AEOI - Automatic Exchange of Information
Automatic Exchange of Information agreements (AEOI) is made between countries. These agreements allow the exchange of information between tax authorities of different countries about financial accounts and investments to help stop tax evasion.
Financial institutions, for example, banks, building societies, insurance companies, investment companies, will have to provide information on non-residents with financial accounts and investments in a Country to the Tax Government. A Tax Government will share this information with other relevant countries.
CFC - Regimes
Most industrial Countries run CFC-Regimes (Controlled Foreign Companies) or adopt single Rules to avoid a double non-taxation of foreign entities. Income is then deemed as received even without distribution to a shareholder.
The tricky part is if someone did so over the past without declaring these non distributed profits, could end up in a Law Suit, triggering hefty fines and in some cases jail term.
Chenevieres Consulting SA (CCSA) advises its international clients about necessary steps. Get in touch to discuss your personal situation.
CRS - Common Reporting Standards
As the world becomes increasingly globalised and cross-border activities become the norm, tax administrations need to work together to ensure that taxpayers pay the right amount of tax to the right jurisdiction.
A key aspect for making tax administrations ready for the challenges of the 21st century is equipping them with the necessary legal, administrative and IT tools for verifying compliance of their taxpayers. Against that background, the enhanced co-operation between tax authorities through AEOI (CRS – COMMON REPORTING STANDARDS) is crucial in bringing national tax administration in line with the globalised economy.
DTA - Double Taxation Agreements
Different countries have their own tax laws. If you are a resident in one country and have income and gains from another, you may have to pay tax on the same income in both countries – or none of them. DTA – Double Taxation Agreements aim to avoid ‘double taxation’ or double non-taxation.
For example, an individual who is resident in Belgium, but has rental income from a property in another country, may have to pay tax on the rental income in both in Belgium and that other country.
To avoid double taxation (and of course a double non-taxation), many countries entered into Tax Treaties (DTA – Double Taxation Agreements), mainly based on international OECD-Standards.
The EU-VAT (European Union value added tax) is a tax on goods and services within the European Union (EU). The EU’s institutions do not collect the EU-VAT, but EU member states are each required to adopt a value-added tax that complies with the EU-VAT code.
Different rates of VAT apply in different EU member states, ranging from 17% in Luxembourg to 27% in Hungary. The total VAT collected by member states is used as part of the calculation to determine what each state contributes to the “EU’s budget”.
Inheritance & Succession
Being unaware of international Inheritance & Succession laws can result in costly surprises, in some cases even result in tax issues if tax debts cannot be paid right on time.
Succession Law is governed by the jurisdiction of the country in which immovable assets are situated. Everything else such as cash in bank, stocks and shares are governed by the jurisdiction of your domicile or residency. Needless to say that there vast differences between Common Laws and Continental Laws.
Major developments are currently in progress with regards to Intellectual Property (IP) tax regimes (IP-Boxes) as part of the Organisation’s for Economic Co-operation and Development (OECD) Action 5 of the Base Erosion and Profit Shifting (BEPS) Action Plan.
According to BEPS Act. 5 IP-Boxes need to implement a so-called “Nexus-Approach, meaning that there should be a direct link between R&D expenditure, generated income and tax benefits.
Find out more and get in touch with us.
A permanent establishment (PE) is a fixed place of business which generally gives rise to corporate, income or value-added tax liability in a particular jurisdiction. Sometimes even a person with contractual power is enough to create a tax liability. The term is defined in many income tax treaties and in most European Union Value Added Tax systems. The tax systems in some civil-law countries impose income taxes and value-added taxes only where an enterprise maintains a PE in the country concerned. Definitions of PEs under tax law or tax treaties may contain specific inclusions or exclusions.
Expats who temporarily move abroad may face not only the complexity of a foreign tax system; they may also remain liable to some taxes at home. Hence International Tax Planning is essential to avoid unnecessary double taxation.
For most of our clients, the most valuable advice provided by us is based on our deep understanding of tax systems in various countries, enabling us to point out the interaction between the country of residence and country of domicile (often in Common Law Jurisdictions). In any way it is possible to end up in a Tax Residency in one or more countries, triggering Tax Liabilities in each country.
Transfer Pricing In International Tax
Transfer pricing is probably one of the most important issues in international taxation. Transfer pricing happens whenever two companies that are part of the same multinational group trade with each other and establish a price for the transaction.
Transfer pricing as such is not illegal, however, it becomes illegal or abusive if transfer mispricing takes place to shift profits into low tax jurisdictions, also known as transfer pricing manipulation or abusive transfer pricing.
Speak to us about possible mismatch arrangements. Consultation via Skype possible.
In most Common Law jurisdictions estate planning may include the use of a Trust.
However, in most European countries the legal system governing estate planning is very different, and will most probably include ‘forced heirship’ laws and the imposition of succession or gift taxes (which are paid by the beneficiaries, the settlor or even both).
Some countries won’t recognize the legal system of a Trust and didn’t enter into “The Hague Trust Convention” – an international agreement on the Law Applicable to Trusts and on their Recognition.
In such cases, all Trusts Assets are deemed to be personal assets of the Settlor if it comes to Wealth Tax. To avoid unnecessary taxation, proper tax planning is key.