The Impact of TP Policies on Managing a Company in Crisis

The Italian government, with Legislative Decree No. 14 on January 12 2019, approved the new Code of Business Crisis and Insolvency (the Code).

The novelties of this Decree are the tools and mechanisms included for warning and preventing the crisis. In this way, the Legislator has tried to comply with the guidelines expressed by the European Commission on a new approach to manage business failures and insolvency (2014/135/EU).

According to Article 13 of the Code, any income, equity or financial imbalances, in relation to the specific characteristics of the company and the entrepreneurial activity carried out by the company, are identified as “crisis indicators”, taking into account the date of incorporation and the start of the activity.

Published in: TPWeek - 31 may 2019

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The Data Economy: On Evaluation and Taxation

While data-centred business models are claiming an ever-growing share of worldwide revenue, regulatory efforts to identify proper tax rules for the relevant activities are intensifying. It is questionable whether or not the proposals currently on the table capture the distinctive features of the data economy. The formulation of appropriate tax rules requires a thorough understanding of the mechanics of data processing activities and due consideration of the difference between information, which is an intangible asset, and tangible assets.

It is widely acknowledged in the areas of business, legislation and policymaking, as well as administration and human rights protection, that the dominion of data is increasing. This is clearly illustrated by the series of legislative initiatives launched and/or adopted in order to provide a legal framework applicable to the unstoppable flow of data.

Data collection and analysis are not, however, new processes. In particular, data processing is deemed to encompass:

any operation or set of operations which is performed on personal data or on sets of personal data, whether or not by automated means, such as collection, recording, organisation, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction.

Published in: European Taxation, 2019 (Volume 59), No. 5 - 15 April 2019

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Italy Clarifies Key Transfer Pricing Tenants

During Telefisco 2019, Italy’s annual tax conference, Italy’s tax authority clarified several transfer pricing (TP) tenants. Notably, the most important include:

• Clarification regarding when penalty protection may be applied to TP documentation; and

• The inapplicability of penalties for filing discrepant tax returns in the TP area.

Penalty protection
In accordance with Article 1, Paragraph 6, and Article 2, Paragraph 4 of Legislative Decree No. 471/1997, if a taxpayer provides the authorities with adequate documentation that shows TP policy was applied appropriately within intercompany transactions, penalties for administrative violations related to tax return discrepancies may not apply (i.e. “penalty protection”).

Published in: TP Week - 1 May 2019

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International Tax Dispute Resolution: New EU Rules

lnternational tax disputes arise, in principle, where

1. there is a bilateral or multilateral treaty for the avoidance of double taxation (hereinafter "Double Tax Convention" or "DTC") or an equivalent instrument and

2. the contracting jurisdictions exercise their taxing power in a manner resulting in violation of its provisions.

In addition, such disputes can also arise without violation of the DTC (including equivalent instruments), if there  is disagreement or uncertainty in relation to the correct application of its provisions. In a nutshell, international tax disputes can arise, if there is a framework agreed between two or more jurisdictions regarding the exercise of their taxing power in cases involving both of them (in principle in a DTC).

In their vast majority, existing DTCs previde for the resolution of the above disputes through the so-called mutuai agreement procedure or MAP, following the respective provisions of the OECD Model Tax Convention (hereinafter the "OECD Model"). MAP aims at dispute resolution through agreement between  the national tax authorities involved, on the basis of dialogue and cooperation, following request by the taxpayer affected.

Published in: IAFEI Quarterly (43rd Issue) - 11 April 2019

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Geotaxation and the Digital: Janus in the Mirror

Geopolitics has been defined as ‘great power competition over access to strategic locations and natural resources’.
In essence, it focuses on the impact of geography on international political relations and vice versa.
The principal actor in international political relations is the state. And the effective power to tax is historically a constitutive element of the state. Tax revenue is, in fact, one of the fundamental resources for the modern state to perform its role, i.e. to ensure security of the people in its territory and to deliver its policy objectives.
Tax policy can, therefore, be considered of key relevance for national sovereignty. In this light, geotaxation can be understood as the study of the interactions between geography and the international tax framework.

It focuses on international tax relations and their development under the influence of geographical factors. Thus, it considers collaborations among different states at various levels, such as the League of Nations, the OECD, the BEPS Inclusive Framework, the UN, the IMF and the European Union, and their impact on national and international tax policy.

Published in: Intertax (Vol.47) - 18 March 2019

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Competitive Taxation and Tax Competition: The Winner Takes it All?

The Debate

What makes a tax system competitive?
How can countries multiply the competitiveness of the existing system?
These question-marks are attracting substantial research by today’s policy makers, at national and international level as well as by business lobbyists. Most importantly, their potential replies entail significant impact for taxpayers and the society in general. Indicatively, one of the principal objectives of European Commission’s 2015 Action Plan for A Fair and Efficient Corporate Tax System was to create “a competitive and growth-friendly corporate tax environment for the EU”. On a similar pattern, the 2018 Digital Tax Package seeks to enhance the competitiveness of the Single Market. At the other side of the Atlantic, the fiercely debated U.S. tax reform had one clear-cut objective, to increase the competitiveness of the U.S. tax system.

Published in: Kluwer International Tax Blog - 4 March 2019

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Resolving Cross-Border Tax Disputes: Developments in the EU and Around the Globe

Cross-border dispute resolution mechanisms have been evolving rapidly in recent years.
The importance of an effective process for enforcing bilateral double tax agreements and for avoiding double tax issues more generally cannot be understated. Two critical tools in this regard are the mutual agreement procedure and arbitration.
The final report on action 14 of the OECD’s base erosion and profit-shifting project focuses on the improvement of tax dispute resolution. Along with the changes that the multilateral instrument makes to article 25(5) of the model convention, the OECD’s work is inspiring international change.

Published in: TAX NOTES INTERNATIONAL - February 25, 2019

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Do the EU’s Open Internet Regulation And Proposed Digital Services Tax Threaten the Digital Single Market?

The EU’s digital single market serves as the framework for its efforts to exploit digital opportunities and achieve sustainable growth and development in the modern era. Some of the EU’s undertakings have sparked heated debates regarding their suitability for effectively pursuing their stated objectives.

This article examines two of these initiatives — the Telecommunications Single Market Regulation, adopted in 2015, and the recently proposed digital services tax (DST) — and the risks they may pose to the digital single market.

Published in: TAX NOTES INTERNATIONAL - October 15, 2018

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McDonald’s Fiscal State Aid Clearance: Questions Still Pending

Following three years of investigation, McDonald’s has been cleared from the charge that it received fiscal state aid from Luxembourg, by virtue of the European Commission’s concluding decision of 19 September 2018. Thus, the Commission seems to have closed one of the various fronts opened in the fiscal state aid area in the last five years, including cases like Apple, Starbucks and Engie. Yet, the war is much ampler and critical questions remain still pending.

From a business perspective, the ongoing fierce debate entails important implications and requires close monitoring. On the one hand, taxpayers need to ensure their timely intervention in cases concerning tax measures from which they themselves or their competitors have potentially benefitted. On the other hand, major part of the Commission’s recent investigations focuses on tax rulings, questioning their validity as an instrument to obtain tax certainty. The outcome of the debate shall determine the expectations taxpayers can place on the tax rulings they have or request from EU Member States and subsequently their alternatives to ascertain their tax liability in the Single Market.

Published in: Kluwer International Tax Blog - 4 december 2018

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Italian Tax Agency Clarifies Transfer Pricing Adjustments and VAT

The case in the tax ruling referred to transfer pricing adjustments made to permit the applicant enterprise to reach the minimum profit level provided in the group TP policy.

Specifically, the applicant company provided goods and services to a related company. According to an agreement between them, the former received remuneration from the latter for the difference between the amount of profit actually realised and the amount of profit at arm’s length. The question raised was whether or not such remuneration was relevant for VAT purposes.

Published in: TP Week - 7 November 2018

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Digitalization. Making the Best out of International Taxation’s Disrupters

International taxation is undergoing the most tremendous overhaul of the last 100 years. New standards have been identified at international level, bilateral tax treaties are re-negotiated in a multilateral context, discussions are ongoing on the next changes.

The outburst of the transformation is usually identified about five years ago, when the OECD launched its Base Erosion and Profit Shifting (BEPS) Project, in 2013. However, the change had in fact started much earlier, when new technologies began revolutionizing our every-day lives. Distances shortened. Time intensified. A new world order arose, where virtuality is the new reality and ideas the new gold.

Published in: Finance&Gestion - n. 363 - October 2018

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Bitcoin and Virtual Currencies Are Real: Are Regulators Still Virtual?

It is already ten years that the bitcoin is on the market; and twenty years from the primary conception by Wei Dan of a currency exploiting cryptography. Yet, only today is the bitcoin on the main headlines of daily newspapers and TV newscasts all around the world and its value fluctuations closely monitored on a number of websites. If a couple of years ago virtual currencies were a topic for policy-making elites, nowadays they have reached all classes, irrespective of profession and interests.

The virtual currency market is evolving with the speed of light. This should not be a surprise though, taking into account the parallel ongoing development of digital economy. Both, virtual currencies and digital economy provoke concerns, mainly due to the lack of information, while they also contain the promise of an infinite and innovative potential. The technology behind Bitcoin, blockchain or digital ledger technology, is in fact expected to overhaul the way transactions are performed and records are kept.

Published in: INTERTAX, Volume 46, Issue 6 & 7

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“The Ulaanbaatar Declaration”: Global Tax Advisers Platform Signs Declaration Setting Out Key Priorities in International Taxation

On 12 September 2018, the Global Tax Advisers Platform (“GTAP”) issued the Ulaanbaatar Declaration, establishing 10 key priorities for GTAP in pursuing: 

• International cooperation among tax advisers; and 

• Optimisation of the national and international taxation framework.

GTAP was established by CFE, AOTCA and WAUTI, who collectively represent more than 500,000 tax advisers in Europe, Asia and Africa. GTAP is an international platform that seeks to bring together national and international organizations of tax professionals from all around the world. GTAP’s fundamental principle is that taxpayers’ and tax advisers’ interests are better pursued and served within a fair and efficient global tax framework.

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Mandatory Electronic Invoicing: Are You Ready?

The Italian Revenue Agency has provided clarifications and practical guidance on the issuance, receipt and preservation of electronic invoices through various rulings.

The Italian Budget Law 2018 provided that both companies and individuals liable to VAT must issue and receive electronic invoices when they supply goods or services to Italian tax residents. The obligation enters into force on January 1 2019. However, it already applies to the supply of gas and petrol as motor fuel as of July 1 2018.

Published in: TP Week - 2 August 2018

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Au fil des années, la CFE est devenue un interlocuteur privilégié au sein des institutions européennes

L'IEC est membre d'un certain nombre d'organisations internationales qui lui permettent de représenter les intérêts de ses membres au niveau international et au sein de différentes institutions, mais aussi d'échanger de nombreuses informations et de se préparer ensemble à l'avenir. L'IEC est membre de la CFE spécifiquement pour les conseils fiscaux, car elle est l'organisation européenne défendant ces professionnels. Le président de la CFE a accepté de répondre à nos questions pour nous en dire un peu plus sur la CFE, comment elle défend la profession et pourquoi il est important pour nous conseils fiscaux d'être membres.

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