Why changes in German VAT law lead to impounding of Swiss cars

Due to a change of German VAT law Swiss employers have to be sure, that their employees in leading positions are not living in Germany. OK, the thing is, that under German VAT law the use of a Swiss car by a person living in Germany leads to the fact that the Swiss company has to register for VAT in Germany. This fact alone is not really a big problem. But if the car is used by a leading employee there must also be paid customs on this car. If this is not made, the car might be impounded by the German customs while entering Germany.

Law changes in Switzerland as of 2014:

  • Switch on the light on your cars and motorcycles also during the day
  • No more tax on lottery wins
  • Shareholders have to proof the salaries of the board of directors, golden parachutes and golden welcomes are forbidden
  • Outdoor guides have to register

Look ahead:

  • USTR III (Reform of enterprise taxes, part 3): The fee on the issue of shares shall be waived; to improve international acceptance there shall not anymore be different taxation on income from abroad and from Swiss for Holdings and management companies.

Author: Christian Zeller, WIRTSCHAFTS-TREUHAND AG, Basel



Tax fraud reports in Germany

At the moment you can read a lot about the so called “report to the tax authorities of false or incomplete tax declaration“, where there is no penalty to fear in Germany if one fulfills certain requirements. To avoid the penalty in detail one has to:

1.    Lay open the full amount of the evaded tax in the last five years and
2.    Pay the whole tax debt plus penalty loading supplies plus interests.

Altogether this can be expensive enough already.

If the “report to the tax authorities of false or incomplete tax declaration” is incorrect in any way this can lead to a disaster.

Exactly this could be seen in the case of Uli Hoeneß, former Manager and just resigned president of the FC Bayern München. He was afraid that his name was written on a tax-CD from Switzerland. Therefore his consultants quickly prepared such a tax fraud report. Probably too quick, because it finally failed.

The interesting point about the case of Uli Hoeneß was that – in the beginning – the amount of the evaded tax was expected to be about 1 Mio. €. As soon as the process at the regional court Munich began the amount raised up to 3 ½ Mio. €. After 4 days of processing the amount added up to – listen exactly – 28 Mio. €. This was also exactly the day when the court did not want to inquire anything anymore. Uli Hoeneß got imprisonment for 3 ½ years and – who wonders – he accepted this penalty.

Nowadays there is a huge discussion if it’s appropriate to allow such tax fraud reports at all. At the end the financial administration won – because of the amount of tax income the country receives from those reports.

But most probably such tax fraud reports will be much more expensive in the future. It is planned to tax the last 10 years and the penalty surplus will also rise up.

In any way – we expect to get more such cases up to the end of the year.

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


Poland – country and company profile THOMAS sp. z o.o.

Presentation at General Meeting of IAPA, May 26, 2012

Republic of Poland is a European country located in the center of the continent and borders with Germany, Czech Republic, Slovakia, Ukraine, Belarus, Lithuania and Russia. Its area exceeds 312 thousand square kilometers where lives over 38 million residents.

The Polish currency is PLN (Polish Zloty). The GDP reached in the year 2011 the level of 14 thousand USD per capita (over 20 thousand USD when the purchase power is considered).

One of the most important facts in the history of the country was adoption of the constitution in 1791. It was the second modern constitution in the world (after United States of America) and the first one in Europe.

The economic situation of Poland is one of the best in Europe. This month German press published comparison of the Polish economy and EU-27 countries. In general Poland has got higher GDP growth since 2004, similar unemployment rate and lower much public debt.

Our company, THOMAS sp. z o.o., operates since 1993, i.e. from the beginning of the free economy in Poland. Recently it is a family company owned and managed by Bożena Wiklińska and Tomasz Wikliński. In our practice we use modern tools helping us act according to the ISO 9001:2008 based quality system we developed. Recently we added to the portfolio of our products BAC (Budget Assistant Concept), a system that helps in budgeting and controlling.

Our company provides wide range of services required by entrepreneurs in every day activity – starting from accounting, through staff and payroll service, finance management that slowly becomes our key product, to tax advisory.

During the last year we had an internal discussion how to select people, how to behave in relation to the clients that have got difficult, not to say illegal proposals. We found out that there is something that makes the company either consistent or inconsistent – its values. In the beginning we referred to our strategy developed a couple of years ago and values we formulated that time. We formulated them, but without any deeper meaning, i.e. what it means in practice. One of the values we defined was professionalism. Now we added sample behaviors that show acting according to this value, for example improving professional skills, finding the best way to help the client reach his strategic goals, communicates with him efficiently.

The same operation we made with the other value that were important for us as the company and our clients, and finally visualized them in graphics with the help of a graphic designer we co-operate with.

The entire task required some time and involvement of all people, but now is a great tools that helps us to hire better people, better assess their skills and attitude and what is the most important – even the most difficult decision we need to make, like staff changes, are much better perceived by other people when referred to the core values of the company.


Finding a location in the Netherlands

The Dutch office market

The office market in the Netherlands is decentralized, which results in each city having a more or less specific office market. Amsterdam (approx. 6.6 million sq.m. office stock) focuses on finance and international trade, The Hague (approx. 4.0 million sq.m.) is the national administration centre where the government and public departments are the main users of the local office buildings. Rotterdam (approx. 3.1 million sq.m.) has one of the largest ports in the world, as a result of which the office market has a traditional focus on insurance and trade. Utrecht (approx. 2.5 million sq.m.) is the heart of the country with a focus on transport and domestic commercial services. In Eindhoven (approx. 1.4 million sq.m.) and Arnhem (approx. 1.1 million sq.m.) occupiers of office space have strong ties with electronics, chemicals and energy supply.

In general the office leasing market reflects the trends in the national economy. After 2000 when GDP fell, the demand for office space fell back as well and supply increased rapidly. Like the Dutch economy, take-up levels increased in the period 2004-2007. In 2008 and 2009 take-up decreased due to the changing economic climate. Occupiers are increasingly cautious in decision making and activity is driven by cost reduction and is focused primarily on good quality, well-located space. In the course of 2009 the supply rose by approx. 11% compared to 2008. There is a strong polarisation between (economically) dated and modern office space in the total supply.

Owners are aware of the fact that the market has changed and it has become a lot more difficult to attract new tenants. In all markets incentives went up; in areas confronted with high-vacancy rates the growth of incentives is even more generous.

The Netherlands has seen its key office markets slow down over the course of 2009. However, signs of modest improvement in occupier interest are becoming evident, suggesting that the prime market segment has found its floor and no further rental falls are expected. Prime rents in the top CBD locations across the country have stabilized, whilst secondary and non-core locations continued to decline.

Location Prime rent (Jan. 2010)Euro/sq.m/yr
Amsterdam – Zuidas 360
Amsterdam – Central 270
Amsterdam – South-East 195
Rotterdam 180
The Hague 200
Utrecht 195
Eindhoven 170

Town planning

The Netherlands has applied strict regulations with respect to the development of offices, retail, industrial and residential schemes since 1950. The municipal system of zoning plans determines in detail what can and cannot be built. In general, developers are only granted building permits if their plans fit in with the zoning plans or if an exemption has been granted. The zoning plans also apply to all redevelopment projects. It is therefore not easy to change the use of the building without the cooperation of the local authorities. Municipal as well regional approval is mandatory with respect to zoning plan changes. Procedures for obtaining permits are scheduled according to strict timetables. It can take several years to obtain approval for complex building plans in which public authorities play a dominant role.

Lease or buy

The general practice in the Netherlands is to lease office space: approx. 65% of all office buildings are owned by investors. Owner-occupier situations are more common in the industrial real estate market, but due to an increasing number of sale-and-lease-back transactions this proportion is changing.

Leasing has advantages, such as a positive impact on the company’s cash flow, flexibility, the possibility of off-balance presentation and negotiation of incentives with landlords. Lease contracts can be subject to VAT; which may result in VAT savings in specific situations. Depreciation is an important consideration with respect to the ownership of real estate.

Since the beginning of 2007, the depreciation on real estate is limited, both for BVs and for IB entrepreneurs. Depreciation is exclusively permitted where and in as far as the book value of the building exceeds the so-called base value. The level of the base value depends on the intended use of the building.

Leasing Practises and Taxes

Offices and Industrial

Typical lease length: Negotiable, but the common practice is 5 years + auto-renewals for 5 years
Typical break options: Negotiable
Frequency of payment: Quarterly in advance Annual index: Linked to CPI consumer price index (all households)
Rent reviews: To market prices only if agreed upon (frequency usually 5 years / by expert panel)
Service charge: Depending on contract
Tax (VAT): 19%
Tax (others): Property tax, water tax and sewer tax

In all instances:
The tenant has security of tenure as the lease automatically renews at expiry, bearing in mind the notice period. The exception to this is if the landlord wishes to occupy, tear down or redevelop the building. These conditions are rather strict and in reality the landlord’s options of terminating the lease are limited.

  • The tenant pays for internal repairs and utilities.
  • The tenant is responsible for insurance of contents.
  • The landlord pays for the external and structural elements of the building.
  • The landlord is responsible for building insurance and non-recoverable service charge items.
  • The landlord provides property management services that are not recoverable through service charges.

More about taxes

The landlord and the tenant are each partly responsible for the property tax levied by the local authority. Each property is assessed for taxation purposes, known as “onroerende zaak belasting” (OZB). The local government gives a value for the property and that value applies for one year. Each year the authorities collect the tax. The rate depends on the local authorities and this is a percentage of the value according to the Immovable Property Act.

Purchase Practises and Taxes
The purchaser is responsible for the so-called ‘kosten-koper’, which means that the buyer is liable for the payment of all additional costs. Those costs include transfer tax (6%), notary costs (0.2-0.5%), legal costs (negotiable) and some minor administration costs, such as land registration (Kadaster).

General building costs

Operational Costs 10.0 %
Maintenance 7.0 %
Management 1.5 %
Property tax Depending on the Municipality
Others 1.0 %
Insurance 0.3 %

Market Outlook
Although the Dutch economy is now on the road to recovery the market conditions are still challenging. Supply will continue to creep up, albeit at a slow rate. Demand is subdued with lease extensions dominating the market in the short term. Prime rents are expected to remain largely stable, however, some pressure may be felt in the secondary markets and overall incentives remain high.

Investment in Immovable Property

It is possible to make private immovable property profitable by leasing it to private or corporate tenants. The market can be broken down into 3 fiscal situations:

  • Personal investment
  • Income from other work
  • Income from business operations

Personal investment
In most instances the income from immovable property is subject to a fixed tax rate via Box 3. In the case of leasing beyond the scope of normal active asset management, the income is not taxed via Box 3, but via Box 1, as income from other work. The balance of the value applicable to the immovable property, as at 1 January and 31 December of each year, minus the financing debts on 1 January and 31 December is taxed at 1.2% via Box 3. Immovable property subject to tax based on the principles applicable to Box 3 is, in principle, valued at current market value at the reference date. Box 3 is a fixed tax rate for income from immovable property. The actual income, whether rent or lease is irrelevant.

Income from other work
In the case of private entities, income from ordinary investment and speculation does not translate into taxable income from other work. Where the activities however go beyond ordinary active asset management, such as in the case of the preparation and sale of immovable property where the sales profit is increased by carrying out major maintenance in-house, the work will not be considered normal
investment or speculation. The income will be viewed as taxable income where the work has a favourable influence on the financial outcome. The actual lease revenue is taxed in Box 1 at a maximum progressive rate of 52%. The (business) costs are deductible. If of the immovable property is sold, the profits (sales value minus the fiscal book value) will also be taxed progressively.

Income from business operations
This is processed in a similar way to that outlined in situation 2.

Depreciation
The annual depreciation is deductible from the annual profits in situations 1 and 2. As of 1 January 2007, the fiscal book value may not however fall below the so-called base value. The base value is equivalent to the WOZ value. If the immovable property is not leased, but used by the company itself, then the base value is equivalent to 50% of the WOZ value (WOZ for ‘Wet waardering onroerende zaken’ or Real Estate Valuation Regulations).

Private house
A private house is viewed as the complete unit of the house with the garage and other buildings on the property. Houseboats and caravans are also viewed as private houses. The only condition being that they are permanently bound to a single address. A private house is only considered as such where the house is owned by the occupant (tax payer) and where it serves as permanent domicile and not as temporary domicile.

The Own Home Scheme (Eigenwoningregeling)
Once it has been determined that a house can be viewed as an ‘own home’, the house automatically qualifies fiscally for the Own Home Scheme based on Box 1 (Work and Home: Maximum tax rate 52%).

The own home scheme works as follows: The fixed sum assumed by the legislator for the enjoyment derived from the own home is fiscally expressed in the own home fixed sum. The own home fixed sum is determined on the basis of a fixed percentage of the value of the house in question. The basis for determining the value of the own home is the value of the property, as determined on the basis of the WOZ value. The WOZ value is determined by municipal decree. Certain costs can be deducted from the above-mentioned own home fixed sum. This does not however mean that the interest paid on a mortgage bond is automatically tax deductible.

Author: Harry den Hond, Schagen Lensen & van Krieken Accountants, www.slk.nl


Starting Business in the Netherlands

Under Dutch law, a foreign individual or company may operate in the Netherlands through an incorporated or unincorporated subsidiary or branch. Dutch corporate law provides a flexible and liberal framework for the organization of subsidiaries or branches. There are no special restrictions for a foreign entrepreneur to do business in the Netherlands.

The business operations can be set up in the Netherlands with or without a legal personality. If a legal entity has legal personality, the entrepreneur cannot be held liable for more than the sum it contributed to the company’s capital.

Dutch law distinguishes 2 types of companies both of which possess legal personality: the private limited liability company (besloten vennootschap met beperkte aansprakelijkheid – BV) and the public limited liability company (naamloze vennootschap – NV). These forms of legal entities are most commonly used for doing business in the Netherlands.

Other common forms of business entities are sole proprietorship (eenmanszaak), general partnership (vennootschap onder firma – VOF), (civil) partnership (maatschap) and limited partnership (commanditaire vennootschap – CV). None of the latter forms possesses legal personality and, as a consequence thereof, the owner or owners will be fully liable for the obligations of the entity.

All entrepreneurs engaged in commercial business and all legal entities have to register their business with the Trade Register (Handelsregister) at the local Chamber of Commerce (Kamer van Koophandel).

This section covers the abovementioned legal entities for doing business in the Netherlands from a legal perspective. After dealing with the distinction between a subsidiary and a branch, the above mentioned entities will be described in greater detail. This will be followed by a summary of the status of intellectual property rights in the Netherlands. Finally, this manual will explain the advantages and disadvantages of doing business through a subsidiary or a branch.

Branch, subsidiary

Branch
A branch is not a separate legal entity. A branch is a permanent establishment of a company from which business operations are carried out. As a result, the company that establishes a branch in the Netherlands is liable for claims incurred by actions carried out by the branch.

Subsidiary
A subsidiary is a separate legal entity that may be established by one or more shareholders. The subsidiary is a legal entity that is controlled by the (parent) company. Control of a subsidiary is mostly achieved through the ownership of more than 50% of the shares in the subsidiary by the (parent) company. However, under certain circumstances it is also possible to obtain control by special voting rights or diversity of the other shareholders. These shares or rights give the (parent) company the votes to determine the composition of the board of the subsidiary and thereby to exercise control. Since a subsidiary has limited liability, a shareholder (the parent company) is, in principle, only liable to the extent of its capital contribution.

Private limited liability company (BV)

The laws regulating the BV are largely based upon rules governing the NV. The shares of a BV are not freely transferable (subject to blocking clauses incorporated in the articles of association) which makes this type of company generally preferred as the vehicle for a privately held company.

Incorporation
A BV is incorporated by one or more incorporators pursuant to the execution of a notarial deed of incorporation before a civil-law notary. The notarial deed of incorporation must be executed in the Dutch language and must at least include the company’s articles of association and the amount of issued share capital. Prior to incorporation, statement of no objection (‘verklaring van geen bezwaar’) must be obtained from the Dutch Ministry of Justice. This statement is required for incorporation and ensures that all statutory requirements for incorporation have been met. Certain information regarding the incorporator(s) must be submitted before approval is granted.

While the BV is in the process of incorporation, business may be conducted on its behalf provided that it adds to its name the letters, ‘i.o.’ (for ‘in oprichting’), which means in the process of being incorporated. The persons acting on behalf of the BV i.o. are severally liable for damages incurred by third parties until the BV (after its incorporation) has expressly or implicitly ratified the actions performed on its behalf during the process of incorporation. A similar liability arises for the persons responsible if the BV is not incorporated or if the BV fails to fulfil its obligations under the ratified actions and the responsible persons knew that the BV would be unable to do so. In the event of bankruptcy within 1 year of incorporation, the burden of proof lies with the persons responsible.

Members of the board of directors are also severally liable to third parties for legal acts performed after incorporation, but preceding the registration of the BV with the Trade Register.

Share capital
A BV must have an authorized capital, divided into a number of shares with a par value expressed in Euros. Shares without a par value are not permitted. At least 20% of the authorized capital must be issued and at least 25% of the par value of the issued shares must be paidup. The issued and paid-up capital of a BV must amount to at least € 18,000.

Payment for shares can be in cash. If payment for shares is in cash, the civil-law notary must be provided with a statement from a bank to the effect that, upon incorporation, the money will be available to the BV at the bank in question, or that the bank has received the required amount of cash in an account in the name of the BV i.o. This statement may not be issued more than 5 months prior to the date of incorporation.

Payment for shares can also be in kind. Payments in kind are contributions of property and/or other non-cash items. These payments are restricted to items that can be objectively appraised. If these payments take place upon incorporation of the BV, the incorporators must describe the contributed assets and an auditor must issue a statement to the effect that the value of the contribution is at least equal to the par value of the shares. The statement of the auditor is to be provided to the civil-law notary involved prior to incorporation and may not be issued more than 5 months prior to the date of incorporation.

Shares
A BV may only issue registered shares. Besides ordinary shares, a BV may also issue priority shares, to which certain (usually voting) rights are allocated in the articles of association, and preference shares, which entitle the shareholder to fixed dividends that have preference over any dividends on ordinary shares. Within a given type of share, the articles of association may also create different classes of shares (e.g. A, B and C shares) to which certain specific rights are allocated (e.g. upon liquidation).

Dutch law does not allow for the existence of non-voting shares. All shareholders must at least have one vote. However, by using a trust office, the voting power can be separated from the beneficial interest.

The articles of association of a BV must stipulate limitations on the transferability of the shares. Dutch law provides for 2 possible restrictions, which require the transferor either to:

  • offer his shares to the other shareholders, the right of first refusal, or;
  • obtain approval for the transfer of shares from the corporate body, as specified in the articles of association.

Shares in a BV are transferred by a deed of transfer executed before a civil-law notary.

The board of directors of a BV must keep an up-to-date shareholders’ register, which lists the names and addresses of all shareholders, the number of shares, the amount paid-up on each share and the particulars of any transfer, pledge or usufruct of the shares.

Management
The management of a BV consists of the board of directors and the general meeting of shareholders. A BV can, in addition, under certain circumstances have a supervisory board.

General meeting of shareholders
At least one shareholders’ meeting should be held each year. Shareholders resolutions are usually adopted by a majority of votes, unless the articles of association provide otherwise. As a rule, the shareholders may not give specific instructions to the board of directors with respect to the management of the company, but only general directions.

Supervisory board
The supervisory board’s sole concern is the interest of the BV. Its primary responsibility is to supervise and advise the board of directors. Pursuant to the Large Companies Regime (Structuurregeling), the supervisory board is only a mandatory body for a Large BV; however this is optional for other BVs.

Board of directors

The board of directors is responsible for managing the BV. The members of the board of directors are appointed and removed by the shareholders (unless the BV is a Large BV). The articles of association generally state that each director is solely authorized to represent the company. However, the articles of association may provide that the directors are only jointly authorized. Such a provision in the articles of association can be invoked against third parties.

The articles of association may provide that certain acts of the board of directors require the prior approval of another corporate body such as the shareholders’ meeting or the supervisory board. Such a provision is only internally applicable and cannot be invoked against a third party, except where the party in question is aware of the provision and did not act in good faith.

A member of the board of directors of the company can be held liable by the BV, as well as by third parties. The entire board of directors can be held liable to the BV for mismanagement. An individual member of the board of directors can be held liable with respect to specific assigned duties. The shareholders can discharge the members of the board of directors from their liability to the company by adopting an express resolution barring statutory restrictions.

Besides the aforementioned liability prior to incorporation and registration, liability towards third parties can occur in several situations. For example, in case of the bankruptcy of the BV, the members of the board of directors are severally liable for the deficit if the bankruptcy was caused by negligence or improper management in the preceding 3 years. An individual member of the board of directors can exonerate himself by proving that he is not responsible for the negligence or improper management.

Simplification and flexibilization of Dutch private company law
Dutch private company law is currently subject to extensive discussion. A Bill to simplify Dutch private company law was submitted on 31 May 2007 and is currently pending in the Dutch Parliament. The Bill will abolish many of the formalities that are currently required to set up a BV; e.g. the requirement of a minimum capital of €18,000. The new legislation will make it easier for entrepreneurs to set up a BV in the future.

Public limited liability company (NV)

In general, everything mentioned above that applies to the BV also applies to the NV. This section will outline the most significant differences between the NV and the BV.

Share capital and shares
The minimum issued and paid-up share capital is € 45,000. Besides registered shares, a NV may also issue bearer shares. Bearer shares must be fully paid up and are freely transferable. Registered shares have to be transferred by executing a deed of transfer before a civil-law notary, and in contrast to a BV, it is not a statutory requirement that the articles of association of an NV provide for limitations with respect to the transferability of the registered shares. An NV is authorized to issue share certificates (certificaten).

Other common forms of business entities

Partnership (maatschap)
Entrepreneurs in the liberal professions (such as doctors, lawyers and graphic designers) often set up partnerships (maatschap).

A partnership is an arrangement by means of which at least two partners, who may be individuals or legal entities, agree to conduct a joint business. Each partner brings money, goods and/or manpower into the business. Each partner is personally, either jointly or severally, liable for all the obligations of the partnership. A partnership does not possess legal personality.

A public partnership (openbare maatschap) participates in judicial matters under a common name. The possessions of a public partnership are legally separated from the possessions of the partners.

General/commercial partnership (VOF)
A general partnership can be defined as a public partnership that conducts a business instead of a profession. A public partnership and the partners must be registered in the Commercial Register at the Chamber of Commerce.

A limited partnership (CV)
A limited partnership is a special form of the general partnership (VOF) which has both active and limited (or sleeping/silent) partners.

An active partner is active as an entrepreneur and is liable, as in the case of the general partnership.

The silent partner, however, tends to finance the business and stays in the background. The silent partner is liable only up to the amount of his capital contribution. He is not allowed to act as an active partner and his name cannot be used in the name of the partnership. If the silent partner enters the business (to provide extra finance for growth) he becomes liable as an active partner.

Sole proprietorship (eenmanszaak)
In the case of a sole proprietorship (eenmanszaak), 1 (natural) person is fully responsible and liable for the business. A sole proprietorship does not posses legal capacity and there is no distinction between the business assets and private assets of the natural (person).

Legislative proposal
There is currently a bill pending in the Dutch Parliament which provides for replacement of the partnerships described above by a new legal form of partnership. Depending on whether it is public or not, it will be possible for such a partnership to obtain legal personality and, consequently, to hold property, to contract in its own name, to sue and be sued. Obtaining legal personality, however, does not result in a reduction of the liability of the owners or partners in the partnership. This new form of partnership will be introduced in the Dutch Civil Code in the near future.

Trust company

A trust company is entitled to perform corporate trust services for payment, such as the administration and management of a company that conducts business in the Netherlands. A trust company can take care of (required) administrative services, such as the preparation of annual reports. In certain instances the trust company is the (sole) director of the company for which it provides the services.

Intellectual property

The Benelux Convention on Intellectual Property regulates the provisions regarding the registration, use and protection of trade marks, designs and models in the Netherlands, Belgium and Luxembourg.

Trademarks can be names, drawings, stamps, letters, numbers, shapes of goods or packages and all other signs used to distinguish the goods of one company from those of others. A registered trademark is protected for a period of 10 years from the registration date and the protection can be extended by a further 10 years. Renewal must be requested and all due fees paid. The rightful owner is entitled to claim damages for infringement of its rights (such as the use of the trademark by another party).

A design or model is the new appearance of a utility product. A registered model or design is protected for 5 years from the registration date onwards and the protection can be extended by 4 periods of 5 years each, up to a maximum of 25 years. Renewal will be effective upon timely settlement of all fees due. The rightful owner is entitled to claim damages for any infringement of its rights (such as the use of the model or design by another party).

Copyright Act 1912 (Auteurswet 1912) contains provisions regarding the protection of copyrights. Copyright does not require registration in the Netherlands and applies (amongst other things) to literature, dramatic, musical and artistic work, sound recordings, films and computer programs. A copyright expires 70 years after the author’s death.

Council Regulation (EC) No 40/94 on the Community trademark introduces a system for the award of Community trade marks by the Office for Harmonisation in the Internal Market (OHIM). The Community trademark system of the European Union enables the uniform identification of products and services of enterprises throughout the European Union. Requiring no more than a single application to OHIM, the Community trade mark has a unitary character in the sense that it produces the same effects throughout the Community. The Community trade mark contains provisions concerning the registration and use of Community trademarks by (legal) persons and the protection of the rightful owners of such Community trademarks. A registered trademark is protected for 10 years from the registration date onwards and the protection can be extended repeatedly by subsequent ten-year periods. Renewal must be requested and all fees due settled in good time. The rightful owner is entitled to claim damages for infringement of its rights (such as the use of the trademark by another party).

Branch or Subsidiary

Many foreign companies make use of a subsidiary rather than a branch. The main legal reason to set up a subsidiary, instead of a branch, is limitation of liability. As a shareholder of a subsidiary, the foreign company’s liability is, in principle, limited to the extent of its capital contribution; whereas, if the foreign company makes use of a branch, it is fully responsible for all the obligations and liabilities of the branch.

One major advantage of setting up a branch is that it does not, in principle, require the same legal formalities required for setting up a subsidiary. However, the simplification and flexibilization of the Dutch limited company law (as mentioned above) may well diminish this advantage.

Another important aspect to consider with respect to the choice of setting up a branch or a subsidiary in the Netherlands is the matter of local tax regulations. The choice of setting up a branch or a subsidiary will be determined based on the circumstances and relevant factors with respect to the business as such, and the Dutch tax regulations and tax treaties.

Author: Harry den Hond, Schagen Lensen & van Krieken Accountants, www.slk.nl


Doing business in Poland: Country profile

Official name: Republic of Poland
Population: 38,463,689
Area: 322,575 km²
Official language: Polish
Currency: Polish Zloty (PLN)
Capital city: Warsaw
GDP Per Capita – purchasing power parity : 18,072 USD

Poland is located in Central Europe at the Baltic Sea. It borders on Germany (in the West), Czech Republic, Slovakia (in the South), Ukraine, Belarus (in the East), Lithuania (in the North-East) and Russia (Kaliningrad district – in the North). By area it is the 68th country in the world and 9th in Europe. Poland is divided in 16 voivodships. The main river is Vistula that flows from the mountains in the South to the Baltic Sea.

Poland is a homeland for many persons known worldwide : Nicolaus Copernicus – an astronomer that “stopped the Earth and made Sun moving”, John Paul II – the Pope, Lech Walesa – that played an important role in changing the political system of the countries in Eastern Europe, Frederic Chopin – a composer, many scientists, travelers, soldiers fighting for independency of Poland and other countries.

The history of Poland reaches the year 966 when Mieszko I, the first ruler, accepted Christianity. Poland became a kingdom in 1025 and entered into a Commonwealth with Lithuania.  During the majority of its history Poland was independent, multiethnic and multireligious.  

In 1795 Poland was divided between three invaders: Kingdom of Prussia, Russia and Austria. It regained the independency in 1918 after the First World War. During the Second World War it was occupied by The Third Reich and Soviet Union. After the war Poland became a socialist republic, politically and economically dependent on the Soviet Union. In 1989 the political system was changed and it became a parliamentary democracy. After very difficult reforms in the early nineties it returned to a market economy. Poland is a member of the European Union since 2004.
Poland is a fast developing country. The GDP in 2009 reached the level of 1,7% and it was the only positive number in the EU (average – minus 4,1%). The economy is mixed in terms of ownership. 25% of GDP is generated by state-owned-companies, what is a level similar to France and Norway. It is an attractive place for investments – good geographical location, internal stability, participation in the EU. It is however not ideal – unclear law, significant bureaucracy, high administration charges, not enough developed infrastructure and high unemployment are the most important problems for the entire society.

Author: Tomasz Wikliński, THOMAS sp. z o.o., www.thomas.pl


Doing Business in Hungary: Cultural Background

Although this is not a comprehensive guide to doing business in Hungary the below cross cultural knowledge can help you to understand how business gets done in Hungary.

Although Hungarians are transactional and do not require long-standing personal relationships in order to conduct business, being introduced by someone they know and trust can often help. Prior to doing business in Hungary you will need the help of a local representative. This individual can help approach businesses, make appointments, act as an interpreter and be a decent source of cross cultural knowledge.

Once you have built some contacts you need to invest time in strengthening relationships. Socializing is an important part of the relationship building process. Hungarians prefer face-to-face meetings rather than more impersonal vehicles of communication such as letters. Hungarians are emotive speakers who say what they think and expect you to do the same. Hungarians often use stories, anecdotes, and jokes to prove their points.

Appointments are necessary and should be made in advance in writing. It is often difficult to schedule meetings on Friday afternoon or from mid July to mid August. Also avoid scheduling meetings from mid December to mid January. Punctuality for all social situations is taken seriously. If you expect to be delayed, telephone immediately and offer an explanation. It is considered extremely rude to cancel a meeting at the last minute and could ruin your business relationship.

Hungarians like to consider every aspect of a deal and will therefore spend more time negotiating and reviewing things before making a decision.  Details are vital so Hungarians will often require substantial amounts of information before arriving at a conclusion.  In negotiations, Hungarians do not hesitate to interrupt, argue or criticise if they feel it is needed. Arguments and debates are generally considered constructive ways of bringing about new ideas.

Most Hungarians conduct business in either German or English.  Foreigners are not expected to speak the local language as Hungarian is considered one of the most difficult languages to learn.  Avoid confrontational behaviour or high-pressure sales tactics. Bring plenty of business cards and present them to all you meet.

Traditional working hours are 9:00 am to 5.00 pm, Monday to Friday.  However, Hungarians will usually work overtime and often without a lunch break. Deadlines are an important part of Hungarian business culture.  Hungarians are expected to work overtime to meet a deadline and expect their business partners to do the same.

Hungarians prefer to keep their private and professional life separate. Despite initially being quite reserved, once Hungarians develop business relationships these are usually genuine and last forever.

If invited to a Hungarian’s home for a meal, bring a box of good chocolates, flowers or Western liquor. Do not bring wine as the Hungarians are proud of the wines they produce. An empty glass is immediately refilled so if you do not want more to drink, leave your glass ½ full. Hungarians never clink beer glasses, a tradition dating to the 1849 execution of Hungarian patriots when Habsburg officers clinked their glasses at each gunshot. If invited to a party or other large gathering, arrive no more than 30 minutes later than invited.

Author: Tamás Bajor, Vienna Consult Kft., www.viennaconsult.hu


Doing business in Hungary: Country profile

Fact File  

  • Official name – Republic of Hungary
  • Population – 10,037,637
  • Official Language – Hungarian
  • Currency – Forint (HUF)
  • Capital city – Budapest
  • GDP Per Capita – purchasing power parity $19,000

Formerly communist Hungary is one of the ten Eastern European countries that acceded to the European Union on 1 May 2004. Hungary is a landlocked state with many neighbours – Slovakia, Ukraine, Romania, Serbia, Croatia, Slovenia and Austria. It is mostly flat, with low mountains in the north. Lake Balaton, a popular tourist centre, is the largest lake in central Europe.

The ancestors of ethnic Hungarians were the Magyar tribes, who moved into the Carpathian Basin in 896, conquering the people already in the region. Hungary became a Christian kingdom under St Stephen in the year 1000. Hungary has played an important role as part of the Austrian-Hungarian Empire under the Habsburgs.

The Hungarian language is unlike the other neighbouring languages and is only distantly related to Finnish and Estonian. It is a member of the Finno-Ugric family of languages, unrelated to the Indo-European language family, which contains the major European languages. Hungarians list their surnames first.

The capital city, Budapest, which originally was two separate cities: Buda and Pest, straddles the River Danube. It is rich in history and culture and famed for its curative springs.

The country‘s main manufactured exports include machinery and transport equipment, foodstuffs and chemicals. Hungary is a highly musical country whose traditional folk music inspired its great composers such as Liszt, Bartók and Kodály.

Author: Tamás Bajor, Vienna Consult Kft., www.viennaconsult.hu


Doing Business in Germany: Decentralisation and Football

Doing business abroad always requires knowledge of the country, its people and their culture. In this article we focus on the geographic decentralisation of German industry and on football.

Germany’s main partners in the European Union France and Great Britain are politically and economically highly centralized. Paris and London are the centre of political and business life in their respective states. Germany in contrast is highly diversified. The reason has its roots in German history and especially the division into two states after World War II.

Germany is a federal state with 16 different states. The largest states are North Rhine-Westphalia and Bavaria with together over 35% of Germany’s population. The smallest are the capital Berlin and the old Hanseatic city-states of Hamburg and Bremen. The influence of the states on domestic politics is relatively strong. Consequently the federal parliament consists of two chambers. The Bundestag is elected through direct elections. The members of the Bundesrat represent the governments of the 16 federal states.

German industry is not centralised at all. Chemical industries are based predominantly in the west of Germany (Ludwigshafen/Leverkusen). Car industry is situated mainly in the south (Stuttgart/Munich) and in the northern town of Wolfsburg (Volkswagen). The biggest harbours are situated in the north of the country. Hamburg is the second biggest sea port in Europe and a big logistic hub. The centre of the fashion industry is Düsseldorf. The financial centre with headquarters of most German banks and of the European Central Bank is Frankfurt. Media and IT industries concentrate in Berlin and Hamburg. Foreign managers and business people should investigate the optimal location for their business plans before coming to Germany.

What does football (for Americans: soccer) have to do with business? Nothing, but it helps if you know whether your future business partner is a football supporter and which team he follows. Football is the biggest sport in Germany. The majority of male population in Germany follow the game. And the number of female supporters is growing.

The most successful club comes from Munich (Bayern). Main contenders in recent years were Werder (Bremen), HSV (Hamburg), Borussia (Dortmund), Schalke (Gelsenkirchen), Bayer (Leverkusen) and VfB (Stuttgart). And the Germans have a lot of pride in their national team.

It is always helpful if you ask the secretary of German partners you intend to meet whether his or her boss likes football and which team he follows. This knowledge might ease communication at an initial meeting. And if your German partner invites you to a game of his local football team you should not refuse this invitation even if the temperature is below zero. He will be honoured by your presence.

Author: Peter Scheller, Somann & Scheller, www.somannscheller.de


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.