Update about Spanish legal regulations

Spain has a provisional government since December of last year, so this financial year of 2016 have not been implemented any reforms yet. There are 2 key dates to explain this situation:

First of all, on December of 2015 Spain held general elections and after 6 months there was no agreement between political parties. Consequently, the past June were held elections again, but if there is not agreement before the end of October Spain will celebrate elections again, for third time in a year.

Meanwhile, in 2016 Spain has continued with the reforms planned for 2015. It should be pointed out that during this period with the provisional government, the acting minister of economy has established a minimum rate of payments of corporation tax in order to get the 8.000 million euros of fiscal adjustment planned for 2016 and 2017 by the current government. This fiscal adjustment is due to a threat of European Commission to Spain for the noncompliance of deficit. They are established a payment of 23% of the accounting result, a 25% for banks and oil companies, and it will be applicable to business that have a turnover of more than 10 million euros. Around 9.000 companies will be affected.

The effect of this measure on the cash flow of companies is significant as soon as the money is no longer in the pocket of the companies and is part of Spanish Tax Agency, so the private sector advances liquidity to the public sector.

Author: Cristina Valenzuela, Ceasa Asesores Fiscales, S.L.


Update on the Swedish General election

As written in an earlier piece, the Swedish General Election took place in autumn of 2014 and there was a change in government. The centre-right government has resigned and is instead replaced by a government lead by Social Democrats together with the Green Party and supported by the Left Party. However they have not the majority in parliament since the Swedish democratic party (right –wing – xenophobic) with 13 % of the votes has a swing position in the parliament. This position was used when they voted for the resigned centre-rights budget alternative for the budget of 2015 which then passed. So for the year 2015 we have a government of Social Democrats and the Green Party who will lead the country on their predecessor’s budget since their own budget was voted down.

The way the budget from the government was voted down is an unprecedented event in Swedish parliament since the usual practice is that you vote for your own budget and not as the Swedish Democrats did vote for another alternative. This act was done as a protest that their views and politics are ignored by the other parties especially when it comes to their priority questions regarding immigration.

The failure to get their own budget approved forced the Prime Minister Stefan Löven of the Swedish Democrats to threaten to call on new elections. The day before new elections would be called however there was an agreement between all parties except for the Swedish Democrats called the “December agreement” which is an gentlemen’s agreement between the parties that the largest party/coalition (government) will get their budget passed. So except for the fact that the new government will have to cope with the opposition’s budget for 2015 they will get their budgets passed for the upcoming 3 years.

The new government’s budget which wasn’t passed indicates however how the country will be run. Higher income tax for those who earn the most, higher cost for employing younger people paid by the companies as social security contributions.

Author: Jesper Lindvall, Revelino Revision AB


Tax news in Slovakia – October 2014

Below is an outline of tax news in Slovakia, as of October 2014. There are 2 major topics covered in the tax news:

1. The Mini One Stop Shop (MOSS) Scheme
2. Amendment to the Income Tax Act from 1 January 2015 proposed by the government

1. The Mini One Stop Shop (MOSS) – Non-EU Scheme

Even for the taxable persons that are not established within the territory of the European Union (EU), but supplying telecommunication services, television and radio broadcasting services and electronically supplied services to non-taxable persons (legal and natural persons  not engaged in business) the  place of delivery is considered to be the location (the state) where the service recipient (as an end consumer and a non-taxable person), is established, has a permanent address or place where he usually resides. E-services means the provision of websites, hosting the website, intra-maintenance of programs and equipment, supply of software and its update, supply of images, text and information and accessibility of databases, supply of music, films and games, including games of chance to win and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and broadcasts events and distance teaching.

Taxable persons – providers of these services can use MOSS through the simplified procedure of a single contact point via web portal of any Member State, with no necessity to burden each and every individual state where these services will be provided. Thus they can avoid multiple registrations in each Member State of consumption (in a Member State of the customer) and fulfil their obligation to declare and pay tax imposed by a Member State of consumption. Its obligation to declare and pay the tax (which belongs to the Member State of consumption) they fulfil through a single submitted return via the portal of the Member State of identification.

When using MOSS all the communication is processed electronically and there is no signing of papers using electronic signature or conclusion of an agreement with the tax administrator about electronic delivery required.

Registration and deregistration

Providers who are not established within the territory of the EU may choose to register in any Member State. Member States will make the registration available from 1 October 2014 and if the taxable person registers during the 4th quarter of 2014 the registration becomes effective from 1 January2015.

Tax return submission

Provider who uses some of the special scheme is obliged to electronically submit the quarterly MOSS VAT returns  regardless of the fact whether or not he actually provides services, within 20 days of the end of the period to which the tax returns relates and within the same period the provider is also obliged to pay the related tax liability.

The MOSS VAT return includes the information about the services provided to customers in each Member State of consumption. Domestic provider shall include in the tax return all the telecommunications services, radio and television broadcasting and electronic services which he provided to customers within the European Union. The mentioned services provided to the domestic customers shall be included in a regular tax return. The Member State of identification shall divide VAT return according to Member State of consumption and will send the data to the particular Member State of consumption.

Tax liability payment and refund of taxes

Provider pays the due VAT to the Member State of identification. Provider pays the total amount of the submitted return. The Member State of identification shall generate a unique reference number for each MOSS VAT return and notifies this number to the taxpayer.

2. Amendment to the Income Tax Act from 1 January 2015 proposed by the government

Following are the most significant proposed changes in the Income Tax Act that the government plans to have approved by the Parliament with effect from 1 January 2015

A. Depreciation of tangible fixed assets

The government proposes that the tax depreciation classes be extended from the current four to six. The proposed depreciation classes are outlined in the following table:

Depreciation class:  1    Years of tax depreciation:   4
Depreciation class:  2    Years of tax depreciation:   6
Depreciation class:  3    Years of tax depreciation:   8
Depreciation class:  4    Years of tax depreciation:  12
Depreciation class:  5    Years of tax depreciation:  20
Depreciation class:  6    Years of tax depreciation:  40

The most significant changes include the introduction of the new depreciation class 3 with 8 years of tax depreciation, where machinery and production technology such as electrical engines, generators, transformers and their parts will be included; under the current rules, these items are depreciated for tax purposes over 12 years.

Another significant change affecting a major group of businesses is the introduction of the new depreciation class 6 with 40 years of tax depreciation. This depreciation class will be used for buildings used for administrative purposes, accommodation (e.g., hotels), cultural, educational, entertainment and health-care purposes. Under the current rules, these buildings are depreciated for tax purposes over 20 years.

Further, the government proposes that the accelerated method of tax depreciation be limited for depreciation classes 2 and 3 only, where mostly production equipment, machinery and tools are included. For all the other depreciation classes, i.e. 1, 4, 5 and 6, it is proposed that the straight-line method of tax depreciation only be allowed. Under the current rules, enterprises have a freedom of choosing whichever method of depreciation they prefer for all the depreciation classes.

B. Introduction of thin capitalisation rules

The government proposes the introduction of thin capitalisation rules. The new rules limit the maximum amount of interest expenses charged on loans received from related parties. Under the proposed rules the interest expenses may not exceed 25 per cent of profit before depreciation and tax. Under the current rules, there are no such limits in effect.

The changes above are in a form of the government proposal and have not yet been enacted by the parliament. If enacted, the new legislation will be valid in Slovakia as of 1 January 2015.

Author: Rado Dojczak, D.P.F., spol. s r. o., Bratislava

 


Swedish general election 2014

The result of the Swedish general election has led to a very complicated parliamentary situation. The centre-right government has resigned and is instead replaced of a government lead by Social Democrats together with the Greens and supported by the Left Party. But they are not in majority. The Social democrats has after eight years in opposition proclaimed their self winners of the election however the result this election is only 0.5% more of the popular vote than their worst-ever election performance last time 2010. Their coalition partner, the Greens and supporting partner, the Left party, did no better.

Instead most of the changes was on the right, where the xenophobic Sweden Democrats more than doubled their share of the vote at the expense of the Moderate party, the former leading party and the party of former prime minister Fredrik Reinfeldt.

Sweden Democrats has its roots in a neo-Nazi movement. Its policies are incoherent, apart from a steady hostility to immigrants and cosmopolitans. Many candidates are tainted with thuggery and racism. Yet the agreement reached by all the other parties to ignore them in the hope that they will go away has failed. Exclusion from power has merely strengthened the Sweden Democrats’ claim to be the party of the outsiders. They have now got 13 % of the votes.

The Sweden Democrats are part of a wider wave of romantic and nostalgic nativism around the world. They have much in common with the successful xenophobic and populist parties in Denmark and Norway and something in common with Ukip in the UK. All these are movements against the elites, motivated in part by an anger against establishment snobbery even if most of their rage is directed at foreigners and immigrants.

The difficulty for the new minority government, led by former union leader Social democrat Stefan Löfven, is to bring their politics through a parliament with the centre-right side and the Sweden Democrats in majority.

The former Prime Minister, Fredrik Reinfeldt leaves the national political scene, disappointed. The former government could claim success in navigating the crash of 2008 better than almost any other country.

However, we have now seen the first step of the new government. Last week they produced their first budget. More money spend on reducing unemployment, combined with higher income taxes for those who earn most. Higher social security contributions taxes paid by companies for hiring employees might effect decisions whether companies will increase or reduce their workforce.

Will the government survive 4 years? It is in the hand of the Sweden Democrats.

Authors: Jesper Lindvall and Lennart Nilsson, Revelino Revision AB, Trelleborg


International advice for medium-sized businesses

On the 23rd and 24th of May 2014 the IAPA (International Association of Professional Advisers) had their annual meeting in Hamburg where the international network celebrated their 25th anniversary. 34 persons from 16 European tax advising and auditing firms attended the meeting.

The participation of colleagues also from non-member countries at the annual meeting shows the attractiveness of this network as well as the increasing necessity for advisors of medium-sized businesses to gain international know how.

Apart from professional exchange via presentations about international tax law and lectures about changes in tax law in the countries of the IAPA members, Somann & Scheller had the opportunity to present their office to the IAPA colleagues.

The successful event has again emphasized that the members of the IAPA can give their clients fast and first class professional advice because of the intensive co-operation between the offices when it comes to cross-border cases.

Author: Claudia Keidies, Partner at Somann & Scheller, Hamburg


Doing business in Switzerland: What’s so special on a Swiss Holding-Company?

Some people must have asked themselves, what’s so special about a Swiss Holding Company compared to an EU-Holding-company. However it’s a fact, that the Swiss holdings are criticised and flacked by the politicians and tax authorities of foreign countries – even though most of the people do not know why – except that it is a “Swiss Holding Company” and there must be something wrong with it.

First we need to know, that Swiss taxes are divided in different tax-authorities that raise taxes: federal taxes, cantonal and communal taxes. The tax-rate for federal taxes of corporate entities is 8.5%. The regular cantonal and communal taxes vary between 8 and 25%.

Second we need to understand that the Swiss Holding Company does not differentiate between whether it is domestic or foreign-owned and managed. Foreign shareholders are non-privileged towards Swiss owners. Furthermore , the Holding Company exempts – as well as the counterpart in the EU – all dividends from applicable participations from taxation.

 Now what the cantonal and communal taxes additionally exempt from taxation is ”other income” as for example interests, licence-fees or management-fees but only under the condition, that the company has the “holding-privilege” which is tied to the following requirements:

  • 2/3 of the assets of a company have to be in qualifying shareholdings or
  • 2/3 of the income have to come from qualifying shareholdings (dividends)

Then we have to consider, that the tax-exemption of other income is not valid for the federal taxes. This is a consquence of the existing autonomy of the cantons which prohibits Switzerland and the federal taxes to intrude into cantonal matters.

By the way: Dividends from a Swiss corporate entitiy are taxed with 35% source-tax (Verrechnungssteuer) – if the receiver of the dividends is not another corporate entitiy within the EU. In this case the ”notification procedure” is applicable. Of course the source tax can be refunded and/or applied for if there is a double taxation treaty between the two countries involved.

Author: Hugo Schauli, dipl. Wirtschaftsprüfer and Partner der Wirtschafts-Treuhand AG, Basel, Switzerland

hugo.schauli[@]wirtschafts-treuhand[.]ch
www.wirtschafts-treuhand.ch


General annual meeting in Moscow

This year’s General Annual Meeting of the IAPA took place on May 28th and 29th in Moscow. It was the first meeting of the IAPA in Russia. Host was Kosmos Audit. The participants of the meeting enjoyed Kosmos Audit’s outstanding hospitality.

The photo shows the participants on the Red Square in front of the Kremlin.

moscow

This year’s meeting focussed on the question how to provide clients, associated partners and other interested parties with interesting topics. The information center will provide details regarding tax and legal systems in member states, international tax planning as well as accounting and auditing issues in an international context. In the next months various articles will be published on this website.

Author: Peter Scheller, Editor-in-Chief


The first post

This is the first post from IAPA. In the future there will be blog-like information in this section. Everything around our claim „Audit, Tax and Accounting in Europe. And worldwide.“

You will find posts from Austria, Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Switzerland.

The information comes from dozens of Chartered Accountants and Tax Advisers from numerous European IAPA members. Have fun with their posts. Comments are deactivated but, please, feel free to contact any individual author or other member of IAPA for questions or further assistance.