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International Tax Newsletter - Europe & African region

Europe & African region

International Tax Newsletter

Europe and Africa regions

October 2018

This e-newsletter gives you an overview of international tax developments being reported globally by KPMG member firms in the Europe and Africa regions between 1 October and 31 October 2018.

 

Austria Belgium Estonia European Union
Finland France Germany Ireland
Italy Kenya Malta Netherlands
Nogeria Norway Siberia South Africa
Switzerland United Kingdom Zambia  



For a full summary of global tax developments, visit kpmg.com/TaxNewsFlash.

To contact the International Tax Team email internationaltax@kpmg.com.

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International Tax Newsletter - Europe & African region

Hot Topic

United Kingdom - Chancellor’s Autumn Budget 2018

As the uncertainty of Brexit looms, the Chancellor’s Autumn Budget 2018 has taken decisive action on several significant tax changes.

KPMG in the United Kingdom compiled the key announcements for businesses, employers and individuals. Click here to access:

Austria

Proposed legislation

Tax compliance - 19 October 2018

A recent amendment to Austria’s tax law introduced a tax internal control system (“Steuerkontrollsystem”) that is to apply in the course of “horizontal monitoring.” The tax authorities have issued guidance to implement these measures.

Read more.

Belgium

Tax legislation approved and regulatory update

VAT - 1 January 2019

The Finance Commission approved the draft law introducing an optional VAT regime for the rent of professional real estate.

Read more.

Estonia

Tax legislation approved and regulatory update

VAT - 1 October 2018

A change to the VAT law in Estonia replaces the term “plot” of land with the term “building land.” This VAT change is effective 1 October 2018.

Read more.

European Union

Tax legislation approved and regulatory update

EU blacklist / Tax transparency - 2 October 2018

The Economic and Financial Affairs Council of the EU agreed to remove Palau from the EU blacklist of non-cooperative jurisdictions, first published on 5 December 2017.

Read more.

VAT - 2 October 2018

ECOFIN reached an agreement on VAT rate e-books, quick fixes and reverse charge mechanism.

Read more.

 

Proposed legislation

Digital economy  - October 2018

European Commission has announced detailed proposals aimed at taxing digital services based on revenues generated in the country of consumption.

Read more.

 

Administrative and case law

Various tax areas - October 2018

The EU Tax Centre prepared a summary of EU tax developments that can have both a domestic and a cross-border impact.

Read more.

 

Other

VAT - 1 January 2019

KPMG experts consider the practical effects of the new regime aimed at harmonising the VAT treatment of vouchers across the member states.

Read more.

Finland

Proposed legislation

ATAD - 27 September 2018

The Finnish government released a proposal to amend the interest deduction limitation rules pursuant to implementation of the EU Anti-Tax Avoidance Directive. If enacted, the new interest deduction limitation rules would be effective as of 1 January 2019.

Read more.

France

Tax legislation approved and regulatory update

Employment income / WHT - 1 January 2019

A major tax reform measure will be effective 1 January 2019 — the introduction of withholding tax regime that is intended to eliminate the one-year time lag between the receipt of income by workers and the remittance of the tax on this income.

Read more.

VAT - 19 October 2018

New conformity requirements for software and cash desk systems were essentially put in place to address potential manipulation by businesses of IT systems that could allow them to modify their turnover and effectively pay less tax.

Read more.

 

Administrative and case law

Tax credit / Double taxation relief - 4 October 2018

The CJEU issued its decision in the Commission vs. France case (C-416/17) regarding the compatibility with EU law of the French Supreme Court’s case law interpreting the CJEU decision in the Accor case (C 310/09).

Read more.

VAT - 4 October 2018

The Advocate General to the CJEU issued an opinion concerning recovery VAT on costs incurred by a fixed establishment that are also used for the activities of a foreign head office. The case is: Morgan Stanley, C-165/17.

Read more.

Germany

Administrative and case law

VAT - 18 October 2018

The German Federal Tax Court has asked the CJEU to clarify whether VAT may be charged on EU subsidies.

Read more.

Ireland

Proposed legislation

Budget 2019 - 9 October 2018

Ireland’s government announced the details of budget 2019. Proposed tax measures affecting businesses include:

  • a “strong reaffirmation” to the 12.5 percent corporation tax rate 
  • an exit tax at a rate of 12.5 percent to apply from midnight 9 October 2018 for companies ceasing to be Irish tax residents  
  • controlled foreign corporation rules to be effective from 1 January 2019  
  • start-up relief from corporate tax extended until end of 2021.

Read more.

 

Administrative and case law

CJEU/ VAT - 18 October 2018

The CJEU rendered judgment in a case concerning an Irish airline (taxpayer) that had incurred costs—and related VAT— in respect of its attempt to acquire its competitor airline. The case is: Ryanair no. C-249/17.

Read more.

Italy

Tax legislation approved and regulatory update

Tax amnesty - 23 October 2018

A tax amnesty program has been established by a new “law decree.” The tax amnesty offers relief from certain penalties and interest if, in general, the taxes are paid in full. In some instances, the taxes could be paid in installments over a period of time.

Read more

VAT - 24 October 2018

VAT measures were included in Law Decree no. 119 of 23 October 2018 that has been published in the official gazette and that has an effective date of 24 October 2018.

Read more.

 

Proposed legislation

ATAD - 2 October 2018

Provisions to transpose, into Italian tax law, the EU directives on anti-tax avoidance are pending before the Italian parliament.

Read more.

 

Administrative and case law

Corporate income tax - October 2018

The Italian Revenue Agency issued two “statements of practice” in the form of tax rulings that describe the tax-exemption requirements for proceeds from an Italian real estate investment fund.

Read more.

Merger and acquisitions  - October 2018

Recent guidance and court cases offer some clarification regarding merger and acquisition transactions.

Read more.

Kenya

Tax legislation approved and regulatory update

Finance Bill  - 21 September 2018

The National Assembly approved the 2018 Finance Bill. Revenue measures in the legislation include:

  • introduction of VAT on petroleum products
  • Excise tax (duty) on telephone and data services and fees charged by financial institutions
  • Measures on taxation of gaming, betting, and lottery companies
  • Reinstatement of an excise tax on sugar confectionery products.

Read more.

Malta

Proposed legislation

Budget 2019  - October 2018

The Finance Minister announced key economic indicators as well as a number of key tax and other measures. Proposed international tax measures include:

  • an interest limitation rule
  • exit taxation in case of the transfer of tax residence, or transfer of assets or business
  • additional general anti-abuse rule 
  • controlled foreign company rule
  • the introduction of a patent box regime based on the modified nexus approach and therefore in line with the EU Code of Conduct on Business Taxation and the OECD BEPS action 5 standard.

Read more.

Netherlands

Proposed legislation

VAT - 3 October 2018

The Dutch Ministry of Finance announced its intentions regarding continuing VAT cost-sharing exemption for financial institutions and insurers because of its potential implications.

Read more.

Tax plan / ATAD - 25 October 2018

The Deputy Minister of Finance published answers to questions raised by the Lower House about legislative proposals in the 2019 Tax Plan package (including ATAD1).

Read more.

 

Tax legislation approved and regulatory update

Dividend tax  - 16 October 2018

A letter from the Deputy Minister of Finance announces that the government has decided not to repeal the dividend tax (as had been proposed on Budget Day, with repeal set for 2020).

Read more.

 

Administrative and case law

Corporate income tax - 19 October 2018

The Supreme Court of the Netherlands rendered a final judgment in two corporate income tax cases (for which it had previously requested and in early 2018 received a preliminary ruling from the CJEU.

Read more.

Nigeria

Tax legislation approved and regulatory update

Income tax / Voluntary offshore assets disclosure - 8 October 2018

An executive order requires Nigerian taxpayers holding offshore assets and income to voluntarily declare those assets and incomes within a period of 12 months and to pay the related income tax.

Read more.

 

Other

Dividend tax - 4 October 2018

KPMG in Nigeria prepared a report on the impact of a judgment of Nigeria’s Federal High Court in 2016 concerning excess dividend tax.

Read more.

Norway

Proposed legislation

Budget 2019  - 8 October 2018

Norway’s state budget 2019, includes measures relating to the Norwegian petroleum tax regime. Changes include:
­

  • the statutory corporate tax rate is proposed to be reduced from 23 percent to 22 percent effective from 1 January 2019. 
  • the special petroleum tax would be increased from 55 percent to 56 percent (i.e., the marginal tax rate of 78 percent would be unchanged).

Read more.

Serbia

Tax legislation approved and regulatory update

Corporate income tax - 31 October 2018

The Ministry of Culture and Information adopted a new “rulebook” on deductible expenditures for investments in the field of culture.

Read more.

 

Administrative and case law

Property Tax - October 2018

The Ministry of Finance issued opinions concerning the valuation of property for purposes of determining the property tax base of real estate.

Read more.

 

Treaties

Central European Free Trade Agreement - 25 October 2018

The Serbian Parliament ratified an additional Protocol to the Central European Free Trade Agreement (CEFTA) that concerns trade facilitation, the concept of “originating products,” and methods of administrative cooperation.

Read more.

South Africa

Tax legislation approved and regulatory update

Debt relief - 1 January 2018

Section 19 and paragraph 12A of the Income Tax Act contain rules with tax implications for debtors whose debts are reduced or eliminated for less than the face value of the debt.

Read more.

 

Proposed legislation

Dividend stripping - 1 January 2019

The Taxation Laws Amendment Bill, 2019 proposes to amend the dividend stripping provisions, effective for tax years beginning on or after 1 January 2019.

Read more.

Doubtful debts - 1 January 2019

Section 11(j) of the 2018 Taxation Laws Amendment Bill, applicable to non-banking taxpayers, would be repealed and replaced in its entirety. The new provisions would allow the South African Revenue Service to issue a directive enabling taxpayers to claim a doubtful debt allowance of up to 85 percent.

Read more.

Tax compliance / Trusts  - 17 September 2018

The South African Revenue Service has proposed tax law changes to address what the tax agency views as mechanisms employed by taxpayers to defer or avoid the payment of taxes. One change that SARS intends to implement concerns additional disclosures on the income tax returns filed by trusts.

Read more.

VAT - October 2018

Changes to the VAT rules that apply for foreign suppliers of e-services are being considered in South Africa.

Read more.

Switzerland

Tax legislation approved and regulatory update

VAT - 1 January 2019

A change to the VAT measures that apply with respect to foreign sellers of “low-value” goods requires foreign sellers generating more than CHF 100,000 of sales of low-value goods per year to register for Swiss VAT as of 1 January 2019.

Read more.

 

Proposed legislation

Tax reform - 28 September

2018 Legislation (known in English as the “Federal Act on Tax Reform and AHV Financing”) was accepted by Parliament. This legislation is subject to an optional referendum with a key date in mid-January 2019. If a referendum is called, a public vote could be held on 19 May 2019.

Read more.

United Kingdom

Proposed legislation

Autumn Budget - October 2018

KPMG in UK prepared a summary of reactions and insights into Philip Hammond's Autumn Budget statement.

Read more.

 

Administrative and case law

Corporate income tax - 5 October 2018

The Upper Tribunal has found for HMRC in a lead case concerning a disclosed tax arrangement where a deduction was claimed for a debit arising from the partial derecognition of financial assets relating to derivative contracts. The case is: Union Castle Steamship Company Ltd v HMRC.

Read more.

VAT  - 22 October 2018

The CJEU issued a judgment concluding that concerning a hire-purchase agreement, the supply of a vehicle and supplies of credit can be treated as separate supplies for VAT purposes. The case is: Volkswagen Financial Services (UK) Ltd., no. C-153/17.

Read more.

Zambia

Proposed legislation

Budget 2019  - 1 January 2019

Zambia’s budget 2019 includes tax measures that generally are proposed to be effective 1 January 2019. Changes include: 

  • ­ a general “thin capitalisation” measure would limit the amount of deductible interest to 30% of EBITDA
  • reduced corporate income tax rate for companies that add value to copper cathodes (15 percent from the current 35 percent).

Read more.

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