LEXUNION Newsletter Nº4 – 4t 2015

We are glad to let you know that the 4th 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 4-2015

 

BELGIUM______________________________________

Property gift law: Brussels Capital Region

Since 1 January 2016, the rates of property gift duties applied by the Brussels region have been modified and reduced significantly.

The Brussels region has aligned itself on the rates adopted by the Flemish region.

FRANCE_______________________________________

1.- Interpretation of tax agreements by French tax jurisprudence

  • Capacity as resident according to the meaning of tax agreements: A person exempt from tax in a contracting state cannot be regarded as resident of this state

By two rulings dated 9 November 2015, the Council of State determined that a « person exempt from tax in a contracting State due to his/her status or activity cannot be regarded as subject to this tax […], or consequently, as a resident of that state for the application of the agreement. »

Consequently, he/she cannot claim the provisions of the tax agreement. These two rulings, given in the context of the interpretation of agreements applicable in matters of tax on Franco-German income on 21 July 1959 and Franco-Spanish income on 10 October 1995, concern the situation of retirement organisations and pension funds exempt from corporate tax in these countries.

The Council of State gives precedence to the objective of the agreement, namely the elimination of double taxation which would require, according to this interpretation, actual liability for tax and illustrates more generally the intention to fight situations of double non-taxation.

  • Qualification of shares in a real-estate corporation

The Plenary assembly of the Court of Cassation gave a ruling on 2  October  2015 which confirms that  the  shares  of  a  foreign  real-estate  corporation in France  are, in  the  absence of  contractual  stipulations  to  the  contrary, assets of a movable nature and not immovable assets for the application of tax agreements relative to freedom from conveyance duty.

The ruling was given in application of the France-Monaco tax agreement dated 1 April 1950 on inheritance, which stipulates that the question of knowing whether an asset or a right has an immovable character must be resolved according to the legislation of the state in which is located the asset in question or the asset to which the envisaged right relates (article 2§2). It is therefore for internal French law to determine whether the shares belong to the category of movable or immovable assets. Yet, French tax provisions do not specify that shares in foreign real-estate corporations must be qualified as immovable assets but only that they should be considered as « French » if the conditions are fulfilled. We note that the « modern » tax agreements concluded or renegotiated by France contain a definition of « real-estate corporation » allowing it to tax the transfer of property held indirectly by a legal entity.

2.- Social-security deductions: the General Directorate of Public Finance informs individual residents and non-residents concerned by the return of social-security deductions

By a press release dated 20 October 2015, the Ministry of Finance and the Public Accounts takes note of the De Ruyter ruling on social-security deductions and specifies the persons and income covered, the periods concerned and the procedures for making claims. The press release can be consulted at the following address:

http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptive_7642/fichedescriptive_7642.pdf.

For any additional information, especially on complaints pursuant to social security deductions your client has paid, please contact the following people by phone (at 00.33 1 44 01 25 25) or by e-mail:
Pascale SANSEAU: pascale.sanseau.75237@paris.notaires.fr),
Bertrand SAVOURE: bertrand.savoure@paris.notaires.fr),
Pascal JULIEN SAINT-AMAND: pjsa@paris.notaires.fr

ITALY_________________________________________

“Stability Law” 2016.

The budget law (so-called « Stability Law ») for 2016, nº. 208 of December 28th, 2015, published in the Official Gazette nº. 302 of 30/12/2015, has provided:

– The modification of the thresholds for the use of cash, increased to EUR 3,000 instead of the previous limit of EUR 1,000;

– The modification, starting from January 1st, 2017, of VAT rates (the reduced rate of 10{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} will pass to 13{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} and the standard rate of 22{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} will pass to 24{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} from 2017 and to 25{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} from 2018);

– The abolition of Municipal real estate levy (IMU) and of the tax on indivisible services (TASI) on the primary residence as well as a series of measures to promote the real estate market, among which are, in particular, i) facilitating the possibility to deduct from IRPEF (income tax on natural persons) the rate of 50{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} of VAT paid for the purchase from a building constructor of homes of energy class A or B (residential units) carried out before December 31st, 2016, as well as ii) the extension throughout 2016 of IRPEF deduction of 50{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} of the expenses borne for building restoration and of 65{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} of the expenses borne for the energy upgrading of buildings.

SPAIN_________________________________________

New tax treaty between Spain and Andorra

With initial effect on February 26th 2016, Spain and Andorra have signed an agreement to prevent international double taxation between both countries.

That agreement, together with the one signed with France previously, makes Andorra now an interesting country to invest in and, in some cases, live, due to its quality of life and very favourable taxation for companies and individuals, specially the wealthy ones.

Andorra left the list of Tax Havens some years ago and has initiated a new open and transparent tax and economic system, fully modernised and aligned with the OECD principles and international anti-laundering systems.

The Andorra tax reform makes maximum taxation of any Andorran company at 10{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} of its income, and the same rate for individuals on their personal income tax. Its indirect tax (similar to VAT) is at 4.5{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099}.

The new Spain-Andorra tax treaty follows the basic OECD scheme, establishing a maximum withholding tax on distributed profits, interest and royalties of 5{5a123fd2ff0edecec35de014470138a8d457280103a9b9810af819076914f099} (with some exceptions).

It also includes an information exchange agreement between both countries, but not allowing “fishing expeditions”.

It may be a great opportunity for European investors and companies. Specially for the ones living in Andorra’s neighbour countries, France and Spain, we recommend analysing with your tax and financial advisers whether establishing a company in Andorra or moving to that country would be an optimal solution for economic and tax reasons in some cases. ■