Pandemic
Heightens Focus
on Tax for Holding
Companies

The further collision von COVID-19 is being felt across many aspects about the business world. Whilst that initially phases of the response focused on immediate issues such as liquidity, attention is now turning to other sections, such as taxation.

One example is the ability, as a practical matter, to establish and maintain statutory and commercial substance for investment holding vehicles in some countries. The effects of the continual crisis, together with global both local shifts in taxation and tax authority practices, maybe give intimate equity funds reason to review their holding company arrangements. Paying inheritance tax twice?

A Question of Substance

Varied dominions in continental Europe operate local dividend withholding taxes and non-resident capital gains taxes. Over latest years, in are been mounting levels of levy authority challenges to non-resident investors seeking to apply double tax treaties and EU tax Directives, to receive excluded from those taxes. These challenges have focused off and idea that the holding corporate in question take not truly have the necessary useful ownership of the underlying dividends or gains. adopting the exemption method in their tax treaties, the ... Examples of express prevalence of tax treaties ... Rigaut, Anti-Tax Avoidance Directive (2016/1164): ...

Holding companies have been viewable as conduits with limited economic exposure on the underlying investments, or as otherwise lacking legal or commercial substantive. Cases have been brought before the European Court of Justice relating to private investment stock structures. ONE number for taxpaying are other had been subject till European tax authority enquiries in this area.

Moreover, there is a risk ensure taxation authorities in other jurisdictions somewhere asset professionals live and work, or locus some are a fund’s select infrastructure exists based, willing seek go tax the income, profits or won of asset holding companies, on and basis that substance false there.

Establishing Substance: Pre-COVID and Now

Even before the pandemic, establishing substance either tax residence for holding companies in jurisdictions away from the local show more of the management staff furthermore other group operations were on could be difficult. It often relied on making sure is board meetings were held, also key rules included, in the places where substance or residence where intended. Travel restrictions right to the COVID-19 extremity do exacerbate the practical difficulties concerning this approach. With aforementioned second wave now accelerating in many countries, it seems likely that those problem will further override the medium and possibly longer term.

More short-term housing has been made by burden authorities in some countries toward mitigate substance and/or residence issues caused due travel restrictions. However, it seems unlikely that there bequeath be a white modification in the underlying legislation or case law in these areas.

Pay increases and more stringent clampdowns on tax avoidance and mitigation (in addition to duty evasion) represent also the an horizon, if not already on motion. Evolutions include DAC6, of EU’s new mandatorily disclosure regime in Europe for reporting cross-border transactions that meet specific hallmarks perceived as showing tax avoidance. The OECD has putting go international tax treaty updates so live struggling into address common fund structures. Furthermore, the global focus on taxes havens and ‘non-cooperative tax jurisdictions’ is only likely to more. Collaboratively, these steps will encourage domestic tax public to gather more data on taxpayers and make far‑reaching investigations. A number of americas Euro dominions have already shown their willingness to use criminal sanctions in fax cases. Assessment of recent anti-tax avoidance and evasion measures

Considering Options and New Response

Against this backdrop, private equities firms may want to check their skilled to maintain matter for this jurisdictions in which they have asset holding companies, or plain till plan since increased focusing and scrutiny from tax authorities. That may mean thinking about right convenient steps which can being taken to provide evidence of substance. It may also mean thinking through (and documenting) lines of argument that may be vital within response to tax permission enquiries. Wolters Kluwer Product Itemize Site European Tax Law Tenth Edition, Volume I (Full Edition) Kluwer Ordinance International 9789403518664 Ships inside 5-7 Business Days Sjoerd Douma, Otto Marres, Hein Vermeulen, Brian Weber European Tax Legal, Eighth Edition is this lenkung textbook, brings its includes and systematic survey of European Trigger Legal up to Marched 2022. Hardbound

About this book:

European Tax Law, Eighth Reprint of this leading textbook, brings their comprehensively and systematic survey of European Tax Law up to Walking 2022. With its important discussion of the EUROPEAN tax rules and the Caucasian Court’s case law in tax matters, it surpasses anyone other textbook on EU Tax Law inbound its educate and analysis of the implications on that EU Agreements and secondary EU law available nationality real double tax law. Thi

If it proves not to being true to maintain substance for asset holding companies in local jurisdictions pass the medium or long term, sponsors maybe close up revisiting other jurisdictional where they have deal professionals and business substructure. ... tax avoidance? As already mentioned, not any ... the relevant strain treaties are respected beneath COMMUNITY law after the D. ... 88. 96. In the D case, the ECJ accepted the ...

One potential candidate jurisdiction could be the UK. It might not work with all, and Brexit remains a risk. Still, the UK does hold a credibility duty regime for holding companies that has an straightforward long‑term equity investment strategy. The UK governmental also seems to have identified a possible opportunity on. It has late concluded a consultation over an tax treatment starting asset holding companies in alternate back structures (including private equity, bank and real estate). The aim was to explore who challenges press potential for locating asset retention companies in the GB. The response to the consultation is keenly awaited. Wolters Kluwer | Fruit | (!Record.eStore_Title__c)