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INSIGHT: Advance Pricing Arrangement Series—Europe

In the years following the introduction of the Organization for Economic Cooperation and Development (OECD) action plan on Base Erosion and Profit Shifting (BEPS), KPMG is expecting a significant increase in transfer pricing controversy. This rise of transfer pricing controversy is fueled by an increase in exchange of information between tax authorities, the number and qualification of tax auditors, tax authority aggressiveness, tax authorities’ use of technology to identify transfer pricing risks and inconsistencies, developing tax laws and regulations, and public pressure on governments to increase revenues generated from corporate income taxes.

Tax authorities have been fighting tax evasion and aggressive tax avoidance through increased transparency. The importance of providing greater tax certainty to taxpayers to support trade, investment and economic growth remain an important focus area for both taxpayers and governments. At the same time, the European economy is encountering the debt crisis, Brexit, trade wars, and tariff discussions. Against this background, multinationals have an increasing demand for legal and planning certainty. Thus, KPMG has seen an increase of Advance Pricing Arrangement (APA) applications covering countries in Europe. This article analyzes these programs in Belgium, Denmark, Germany, Italy, the Netherlands, Poland, Portugal, Spain, Sweden, Switzerland, Ukraine, and the UK.

European Commission investigation into individual Belgian “excess profit” tax rulings

On September 16, 2019, the European Commission launched an investigation into whether the “excess profit” tax rulings granted to 39 companies by Belgium constitute State aid within the meaning of EU law (See the European Commission’s press release).This investigation is a response to the General Court's decision in case T-131/16 annulling the Commission's initial decision that these rulings formed part of a Belgian aid scheme that was incompatible with EU law (see Euro Tax Flash 395). 

No incremental notional interest deduction for assessment year 2021 ?

The notional interest deduction (NID) has become less attractive after the corporate tax reform as the calculation is now based on the positive increase of the equity of the company (incremental notional interest deduction).

Circular letter discusses grandfathering rule in earning stripping regime

The tax authorities have released a circular letter on the grandfathering rule in the new earnings stripping regime. The other aspects of the regime will be discussed in another forthcoming circular letter

AG Opinion regarding Netherlands' withholding tax on dividends paid to foreign investment funds

On September 5, 2019, Advocate General (AG) Pitruzzella of the Court of Justice of the European Union (CJEU) rendered his opinion in the Köln-Aktienfonds Deka case (C-156/17) concerning the compatibility with EU law of the Dutch withholding tax on dividends distributed to non-resident investment funds. The AG concluded that the shareholders and distribution requirements imposed by the Dutch legislation to benefit from a tax refund may be contrary to the free movement of capital.

L'administration clarifie les règles d'exigibilité

Dans sa circulaire administrative 2019/C/65 du 9 juillet 2019, l'Administration de la TVA commente les différents aspects des règles d'exigibilité de la TVA qui sont entrées en vigueur le 1er janvier 2016. Elle évoque également les règles d'exigibilité qui n'ont pas été modifiées depuis lors. Elle clarifie les règles en s'appuyant sur des exemples, selon la nature de l'opération et la qualité du client.

Administratie verduidelijkt de opeisbaarheidsregels

Met haar administratieve circulaire 2019/C/65 van 9 juli 2019 licht de btw-administratie de verschillende aspecten toe over de opeisbaarheidsregels van btw die in werking zijn getreden op 1 januari 2016. Ook de opeisbaarheidsregels die sindsdien niet zijn gewijzigd, komen aan bod. Voorbeelden verduidelijken de regels in functie van de aard van de handeling en de hoedanigheid van de afnemer.

Belgium has ratified the Multilateral Instrument

The federal law containing assent with the multilateral instrument (MLI) which implements the tax treaty related measures of the OECD Action Plan on Base Erosion and Profit Shifting (BEPS) in existing bilateral tax treaties has been published in the Belgian Official Gazette of 17 July 2019. The publication marks the final step in the process of ratification of the MLI.

Belgium – Court of Cassation Rules on Notion of Salary Subject to Social Security

Last year, the National Social Security Office (NSSO) modified its stance with regard to the qualification of salary subject to Belgian social security1 on the basis of a judgement of the Belgian Labour Court2.  

The judgement of the Belgian Court of Cassation of 20 May 20193 has now confirmed the earlier judgement of the Labour Court and therefore the opinion of the NSSO.  As a consequence, social security contributions remain due on all benefits that relate to the work performed by the employee in the execution of his/her employment contract with the employer or that relate to the function of the employee carried out for the employer.  This principle applies even without any intervention of the (Belgian) employer in the payment/grant of the benefit.

Het Wetboek van Vennootschappen en Verenigingen - nieuwe opportuniteiten voor familiebedrijven

Het is intussen algemeen bekend dat de langverwachte hervorming van het Belgische vennootschaps- en verenigingsrecht is goedgekeurd in het federaal parlement. Het nieuwe Wetboek van Vennootschappen en Verenigingen (WVV) zal ettelijke ingrijpende wijzigingen van het bestaande vennootschapsrecht omvatten, waaronder een aantal aspecten die van belang zijn voor de opvolging en controle van familiebedrijven.

Deze hervorming opent nieuwe perspectieven voor de overdracht van aandelen in een familiale context. Zo ook voor de bedrijfsleider die aan successieplanning wil doen, maar zelf nog de controle wenst te behouden.