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“Belgium: Further changes to the taxation of dividends and liquidation proceeds.” Page 2
“European Union: FTT likely to be delayed.” Page 3
“Germany: Inheritance tax treatment of non- residents probably unlawful.” Page 6
“Russia: Court endorses jurisprudence on annual renewal of residence certificates.” Page 9
“United Kingdom: New tax on company-owned residential property.” Page 10
European Tax BriefTax
Editorial
Volume 3 Issue 2 – July 2013
PREC ISE . PROVEN. PERFORMANCE .
InsideWelcome to the latest issue of
Moore Stephens European Tax Brief. This
newsletter summarises important recent
tax developments of international interest
taking place in Europe and in other
countries within the Moore Stephens
European Region. If you would like more
information on any of the items featured,
or would like to discuss their implications
for you or your business, please contact
the person named under the item(s). The
material discussed in this newsletter is
meant to provide general information
only and should not be acted upon
without first obtaining professional
advice tailored to your particular needs.
European Tax Brief is published quarterly
by Moore Stephens Europe Ltd in
Brussels. If you have any comments or
suggestions concerning European Tax
Brief, please contact the Editor, Zigurds
Kronbergs, at the MSEL Office by e-mail
at zigurds.kronbergs@moorestephens-
europe.com or by telephone on
+32 (0)2 627 1832.
Tax European Tax Brief – July 2013
2
In the previous issue of European Tax Brief, we reported on the
increases in the rate of tax on investment income (see ‘Belgium’s
2013 budget measures’, Volume 3 Issue 1, April 2013). Shortly
after we went to press, further changes were announced to the
taxation of dividends.
To recap briefly, until 2011, dividends were subject to a
withholding tax of 15%, but in some limited cases, 25%. In
2012, the rate was increased to 21% and then to 25% in 2013.
Liquidation proceeds remained taxable at 10%.
The latest change, announced at the end of March, was that
the rate of tax on dividends would in certain circumstances
revert to 15%. This limited reduction applies only to:
• New companies incorporated after 30 June 2013 and
• In the case of existing companies, in respect of newly issued
shares representing a new contribution to the capital of the
company in cash on or after that date.
Furthermore, the 15% rate will apply only if the company is
classified as a small or medium-sized company, the capital is
entirely paid up and the shares remain in their original ownership.
Should the shares be transferred, the preferential withholding-tax
rate will no longer be applied. The only exception is where the
shares are inherited from a deceased parent or child, in which
case the preferential régime remains intact.
Finally, it will not be until the fourth year after incorporation or
the qualifying capital contribution that distributions will benefit
from the 15% rate. During the first two years, the normal
dividend withholding tax of 25% will remain applicable. During
the third year, dividends can be distributed at a withholding-tax
rate of 20%.
It was noted above that liquidation proceeds have hitherto been
taxable at 10%. However, the Government has also announced
that the tax on liquidation proceeds will be increased to 25% as
from 1 October 2014.
BelgiumFurther changes to the taxation of dividends and liquidation proceeds
Hence, companies contemplating dissolution still have sufficient
time to complete the entire liquidation procedure.
Given the rather high personal income tax rates in Belgium,
many company owners prefer to retain the maximum possible
earnings in their company, and then ultimately withdraw them
by way of liquidation, at the cost of 10%.
Anticipating that the prospective tax increase may precipitate
a rash of liquidations followed by incorporation of a new
company, which would be considered abusive, the Government
is also proposing to introduce a temporary measure allowing
retained earnings to be converted into locked-up share capital.
Under this procedure, the appropriate amount of reserves would
be distributed as a dividend and immediately be paid back to
the company as a capital increase. In this event, the withholding
tax on dividends would be limited to 10% (as currently for
liquidations) instead of the normal 25%. However, the capital
that would generated in this way would have to be kept at the
same level for five years if the company is a small or medium-
sized company and for nine years in the case of a large company.
If the company were to perform a capital reduction within the
lock-up period, additional tax would be payable.
If a capital reduction were performed within the first two years
(four for large companies), additional tax of 15% would be
payable on the capital repaid (upon the whole of the reserves
contributed under the preferential régime), resulting in total tax
paid of 25%. In year 3 (years 5 and 6 for large companies), the
additional tax would be reduced to 10%, resulting in total tax of
20% and in year 4 (years 7 and 8 for large companies) the
additional tax would fall further to 5%, so total tax of 15%
would have been paid on the reserves.
As of year 5 (year 9 for large companies), a capital reduction
would no longer result in an additional taxation, so the reserves
would have been incorporated into share capital at a final tax
of 10%.
These rules have not yet entered into force, so small changes
could still occur to the régime.
Tax European Tax Brief – July 2013
3
Limited bank-interest exemption breaches EU law
Commission acts to enforce administrative cooperation Directive
The Court of Justice of the European
Union has held that Belgium’s treatment
of interest on deposits in foreign banks is
in breach of European law.
In Belgium, individual taxpayers may
earn up to EUR 1830 of interest from
designated savings accounts in Belgian
banks free of income tax, but this
exemption does not extend to interest
on savings accounts held in foreign banks.
In Commission v Belgium (Case
C-383/10), the Court held that Belgium
had failed to fulfil its obligations under
Article 56 TFEU and Article 36 of the
EEA Agreement by introducing and
maintaining a system of discriminatory
taxation of interest payments by
non-resident banks, resulting from
the application of a tax exemption
reserved only to interest payments by
resident banks.
The Belgian Government is now
essentially faced with two choices. It
could either extend the exemption to
savings accounts in all EU or EEA banks,
or abolish it altogether.
European Union
The latest indications are that the introduction of the financial
transaction tax (FTT) is not now likely before 1 July 2014 at
the earliest.
Discussions in the working group have been continuing since
FTT received the green light in February (see European Tax Brief,
Volume 3 No 1, April 2013), but apparently there are several
issues remaining to be resolved, not least the scope and rates
of the tax. All Member States can take part in the discussions,
but only the 11 participating Member States can vote and
decide on the draft Directive, which then needs to be
implemented in national legislation.
The European Commission has
announced it may take legal action
against five Member States that have
failed to implement the Directive on
administrative cooperation in the field of
taxation in their law by the deadline of
1 January 2013.
Meanwhile, the legal action brought against the FTT by the
United Kingdom (see United Kingdom: ‘Legal basis of FTT
challenged’) has no effect either to suspend work on or prevent
implementation of the tax, although an eventual judgment in
favour of the United Kingdom’s case may bring everything back
to square one.
As a reminder, the countries that have so far committed
themselves to introducing the FTT are Austria, Belgium, Estonia,
France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia
and Spain.
FTT likely to be delayed
The Directive (2011/16/EU) replaces a
narrower 1977 Directive and greatly
increases the scope of automatic
exchange of information between tax
authorities. Designed to improve the
efficiency and effectiveness of the battle
against tax evasion, the Directive prevents
Member States from refusing a request
for information from another national
tax authority on the basis that the data is
held by a financial institution. It sets clear
deadlines for the transmission of
spontaneous information (where tax
evasion is suspected) and information
Tax European Tax Brief – July 2013
4
on request. And it provides for common
forms, computerised formats and
standard procedures to improve the
quality and speed of data transmitted
between national authorities.
Moreover, under the Directive, automatic
exchange of information between tax
authorities will be considerably extended
in the future. Tax authorities will
automatically exchange available
information on individual taxpayers’
income from employment, immovable
Although an amendment designed
considerably to extend the Savings Tax
Directive has been on the table since
2008, the ECOFIN meeting of Finance
Ministers on 14 May still failed to adopt
it, and postponed a final decision to a
later meeting.
Under the Savings Tax Directive
(2003/48/EC), tax authorities exchange
information automatically on the
identities of individuals from other
Member States who hold bank deposits
In January, we reported on the European Commission’s Action
Plan against fraud, evasion and aggressive tax avoidance,
launched on 6 December 2012 (see European Tax Brief,
Volume 2 No 4).
Two of the specific measures included in the plan were aimed at
combating VAT fraud, and these have now been approved by
Member State Finance Ministers (at the ECOFIN Council on
22 May), who called on them to be adopted by the end of June.
The measures are based on two Directives:
• one aimed at enabling immediate measures to be taken in
cases of sudden and massive VAT fraud (the ‘quick-reaction
mechanism’)
property, directors’ fees, pensions and life
insurance from 1 January 2015.
The five Member States against whom
infringement action may be taken are
Belgium, Finland (as respects the Åland
Islands only), Greece, Italy and Poland. It
is known that both the Polish and Greek
parliaments are currently considering the
implementing legislation.
Meanwhile, with the encouragement of
the Council of Ministers, the European
in their jurisdiction, so as to enable
interest payments made in one Member
State to residents of other Member
States to be taxed in accordance with the
laws of the state of tax residence. During
a transitional period, as an alternative to
exchanging information, Member States
can instead charge a withholding tax on
the interest. The rate of that withholding
tax is now 35%, but only two states still
make use of this option – Luxembourg
and Austria. Luxembourg has recently
announced that it will begin to exchange
• the other allowing Member States to implement, on an
optional and temporary basis, a reversal of liability for the
payment of VAT on the supply of certain goods and services
(the ‘reverse-charge mechanism’)
Since fraud schemes, such as ‘carousel fraud’, evolve rapidly,
swift response is crucial. Until now, such situations have been
tackled either by amendments to the VAT Directive (2006/112/EC)
or through individual derogations granted to Member States
under the Directive. Both require a proposal from the Commission
and a unanimous decision by the Council, a process that can take
several months.
Commission has proposed a further
extension of administrative cooperation
to include information on dividends,
capital gains, all other forms of financial
income and account balances. These
categories would be added to the
Directive and become effective from the
same date.
Administrative cooperation on VAT is
covered by a separate Directive.
Enhanced action against VAT fraud agreed
Agreement on extended Savings Directive postponed
Tax European Tax Brief – July 2013
5
information as from 1 January 2014,
leaving only Austria relying on the
withholding-tax option.
The amendments the Commission tabled
five years ago reflect changes to savings
products and developments in investor
behaviour since the Directive came into
force in 2005. They are aimed at
Thirteen EU Member States have agreed
to participate in a pilot for private
VAT-ruling requests relating to cross-
border activities. The countries concerned
are Belgium, Cyprus, Estonia, France,
Hungary, Latvia, Lithuania, Malta, the
Netherlands, Portugal, Slovenia, Spain
and the United Kingdom.
Taxable persons planning cross-border
transactions in one or more of these
participating Member States may wish to
Although it has still not yet agreed to extend the scope of the
Savings Tax Directive, as reported in the previous item, the
Council of Finance Ministers did authorise the Commission to
open negotiations with Andorra, Liechtenstein, Monaco,
San Marino and Switzerland, on extending the agreements with
them to include the extended measures in the draft.
Under agreements signed in 2004, the five countries apply
measures equivalent to those provided for in the Directive.
Guernsey, Jersey, the Isle of Man and seven Caribbean territories
do the same, under bilateral agreements concluded with each
of the Member States.
Equivalent measures in the current agreements involve either
automatic exchange of information or a withholding tax on
interest paid to savers resident in the European Union. A
proportion of the revenue accrued from the withholding tax is
transferred to the country of the saver’s tax residence, as is the
case between the Member States.
enlarging its scope to include all types of
savings income, as well as products that
generate interest or equivalent income,
and at providing a ‘look-through’
approach for the identification of
beneficial owners.
Failure to agree to date is thought to be
attributable to continued Austrian
ask for such a ruling with regard to the
transactions they envisage.
In that case, they are invited to introduce
their request for a cross-border ruling in
the participating Member State where
they are registered for VAT purposes.
This request must be introduced in line
with the conditions governing national
VAT rulings in that Member State.
objections to exchange of information on
the grounds of its attachment to the
principle of bank secrecy.
Given the continued impasse, the Council
somewhat paradoxically agreed to open
negotiations with five non-EU countries
on extending the equivalent agreements
with them to incorporate the extended
scope of the draft Directive (see below).
If two or more companies are involved,
the request should only be introduced by
one of them, also acting on behalf of the
others. Such requests should be
accompanied by a translation into the
official language of the other Member
State(s) concerned, although alternative
arrangements may be available.
On the basis of such a request, the
Member States concerned will consult
each other. However, there is no guarantee
that they will agree on the VAT treatment
of the transactions envisaged.
The pilot was launched on 1 June and is
expected to run until the end of 2013.
Savings Agreement negotiations to open with neighbouring states
Cross-border VAT ruling pilot launched
zigurds.kronbergs @moorestephens-europe.com
Tax European Tax Brief – July 2013
6
GermanyInheritance tax treatment of non-residents probably unlawful
Advocate-General Mengozzi of the Court
of Justice of the European Union is of
the opinion that the treatment under
inheritance tax of transfers between
non-resident spouses of property situated
in Germany is unlawful. The Advocate-
General’s Opinion in a case is the usual
preliminary to a final judgment of
the Court.
He delivered his Opinion within his final
statement dated 12 June in the case of
Yvon Welte v. Finanzamt Velbert (Case
C 181/12). The taxpayer was a Swiss
national and resident of Switzerland who
inherited a German property from his
deceased wife in 2009. Frau Welte,
although born in Germany, had also been
resident for tax purposes in Switzerland
at the time of her death.
Under Germany’s Inheritance and Gift Tax
Act (Erbschaftsteuer- und
Schenkungsteuergesetz), a transfer
between spouses, at least one of whom
is resident in Germany, qualifies for an
allowance of EUR 500 000. However,
where both parties are non-resident, the
allowance is EUR 2000 only.
The Advocate-General considered that
this difference of treatment was in breach
of what is now Article 63 TFEU on the
free movement of capital, which also
applies vis à vis third countries (such as
Switzerland), since the differential
allowance was likely to deter non-
residents from acquiring or holding
property in Germany.
He also considered whether Article 64
TFEU applied. Under that Article,
legislation that was in force at
31 December 1993 and that restricts
capital movements between the
European Union and third countries is
allowed to stand. Although the German
legislation was of more recent origin, it
was identical to the law as it had been
on that date, so Article 64 could apply.
However, in Advocate-General
Mengozzi’s opinion, Article 64 was
limited in its application to economic
activity, to which passive ownership (as in
this case) did not in principle amount.
The Court is not bound to follow an
Advocate-General’s Opinion when
passing judgment, but a decision
in favour of the taxpayer is likely in
this case.
GibraltarBudget cuts tax
The 2013-14 Budget presented by the Government includes
reductions in income tax, increases in personal allowances and
an incentive for office construction.
In Gibraltar, individuals may choose between being taxed on
their net income, as reduced by personal allowances (the
‘allowance-based system’), and on their gross income (with no
deductions or allowances taken into account). In the allowance-
based system, the rate of tax on the middle band (taxable
income of between GBP 4000 and GBP 16 000) is to be reduced
to 24% from 30%, while the top rate remains 40%. Earned
income not exceeding GBP 10 000 will be wholly exempt. There
are also across-the-board increases in the personal allowances,
which take account of the personal circumstances of the
taxpayer and the taxpayer’s family.
Gibraltar has no capital gains tax, inheritance tax, wealth tax or
VAT. There is, however, stamp duty on property transactions of a
value exceeding GBP 200 000. Corporation tax remains at 10%
for all companies on income that has accrued in or been derived
from Gibraltar.
As regards construction, a capital allowance (tax depreciation)
of 30% will be given on capital expenditure incurred before
1 April 2015 on the construction of office accommodation.
The remaining 70% of expenditure may be written down over
the following seven years.
Tax European Tax Brief – July 2013
7
At its meeting on 21 June, the European
Council of Economic and Finance
Ministers (ECOFIN) of the 27 (now 28)
Member States of the European Union
endorsed Gibraltar’s Income Tax Act (as
amended earlier in June) as now being
compliant with the EU’s Code of Conduct
for Business Taxation. This is the first time
that Gibraltar’s tax system in this area has
been approved by both ECOFIN and the
Code of Conduct Group.
ECOFIN endorses Income Tax Act
The Code recommends that Member
States (Gibraltar is a dependent territory
of the United Kingdom under the EU
Treaties) to refrain from introducing any
new ‘harmful’ tax measures (this is
known as the ‘standstill principle’) and
amend any existing laws or practices that
are deemed to be harmful by reference
to the principles of the Code (this is
known as the ‘rollback principle’).
Previous assessments of Gibraltar’s new
income tax system concluded that the
non-taxation of interest on inter-company
loans was harmful, since it was in
practice beneficial for transactions with
non-residents. This relief has now been
amended so that interest is only tax-free
if it does not exceed GBP 100 000 in the
tax year.
A number of tax rises are scheduled in the Hungarian
Government’s interim budget, tabled in Parliament on 17 June.
These include a 50% increase in Hungary’s own financial
transaction tax, the main rate of which is to rise from 0.2%
to 0.3%.
The rate on cash transactions is to double, from 0.3% to 0.6%.
The new rates are to apply from 1 August 2013.
By a decree dated 28 June, the Italian
government imposed two tax measures to
compensate for the revenue lost by its
earlier decision to postpone the one
percentage point increase in the standard
rate of VAT for three months to 1 October.
The standard rate was set to rise to 22%
on 1 July.
The two tax measures involve imposing
excise duty on electronic cigarettes and
increasing the advance payments
individuals and companies need to make
Hungary
Italy
FTT and social security contributions set to rise
VAT increase postponed but advance tax payments up
Hungary, incidentally, has chosen not to participate in the
European Union’s financial transaction tax.
Although there is to be no increase in the rate of the health-
insurance component of social security contributions, liability
will be extended to embrace also interest income received by
individuals with the exception of interest income from long-term
deposits and government bonds.
on account of income tax and corporation
tax.
Electronic cigarettes are in future to be
treated as tobacco products and will be
subject to an ad valorem excise duty of
58.5% (previously 21%).
Individuals, such as self-employed
entrepreneurs and professionals, who
need to make payments on account of
income tax in respect of the current tax
year will have to ensure that when they
pay their final instalment (due on
30 November), the total tax paid in
advance over the year will amount to
100% of their final liability for 2012. Until
now, the maximum payment required was
99%. This will also apply to payments on
account of IRAP (the regional tax on
production activities on individuals and
companies).
Companies will have to ensure that by the
time they pay their final instalment of
corporate tax (in the 11th month
Tax European Tax Brief – July 2013
8
New forms of partnership have recently
been introduced in Jersey to provide
investors with an efficient way to manage
their interests. ‘Separate limited
partnerships’ (SLPs) and ‘incorporated
limited partnerships’ (ICPs) offer differing
degrees of legal personality and tax
treatment and complement the range of
existing partnership structures already
available in Jersey. These limited
partnerships will provide clients with their
own legal personality without the
additional accounting and disclosure
burdens that affect ‘qualifying
partnerships’ under the Partnership
(Accounts) Regulations 2010.
Limited partnerships with separate legal
personality have become particularly
popular amongst promoters of private
equity and mezzanine funds amongst
other things, to have the assets of the
partnership recorded in the name of the
partnership.
The tax treatment for SLPs and ICPs will
be similar to that of a 1994 limited
partnership in that the partnership will
not be subject to Jersey income tax in its
own name and is therefore tax-
transparent. Jersey-resident partners are
charged to Jersey income tax on their
share of the profits arising from an SLP
or ICP. Partners who are not resident in
Jersey are subject to Jersey income tax
solely on Jersey-source income other than
bank interest and building-society deposit
interest, which will generally mean that
no Jersey income tax will be paid by
overseas partners unless the ICP or SLP
is in receipt of Jersey-source investment
income other than bank and building-
society deposit interest.
Investors choosing to utilise an SLP or ICP
can therefore benefit from more clarity
JerseyNew partnership vehicles
on their tax affairs thanks to this simple
delineation of liabilities, making it an
attractive proposition and positive selling
point for Jersey.
following the end of their fiscal year) the
total prepaid to date will be at least 101%
of the previous year’s liability.
These increases do not affect taxpayers’
right to claim a reduction in their advance
payments if they reasonably anticipate a
reduction in their revenue in 2013 as
compared to the previous period.
For fiscal years 2013 and 2014, the
prepayment on withholding taxes due
from financial institutions (e.g. banks) will
be 110% of the previous year’s amount.
The Government has also postponed the
interim payment of the property tax (IMU)
enacted by the previous (Monti)
government, due on 16 September,
but only in respect of taxpayers’ principal
residences, while it seeks an agreed way
forward to reform or replace the tax.
Tax European Tax Brief – July 2013
9
not been withheld as required. In such a case, the tax authorities’
recourse was to the foreign recipient of the payment.
It remains to be seen whether the tax authorities will now change
their practice, but the court’s judgment should be of assistance to
taxpayers who are challenged or assessed in similar circumstances.
Nevertheless, in order to avoid any unwanted disputes with the
tax authorities, we still recommend in such cases that Russian
taxpayers adhere to a conservative approach, ensuring that they
obtain a new certificate of permanent tax residence for non-
resident recipients of income for every tax period.
As part of revised budget measures
following a decrease in projected
revenues in 2013, Slovenia has increased
the standard rate of VAT from 20% to
22%, with effect from 1 July 2013. The
reduced rate has increased from 8.5% to
9.5% on the same date.
The Russian Federal Arbitration Court has recently confirmed that
it is not necessary for non-resident entities claiming benefits
under Russia’s tax treaties to renew their residence certificates
annually.
Under Russia’s income tax code, a non-resident entity is required
to provide the Russian tax authorities with a certificate of
residence from its own country’s tax authorities if it seeks to
benefit under a double tax treaty concluded by the Russian
Federation. It is the practice of the Russian tax authorities to
demand these certificates be renewed annually.
In a case that came before the Federal Arbitration Court of the
Povolzhsky region, a Russian company had paid interest in 2009
to a Cypriot company under a loan agreement. The Russian
company held a tax-residence certificate issued in 2007 by the
Cyprus tax authorities with respect to the Cypriot company.
Under Article 11 of the Russia-Cyprus double tax treaty, royalties
are taxable in the recipient’s state only, so no withholding tax was
deducted. On the basis that the certificate did not relate to 2009,
the Russian tax authorities assessed the paying company to tax
and late-payment interest.
When the company’s appeal came before the courts, the
Povolzhsky regional court held that there was no requirement in
Russia’s tax legislation requiring residence certificates to be
renewed annually. Accordingly, since the relevant details on the
certificate were still correct, the paying company had the evidence
required to pay the interest gross. Moreover, the court also held
that the paying agent should not be held liable for tax that has
Russia
Slovenia
Court endorses jurisprudence on annual renewal of residence certificates
VAT rates increased
Tax European Tax Brief – July 2013
10
ATED, the annual tax on enveloped dwellings, applies from
1 April 2013 to high-value residential property in the United
Kingdom owned by or through a corporate or collective-
investment vehicle.
The tax affects properties of a value greater than GBP 2 million as
at 1 April 2012 (or at acquisition, if later) owned, wholly or partly,
by a company, a partnership with at least one corporate partner,
or a collective-investment vehicle, such as an open-ended
investment company or unit trust (the ‘corporate owner’).
Properties will need to be revalued as at 1 April 2017 and every
five years thereafter. Owners are expected to make or obtain a
valuation themselves, although the tax authorities (HMRC) will
perform what is called a ‘pre-return banding check’ on the
application of owners who reasonably believe the value of their
property falls within 10% either side of a band boundary (see the
Table below).
ATED takes the form of an annual charge at one of four rates,
depending on the value of the property, as follows:
Value of property (GBP)Tax payable per annum
(GBP)
More than 2 million but no more than 5 million
15 000
More than 5 million but no more than 10 million
35 000
More than 10 million but no more than 20 million
70 000
More than 20 million 140 000
In the case of mixed-use property, only the residential part will be
liable to ATED, and a separate valuation of that part will need to
be used.
Residential property for this purpose does not include hotels and
similar establishments, care homes, student halls of residence,
hospitals or prisons(!). Also exempt are, among others, properties
open to the public for at least 28 days a year; properties let to
third parties on a commercial basis and not at any time occupied
or available for occupation by the owner or connected persons;
properties acquired as part of a property-development business
also with no element of owner occupation; and certain
farmhouses occupied by farm workers.
United KingdomNew tax on company-owned residential property
For 2013 (the year beginning 1 April 2013), returns must be filed
by 1 October 2013 and payment is due by 31 October. For 2014
(the year beginning 1 April 2014) and future years, returns must
be filed and payment made by 30 April of that year.
ATED is not the only new tax liability to be imposed on corporate
owners of high-value residential property. There is also a charge
to 28% capital gains tax on the capital gain, measured as from
6 April 2013 on the sale by the corporate owner (including
non-resident owners) where the sale proceeds exceed
GBP 2 million and the property has been subject to ATED
during the period of ownership since 6 April 2013 (reduced
proportionately where it was subject to ATED for only part of
that period).
There is also a 15% charge to stamp duty land tax (SDLT) on the
acquisition of a high-value property by a corporate owner. This
has been in force since 21 March 2012.
“ATED, the annual tax on enveloped dwellings, applies from 1 April 2013.”
Tax European Tax Brief – July 2013
11
On 18 April, the United Kingdom initiated a judicial action
seeking annulment of the European Council’s decision
authorising enhanced cooperation with respect to the financial
transaction tax (FTT).
The case filed before the Court of Justice of the European Union
is United Kingdom v Council, C-209/2013.
The grounds of the challenge are that the authorising decision is
unlawful because adoption of the FTT:
• will have extra-territorial effects, contrary to Article 327 TFEU
(the Treaty on the Functioning of the European Union) and/or
customary international law and/or
• impose costs on non-participating states in breach of Article
332 TFEU.
The United Kingdom is also known to be pursuing modification
of the FTT proposals by negotiation. The Finance Minister of
Luxembourg has indicated he supports the United Kingdom’s
action.
As will be known, 11 Member States have agreed in principle to
adopt the tax. Although the United Kingdom will not be
adopting the tax, transactions in financial instruments issued in
a participating country will be subject to the tax no matter
where the transaction takes place, as will transactions where at
least one party is a financial institution established in a
Legal basis of FTT challenged
participating country. Sources in the City of London estimate
that the tax could add almost GBP 4000 million in a full year to
the cost of issuing UK Government debt.
For fuller details of the tax, see European Tax Brief, Volume 3 Issue
1 (April 2013).
Scotland replaces SDLT
The Land and Buildings Transaction Tax
(Scotland) Act was passed into law by the
Scottish Parliament on 25 June. As from
April 2015, the new tax will replace SDLT
in Scotland for transactions in real
property located in Scotland.
As with SDLT, on which it is based, the tax
(LBTT) will be payable by the purchaser or
acquirer whenever there is a chargeable
transaction in land or rights over land.
However, whereas SDLT is chargeable
in ‘slabs’, so that the whole of the
chargeable consideration is charged at the
rate of tax appropriate to that band or
slab, LBTT will have a progressive charging
structure, with a nil-rate band and at least
two other bands, and only the excess of
the transaction over the band threshold
will be charged at the higher rate. Precise
rates and bands remain to be fixed.
SDLT will remain in force in the rest of the
United Kingdom.
Tax European Tax Brief – July 2013
For more information please visit:
www.moorestephens.com
We believe the information contained in European Tax Brief to be correct at the time of going to press, but we cannot accept any responsibility for any loss occasioned to any person as a result of action or refraining from action as a result of any item herein. Published by Moore Stephens Europe Ltd (MSEL), a member firm of Moore Stephens International Ltd (MSIL). MSEL is a company incorporated in accordance with the laws of England and provides no audit or other professional services to clients. Such services are provided solely by member firms of MSEL in their respective geographic areas. MSEL and its member firms are legally distinct and separate entities owned and managed in each location. ©DPS22678 July 2013
For ease of comparison, we reproduce below exchange rates against the euro and the US dollar of the various currencies mentioned
in this newsletter. The rates are quoted as at 11 July 2013, and are for illustrative purposes only.
Up-to-the-minute exchange rates can be obtained from a variety of free internet sources (e.g. http://www.oanda.com/currency/
converter).
Currency table
CurrencyEquivalent in euros
(EUR)Equivalent in US dollars
(USD)
Euro (EUR) 1.0000 1.3035
Pound sterling (GBP) 1.1571 1.5080
