We are glad to let you know that the 8th 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-8-2016_en-fr

FRANCE__________________________________________________________________

1/ Statutory inheritance portion and international public order

In an Order of 11 May 2016, the Paris Court of Appeal ruled that the statutory inheritance portion was not a principle of international public order in French law.

This decision is in line with the trend towards contractualisation of French inheritance law and a pullback from the concept of a statutory inheritance portion.

2/ Stepping up the fight against assets held abroad

French legislation and the French tax authorities are strengthening sanctions for concealment of assets held abroad.

In addition to the usual tax clawbacks (income tax, solidarity wealth tax and donation/succession), taxpayers are subject to late interest and an 80{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} penalty.

These measures confirm once again the need for our clients to voluntarily regularise their undeclared offshore accounts.

3/ Introduction of deduction of income tax at source

A headline measure of the 2017 French finance bill, deduction of income tax at source is expected to be introduced in financial year 2018.

4/ Reduction in the corporate tax rate

Article 6 of the 2017 draft finance bill provides for application of a rate of 28{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} (instead of the current 33.33{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099}) for all companies.

This rate will be introduced progressively up until 2020. The specific regime for SMEs posting turnover of less than €7.63 million will be maintained (15{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} up to turnover of €38,120).

5/ Confirmation of validity of share contribution to a Luxembourg life insurance policy

The Court of Cassation confirmed on 19 May 2016 the option for French residents to contribute shares to a Luxembourg life insurance policy.

ITALY____________________________________________________________________

The “After us” law

The “After us” law was definitively approved by the
Chamber of Deputies
at its meeting of 14 June 2016 concerning assistance for persons with severe disabilities and no family support.

For the first time in Italian legislation, the above-mentioned law identified and recognized specific protections for disabled persons without relatives. Such legislative intervention had been requested for years.

The law is based on the draft bill « Provisions on assistance for persons with severe disabilities without any family support ». Its content is embodied in ten articles which still have to be supplemented by further ministerial instructions and, in particular, by numerous regulations from the respective districts.

The first article requires that « persons with disabilities should have the opportunity to choose, on an equal basis with others, their place of residence and where and with whom they live, and are not obliged to accept a particular living arrangement. »

The first article also defines the recipients of « assistance, care and protection » as « persons with severe disabilities, not determined by the natural aging or medical conditions related to old age, without family due to the absence of both parents, or because of inability to provide adequate parental support and also due to the absence of family support (…) « .

The elderly and persons with disabilities identified as « not severe » are therefore excluded.

Provision is made for the progressive « taking charge of the person concerned » where the parents are alive, in order to avoid institutionalisation (this term is used instead of the more explicit « segregation »). The reference for these interventions should be the so-called individual projects provided for under article 14 of law 328/2000, but with the added involvement of the person concerned or his representatives.

The « After us » law provides for the creation of a fund for assistance and support for disabled persons without family support, and benefits for individuals, organisations and associations who will decide to allocate resources for their protection, tax benefits, exemptions and incentives for the purchase of insurance policies, trusts and transfers of goods and post-mortem rights.

The requirements for access to the Fund have been identified by the Ministry of Labour within six months after the law came into effect. The districts are defining the criteria for the disbursement of funds, the monitoring of implementation of the activities and the grounds for revocation of funding.

In respect of trusts, insurance policies and special funds, the main innovation lies in the major tax benefits or deductions on expenses incurred from underwriting insurance policies and contracts in order to protect severely disabled persons, and exemptions and relief on transfers of assets after the death of family members, establishment of trusts and other legal protection instruments.

In fact the insurance premiums on death risk are already deductible at the rate of up to €530 per year. From 2017 for the policies on « death risk aimed at protecting persons with severe disabilities », this amount will increase to €750.

It will be possible to deduct the taxes on the costs of these policies from the date of the income declaration.

Any transfer of assets (tangible or intangible) by reason of death, by means of a gift, trust or free of charge, will be exempt from payment of inheritance and donation taxes.

To avoid payment of this tax, it is necessary to prove that the purpose of each transfer is « social inclusion, the care and assistance of disabled persons ». This purpose should be explicitly indicated.

With regard to trusts, the law provides the same deductions that are recognized in other types of legal relationships.

In order to benefit from concessions on a trust, the following requirements apply: in addition to the purposes of the trust, the founding document should identify the person responsible for supervision of the trust, and the duration and expiry date of the relationship, which coincides with the date of death of the disabled person.

Dott.ssa Ekaterina Volkova

 

THE NETHERLANDS_________________________________________________________

Gift tax is changing in the Netherlands as of 1 January 2017. Normally, a child is exempt from around € 5,300 and everyone else from around €2,100. Instead of the normal exemption, children are eligible for a ‘once in a lifetime-exemption’ from approximately €53,000, but subject to conditions. These conditions are: the child (or his partner) has to be at least 18 years old, but younger than 40 years old. Furthermore, the money must be spent on a house where the child lives (his primary residence)

From 1 January 2017, a major change will be implemented: not only for children, but for everyone between 18 and 40 years old who spends the gift on his own primary residence, an exemption will apply from €100,000. This is a ‘once in a lifetime exemption’, although the gift may be spread over 3 consecutive years. Furthermore, there are complicated transitional provisions for children who already received gifts before 2017.

Income tax in the Netherlands is also changing, starting on 1 January 2017. Assets (except for the house where the taxpayer lives (his primary residence) and except for businesses) are now taxed in so-called ‘box 3’, at 1.2{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} (a flat income of 4{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099}, taxed at 30{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} income tax).

This is set to change from 1 January 2017, also on the basis of the Piketty theory. In short: taxpayers with assets of more than €100,000 will pay more (1.41-1.65{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} in 2017) than taxpayers with assets of €100,000 or less (0.87{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} in 2017). The rates will change every year.

 

SPAIN____________________________________________________________________

Local Property Tax

The Spanish Supreme Court has recently ruled that in cases where there is no express agreement, the vendor of a property may charge the buyer a proportional amount of the local Property Tax (“Impuesto sobre Bienes Inmuebles”, in Spanish) which he/she has already paid, corresponding to the year in which the real estate transaction was completed.

In its resolution, the Spanish Supreme Court established the interpretation of article 63.2 of the Spanish Local Taxes Act. This Act states that local property tax is chargeable to the person who owned the real estate on 1 January of each year.

Thus, it will henceforth be permitted to divide this tax in the year between the vendor and the buyer of the real estate, unless otherwise specified in the purchase agreement between the parties.■