eu constraints on recent and expected changes … · eu constraints on recent and expected changes...
TRANSCRIPT
Preliminary remarks
(Report on Tax Reform)• EU constraints. Key principles:
– Fiscal consolidation (sound public finance)
– Main role of income taxation (corporate
and individual)
– Reduction of selective tax incentives
AGRESSIVE TAX PLANNING
AND CORPORATE TAX
Anti-avoidance(subject -to-tax,
GAAR, Parent/Subsidiary
Directive). Tax incentives
Recommendation (2012/772/UE)
Subject to tax clause:
“Where this Convention provides that
an item of income shall be taxable only
in one of the contracting States, the
other contracting State shall be
precluded from taxing such item only if
this item is subject to tax in the first
contracting State”
DTCs and Spanish provisions
• Spanish DTCs:
– No rule of that kind
– Tax sparing clauses in some DTCs
• Domestic provisions
– Exemption/Foreign tax credit
– General rule: effective payment of the
foreign tax (ECJ decision 8 December
2011, C-157/10 BBVA )
Recommendation 2012/772/UE:
proposal of GAAR• “An artificial arrangement or an artificial
series of arrangements which has been
put in place for the essential purpose of
avoiding taxation and leads to a tax
benefit shall be ignored. National
authorities shall treat these
arrangements for tax purposes by
reference to their economic substance”
GAARS in Spanish GTA (Ley
General Tributaria)• Substance over form (article 13)
• Anti-avoidance (article 15): artificial
transactions, tax benefit as main
purpose
• Sham transactions (article 16)
• Procedural aspects
• EU GAAR, a better option?
Parent/subsidiary proposal 2013
• COM (2013) 814 final, amending
2011/96/EU
– Article 4.1.a): “refrain from taxing such
profits to the extent that such profits are
not deductible by the subsidiary of the
parent company”
Spanish provisions
• Participation exemption (article 22 CTA)
– 5% threshold - Business activity
– Taxation at source - No tax haven
• Tax Reform Report. Proposal 43:
– 10% tax at source – B.activity not required
• Future scenario?
– BEPS Action 2 (hybrids)
Hybrids “juros brasileños”Dividend payment
“juros”
Court (AN 27 February 2014): exemption
applies. The classification as dividend
under art. 10 DTC cannot be disregarded
TA: no
exemption on
dividend
(art. 21 CTA)
Deduction
“juros”
BRAZIL
SPAIN
Parent/Subsidiary proposal 2013
• Commission (2013) 814 final
– Article 1.2 “This Directive shall not preclude
the application of domestic or agreement-
based provisions required for the
prevention of tax evasion”
– New article 1 a “Member States shall
withdraw the benefit of this directive in the
case of an artificial arrangement…..” (GAAR
Recommendation 2012)
Parent/Subsidiary
Spanish provisions• Specific provision (article 14.1.h) NRTA)
– Look-through approach (no exemption at
source if more than 50% non EU residents)
• Court decision: Audiencia Nacional 25
November 2010
– Exception: valid economic purpose,
effective business activity
– Compatible with PSD GAAR proposal?
Tax incentives
• Legitimate tax policy option vs. Potential
risks of unlawful State Aids and harmful
tax competition
• Tax Reform Report. Proposal 45:
– No tax incentives (tax credit such as: R&D&I
or environment investments, new jobs or
reinvestment of extraordinary profits)
– What about the patent box regime?
Profit shifting
P. B. regimeInput incentive
STATE A
Company X STATE B
Company X/Y
R&D activity R&D result
Inheritance tax on non residents:
EU constraints• Commission proposals (tackling tax
obstacles, relief of double taxation)
• ECJ doctrine (cases Barbier, Geurts-
Votgen, Jäger, Eckelkamp, Arens-Sikken,
Block, Mattner, Halley, Ivon Welte)
– Discrimination in comparable situations
– Restriction on free movement of capital
EXAMPLE
• Deceased resident in the region of
Valencia (Spain) all assets in Spain
• Heirs (on equal footing) residents in
Valencia, Madrid and Brussels.
– Tax allowance (tax base):100.00 (R in
Valencia and Madrid), 15.956’87 (R in
Brussels)
– 75% tax debt reduction: only R in Valencia
Inheritance tax and non
residents: Spanish provisions• Problem raised by regional legislation
• ECJ pending decision : Commision vs.
Spain (C-127/2012)
• High Supreme Court (4209/2011 Const.
Court on IHT provisions Valencia)
• Report on the Tax Reform. Proposal 57:
same exemption in all Spanish territory
Pensions (temporary residents)
• The exclusive rule in article 18 OECD MC
– Alternative proposals in the Commentary
– Recent exceptions (DTC Germany-Spain)
• Tax Reform Report. Proposal 32:
– Foreign retired residents: pensions taxed at
the lowest Income Tax rate
– Tax competition and profit shifting?
Recovery of unlawful aids:
EU provisions• Procedural regulation (659/1999,
794/2004). Article 14.3:
– “Recovery shall be effected without delay
and in accordance with the procedures
under the national law of the member State
concerned, provided that they allow the
inmediate and effective execution of the
Commission’s decision”
ECJ decision 13 May 2014
(C-184/11 Commission vs. Spain)• (Grand Chamber): Spain has failed to
fulfil its obligations under art.206.1 TFUE
– Spain has been the subject of a number of
judgements of the kind (failure in inmediate
an effective recovery)
– Delay for recovery (more than 5 years)
– Penalty: lump sum (not reduced because of
regional infringement)
Recovery of unlawful aids
Spanish provisions• Main issues
– Legal certainty and legitimate expectations
(risk of retrospectivity)
– Statute of limitation (possible solutions)
• Procedure (Member States autonomy)
– In the case of tax benefits: lack of ad hoc
provisions
– Next modification of the GTA?