Newsletter Lexunion Nº13 – 1T 2018

Newsletter Lexunion Nº13 – 1T 2018

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We are glad to let you know that the 13th 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 13-2018_en-fr

GERMANY____________________________________________________________________________

Deduction at source on dividends distributed to a non resident company

The European Court of Justice (ECJ) held in a decision of 20 December 2017 (C-504/16, C-613/16, Juhler Holding) that the2007-2012 version of the provisions of Article. 50d al. 3 EStG (German Income tax Act) was contrary to European law (parent company-subsidiary directive, freedom of establishment).

Said article governs the conditions of the reimbursement of the deduction at source in the event of a distribution of dividends to a non resident company. Under said provisions, said reimbursement provided for by the parent company – subsidiary directive was refused where(1st condition) it would have been refused if the shareholders of the parent company had been direct shareholders of the German subsidiaryand (2ndcondition) when one of the three following alternative conditions is met: (1) the foreign parent companycannot prove economic or other grounds for its interposition between its own shareholders and the German subsidiary; (2) the parent company’sown economic activity is not significant; (3) the parent company doesnot have a commercial organisation which allows it to achieve its company objects (number of employees, etc.).

In consequence, the ECJ dismissed theGerman Federal Central Tax Office (Bundeszentralamt für Steuern or BZSt) which refused to reimburse the deduction at source to a foreign company. Admittedly, said provision has been amended again since then, but there is still doubt on the legality of the current version and the Cologne Fiscal Court (Finanzgericht) has referred to the Court a preliminary question on said issue.

 

ITALY_______________________________________________________________________________1/ Advance dispositions of treatment

Article. 4 of the law December 22nd, 2017, no. 219 “Rules on informed consent and advance dispositions of treatment” – entered into force on January 31st, 2018 – allows subjects of age and capable of understanding and willing, in anticipation of a possible future inability to self-determine, to entrust a document containing advance provisions on health treatment, after having taken adequate medical information on the consequences of the choices made.

The deed containing the advance dispositions of treatment can have the form of a public deed or of an authenticated private agreement.

As for the tax aspects, pursuant to paragraph 6 of the art. 4, advance dispositions of treatment, even if drafted by public deed or authenticated private agreement, are not subject to registration obligation. They are also exempt from stamp duty and any other taxes and duties.

2/ Cancellation of the deed of incorporation of a joint-stock company

The Judge of the Register at the Court of Milan approached the issue of cancellation from the Companies Register of the deed of incorporation of a joint-stock company in which appears, as a single member, an attorney with a power of attorney then revealed to be false.

The Judge of the Companies Register can not order to cancel from the Companies Register a single member joint-stock company incorporated by a subject who later turned out to be a false attorney (falsus procurator).

 

SPAIN_______________________________________________________________________________

Spanish Tax Authority is pressing hard over tourist renting platforms as AirBnB, Wimdu, Homeaway or Niumb.

Before next October 31st 2018, all those type of companies must inform the Spanish Tax Authority about all the transactions executed every quarter through their platforms, related to Spanish flats and indicating the name and identification of their clients renting homes in Spanish territory.

That obligation will be mandatory from next July 2018, so they will start informing about transactions made over the first quarter in 2018.

Real estate brokers, on the other hand, will have to include in their forms the identification of the building, its ID number, the number of days in which it has been rented for tourists, and the price received by the owner.

Newsletter Lexunion Nº12 – 4T 2017

Newsletter Lexunion Nº12 – 4T 2017

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We are glad to let you know that the 12th 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 12-2017_en-fr

FRANCE____________________________________________________________________________

A) Main changes arising from the Finance Law for 2018

  1. Reduction in the rate of corporation tax

Corporation tax will gradually go from 33.3% to 25% by 2022.

  1. The wealth tax will be replaced by the property wealth tax

The wealth tax is abolished and replaced by the property wealth tax. The taxation threshold (€1.3 million) and the rates remain identical but the tax base is modified because the property wealth tax is now only based on property assets held directly and indirectly.

Note that anti-abuse measures have been taken, notably concerning the deductibility of loans.

These measures are therefore likely to affect plans put in place for non-residents.

  1. Flat tax on income from capital

A flat tax is put in place at a rate of 30% on property income (interest, dividends and property capital gains) representing 12.8% income tax and 17.2% social-security deductions, from 1 January 2018.

The rate of taxation applicable to non-resident natural persons will depend, concerning the income tax, on any provisions of a tax agreement.

Property income and real-estate capital gains are not concerned by this flat tax.

B) Jurisprudence in international law

  • Reserved share of estates and public policy

The Court of Cassation, by two rulings dated 27 September 2017, judged that a foreign law ignoring the reserved share of estates is not, in itself, contrary to French international public policy.

The international public policy exception could, however, apply in the case where the persons entitled to a reserved share are in a situation of economic insecurity or need.

  • Taxation and abuse of rights

Abuse of right may be constituted by the application of the provision of an international agreement.

By decision dated 25 October 2017, the Council of State ruled abusive the interposition of a company whose existence was justified by the sole aim of avoiding tax through the application of a tax agreement.

ITALY______________________________________________________________________________

Dedicated bank account for tax payments

The law 4 August 2017, n° 124, published in GazzettaUfficiale No. 189 of August 14th, 2017 (annual market and competition law), by changing the discipline referred to in paragraphs 63 et seq of the law December 27th, 2014, no. 147, made it mandatory for notaries to have a management capable of ensuring transparency and traceability of some of the sums received and anticipated by different ways.

In particular, the notary has to pay on a special dedicated bank account “all sums due by way of charges for which the same notary is withholding agent”. He must also “pass” on this dedicated bank account, “However the prepaid expenses referred to in art. 15, paragraph 1, no. 3)”of Presidential decree no. 633/1972, are excluded from the calculation of the taxable amount for VAT purposes.

Art. 1, paragraph 65 of the law December 27th, 2013, no. 147 provides in particular that “The sums deposited in the bank account, referred to in paragraph 63, constitute separate property. Those sums are excluded from the succession of the notary or other public official and from his matrimonial property of the family and exempt from foreclosure by anyone and also the credit to the payment or to the payback of the same is free from foreclosure.”

The legislation does not expressly provide for the obligation for the notary, to have, in addition to the dedicated bank account, at least anotherbank account at the same bank or at another financial institution.

However it is considered improper to manage financial transactions by using a single bank account on which any amount is brought.

The notary then must have at least two bank accounts:

– a “dedicated account”, to record the transactions of the received sums (or anticipated) “in relation to the deeds received or authenticated by the notary and subject to real estate or commercial publicity”;

– a “free” account that can be used for other purposes (fees, VAT, personal expenses and expenses for the office, etc.).

The forecast of paragraph 63 is very wide where it expressly states that on the dedicated bank account must be paid the amounts owed for taxes for which the notary is withholding agent and the expenses excluded from the calculation of the taxable base according to art. 15, paragraph 1, no. 3) of Presidential decree no. 633/1972. However, the traceability concerns only the amounts received (or anticipated) “in relation to the deeds received or authenticated by the notary and subject to real estate or commercial publicity.”

On said bank account must be paid all charges levied by the notary in connection with the so-called execution (such as stamp duties, land and mortgage taxes, etc.), advances excluded from VAT according to art. 15 and any other sums entrusted to the notary “and subject to entry in the register of the amounts and values of which at law January 22nd, 1934, no. 64”.

The notary is obliged to maintain appropriate documentation of the specific uses of the amounts deposited in the dedicated bank account and subsequently used.

This shall be without prejudice to art. 3 of Ministerial Decree of 31 October 1974, which provides for the possibility for operators in the notarial profession to postpone the issuance of the invoice within 60 days of thereceipt of the amount from the customer.

 

SPAIN______________________________________________________________________________

New rules on companies’ restructuring in Andorra

Andorra has established a special tax regime for merger and acquisitions operations for companies settled in that country.

It also includes operations of non-proportional splits and of assets return, aiming to ease the resolution of conflicts in Andorran business, especially among family offices. Thus, those rules make restructuring of family holdings a tax-free operation.

Nevertheless, Andorra wants to avoid using those rules just for tax reasons, so a valid economic reason is necessary in order to benefit from those tax exemptions.

Tax benefits in those operations include not only Corporation Tax, Personal Income Tax on its shareholders, and Non-residents Income Tax, but also every other tax or duty to be paid because of that restructuring.

The procedure used for those benefits is tax deferral, to avoid taxing the amounts accrued due to restructuring purposes, only in those cases where any Andorran tax was due.

This tax regime is fully aligned with the European Directive 2009/133/CE on the common regime applicable to mergers and acquisitions in the European Union, so it should not be difficult to implement for those notaries and lawyers working in the EU with any relationship with Andorra, France or Spain.

Newsletter Lexunion Nº11 – 3T 2017

Newsletter Lexunion Nº11 – 3T 2017

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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

BELGIUM____________________________________________________________________________

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.

FRANCE_____________________________________________________________________________

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.

ITALY_______________________________________________________________________________

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.

SPAIN_______________________________________________________________________________

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.

SWITZERLAND________________________________________________________________________

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.