A visa: for anyone living outside Spain who needs to enter the country to start the process for setting up a business.
  2. A permit: for anyone already living in Spain and able to start their project.

Both options are also valid for family members. No minimum investment or employment in Spain is required.

An economic analysis of each project will be carried out by a government agency (“Dirección General de Comercio Internacional e Inversiones”), which considers:

  1. the business plan
  2. the professional profile (education and experience)
  3. the value added for the Spanish economy

The entrepreneur will also need medical insurance in Spain, and evidence of having enough funds for living in Spain.

These requirements can be checked with any of our Lexunion offices in Spain.


News on Swiss Foundations

Positive changes are underway for Swiss foundations: on the one hand, in the canton of Zug, there are several new foundations, set up by individuals from Asia and the United States, who invented and hold the rights to new electronic currencies, promoting crypto-money transactions; on the other hand, Geneva has become one of the global capitals for charitable foundations.

Newsletter Lexunion Nº10 – 2T 2017

Newsletter Lexunion Nº10 – 2T 2017


We are glad to let you know that the 10th edition of the Newsletter of our network LEXUNION is now available.

It’s a free quarterly newsletter that deals with legal and tax developments in member countries of the Lexunion network, with the purpose to help french compagnies and persons clients of our network.

It can be downloaded on this link: Newsletter client – Lexunion 10-2017_en-fr


1.- President Macron’s main tax measures

The main tax measures in Mr Macron’s presidential program are as follows:

  • Corporate tax reduced from 33.33{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} to 25{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} by 2022,
  • Solidarity Wealth Tax (Impôt de Solidarité sur la Fortune (ISF)) changed to wealth tax on property,
  • Introduction of a 30{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} flat tax on income from movable assets,
  • Abolition of housing tax for 80{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} of French households,
  • Application of income tax withholding deferred to 2019.

2.- Criticism of proportional penalty for failure to report a trust

Following submission of a priority question on constitutionality (QPC), the French Constitutional Council ruled on the Constitutional compliance of the penalties provided for in IV bis of Article 1736 of the French General Tax Code (CGI). This regime requires the administrator of a trust to report the trust to the French tax authorities if said administrator, the principal or one of the beneficiaries is resident in France for tax purposes or if the trust relates to assets located in France.

In the event of failure to report a trust, the administrator is liable to a penalty of €20,000 (€10,000 in the pre-2013 version) or if it is higher, an amount equal to 12.5{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} (5{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} in its pre-2013 version) of the assets or rights placed in the trust and the accumulated earnings thereon.

By a decision of 16 March 2017, no. 2016-618 QPC, the Constitutional Council ruled that proportional penalties of 12.5{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} (and 5{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} in the pre-2013 version) are anti-Constitutional.

Fixed penalties of €20,000 (or €10,000 before 2013) remain applicable however.


1.- New taxation of real estate gains realized in Germany by residents of France

The 1959 Franco-German tax treaty has been modified by an amendment which came into effect in 2016. The new text changes the taxation of gains on sales of real estate realized in Germany by residents of France. In future, profits generated from the sale of real estate located in Germany but belonging to French residents will also be taxable in France, whereas previously they were totally exempt.

Double taxation is avoided by charging the German tax to the French tax. However, when the German tax is nil (as is the case when the real estate has been held for 10 years), the French tax is payable in full by the vendor.

This is a harsh blow to French investment in real estate in Germany. Fortunately, such investment is still interesting for many other reasons.

2.- GmbH as legatee: double taxation

A person had named a GmbH in his will as sole heir to his estate, and this estate was to be used to finance the company’s business. Following the death of the deceased, the treasury had not only charged inheritance tax on the estate, but had also deemed the inherited estate to be taxable income for the GmbH, and had therefore charged it corporation tax.


New legal matrimonial regime from 01.01.2018

In the Netherlands, Matrimonial Law will change on 1 January 2018. Full community of property will no longer apply, but for those couples who marry after 1 January 2018, a ‘smaller’ community property regime will apply. The main points are:

  • Assets and debts that the spouses had before the marriage will no longer be part of the community property;
  • Inheritances and gifts (received by the spouses before and during the marriage) will no longer be part of the community property.

The system in the Netherlands will then be more aligned to the mainstream European systems, but again, only for couples marrying after 1 January 2018.


In Spain last month, a new possibility opened up for consumers to try to recover expenses paid by them when signing a public deed for a mortgage loan, particularly notarial fees, public registry fees and indirect taxes.

This follows a 23 December 2015 Supreme Court resolution which found that clauses stating that such expenses are payable by the consumer are not valid, and are in fact abusive clauses. However, other Supreme Court resolutions (e.g. 9 February 2015) considered that taxes should be paid by the consumer, not by the bank. Recently, some regional courts have ruled that the consumer is obliged to pay indirect taxes (in Spanish, “Impuesto sobre Actos Jurídicos Documentados”), while others have not.

As solid legal arguments exist, we recommend consulting your Spanish lawyer to check whether it is advisable to claim these expenses or not, or to negotiate them with the bank before signing your loan.


Challenging notarization in the case of companies with a simplified structure

In Switzerland, all important acts in a company’s social life (constitution, amendment of articles of association, capital increase, change of company name or registered office, etc.) require the involvement of a notary. However, the Federal Council has submitted a bill to Parliament challenging this principle in the case of “companies with a simplified structure”.

Typically, such companies would simply have articles of association whose content meets the strict minimum requirements laid down in the Swiss Code of Obligations (Code des obligations).

The Swiss Federation of Notaries will have the tricky task, seen time and time again, of convincing MPs that notarial involvement upstream is far better than litigation downstream… ■

Newsletter Lexunion Nº9 – 1T 2017

Newsletter Lexunion Nº9 – 1T 2017

We are glad to let you know that the 9th edition of the Newsletter of our network LEXUNION is now available.

It’s a free quarterly newsletter that deals with legal and tax developments in member countries of the Lexunion network, with the purpose to help french compagnies and persons clients of our network.

It can be downloaded on this link: Newsletter client – Lexunion 9-2017_en-fr


Increase in abatement for acquisition of residential property in Brussels

The Brussels region has amended the conditions applying to the abatement for the acquisition of residential property in Brussels.

The new abatement amounts to€175,000 (a saving of €21,875) and applies only to acquisitions for €500,000 or less.

To be able to benefit from this reduction in duty, the buyer may not possess any other residential property in Belgium or abroad and must live in the property acquired and remain there for at least five years.

On the other hand, the interest on mortgage borrowing is no longer deductible for purposes of direct taxation.



Divorce without Judge

Law No. 2016-1547 of 18 November 2016 introduced a new kind of “de-judicialised” divorce in France.

The new Article 229 of the Civil Code states that “spouses may mutually agree to their divorce by private deed under signature countersigned by lawyers, filed as a notarised deed”.

The main features of this divorce without judge are as follows:

  • Each spouse must be attended by a lawyer,
  • This type of divorce is not possible if there are disabled children of legal age,
  • Children not of legal age must be informed of their right to be heard by a judge: if any of the children expresses such a wish the procedure becomes a judicial one,
  • The divorce agreement must include in particular the methods for the complete settlement of the effects of the divorce and the settlement of the matrimonial property regime,
  • The divorce agreement drawn up by the lawyers must be signed by the spouses after a cooling-off period of fifteen days,

This agreement is then filed as notarised deed, giving it a definite date as well as enforceability. The dissolution of the marriage takes effect on the date of filing.

In an international context, the filing notary will be in charge of delivering the certificate referred to in Article 39 of the Brussels II bis regulations with a view to having the divorce recognised in another Member State.

The execution of these divorce agreements will be more uncertain as regards aspects relating to visiting rights and alimony obligations, since the notary will not be able to deliver the certificates provided for in Articles 41 of the Brussels II bis Regulation and 21 and 48 (Annex I) of Regulation 4/2009 (Alimony Regulation). In such cases it will therefore be preferable to resort to a judicial divorce procedure.

SWITZERLAND____________________________________Rejection by referendum of the bill to reform corporation tax (RIE III)

In a referendum on 12 February 2017, the people of Switzerland, against all expectations, by a large majority rejected the proposed reform of corporation tax III (RIE III) which had been passed by the federal Parliament.

RIE III sought to abolish a number of privileged tax regimes of holding or domiciliary companies considered not to conform to international rules, and in particular to OECD standards.

To ensure Switzerland’s attractiveness, RIE III intended to respond to these international criticisms while at the same time over hauling the Swiss corporation tax regime, with overall very low tax rates and the introduction of several mechanisms, accepted internationally, allowing the tax burden to be reduced. Thus the RIE III notably provided the possibility for cantons to introduce the patent box (privileged tax for income from patents filed), an over-proportional deduction of research and development costs (up to 150{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099}) and the deduction of so-called notional interest for companies with above-average equity.

This reform failed in that the majority of voters feared that the expected reduction in tax revenue from companies would have to be offset by an increase in personal taxes.

As a result of this failure, the cantonal privileges criticised remain in force for the time being. The federal Council and the Parliament are going to have to buckle down and find a new, more balanced solution. ■