On 20 May 2015, the European Parliament adopted the Fourth Money Laundering Directive. This directive obligates EU member states to adopt a UBO-register of corporate and legal entities. Such register should include at least the name, the month and year of birth, the nationality and the country of residence of the UBO, and additionally, the nature and extend of the beneficial interest held by the UBO. The register should be accessible to the respective tax authorities, obliged entities (for example banks, lawyers and notaries, as they have to perform KYC procedures) and the public if they have a “legitimate interest”.
On 18 March, the European Commission published a proposal to amend the Directive on administrative cooperation between Member States (Directive 2011/16/EU). The proposal entails a mandatory exchange of information on cross-border rulings and advance pricing arrangements. If the proposal is approved, it will become effective as per 1 January 2016. [/message_box]
The European Union and Switzerland have initiated an agreement that will require both Switzerland and the EU member states to automatically exchange information as of 2018 in relation with the financial accounts of their citizens. The financial account data includes, amongst others, names, addresses, tax ID numbers and dates of birth of accountholders.
The driving force behind the agreement is to prevent EU residents to hide undeclared income in Swiss accounts, as to evade paying taxes.
In an effort to provide as much transparency on the Dutch Ruling practice as possible without violating confidentiality, the Dutch Under Minister of Finance provided insight information on the Dutch ruling practice in a letter to Parliament. He provided information in relation to the ruling practice itself, in relation with the type of rulings concluded, as well as information on the number of rulings concluded.
The Under Minister of Finance also stated that he sees no reason to systematically inform Parliament, thus without cause, of concluded rulings. He declared that systematically informing Parliament of concluded rulings, even if informed on a confidential basis, violates the trust of the tax payer in the Dutch tax authorities, and with that, the trust in the Netherlands as a state of residence.
On 6 February 2015 the OECD published three papers addressing different developments in the BEPS Action plan:
Action 5: Agreement on modified nexus approach for IP regimes
Action 13: Guidance on the implementation of transfer pricing documentation and country-by-country reporting
Action 15: A mandate for the development of multilateral instrument on tax treaty measures to tackle BEPS
The OECD will present these developments during the G-20 Ministers of Finance meeting of 9-11 February 2015.
In accordance with the base erosion and profit-shifting (BEPS) project, the OECD on September 16 released its first recommendations to G-20 finance ministers and central bank governors for a coordinated international approach to combat tax avoidance by multinational enterprises. The reports address seven of the 15 items listed in the BEPS action plan.
The EU-Council of Economic and Finance Ministers have adopted the amendments to the Parent Subsidiary Directive, challenging hybrid financial instruments which have the characteristics of both debt and equity.
A payment on hybrid financial instruments could be eligible for tax deduction in the state of source, and at the same time, be tax exempt in the state of residence (double non-taxation). The adopted amendments provide for a mandatory limitation of the exemption in the state of residence, to the extent the (interest) payments are deductible in the state of source.
All EU member states are required to implement the amendments in their domestic legislation no later than 31 December 2015.
In January, the Dutch Minister of Finance published guidance notes in relation with the intergovernmental agreement (“IGA”) concluded between the Netherlands and the United States.
The IGA facilitates the intergovernmental implementation of FATCA, aimed to combat tax evasion by U.S. persons holding assets through offshore entities and accounts.
The guidance notes provide for technical clarification of certain aspects of the concluded IGA.
In between 16 and 19 December the OECD published the following public discussion drafts on specific issues under these action plans:
Action 4: Limitations on interest deductions
Action 8-10: Transfer pricing for risk re-characterization and special measures
Action 10: Profit split method for transfer pricing in the context of global value chains
Action 10: Transfer pricing for commodity transactions
Action 14: Improving dispute resolutions
Following the decision of the EU Court of Justice in June, the Amsterdam High Court ruled that the Dutch tax authorities should have allowed a fiscal unity between:
- Dutch sister companies while being held (in)directly by a EU resident parent company; and
- A Dutch parent company and a Dutch second-tier subsidiary, while the second-tier subsidiary is held through a EU resident (first tier) subsidiary.
It is expected that the Dutch tax law should be amended, following this ruling.