International Tax Adviser Handbook by Corporate ABM

International Tax Adviser Handbook 2013

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International Tax Adviser Handbook 2013

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ESSENTIAL CREDENTIALS FOR AN INTERNATIONAL TAX CONSULTANT: BUSINESS FIRST

As a lecturer on an MA course for International Taxation, my first question to students is, “What do you think are the essential credentials for an international tax consultant?” Invariably I receive the answer, “He or she has to have a good knowledge of international tax systems”. Although true, the answer really should be, “He or she has to have a good understanding of business and the commercial requirements of Clients”. The key is to think first of the business goals and activities of the Client, rather than think purely of how to minimise the tax costs for an organisation. The mind-set or culture of the client organisation provides the backdrop to all future advice. Businesses might instruct a tax consultant for a wide range of reasons or with a specific purpose in mind. The business could be seeking to optimize existing assets, perhaps mitigate risk in relation to a new legal landscape as per the recent General Anti-Abuse Rule, have transfer pricing concerns or simply wish to check compliance across the business. This article sets out the approach one would expect the competent international tax consultant to adopt when taking on a new business client with the purpose of a global business restructuring or optimising their existing structure. Briefing The fundamental first requirement must be for the consultant to listen. It is always the Client who knows what he wants to achieve, although he may not be fully aware of how the structure or his personal requirements can progress to the desired end. Creating 4 | International Adviser Tax Handbook | www.intladviser.com

the structure without understanding what the Client wants is like baking a cake with the wrong ingredients. When considering the issue of restructuring, Transfer Pricing is often a useful place to start as it provides the consultant with the opportunity to undertake a functional analysis of the Client’s business. This helps to assess the risk and rewards that could be obtained by each entity within a corporate structure. Remotely obtained advice, presented without the Client’s involvement, can prevent him from truly attaining the commercial objectives that the Client wants. Receiving instructions from a Client concerning the tax laws of different jurisdictions and sending those instructions to a colleague in that jurisdiction might result in advice that is technically correct, but not totally relevant to the client’s needs and commercial strategy. Having listened to the Client and understood his goals, the consultant should question the issues presented by drilling down into the business and preparing a transfer pricing memorandum in order to understand the business model. The socio-economic landscape should also play a part in this process. This will comprise the main part of

IFS www.interfis.com or www.itsapt.com roy@interfis.com +44 203 3686968

a typical consultation of up to two hours’ duration. It is only following this investigation that the consultant should create some initial ideas. He should not have any preconceived constraints in the form of existing arrangements and start from a clean state. By proposing various pathways such as different entities, contractual arrangements, changes in personal or corporate domiciliations, the consultant engages with the Client’s commercial and personal aspirations, ascertaining whether his suggestions are possible within the Client’s overall ambitions. By using a white board, it is so easy to eliminate ideas which cannot achieve these objectives, e.g. proposed changes in shareholding where there is a pre-emption clause which prohibits this, or suggestions for external finance where certain security cannot be offered — or indeed any other ideas promulgated which the Client cannot achieve. Eventually, the ideas reflected on the white board are those which can be commercially or personally achieved by the Client. This creative process clearly cannot be undertaken without having technical expertise, with most consultants having a general knowledge of tax systems in many jurisdictions. It is useful if he or she has an expert knowledge of the tax system in one specific country, either the country the business is headquartered or the proposed jurisdiction. This knowledge may be confined to cross-border transactional activities for commercial businesses, or international

migration and cross-border taxation of investment income for personal issues. Many books have been written on the tax systems in developed and developing countries around the world, not least my own International Tax Systems and Planning Techniques first published in 1983 and after 65 releases now to be found in an online version at www. itsapt.com. This is a website I have created which has over 300 relevant articles on international tax issues under its Knowledge section. Similar international tax concepts apply for most developed countries, so that besides a general knowledge of the tax systems themselves, the consultant needs to understand the provisions of double tax treaties entered into between these jurisdictions which may affect his or her proposals. Such an understanding will not be confined simply to the articles of a relevant treaty, but also to how these provisions are interpreted and relevant Court cases addressing these provisions. There are many excellent websites which have all of the double tax treaty networks analysed and summarised — but care should be taken not to look at one particular article and assume this is applicable without reading the entire treaty. For example, there may be a limitation of benefits provision elsewhere in the treaty or even a protocol entered into subsequently which may change its terms. The consultant ought to be able to explain and convey these principles to the Client who will most likely not have the specialised knowledge of the matter.

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The consultant will also consider the antiavoidance legislation that usually applies within major developed countries. This is not simply what is legal and what is not, but what will obtain the desired tax consequences for the Client without invoking investigations by Tax Administrations. Transfer Pricing is an element in the armoury of tax authorities which should always be borne in mind, but there are many others such as the attribution of foreign retained income back to the domestic beneficial owner or even a general anti-avoidance rule (GAAR) common in many countries nowadays. The last thing a Client will thank his adviser for is putting him into a structure which is ineffective, costly to dismantle and stressful in every way. This is why in the forty years that I have been practising as an international tax consultant I have never recommended ‘tax schemes’ for Clients. Even if the law appears to substantiate the scheme at the time, and even with tax counsel opinion confirming this, there will often be legislation which has a retrospective effect denying the tax benefits contemplated. By this point, the consultant and the Client should agree on what is commercially or personally desirable and what should be developed by the consultant to create the appropriate legal structure. Verification Having completed the process of creating and developing a structure which is deemed appropriate for the Client’s commercial requirements, the next stage is the verification process. This demands a network of colleagues around the world in whom the consultant has a degree of trust who are able to review the blueprint. This is one of the most difficult parts of a consultant’s work, and why professional global networks have developed over the years. My own network comprises non-related professional advisors, some of whom I have known throughout my forty year career. It is difficult for younger practitioners to create such a network in the developing stages of their career, which is why I have created the ITSAPT organisation at www.itsapt.com as a community of professional advisors with the objective of ensuring that ‘ITSAPT Associates’ can assist each other around the world with Client issues. During the consultation with the Client, tax, legal and other issues are identified which will need to be confirmed with experts in the relevant jurisdiction. They may be issues such as customs duties on importation of goods, VAT issues, transfer taxes and other indirect taxes; personal migration requires relevant reporting requirements; commercial structures have a variety of forms; indeed, there will be an infinite number of issues which require the sort of technical expertise that it would be impossible for one person to have at

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his fingertips. Therefore businesses should expect the consultant to draw upon advice from both internal and external globally located specialists. The international tax consultant is effectively a general practitioner with a specialised knowledge of cross-border commercial and personal issues coupled with an excellent community of like-minded professionals who can assist clients in achieving their aims. Reporting Advice will then be finalised with the appropriate input from professional colleagues and a report produced for the Client. The report should be short enough to be fully comprehensible by the Clients’ key stakeholders whilst detailed enough to explain the complex issues that may be relevant to his existing professional advisors. Clearly this balance will sometimes be difficult to achieve and is often facilitated by an Executive Summary at the beginning of the report with the detailed tax issues being confined to Appendices, so that the main body of the report can be followed by the Client as well. I am often asked whether a legal or accounting qualification is useful for training as an international tax consultant. My diplomatic answer is that both trainings are useful — law since it teaches the practitioner to have lateral thinking and not to be confined to pre-conceived issues (such as a balance sheet for auditing); accounting since it teaches numeracy and the ability to explain complex issues clearly with figures as visual aids. The lateral thinking is essential in the Briefing Stage, the detailed analysis essential in the Reporting Stage. Review The briefing, verification and reporting process should not take more than a week following the first meeting with the Client. The penultimate stage in rendering advice is reviewing the report with the Client once he has had the opportunity of discussing this with his partners, colleagues and other professional advisors. The consultant will give the Client plenty of time to review

and query the report before arranging a review meeting. At this review meeting, certain assumptions that may have been made throughout the process will be clarified but it would be unusual for there to be any major alterations to the proposed structure if the consultant has undertaken a thorough approach to the undertaking. The main feature of the review should be that the recommendations contained in the report have met the commercial needs of the business, without imposing unwarranted or unwanted risk.

relating to investment income and possible migration are also properly achieved.

It is at this review stage that the consultant has the opportunity to develop a long lasting relationship with his or her Client, assuming that the issues have been properly understood. It is long lasting relationships that consultants want to achieve, hence the need to ensure structures are not designed for short term efficiency only.

A competent advisor will have such a network in place and will be able to implement a new business structure in a realistic timescale to meet the business aims.

Implementation Finally, the consultant will assist in implementing the recommendations made. It is essential that the international tax consultant is involved in the implementation of his or her advice by ensuring that corporate entities are created in the appropriate manner, that legal documents are prepared which include the provisions required for the proper implementation of the report, that financial objectives are properly met and that personal requirements

Again, being part of a community of professional advisers is essential for the implementation process, since it is so important to deal with fellow professionals in whom the consultant has total trust. This is best engineered through regular meetings, perhaps at conferences where technical information can be shared at the same time as engendering long term personal relationships.

Overall, businesses should expect a consultant to have the integrity to deal with clients fairly, to observe the transparency of international structures required in todayâ&#x20AC;&#x2122;s world, and to undertake responsibilities with professional diligence. It is the realisation that tax is only one ingredient, albeit a costly one, of the mixture of what makes a commercially successful cake that distinguishes the international tax consultant who cares for his Client and wants to participate in his unchallenged success. Roy Saunders, Founder & MD, International Fiscal Services (IFS) and Chairman, ITSAPT Roy Saunders created International Fiscal Services in 1971 which is a niche international tax boutique and is also Chairman of ITSAPT. For further information please visit www. interfis.com and www.itsapt.com. ITSAPT is the network for international business advisors and their clients, bringing together specialist advisors to enable businesses to optimise the structure of their international operation by enhancing resilience in tax planning, mitigating regulatory and market risk end enabling multi-jurisdiction growth.

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AUSTRIA Erich Baier, MBA, LL.M. (Int’l Tax Law) TEP Certified Tax Advisor BILAnz-DATA Wirtschaftstreuhand GmbH Erich Baier, MBA, LL.M. (Int’l Tax Law) TEP Certified Tax Advisor Schwarzenbergstraße 1-3/14a, 1010, Vienna, Austria

Tel: +43 1 516 12 Fax: +43 1 516 12 14 baier@austrian-taxes.com www.austrian-taxes.com

International Tax Planning with an Austrian Company At the gateway between East and West, Austria is a perfect hub for making investments into foreign countries tax efficient. In order to be able to obtain the benefits of the Austrian Holding Tax Regime, there is no need for a special purpose company. However, any Austrian corporate entity – a GmbH (company with limited liability), an AG (stock corporation), or Austrian permanent establishments of European corporate entities – can benefit from the Austrian Holding Privilege. What are the Key Features of this Austrian Holding Regime? Domestic Holdings Intercompany dividends paid between two Austrian companies are tax exempt in the hands of the receiving Austrian company. Therefore, capital gains arising from the sale of shares in an Austrian corporation held by another Austrian corporation are taxable, and are due at the standard flat corporate tax of 25 %. Any financing costs connected with the acquisition of the shares held are fully tax deductible. Foreign Holdings Provided that the Austrian company holds at least 10 % of the shares of a foreign corporate entity, comparable to an Austrian GmbH, for at least one year any dividends received by the Austrian company and any capital gains resulting from the sale of the shares of the foreign corporation are tax exempt in Austria, regardless of whether there is a foreign treaty. This tax exemption is also valid if the foreign subsidiary of the Austrian company is located in a non-tax treaty country or in an off-shore jurisdiction. No Debt-Equity Ratios or Thin Cap rules Austria does not apply thin capitalisation rules or debtequity-ratios, which would limit the deductibility of interest payments. Therefore, Austrian corporations can leverage the acquisition of foreign shareholdings or any other investments. Interest is fully tax

deductible and can compensate any other income which is achieved by the Austrian corporation. Furthermore, as there is no withholding tax on interest paid to foreign lenders, regardless of location even interest payments to offshore companies are not exposed to any withholding tax at source.

and the dividends when paid to the Austrian company are then taxable. The mere holding of such corporations does not trigger any taxes. What is Seen as Passive Income? The Austrian tax authorities categorise income as passive if income is achieved by the foreign subsidiary, and the overall tax burden of this subsidiary is not more than 15 %. This includes: interest income; royalty income; and capital gains achieved by selling shareholdings of less than 10 % in other corporations. Dividends are also tax exempt if they result from rental income (considered to be active income) – even if the foreign subsidiary is not subject to tax.

The Austrian ‘Check-the-Box’ System An Austrian corporation can make capital gains taxable if it wishes to do so. The Austrian company just has to ‘check-thebox’ in its tax return and can select for which participation any capital gains resulting from a sale should be taxable. Any dividends received stay taxexempt. The Foreign Subsidiary Austrian law does not know CFC-legislation or similar regulations. nevertheless it is important to know how income achieved by a foreign subsidiary has an impact on the tax situation of the Austrian parent company. Provided that the Austrian corporation holds shares in a foreign entity, which achieves passive income, the sale

However, it is important to know, that if the foreign subsidiary achieves profits from buying and selling securities, treasury bonds or stocks, this is considered to be active income and therefore any dividends paid to the Austrian company and any capital gains achieved by the Austrian company are tax exempt. An example of dividends and capital gains is demonstrated in the diagram below.

Dividends and capital gains are TAX EXEMPT IN AUSTRIA.

BVI Ltd.

Rental Income Local Tax: 0

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Cayman Islands Ltd.

African Factory

The Foreign Subsidiary Making Losses Due to the new group taxation system, any losses suffered by foreign subsidiaries can be offset from the domestic tax base of the Austrian company holding shares in such a subsidiary, provided that the Austrian company holds more than 50 % of the shares of the foreign subsidiary. However, these foreign losses have to be exposed to taxes in the hands of the Austrian corporation when the foreign entity is using these losses as a loss carry forward, to compensate its own tax burden. Although losses from the foreign subsidiary can be set off from the tax base of the Austrian parent, dividends paid by such a foreign entity are tax exempt. The Tax Treaty Network Taking into consideration that Austria has a far reaching treaty network (currently 89 treaties) including countries like Barbados, Belize, Estonia, Hong Kong (2011), Liechtenstein, Luxembourg, Malta, San Marino, Switzerland, Singapore, UAE and Cyprus – just to name a few – each has their own interesting tax regime. It is of course a fact

Austrian Holding

Panama Ltd.

Vanuatu Ltd.

Consulting Income

Runs a Hotel

Local Tax: 0

Active Income Local Tax: 0

Dividends and Capital Diagram

that these open a bundle of tax planning opportunities. Dual Resident Companies Provided that the management of the foreign parent company is located in Austria, any corporate entity, regardless of where domiciled, has access to the Austrian holding system. This would be the case when a BVI company is holding shares in a Russian or Ukrainian company but the managing director of the BVI company is resident in Austria. Obtaining Royalty Income via Austrian Companies Austrian companies are quite often used to obtain royalty income from foreign sources. Austria has such a large number of tax treaties, and a large number of these treaties providing for a zero withholding tax rate levied upon royalty payments to or from Austrian companies. However, in the case of other treaty countries,

the withholding tax rate is significantly reduced, ranging between 3 % and 10 %. Only in some cases is it 15 %. Austrian Trading Company An Austrian Company can serve perfectly as an agent for an off-shore principal and profits resulting from the trade of goods are then exposed to an effective tax bracket of only 2 % to 5 %. Summary Combining a large treaty network with a perfect holding regime, together, results in the possibility to obtain binding rulings from the Austrian tax administration. This makes Austria a perfect place for holding companies and further tax planning activities.

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CAnADA Thorsteinssons LLP Tel: 416.864.0829 thor@thor.ca www.thor.ca

FIRM PROFILE: Thorsteinssons is Canada’s largest law firm practicing exclusively in tax. Our lawyers are consistently recognized among Canada’s leading tax practitioners. Tax is an area of great complexity. By restricting our practice to tax we are better able to deliver the level of skill and attention demanded by our clients. Our practice encompasses all aspects of taxation including tax planning, compliance and representation at all levels. We provide tax advice of the highest quality to

clients around the world and are known for our skillful work in highly complex matters. Our close client relationships afford us the in-depth understanding of our clients’ businesses that is necessary to deliver the quality of service and advice they demand. Our goal throughout is to provide our clients with valuable solutions in a timely and efficient manner. Thorsteinssons’ tax lawyers are active in providing key strategic tax planning advice to taxpayers for both

inbound and outbound foreign direct investment. We have a very diverse client base which includes Canadian and foreign based individuals, companies, partnerships and trusts seeking to establish their presence in Canada or abroad both in terms of corporate structure and financing. We have extensive experience advising in connection with issues involving: hostile and friendly cross-border mergers and acquisitions; cross-border public and private debt and equity offerings; the selection

of tax efficient holding company locations; the development and implementation of cross-border financing and treasury operations; controlled foreign company (foreign affiliate) tax planning; income tax treaties; profit repatriation; loss utilization; managing intellectual property and intangible assets; developing tax efficient supply chains; and transfer pricing.

Canada and members of our international tax group routinely meet with lawyers in other jurisdictions to ensure a continuing understanding of global issues impacting cross-border investment. Our established network of relationships ensures timely access to and co-ordination of foreign advice and ensures timely, innovative and high quality advice when dealing in multiple jurisdictions.

Thorsteinssons has longstanding relationships with highly-recognized legal advisers outside of

Working together, we share an uncompromising commitment to excellence in everything we do.

leading lawyers under 40 in Canada by Lexpert magazine. According to Chambers Global 2009 Michael contributes heavily to the firm’s reputation in the mining industry. He is hailed for his skills in resource tax and in the foreign affiliate arena, resulting in his involvement in many cross-border and international instructions.

OUR INTERNATIONAL TAX TEAM

Michael Colborne mwcolborne@thor.ca

Michael McLaren mhmclaren@thor.ca

Marc Ton-That mton-that@thor.ca

Mark Barbour mabarbour@thor.ca

Michael’s practice focuses on corporate and international tax planning, regularly advising Canadian and foreign-based multinational groups on a variety of matters, including inbound and outbound investment and financing, mergers and acquisitions, divestitures, and natural resource taxation.

Michael has a particular expertise in the taxation issues faced by mining companies, and regularly advises a number of Canadian and foreignbased multinational mining companies. In this regard, Michael has experience structuring mining investment in Canada (including oil sands), the United States, Australia,

Mexico, Scandinavia, and numerous countries in South and Central America, Africa and Central Asia. He has also been extensively involved in the recent consolidation of the natural resources sector, having advised on a number of landmark transactions.

financing; mergers and acquisitions; divestitures; restructurings; and natural resource taxation. Michael acts for a number of Canadian and foreignbased multi-national companies that operate in the following industries: natural resources; real

estate; aerospace and defence; paper and household products; pharmaceuticals; financial services; and industrial engineering.

Marc specializes in structuring international and domestic mergers, acquisitions, and reorganizations. One of Canada’s best known taxpractitioners with over 35 years of experience, Marc routinely advises

on a wide range of reorganizations, acquisitions and divestitures, including divisive re-organizations and cross-border spinoffs. In addition to his time in private practice as a partner at two of the

big 4 accounting firms, Marc spent more than five years in senior positions in the Rulings Directorate of the Canada Revenue Agency in Ottawa. During that time, he was a senior rulings officer and

Mark’s practice focuses on domestic and international tax planning, with an emphasis on federal

and provincial mining taxation. He also represents taxpayers in disputes with taxation authorities, and has

appeared in the Tax Court of Canada, the Federal Court of Appeal and the Supreme Court of Canada.

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In 2007 Michael was named one of the

Michael is listed in Law Business Research’s 2010 and 2011 The International Who’s

Who of Corporate Tax Lawyers, 2011 and 2012 The International Who’s Who of Business Lawyers and its 2010 and 2011 Canada Special Report Who’s Who Legal: Canada. Michael is also listed in the 2012 Expert Guide. section chief for various sections that provided advance tax rulings on large re-organizations, mergers, acquisitions and transactions involving partnerships.

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CyPRUS Anna Homenko, Managing Partner Fiduciana Trust (Cyprus) Limited +357 22 460890 anna.homenko@fiduciana.net www.fiduciana.net

Cyprus continues to offer the most favourable environment for international cross-border investment. Over the recent years the Republic of Cyprus has built a reputation of a jurisdiction offering the most attractive tax regime in the European continent. Despite the fact that Cyprus has recently faced a

problem with its two largest banks, following the draconian terms on which international financial assistance was made available in March 2013, , Cyprus steadily remains one of the most attractive jurisdictions for

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International Business, offering many tax advantages that have not been affected by the recent financial events. The Cyprus tax system provides a transparent and efficient

environment for international business, thus enhancing the countryâ&#x20AC;&#x2122;s competitiveness and contributes to making Cyprus a prime location in the international field of holding and trading regimes. Cyprus has a

stable, coherent and reliable legal and commercial infrastructure with a its legal system based on common law, a system which foreign investors are familiar with.

to immovable property situated in Cyprus. Undoubtedly, the above factors make Cyprus the most advantageous holding company jurisdiction in Europe and beyond.

Cyprus provides numerous tax benefits and it is regarded as a low tax jurisdiction. Despite the recent marginal increase in corporate tax rate from 10% to 12,5%, Cyprus still maintains the lowest corporate tax rate in the European Union and boasts an extensive network of double tax treaties, (currently with more than 40 countries), which include, amongst others, treaties with countries of Central and Eastern Europe, India and Asia. The Cyprus tax system is simple, clear and transparent. This, and further attractive features, such as exemption from tax on dividend income, no withholding tax imposed on interest paid by Cyprus entities to its non-Cypriot shareholders, nil taxation on profits and gains derived from the disposal of securities/shares unless it relates

The Cyprus legislation is fully in compliance with the EU and OECD regulations, which places Cyprus in the internationally recognised “white” list of jurisdictions. In December 2012, Cyprus has introduced a new regulatory regime covering the activities of corporate service providers and fiduciaries, which gives additional assurances and security to the investors.

legislation has also recently undergone a much welcome overhaul, which granted a great flexibility, control and asset protection to the settlors. Cyprus International Trusts offer significant tax possibilities and are successfully used as wealth planning vehicles as well as robust asset protection and estate planning mechanisms by many wealthy individuals.

In addition to the above, Cyprus offers an excellent intellectual property rights regime that exempts 80% of income derived from intellectual property from taxation, which essentially results in 2% effective tax rate on profits generated from such activity.

To conclude, we would like to point out that despite the unprecedented financial events in Cyprus, these do not, in any way, diminish the benefits of using Cyprus holding and financial companies and trusts in international structures. The island’s corporate and legal framework remains unaffected by the forced downsizing of the island’s banking sector, and it continues to offer a secure, taxeffective, competitive framework for structuring international cross-border investment.

It is is worth to point out that the Cyprus International Trust

Fiduciana Trust (Cyprus) Limited is a “boutique” Cyprus

trustee and fiduciary services company offering full range of corporate, accounting and international tax planning services and solutions to its clients. Besides the traditional domiciliary and administration services, we are able to assist our clients with the creation of “family office” solutions and establishment of complex interjurisdictional trust structures. Fiduciana Trust (Cyprus) Limited consists of multilingual, highly qualified, experienced members having legal, tax and accounting background. Fiduciana tailors its services to meet the clients’ needs and remains committed to delivering outstanding results and adding extra value to the businesses of its clients. The firm has an established network of associates and is a member of various professional organisations such as ITPA, STEP.

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germany

New German taxation rules on dividends

The German legislator has recently introduced new taxation rules on dividends from minority shareholdings. Different from the general rules of the past, dividends received by German corporate shareholders holding less than 10 percent of the capital of another corporate entity will be fully taxable. Background The background of the new law is that, according to decisions of the European Court of Justice, the former German rules did not comply with the fundamental freedoms of the European Union. Under the former law, nonGerman shareholders that had no permanent establishment in Germany were subject to a definitive German corporate income tax on dividends from minority shareholdings below 10 percent, whereas such minority dividends were effectively tax exempt if received by German tax resident shareholders.

Structures concerned

Outlook

The new rules will have a significant impact on minority holding structures. In particular, the mismatch between the taxation of minority dividends (now taxable) and capital gains from the sale of such minority shareholdings, which for the time being will remain tax exempt in the hands of corporate shareholders, will give rise to structuring need and opportunities. Ballooning structures, dividend stripping schemes and pooling of shareholdings in one corporate entity will gain importance. Note that the German legislator has already implemented certain rules designed to prevent such structuring, e.g. the complicated and questionable rules on stock lending and REPO transactions.

It is likely that the German participation exemption will face further changes. As the concept is focused on the equal treatment of dividends and capital gains, it seems logical and likely that the exemption of capital gains from minority shareholdings will soon also be abolished. But even on the basis on the current amendments, many restructurings will take place; German holding entities having minority interests may be replaced by nonGerman holdings subject to more favorable participation exemption rules and without the German trade tax burden. UCITS funds can be expected,

Shareholders affected The new rules only affect corporate entities holding minority interests of less than 10 percent. Individual shareholders are not affected. Partnerships are deemed to be transparent with respect to their shareholdings: The shares held in corporate entities are to be allocated to their partners on the basis of the partnership interest. UCITS funds are also covered by the new law, but surprisingly they are not viewed as fully transparent. Entities forming part of a fiscal unity (Organschaft) will be viewed separately for purposes of the new 10 percent holding threshold.

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even more than in the past, to sell their shares in German listed stock around the proxy seasons. Overall, German CFC rules will become more important. The real question is what remains from the big picture of the German business taxation system. One may say, not much.

Thomas Fox Partner, Munich T +49.89.2080.3.8166 E thomas.fox@lw.com

Tobias Klass Partner, Hamburg T +49.40.4140.3136 E tobias.klass@lw.com

Anders Kraft Counsel, Frankfurt T +49.69.6062.6619 E anders.kraft@lw.com

Stefan SĂźss Partner, Munich T +49.89.2080.3.8167 E stefan.suess@lw.com

GĂśtz T. Wiese Partner, Hamburg T +49.40.4140.3136 E goetz.wiese@lw.com

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ireland KPMG Tom Woods Partner Tel: +353 1 4102589 tom.woods@kpmg.ie www.kpmg.ie

Aviation, Securitisations, Islamic Finance TOM WOODS Tax Partner – Financial Services Professional Associations • A fellow of the Institute of Chartered Accountants in Ireland • A member the Institute of Taxation in Ireland • A member of Institute of Engineers of Ireland Education • Bachelor in Engineering, University College Dublin • Postgraduate Diploma in Business Studies, University College Dublin Background Tom is the Head of Aviation Finance and Leasing in KPMG Ireland and advises some of the largest aircraft lessors globally as well as investors on their investments into the aviation sector.

• Tom specializes in optimizing the tax efficiency of international groups and investment into such groups. Tom also specializes in cross border transactions. • Tom works very closely with the other KPMG offices in delivering tax advice and leads the delivery of this service for many clients. • Tom has spoken at many of the global aviation conferences on worldwide tax developments affecting the industry (including incentive regimes, treaty developments, local transfer tax and withholding tax changes). • Tom has also spoken at global conferences on Islamic Finance and has been deeply involved in the development of the tax framework for Islamic Finance in Ireland.

Tom is a member of an Irish Government led group looking at the aviation sector in Ireland. Tom is also the lead tax partner in KPMG Ireland’s Securitisation Practice. He also leads the Islamic Finance Practice in KPMG Ireland and is a member of KPMG’s Global Islamic Finance Group. Professional Experience • Tom joined KPMG Ireland’s Financial Service tax practice in 2002 having worked with Arthur Andersen prior to this.

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KPMG Ireland – Aviation Finance & Leasing Practice “Its [KPMG’s] tax, listing, audit, financial modelling and due diligence experience give the institution a unique position in the aviation finance centre of excellence that is Dublin.” KPMG in Ireland has the biggest concentration of aviation leasing clients of any firm in the world, including the major deal-makers and deal-doers in the global aviation finance market. We currently act as adviser to every major aircraft lessor. We have been involved in aviation finance transactions in over 150 countries worldwide,

and we are recognised globally within KPMG as the Centre of Excellence for the industry. KPMG Ireland is the only professional services firm identified in the ‘AirFinance Power 30’ list of companies that make an essential contribution to aviation finance. To qualify, all companies had to meet one test: if they went out of business would the market feel a significant loss? “The most common link between the Dublin lessor community can be summed up in four letters – KPMG.”

The world’s capital market

japan Shimon Takagi White & Case Tokyo Partner Tel: + 81 3 6384 3182 stakagi@whitecase.com www.whitecase.com

Off-shore Asset Reporting Requirement in Japan 1. Overview Japan created a new off-shore asset reporting requirement. According to the new legislation, Japanese residents other than non-permanent residents are required to file an information return by March 15 if the amount of such residentâ&#x20AC;&#x2122;s off-shore assets exceeds 50 million yen at the end of the preceding year.

Whether the asset is located in Japan or not is determined by Article 10 of the Inheritance and Gift Tax Act. Article 10 of the Inheritance and Gift Tax Act provides for a situs rule in respect of the asset because the Japanese Inheritance and Gift Tax Act distinguishes between an unlimited taxpayer who is liable for any asset and a limited

18 | International Adviser Tax Handbook | www.intladviser.com

taxpayer who is only liable for inheritance and gift tax regarding assets located in Japan.

a. Immovable and Movables (Inheritance and Gift Tax Act Article 10 (1) Item 1)

The situs of the property is important in determining whether a limited taxpayer is subject to tax and whether an unlimited taxpayer is entitled to a credit for foreign taxes paid on property situated outside Japan.

Property, whether movable or immovable, and rights over property are located where the property is physically situated or the rights are exercised. b. Ships and Aircraft (Inheritance and Gift Tax Act Article 10 (1)

Item 1 proviso) The situs of ships and aircraft is at the place of registration. c. Mineral right, mining right and right of quarrying (Inheritance and Gift Tax Act Article 10(1) Item 2) The situs of such a right is the location of the mine or quarry. d. Fishing right and fishing area entry right (Inheritance and Gift Tax Act Article 10 (1) Item 3) The situs of such a right is the administrative district where cities and towns along the coast line nearest to the fishing area are located. e. Deposit money, saving money, accumulated money, and custody money at financial institute (Inheritance and Gift Tax Act Article 10 (1) Item 4, Inheritance and Gift Tax Act enforcement Ordinance 1-13) The situs of such money is the location of the branch and office where such deposit money, saving money, accumulated money, and custody money was accepted f. Insurance proceeds and right regarding insurance (Inheritance and Gift Tax Act Article 10 (1) Item 5, Act on Submission of Statement of Overseas Wire Transfers Regulation Article 12(2)) The situs of such proceeds or right is the location of the main office or principal business place of the insurance company that is party to the relevant insurance contract g. Retirement allowances, reward for service or similar salaries (including certain annuity and right of rump-sum payment) (Inheritance and Gift Tax Act Article 10 (1) Item 6, Inheritance and Gift Tax Act enforcement Ordinance 1-3) The situs is the location of the address, head office or principal business place of the person who paid such salaries. h. loan receivables (Inheritance and Gift Tax Act Article 10 (1) Item 7, Inheritance and Gift Tax

Act enforcement Ordinance 1-14) The situs of loan receivables is generally the location of the address, head office or principal business place of the debtor. i. debenture or stock, contribution to a corporation or certificate of foreign depositary receipt. (Inheritance and Gift Tax Act Article 10 (1) Item 8, Inheritance and Gift Tax Act enforcement Ordinance 1-15) The situs of these securities is the location of the address, head office or principal business place of the issuing company. j. rights regarding collective investment trust and corporate taxation trust (Inheritance and Gift Tax Act Article 10 (1) Item 9) The situs of these rights is the location of the address, head office or principal business place of the trustee of these trusts. k. patent rights, utility model rights, design rights, or registered right of implementation of these rights, registered trademark rights, Layout-Design Exploitation Right, Plant breeder’s right and registered exploitation right (Inheritance and Gift Tax Act Article 10 (1) Item 10) The situs of these rights is the address of the registration institute where registered. l. copyrights, publication rights or copyright neighboring rights in case objects of such rights are published (Inheritance and Gift Tax Act Article 10 (1) Item 11) The situs of these rights is the address of the sales office or business office of publication. m. rights other than above a. through l, concerning to sales or business of the person who has sales office or business office (Inheritance and Gift Tax Act Article 10 (1) Item 13) The situs is the location of the sales office or business office.

n. government bond and local government bond (Inheritance and Gift Tax Act Article 10 (2)) The situs is Japan. o. public bond issued by foreign government, foreign local public organization and other similar body (Inheritance and Gift Tax Act Article 10 (2)) The situs is the relevant foreign country. In addition to the above rules described in Article 10(1) and (2) of the Inheritance and Gift Tax Act, the Act on Submission of Statement of Overseas Wire Transfers provides the following rules for certain assets. (Enforcement Ordinance of Act on Submission of Statement of Overseas Wire Transfers Article 10(6), Regulations of Act on Submission of Statement of Overseas Wire Transfers Article 12(3).) p. depositary money, margin requirement money and other guarantee money The situs of such guarantee money is the address of the sales office and business office that accepted such guarantee money. q. mortgage securities or securities or certificated representing options The situs of such securities is the location of the address, head office or principal business place of the issuer. r. contribution of partnership agreement, silent partnership agreement and other similar type of agreement The situs of such agreements is the location of the address, head office or principal business place of the business based on such agreements. s. rights regarding trust (other than (j) above) The situs is the location of the sales office and business office and other similar place where the trust was accepted.

The situs of these assets is the address of the domicile (or residence if a person has no domicile) of the person who owns such assets. 2. Special issue However, it is quickly pointed out that the rule is not reasonable if securities are deposited with a financial institute. For example shares issued by a foreign corporation are non-Japanese assets. However, if a securities firm which has an office in Japan manages shares in a foreign company, the government can obtain information from such securities firm. On the other hand, a Japanese government bond held by off-shore securities firms cannot be captured by the Japanese government without disclosure by the taxpayer. Therefore, the law has been amended by a 2013 tax reform, before implementation, to exclude foreign securities (stock, debentures and other securities issued by foreign corporation etc.) that are deposited with business offices of financial institutions located in Japan from the definition of a foreign asset, and to include securities issued by Japanese corporations and deposited with business offices of financial institutions located outside of Japan. This amendment will result in a reasonable conclusion in most cases. However, it is not clear if this amendment is enough to cover the situation where a taxpayer still tries to hide an off-shore asset. For example if a Japanese government bond is deposited with a non-financial institution outside of Japan, it would be treated as a Japanese asset. Also, the use of a “nominee” could be a simple solution if the right to the nominee is not considered a type of asset specifically described in the rules. The government will keep attacking dishonest taxpayers with more revisions in the future.

t. assets other than described in (a) through (s) above International Adviser Tax Handbook | www.intladviser.com | 19

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Deutsche Bank International Limited is regulated by the Jersey Financial Services Commission and licensed by the Guernsey Financial Services Commission to conduct Banking and Investment Business 20 | International Adviser Tax Handbook | www.intladviser.com

BELGIUM, THE nETHERLAnDS, LUXEMBOURG, CyPRUS, MALTA, MOnACO, SWITzERLAnD. Cygnet Technology Glen Schley Director Tel: +31 10 286 19 22 info@cygnet-ecm.com www.cygnet-ecm.com

Cygnet Cloud, Control Your Greatest Needs Eﬃciently Today! Cygnet Cloud, our front line product, is a Cloud enabled document/file management system. In short it is browser based and allows for seamless 24/7 access, management and control of ALL documents/files whether the documents originate from a hard or soft copy source. The structured nature of the File Plan, based on 20 years industry experience, coupled to the strong indexing rules and its user friendly interface provide unmatched efficiency gains to an organisation. In addition to the efficiency gains from operations, Cygnet Cloud also provides very effective and secure off-site backup and disaster recovery support. The backup schedule is defined in consultation with the customer and their wishes. In general terms noble Solutions usually tackles implementation on a modular basis. This approach, based on experience, prevents “change overload” and project abandonment. We generally tackle items in the following chunks, some of these are worked on in parallel; 1. Online Document Management System (DMS) with clear defined FilePlan and Indexing rules. These rules are built from 20 years industry experience and supplemented with the organisations own unique input. Which includes: • Front end invoice processing module which incorporates scanning an invoice and following to automatic accounts processing and authorisation work flow. • Front end scanning tools which can be combined with third party accounting programs to enable automatic indexing and processing of invoices and bank statements. Imagine no more manual input of invoices to accounting programs and at the same time have these invoices filed and indexed correctly so that they are accessible by all. • Front end scanning tools which will allow for the

automatic indexing of common documents such as signed POA’s, Articles of Association, Trade register documents, Share certificates, tax assessments and more standardised documents whether these are scanned or arrive by email. • Document creation tools based on the organisations own set of standard documents. no more struggling to maintain an organisation wide profile because users are unable or unwilling to source the most recent set of company defined templates. Every document template is accessible within than 2/3 clicks. • Document versioning capabilities, including easy rollback, ensure that all users have access to the most recent document. • Powerful reporting tools which can be used to view user activity and document history. • Work Flow tools to ensure that project documentation flows freely throughout the organisation regardless of time zone or personnel availability. • Full text search on all documents stored in Cygnet ECM

will allow for the scheduling of specific tasks for workgroups to ensure that essential requirements of the corporate management industry are met. Real benefits from Cygnet Cloud services: Failsafe security & Business continuity – Data and document security is paramount. Cygnet tightly controls internal and external user access to ensure total privacy and integrity. Cygnet does this by using the latest developed Security Sockets Layer (SSL) which is used by secure Internet banking systems to fully encrypt all data communications during transmissions. Cygnet Cloud supports disaster recovery planning and strengthens an organisations IT resilience, thereby safeguarding mission critical document, records and emails. Offers short time Return on Investment –

and relatively low risk, they can can be inflexible to change compared with programmable, custom solutions. Cygnet Cloud combines the best of both worlds; by incorporating extensive configuration capabilities into a solutions that is essentially offthe-shelf, Cygnet Cloud customers realise immense value in a very short time scale. Efficiency and scalability are two of the reasons that Cloud is becoming a fundamental component in the supply chain of many organizations. (Source: KPMG - Tax in the cloud.) Besides all of the listed features of what Cygnet Cloud can do for an organisation and the real time benefits that are a direct result of implementation, Cygnet Cloud is a Software as a Service (SaaS) and therefore will be able to provide support and assistance at any time. For any additional information please contact us.

While off-the-shelf solutions are typically quick to implement

2. Integrate Cygnet Cloud enabled Email Management System (EMS) with the DMS to provide up to 6 hours efficiency gain per user per week. This ensures that front line users have in one source all the necessary information to deal with their daily tasks. This includes: • Capture of all incoming and outgoing emails automatically from all sources including mobile devices. • Contact management. This can either be used as the front line CRM tool or can support an organisations primary CRM program. you can even integrate VoIP systems. 3. A fully functional calendar that will not only provides for multiple agendas but

International Adviser Tax Handbook | www.intladviser.com | 21

PORTUGAL PLMJ João Magalhães Ramalho, head of the TAX practice jmr@plmj.pt www.plmj.com

Portugal has a strong mix of drivers and skills that make it a privileged destination for leading global companies and industries: • Strategic location; • Gateway to wider markets; • Highly developed infrastructure and communications; • Business friendly environment; • Highly skilled workforce and adaptable human resources; • Top destination for global multinationals; • Competitive tax system. Regarding the first factor, Portugal truly has a privileged geographic location. Located on Europe’s west coast and in the same time zone as London, Portugal is the nearest European country to the US and Brazil and this makes us a privileged entry point to the European Union (EU). Portugal really is a strategic platform for African and Portuguese-speaking countries making it an effective gateway to wider markets - the second factor. Portugal is an EU Member State and part of the Eurozone. As such it enjoys benefits including free trade, non-tariff barriers and free movement of labour and capital. Furthermore, Portuguese is the fifth most widely spoken language in the world, covering countries like Brazil, Angola, Mozambique, Cape Verde, São Tomé and Principe, GuineaBissau and East Timor and Portugal lies at the heart of this group of countries. The third item reflects our highly developed infrastructure, logistics and communications network. We have five main sea ports receiving international traffic. All have rail access and regular cargo lines linking Portugal to north, Central and South America, Asia, Africa, Europe and the Middle East. We have four

international rail routes exiting Portugal that account for a complete logistical chain, with rail-road-port terminals throughout the country. Portugal also has one of the most developed road systems with excellent international and national accessibility. When it comes to technological communications, 90% of public services are online. Portugal is the EU country with the greatest internet coverage and benefits from the second highest broadband speed among OECD countries. The fourth factor is Portugal’s business friendly environment. This is a global nation which is open to foreign cultures, religions and beliefs. Last year Portugal ranked number two in the Migrant Integration Policy Index. Within this context it is worth mentioning the new golden visa regime which allows for non-EU individuals to obtain under very favourable conditions a visa permit, and therefore full access to the EU. Regarding business itself, all major public services are online and it is even possible to set up a company using the Internet on less than an hour. Additionally, a number of legal obligations have been eliminated or simplified, allowing investors to focus in their activities. Our highly talented workforce and the adaptability of our human resources make up the sixth factor. 42% of Portuguese people speak a second language and the study of English, plus French, German or Spanish is mandatory from elementary school. Portugal is a top destination for global multinationals, and this is the seventh factor. Portugal has a competitive tax system in line with most of its European

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counterparts and it follows most OECD guidelines. At an international level, Portugal is part of all EU Directives envisaging the elimination of double taxation and has signed more than 50 conventions to eliminate double taxation, including with all Portuguese-speaking countries, except Angola, which has not yet entered into any treaties. Another factor worthy of consideration is that Portuguese tax legislation includes a specific rule providing for the elimination of economic double taxation of profits distributed by companies resident in Portuguese-speaking African countries and in East Timor. At a domestic level, Portuguese tax legislation also makes provision for some tax and financial benefits designed to encourage foreign investment which are worth mentioning. Another important factor is that capital gains made on the transfer of securities by foreign entities that are not domiciled in blacklisted jurisdictions and which are not subject to indirect control of 25% or more by Portuguese residents, benefit from a full tax exemption. Portuguese legislation also features special debt securities tax rules under which investment income paid to nonresident beneficiaries, as well as capital gains deriving from the sale or other disposition of such debt securities are exempt from Portuguese income tax and consequently from withholding tax. Other withholding tax exemptions on interest and rent payments made by public entities to foreign lenders may also apply under certain conditions.

Moreover, a special personal taxation framework was established for non-habitual residents. In a nutshell, this regime applies to all individual taxpayers who become Portuguese tax residents provided they have not been taxed here as tax residents in the previous 5 years. Individuals are considered non-habitual residents upon registration with the local tax services. This new regime is in effect for a 10-year period and taxes employment and self-employment income from high value added activities performed in Portugal at a standard 20% rate. However, provided certain conditions are met, foreign-sourced income such as rental income, investment income and capital gains may be tax exempt. A range of tax incentives are also available for investment in business R&D, corporate restructuring and for investment projects deemed to be of interest to the country’s economic development and for reducing regional imbalances. Finally, it is worth noting that Portugal has implemented a tax arbitration system aimed at achieving a quicker resolution of tax disputes.

Skadden, Arps, Slate, Meagher & Flom LLP

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Skadden’s Brussels office handles merger control, cartel, abuse of dominant position and state aid issues. We advise clients on investigations before various agencies and in litigation, including enforcement proceedings, before European courts. Our lawyers assist businesses and governments on regulatory and liberalization issues, and we work closely with clients to design, implement and monitor worldwide antitrust compliance programmes. Our focus is on EU competition issues raised by mergers, acquisitions and joint ventures, and we are highly experienced in dealing with EU institutions and member state authorities.

Skadden’s Brussels office was recognized as one of the top firms in the area of European Union and International Competition by Chambers Europe 2011 and The Legal 500 2011. ‘This US M&A powerhouse has a highly respected competition and antitrust practice operating on both sides of the Atlantic.’ Chambers Global 2011 ‘An extremely strong player in the US and worldwide.’ Chambers Europe 2011 ‘Delivers an excellent service.’ The Legal 500 EMEA 2011

SLOVAK REPUBLIC White & Case Tomas Cibula Associate Tel: 00421 2 5441 5100 tcibula@whitecase.com www.whitecase.com

Changes in Slovak Tax System – Budget Deficit Measures In the context of the global economic crisis characterized by moderate economic growth and increasing unemployment, one of the main priorities for the Slovak Republic is the consolidation of public finances and the creation of conditions for their long-term sustainability. However, it sees only limited scope for cutting the costs of public administration. Therefore, a substantial part of public finance consolidation is to be achieved by increasing budgetary revenues. In particular, tax revenues. With this aim, significant changes of core tax laws – the income tax act and the act on value added tax – were adopted at the end of 2012. The social security and health insurance laws were also amended. The income tax amendments focus on the direct increase of tax revenues. The most notable change is the increase of the corporate income tax rate and the reintroduction of progressive personal income taxation. As of 2013, the corporate income tax rate is increased from 19% to 23%. Although the basic 19% personal income tax rate remains valid, it applies only to a maximum tax base of approx. EUR 34,400 in 2013; any tax base exceeding this amount is taxed at the newly introduced 25% tax rate.

in the amount of 40% of his/her overall income generated from business activities, instead of deducting actual tax expenses. However, from 2013, lump-sum expenses are capped at EUR 5,040 per year, i.e., EUR 420 per month. This limitation will result in higher taxes paid by entrepreneurs who earn more than approx. EUR 1,000 a month. In order to collect tax revenues earlier than last year, the possibility of automatically prolonging the deadline for the filing of income tax returns from three to six months by a simple notification addressed to the tax authorities was restricted only to those taxpayers who earned income from foreign sources. Furthermore, in order to motivate legal entities to distribute dividends from profits earned in the tax periods of 2003 and earlier (note that from 2004, dividends are not subject to tax in Slovakia) and to generate additional income for the state budget, a special, lower 15% income tax rate applicable to these dividends was introduced. Without this special tax rate, the distribution of these dividends would be subject to standard tax rates. Most of the value added tax amendments aim to combat

Until 2012, a natural person who was an entrepreneur and not a VAT payer during the entire tax period was entitled to deduct lump sum expenses

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tax abuse and thus increase tax revenues indirectly; the others are of a technical character, generally as a result of the implementation of European directives. The introduction of the requirement to pay a guarantee upon registration for VAT purposes is the most notable. Taxable persons who are considered “risky” are obliged to provide a guarantee of EUR 1,000 to EUR 500,000 at the discretion of the tax authorities. A taxable person is considered “risky” if it or its shareholders, statutory representatives or companies owned or managed by them had previous tax arrears or were de-registered because they were “unreliable” (e.g., they failed to file VAT returns or pay taxes on time). The obligation to provide a guarantee also applies to taxable persons which only perform preparatory activities in order to conduct business. The tax authorities are also entitled to de-register “unreliable” taxpayers who fail to comply with their duties. Also, foreign entities registered in Slovakia who do not supply goods and services in Slovakia (except for reverse-charged

supplies) are generally not permitted to deduct input VAT incurred in Slovakia through a VAT return, but only through the VAT refund procedure. The most notable changes in the social security and health insurance laws include the unification of the maximum assessment base for all types of social insurance and health insurance – with respect to any kind of employment income, all social security assessment bases (apart from injury insurance) and the health insurance assessment base are now equal to five times the average Slovak monthly salary. For employees earning more than EUR 1,153 monthly, this ultimately means higher social and health insurance contributions in 2013. Although dividends are not subject to income tax in Slovakia, they are subject to health insurance contributions if the recipients fall within the scope of Slovak health insurance law. The contributions with respect to dividends from profits earned in 2013 and beyond will be significantly higher than in previous years as a result of the increased cap and rate. For more details, feel free to contact White & Case Slovakia at the contact details listed above.

NYSE EuroNExt –

HELPING COMPANIES KEEP UP WITH A CHANGING WORLD NYSE EURONEXT IS ONE OF THE LEADING FINANCIAL MARKET OPERATORS IN THE WORLD, WITH EXCHANGES IN THE UNITED STATES AND EUROPE: THE NEW YORK STOCK EXCHANGE, NYSE EURONEXT, NYSE AMEX AND NYSE ALTERNEXT. THESE EXCHANGES CATER TO COMPANIES OF ALL SIZES AND FROM ALL SECTORS. NYSE EURONEXT IS THE WORLD’S MOST LIQUID STOCK EXCHANGE GROUP, HANDLING OVER ONE-THIRD OF GLOBAL TRANSACTION VOLUMES. FROM THE OUTSET OF THEIR LISTING, COMPANIES GAIN ACCESS TO A SECURE MARKET, STATE-OF-THE-ART TECHNOLOGY, MADE-TO-MEASURE ADVICE AND THE WORLD’S BROADEST INVESTOR BASE. IN 2005, TO OFFER EUROPEAN SMALL AND MID-SIZED COMPANIES ADDITIONAL FINANCING OPTIONS AND ACCELERATE GROWTH, NYSE EURONEXT CREATED A MARKET TAILORED TO SMALL AND MID CAPS – NYSE ALTERNEXT – WHICH MET WITH IMMEDIATE SUCCESS. NYSE EURONEXT OFFERS LISTED COMPANIES HIGH VALUE-ADDED ADVICE ON HOW TO RAISE FINANCING ON ITS EXCHANGES. IT ALSO PROVIDES A HOST OF SERVICES, INCLUDING EXPERTLINE (AN INTERACTIVE PLATFORM BASED IN THE CENTRALISED EUROPEAN MARKET SURVEILLANCE ROOM), A DEDICATED WEBSITE, A QUARTERLY NEWSLETTER (LISTINGS EXCHANGE) AND TRAINING IN BEST PRACTICES THROUGH FREQUENT REGULATORY AND FUNCTIONAL WORKSHOPS.

NYSE EuroNExt NYSE ALtErNExt NYSE NYSE AMEx Welcome to the exchanging world of NYSE Euronext. http://europeanequities.nyx.com MyQuestion@nyx.com

©2012 NYSE Euronext. All rights reserved. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of NYSE Euronext. NYSE Euronext and its affiliates do not recommend or make any representation as to possible benefits from any securities or investments, or third-party products or services. Investors should undertake their own due diligence regarding securities and investment practices. This material may contain forward-looking statements regarding NYSE Euronext and its affiliates that are based on the current beliefs and expectations of management, are subject to significant risks and uncertainties, and which may differ from actual results.

SWEDEn Svalner Tax & Transaction Robert Tranquilli Partner Tel: +46 70 840 12 78 Robert.tranquilli@svalner.se www.svalner.se

Svalner – Sweden’s leading independent Tax and Structuring adviser Svalner is Sweden’s leading independent tax and structuring advisor with a full service offering covering all tax disciplines, but with a focus on M&A tax, structuring and cross border transactions. Banking & Finance, Real Estate, Private Equity, Litigation and VAT are the industry sectors and services that define our firm and where we proudly can say we have a leading position. Our team consists of more than 30 tax lawyers and specialists and we offer tax advice primarily to medium-sized and large companies, both listed and unlisted. For international work we have a broad non-exclusive network allowing us to either introduce the client to our affiliates or follow the client using their local advisors as the case may be.

Our dynamic mix of people with backgrounds from big four, law firms and in-house tax lawyers together with experience from the Supreme Administrative Court and the Tax authority allow us to have a diversified, accurate and hands on view in most tax matters. Our broad experience and understanding of the tax issues both theoretically and practically gives us an edge in our advice. We consider ourselves to be modern and timeless advisors with a pragmatic approach in solving problems creating value for the client. Our independent position, coupled with dedication and accessibility is the foundation of our advice and something highly appreciated by our clients. It is also something that distinguishes us from our competitors primarily the large audit firms.

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Biography: Position: Partner Experience: Robert has extensive experience as a tax lawyer mainly focusing on M&A and Private Equity tax and transactions. Before joining Svalner in 2012 Robert was the Head of Tax and Structuring at Investor AB, Scandinavia’s largest investment company listed on the Swedish Stock Exchange, prior to that he worked as a tax lawyer at PwC. Since 2007 Robert has been a member of the ICC (International

Chamber of Commerce) reference group for taxes. Business Focus: M&A tax and transactions with a special focus on Private Equity and fund structuring Languages Spoken: Bilingual Swedish, Italian, and English

GLOBAL EXPERIENCE LOCAL IMPLEMENTATION With 77 offices in 31 countries of the world, we provide our local and international clients with the full range of legal services, no matter where they choose to do business.

ContaCt us in ukraine DLA Piper Ukraine LLC | 77A Chervonoarmiyska Str. | Kyiv 03150 t +380 44 490 95 75 | F +380 44 490 95 77 ukraine@dlapiper.com For the full list of our legal services & locations see www.dlapiper.com

www.dlapiper.com | DLA Piper

DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at www.dlapiper.com FEB12 | 2062898

Deutsche Bank DB Climate Change Advisors

We all have an investment in fighting climate change. As one of the world’s foremost climate change investors, Deutsche Bank’s Asset Management division is a leader in ideas, research and investment strategies that enable our clients to identify and channel capital towards companies that will help the world to mitigate and adapt to the shifting climate. The financial potential is significant — the environmental rewards incalculable. www.dbcca.com

DB Climate Change Advisors is the brand name for the institutional climate change investment division of Deutsche Asset Management, the asset management arm of Deutsche Bank AG. I018636 (08/10). The services described in this advertisement are provided by Deutsche Bank AG or by its subsidiaries and/or affiliates in accordance with appropriate local legislation and regulation. © 2010 Deutsche Bank AG.

SWITzERLAnD H&P Trust Group Fréderique van Gelderen Partner Tel: +41 41 729 63 63 enja.zwakenberg@henleytrust.com www.henleytrust.com

The firm is an international trust boutique with offices in key locations worldwide, including Switzerland, the netherlands, Cyprus, Malta, Luxembourg, Liechtenstein, Czech Republic, Austria, Hong Kong, Colombia, Brazil and the Caribbean. H&P Trust Group The H&P Trust Group is a highly regarded provider of trust and corporate services in multi-jurisdictional tax planning, asset protection and tax-efficient exit structures for private clients, entrepreneurs and family owned businesses. The partners and senior staff of the H&P Trust Group consist of highly experienced tax advisors, lawyers and accountants with a broad knowledge of international tax planning, asset protection structures and the fiduciary services industry. By designing and implementing effective and creative solutions, the H&P Trust Group attracts clients who are accustomed to Expect Success. The H&P Trust Group is closely connected with Henley & Partners, the world’s leading specialists in international residence and citizenship planning.

Through our offices, we can assist clients in setting up structures and managing companies, trusts, funds and foundations. On the basis of our network of preferred partners, we can also coordinate activities in other jurisdictions such as Singapore, Panama, Mauritius, Seychelles, the Cayman Islands, Latin-America, the British Virgin Islands, the Channel Islands, South Africa, Dubai, Belgium and the United Kingdom. The H&P Trust Group also specializes in the development and implementation of taxcompliant exit scenarios whereby we assist clients to exit an inactive corporate holding or investment structure. These exit scenarios include but are not limited to the structuring of cash-rich companies located in various jurisdictions. We currently perform this activity from our offices in Switzerland, the netherlands, Malta and Luxembourg. As an independent group, we can work with various tax and legal firms as well as wealth managers and (private) banks. This gives us the opportunity to introduce clients and their associates to various sound

OUR ACTIVITIES The H&P Trust Group focuses on the implementation and maintenance of global tax planning and asset protection structures for private clients, entrepreneurs and family owned businesses. We work in close cooperation with the client’s own advisors in creating effective tax and legal solutions. We specialise in generating added value by providing professional input as well as creative ideas and solutions on the basis of our experience and knowledge in the important jurisdictions.

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international (tax) lawyers and banks in all the relevant jurisdictions. The H&P Trust Group is proud to serve reputable families, entrepreneurs and their companies around the globe. We believe in adding value by providing a top quality service with a personal approach and fair pricing. HOW DO WE OPERATE? We like to know our clients personally in order to better understand their business, needs and wishes. Therefore we usually start a relationship with a client and his/her advisors by organizing a meeting in which we make an inventory of the client’s current personal and business situation and define his or her goals and needs. We may mention some global structuring opportunities, which we would subsequently discuss with the client’s tax and legal advisors in order to define the best way forward and to decide on the structure to be set up. Once this decision has been made, we implement the structure and take full responsibility for its

management and maintenance. To ensure that we consistently satisfy the high expectations of our clients, the H&P Trust Group is guided by four principles: • To offer our services only if we feel that we can be of genuine assistance. Without exception. • To extend a highly professional and personal service to all our clients. Worldwide. • To find the best solutions available anywhere by means of a rigorous and efficient approach. At all times. • To base all our business on honesty, integrity and high ethical standards. Without compromise.

United Kingdom Sara Luder Head of Tax Slaughter and May One Bunhill Row, London EC1Y 8YY sara.luder@slaughterandmaycom Tel: +44 20 7090 5051

The tax issues facing businesses with a tax presence in the UK have changed dramatically over the last five years. In 2008, the UK saw a number of key UK groups seek to leave the UK, but this trend has now been reversed and the UK is now seen by many as “open for business”. Slaughter and May has been active in advising in this area, and we have significant expertise in advising international groups on both inward and outward investment. The UK prides itself on being business-friendly, and a series of changes to its tax regime for corporates has made the UK an attractive location for holding companies. In particular, the UK now has a corporate dividend exemption, an exemption for capital gains arising on the sale of trading subsidiaries and a revised regime for the taxation of controlled foreign companies which is more appropriate to the modern world. The UK has always been a popular location for locating businesses for a number of non-tax reasons; these changes, combined with the UK’s excellent network of tax treaties and the absence of any withholding tax on dividends paid by UK companies, means that the UK tax regime should also be attractive to businesses for tax reasons.

Profile: Slaughter and May is a leading law firm with an international corporate, commercial and financial practice. It provides its clients with a professional service of the highest calibre, combining technical excellence with commercial awareness and a practical, constructive approach to legal issues. International work is central to the firm’s practice. Throughout the world, the firm’s lawyers are highly regarded for their excellence, broad experience and versatility. They are renowned for their ability to find effective ways to address the toughest challenges. Slaughter and May’s highly experienced Tax group consists of eight partners and twenty to twenty-five other specialist lawyers. Each member of the group has a wide-ranging practice which enables them to provide not only a depth of tax expertise, but also a real breadth of commercial experience, market awareness and sound judgement. The group advises on the tax aspects of the full range of corporate, commercial and financial transactions. Its services include:

• structuring the biggest and most complicated mergers and acquisitions and corporate finance transactions

• Structured finance

• developing innovative, problem-solving financing structures

• Transfer pricing

• producing documentation to implement transactions • structuring private equity transactions and investment funds from initial investment to exit • advising on tax investigations and disputes - whether representing clients before the Tax Tribunals and the Courts, or negotiating settlements with HMRC • a stand-alone tax consultancy service The group has particular expertise in the following areas: • Mergers and acquisitions • Flotations and privatisations • Group reorganisations • Private equity • Investment funds • Real estate transactions • Banking and capital markets

• Asset finance and leasing • Securitisations • Investigations and disputes Slaughter and May is ranked as a Band 1 firm for Tax in Chambers UK, 2013, Chambers Global, 2013 and Chambers Europe, 2012, and a First Tier firm for Corporate Tax in The Legal 500, 2012. Most of the transactions on which we advise have an international element. Within Europe we regularly work on an integrated basis with the tax specialists at the other Best Friend firms, who share our values and desire to provide the highest quality tax advice. Our core Best Friend firms are Bonelli Erede Pappalardo (Italy), Bredin Prat (France), De Brauw Blackstone Westbroek (Netherlands), Hengeler Mueller (Germany), and Uría Menéndez (Spain and Portugal). In addition to working together on transactions, we meet regularly with the tax partners at these five firms to socialise and to discuss matters of common interest and we frequently share tax technical and market know-how. As a result, the partners know each other and work well together.

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Sara Luder Sara is Head of the firm’s Tax practice and specialises in most aspects of corporate taxation. Sara has extensive experience of corporate transactions including acquisitions, disposals, flotations, demergers and corporate reconstructions, as well as

Steve Edge Steve advises on the tax aspects of private and public mergers, acquisitions, disposals and joint ventures, and on business and transaction structuring (including transfer pricing in all its aspects) more generally. He also advises many banks, insurance companies, hedge funds and others in the financial services sector in a wide range of areas. Steve has long had a reputation for being one of the most constructive and problem-

Tony Beare Tony's practice covers all direct taxes, stamp duty and value added tax but, in particular, corporate tax. His main area of expertise is structured finance but he also has considerable

Graham Iversen Graham is a corporate tax specialist, with particular expertise in mergers and acquisitions (public, private, domestic and cross-border), structured finance, private

William Watson William’s practice covers all UK taxes relevant to corporate, financing and real estate transactions; besides corporation tax, this includes value added tax, the various stamp duties and other direct taxes.

Jeanette Zaman Jeanette's practice includes all direct taxes, stamp duties and value added tax with a strong focus on corporate tax. She has considerable experience advising on mergers and acquisitions, 32 | International Adviser Tax Handbook | www.intladviser.com

considerable experience in structured finance, securitisation and leasing transactions. She has advised on disputes with HMRC which have been settled following negotiation or which have proceeded to litigation. Sara is named as a leading individual for Corporate Tax

in The Legal 500, 2012 and for Tax in the 2013 editions of Chambers UK and Chambers Global, and Chambers Europe, 2012. She was awarded 'Best in Tax' at IFLR's 'Euromoney LMG Europe Women in Business Law Awards 2012' and features in The Lawyer's Hot 100 Dealmakers list.

solving tax advisers, and for having close relationships with HM Treasury and HMRC. He has regularly been involved in public and private consultations on the development of our tax system. In recent years, Steve has been heavily involved in several large scale interventions under HMRC’s high risk corporates programme and in many in-depth tax investigations of specific domestic or international issues. He thus has considerable experience of negotiating and dealing with HMRC at all levels.

A large part of Steve's practice involves advising non-UK multinationals (particularly those based elsewhere in Europe and in the US) on cross-border transactions and tax issues.

experience in private and public mergers and acquisitions and debt and equity capital market transactions.

and Chambers Global, and in Chambers Europe, 2012. He is recommended in the Corporate Tax section of The Legal 500, 2012.

Tony is listed as a leading individual for Tax in the 2013 editions of Chambers UK

equity, corporate reconstructions, and public debt and equity issues. Graham is listed as a leading individual in the Tax section of the 2013 editions of Chambers UK and Chambers Global, and

Steve is named as a star individual in the 2013 editions of Chambers UK and Chambers Global, and in Chambers Europe, 2012. He is also a recommended individual for Corporate Tax in The Legal 500, 2012 and has been rated the ‘World’s best corporate tax lawyer’ by Who’s Who Legal in each of the last five years.

in Chambers Europe, 2012. He is a member of the British Private Equity & Venture Capital Association (BVCA) Tax Committee.

William has developed a special interest in tax issues relevant to real estate and was a member of the group formed by HMRC and the British Property Federation to advise on the introduction and subsequent refinement of the Real Estate Investment Trust

regime. He also has extensive experience of mergers and acquisitions, debt and equity financing and tax litigation.

demergers and corporate reconstructions as well as structured finance transactions. She has also been involved in advising on disputes with HMRC.

individual for Tax in Chambers UK, 2013. She is a member of the Tax Law Committee of the Law Society and its International Tax Sub-Committee.

Jeanette is listed as a leading

William is listed as a leading individual in the Tax section of the 2013 editions of Chambers UK and Chambers Global.

Gareth Miles Garethâ&#x20AC;&#x2122;s practice covers all direct taxes, stamp duties and value added tax with a strong focus on corporate tax. He has extensive experience of corporate transactions, including,

Michael Lane Mikeâ&#x20AC;&#x2122;s practice covers all direct taxes, stamp duties, value added tax and, in particular, corporation tax. He has extensive experience in advising on mergers and acquisitions, capital

in particular, mergers and acquisitions (public, private, domestic and cross-border) and group reconstructions. Gareth is listed as a leading individual in the Tax section of Chambers UK, 2013 and

markets transactions, group reorganisations and structured finance.

Chambers Europe, 2012 and is recommended in the Corporate Tax section of The Legal 500, 2012. He is a member of the City of London Revenue Law Committee.

Act Handbook and speaks at various conferences on Tax issues.

Mike is recommended for Corporate Tax in The Legal 500, 2012. He is a regular contributor to the Tax Journal and Finance

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U.S. Virgin Islands Marjorie Rawls Roberts, P.C. Marjorie Rawls Roberts President Tel: 1-340-776-7235 Jorie@MarjorieRobertspc.com www.marjorierobertspc.com

U.S. Virgin Islands Economic Incentive Programs The U.S. Virgin Islands (“USVI”), an unincorporated territory of the United States, offers targeted tax incentives to attract certain types of businesses to establish and carryout operations in the territory. The USVI offers the incentives through two programs, the USVI Economic Development Program and the University of the Virgin Islands Research and Technology Park Program. The territorial and Federal legal requirements for, and specific benefits of, each program are set out below. I. Economic Development Program Benefits, administered by the Economic Development Commission (“EDC”), are available for designated service businesses, including financial services companies, investment managers and advisors, business and management consultants, international trading and distribution, and any other businesses serving clients outside the USVI. The benefits also extend to the dividends or allocations received by their bona fide resident owners. To qualify for benefits, an applicant must meet the requirements of the territory’s economic development program law (“EDC Program”), as well as receive income that is eligible for tax incentives under the Internal Revenue Code of 1986, as amended (“Code”), and the Treasury Regulations promulgated thereunder. A. Benefits The EDC Program benefits include a credit equal to 90 percent of the otherwise applicable income tax, which applies both to the business receiving the benefits on income from the benefitted business and to the bona fide USVI resident owners on their allocations or dividends. In addition, every EDC Program beneficiary can receive benefits for income from loans in excess of $1 million made to USVI borrowers meeting certain statutory criteria and on income from capital contributions in excess of $1 million made to USVI business entities or business entities in the USVI. Although beneficiaries are permitted to make such capital contributions without modifying their certificates, they must promptly advise the EDC in writing of such investments. Salaries and other forms of compensation such as guaranteed payments are fully taxable.

No withholding tax is imposed by the USVI on payments to U.S. corporations. Further, beneficiaries with foreign corporate owners are exempt from withholding tax on interest payments and are subject to a reduced withholding tax rate of 4.4 percent on dividend payments. Similarly, no income tax is payable on interest paid to nonresident alien individuals and the tax rate on dividends paid to nonresident individuals is four percent.

meet the requirements imposed by the territory’s coastal zone management and building codes for all construction. EDC Program beneficiaries must provide certain employee benefits, including medical insurance, a pension benefit plan, and vacation and sick leave or paid time off. Beneficiaries must also provide employees with a management training program and must commit to provide educational assistance in the territory.

Beneficiaries are also exempt from the territory’s five percent tax on gross receipts and on property tax if they own the building where their business is located. The personal homes of the owners of a beneficiary do not receive the property tax exemption, even if the respective owners maintain home offices. Moreover, if a beneficiary rents an office, the property tax exemption does not pass through to its landlord.

C. Benefit Periods

B. Requirements The EDC Program’s focus has been on direct and indirect job creation in the USVI. This objective is met through several requirements that every beneficiary must meet unless a waiver is granted. First, each beneficiary must have a minimum of ten full-time employees, within a year after the certificate granting the tax benefits is signed by the Chair of the EDC. However, recent legislation reduces the minimum employment requirement to five employees for designated service businesses that serve clients outside the USVI and that are engaged in “non-labor intensive financial services.” At least 80 percent of the employees must be USVI residents unless a waiver is granted. A USVI resident is someone who has lived in the territory for a year, or who has graduated from a territorial high school or the University of the Virgin Islands. Second, each beneficiary must agree to (and make) a minimum capital investment of at least $100,000, typically including build-out costs, office furniture and fixtures, and computers. A beneficiary must purchase goods and services locally when available, must make certain contributions to scholarships and public education, must provide a plan for civic participation, and must

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Benefits are available for initial periods ranging from ten to thirty years depending on where in the USVI the business is located. For example, benefits are available for thirty years for businesses located in the town of Frederiksted on the western end of St. Croix and for ten years in St. Thomas and St. John. Benefits can be extended for businesses that are in compliance with the requirements of their certificates, although the EDC may request additional investment or employment as one of the conditions for extension. Benefits are extended in five year increments and are reduced by 10 percent with an extension, so the income tax credit is equal to 81 percent of taxes rather than 90 percent. Currently, as long as a beneficiary is in compliance until its surrender date, it can terminate its certificate before it expires with no “cancellation” payment or repayment of any tax benefits. II. University of the Virgin Islands Research and Technology Park Program The USVI also offers targeted tax incentives to attract technology and other knowledge-based businesses to establish and carry-out their operations in the territory, which are administered by the University of the Virgin Islands (“UVI”) Research and Technology Park (“RT Park Program”). Like the EDC Program, the RTPark tax incentives also extend to the dividends or allocations received by their bona fide resident owners. To qualify for benefits, an applicant must meet the requirements of the territory’s RTPark Program, as well as receive income that is eligible for tax incentives under the Code and the Treasury Regulations promulgated thereunder.

A. Benefits Benefits are the same as those under the EDC Program, except that the RTPark Program also provides reduced withholding rates on royalty payments to foreign (non-U.S.) corporations and individuals of 4.4 and 4 percent respectively. B. Requirements Businesses must be a “KnowledgeBased Business” which by definition includes an “e-Commerce Business.” A “Knowledge-Based Business” is statutorily defined to include any business that uses highly skilled or highly educated personnel and a high level of research and development to create intellectual assets and property. An “e-Commerce Business” is defined to include any business involving electronically based data transactions for digitally based commerce. Examples of an e-Commerce Business include web-based marketing, financial settlements, telemedicine, and electronic data interchange and other digital supply transactions. A beneficiary entity of the RTPark Program must provide the RTPark with an agreed upon equity interest, negotiate an initial fee to the RTPark during the application process and an ongoing payment which can be a set amount or a percentage of gross income. A beneficiary must work closely with UVI to develop and offer such assistance and opportunities as scholarships, continuing education programs, consulting and research opportunities for faculty, guest lectures, and internship opportunities for UVI students. Such cooperation helps students gain the knowledge and training to obtain employment with technology based businesses. C. Benefit Periods The benefit period is 15 years regardless of where the beneficiary conducts its operations within the USVI. Benefits may generally be renewed for a period of ten years. Subsequent renewals are for periods of five years. III. Federal Legal Requirements for USVI Tax Incentives The USVI offers its economic incentives to businesses under a legislative mandate granted by

the U.S. Congress. Although the Congressional mandate has been amended several times, most recently in the Tax Reform Act of 1986 and the American Jobs Creation Act of 2004, the USVI has provided incentives for approximately 50 years which have greatly assisted the territory in diversifying its economy and developing jobs for its residents. The Code applies in the USVI under a “mirror” system whereby “USVI” is effectively substituted for “the United States” wherever the latter appears. In addition, the Code contains several sections — notably Code sections 932, 934, and 937 — that deal specifically with the USVI and, more particularly, govern the extent to which the USVI can grant tax incentives and how USVI residents file their returns. The USVI can grant tax benefits on any income that is from USVI sources and on certain income that is effectively connected with a USVI trade or business. In general, income earned by a beneficiary is USVI source income if it is fee or compensation income for services performed in the USVI and is reasonable for the services actually provided. Capital gains derived by a USVI business may also be eligible if certain requirements are met (other than certain gains from the sale of assets contributed by a U.S. resident who then moves to the USVI, which must typically be allocated). In addition, certain dividend and interest income from a USVI payor is USVI source income. Finally, income earned by a beneficiary may be effectively connected income with a USVI trade or business if it consists of non-U.S. source dividends or interest derived in the active conduct of a banking, financing, or similar business. The USVI can never reduce or rebate tax on income from U.S. sources, except for sales of inventory manufactured in the USVI where title passes in the United States. Of course, to be eligible in any case the income must also fall within the certificate granted to the business by the EDC or the agreement issued by the RTPark. The Federal legal requirements are the same for both programs, and the Internal Revenue Service has issued specific examples regarding the application of the source rules to beneficiaries of the RTPark Program.

IV. Bona Fide Residency in the USVI The test for determining bona fide residency in the USVI for income tax purposes requires a taxpayer to (i) be present in the USVI for at least 183 days or meet one of four additional tests established by Treasury Regulation; (ii) not have a tax home outside the USVI for the taxable year; and (iii) not have a closer connection to the United States or a foreign country than to the USVI. An individual must meet all three tests in order to be a bona fide resident of the USVI for income tax purposes. Each person who is a bona fide resident of the USVI during the entire taxable year as provided under the Code must file an income tax return – Federal Form 1040 – for the taxable year with the Virgin Islands Bureau of Internal Revenue and pay tax on his or her worldwide income to the USVI. Information: Marjorie Rawls Roberts, P.C. is a tax, corporate and investment law firm composed of six attorneys specializing in the application of the U.S. Internal Revenue Code to the USVI, estate planning for USVI residents, and qualifying for and ongoing compliance under the EDC and RTPark Programs. The firm’s clients include investment bankers, hedge fund managers, hotels, recreational businesses, and retail operations. Marjorie Roberts, the President of the firm, received her law degrees from Harvard Law School and Cambridge University and previously worked at the international law firm of Gibson, Dunn & Crutcher, was an attorneyadvisor at the U.S. Department of Treasury’s Office of Tax Policy, was Chief Counsel to the Virgin Islands Bureau of Internal Revenue, and was General Counsel to Globalvest Management Company, a hedge fund manager, before starting the firm in 1999. She is admitted to practice in California, the U.S. Virgin Islands, the United Kingdom, and the British Virgin Islands as well as before the U.S. Tax Court.

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Venezuela Romero Muci & Asociados Despacho de Abogados, a member firm of Deloitte Touche Tohmatsu Humberto Romero-Muci Tax & legal partner

Tel: +58 (212) 2068730 hromero-muci@deloitte.com www.deloitte.com.ve

Tax aspects of Venezuelan foreign currency control Romero-Muci & Asociados Despacho de Abogados, a firm member of Deloitte, has the distinction of being one of the few professional services organisations in Venezuela with the ability to provide our clients with tax and legal advice in a multidisciplinary manner. We help harmonise processes, procedures and legal documents all over the world. We also guarantee in-depth knowledge of the laws of other countries, which is essential for the overall effectiveness of the required solutions in multinational operations. We respond to the needs of our customers through teamwork appropriate to the nature and complexity of each project, assuring the most effective solutions for your business. We have a department dedicated to local and international mergers and acquisitions, business reorganisations, foreign investment, consulting and tax planning. We also specialise in: counselling free competition law, business and corporate law, individual and collective counselling, administrative, tax, constitutional, labour, commercial and arbitration litigation, structuring, negotiating contracts, associated structures, intellectual property, legal audits and transfer pricing, among others. Currently, Venezuela has 30 agreements for the avoidance of double taxation and is the country with most double taxation treaties in Latin America. Venezuela has opened the public sector to foreign investments from new economies such as China, Russia and Brazil. Government agencies have been contracting with foreign investors to conduct mainly oil and gas exploration activities, the construction

of subway and train railways and housing. It also benefits the private sector because foreign investors subcontract resident private equity enterprises to conduct activities on their behalf in Venezuela. As stated above, our department of international taxation will provide all the necessary services and advice to Venezuelan or foreign companies that decide to invest in Venezuela or are in need of restructuring their business operations. Tax treaties also include transfer pricing rules. Venezuela’s transfer pricing rules generally follow OECD guidelines, requiring income and expenses related to transactions between related parties to be on arm’s length terms. The transfer pricing rules also define related parties and set forth permitted methodologies. Taxpayers are required to verify the existence of arm’s length pricing by conducting a transfer pricing study; prices that do not reflect an arm’s length amount may be adjusted by the tax authorities. Also, it should be noted that Venezuela has introduced thin capitalisation rules, which provide for a debt-to-equity ratio of 1:1. Interest paid directly or indirectly to related parties may be deducted for income tax purposes if debts with related parties and unrelated parties do not exceed the net equity of the taxpayer. It is also very important to note that since 2003, Venezuela has a foreign currency exchange control regime. In light of this, the Ministry of

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Economy and Finance and the Central Bank of Venezuela have established an official exchange rate of VEF4.3 per US$. Individuals and companies are entitled to obtain foreign currency through the Currency Administration Commission (CADIVI) for listed goods and services. In this case, companies and individuals would have to submit the documents and information contained on CADIVI regulations and CADIVI may demand, at its own discretion, additional information to process the request for US$. CADIVI may deliver the amount of US$ requested by the Venezuelan enterprise/individuals or it may deliver a smaller amount. Delivery will happen when CADIVI has disposition of US$. Where a Venezuelan company is not entitled to obtain foreign currency at the official exchange rates or, if able, CADIVI has not delivered them in 90 days, companies or individuals may purchase in Bolivars, securities nominated in US$ at the Central Bank of Venezuela through a system called ‘sistema de transacciones con títulos en moneda extranjera’ (system for the transaction with securities in foreign currency  SITME). Likewise, individuals that have obtained foreign currency through CADIVI, are able to obtain US$ through SITME. Basically, the Venezuelan company/individual should address a Venezuelan financial

institution and purchase in VEF securities nominated in US$. To access SITME, the Venezuelan company is required to certify that it is an importer of products or services and a resident enterprise. Companies are entitled to purchase up to US$50,000 per day and up to US$350,000 per year and individuals are entitled to purchase up to US$5,000 per year. The Central Bank of Venezuela will publish on a daily basis the exchange rate obtained through SITME. Please note that the foreign currency exchange rate at SITME will be higher than the official exchange rate of VEF4.3 per US$. Individuals and legal entities must be registered with the Superintendency of Foreign Investment (SIEX) in order to buy foreign currency or obtain remitted income from overseas investments (eg, dividend payments).