Owen, Christopher: Offshore Survey – April 2009 Supplement

owenapr2009supp.rtf
Archive
  • Bermuda amends company and partnership legislation
    • 19 July, the Bermuda Companies Amendment Act 2009 and a series of other legislative amendments to improve the efficiency of international business in Bermuda received assent and came into force. The Companies Act 1981 was amended to improve the process of delivering documents to shareholders via the Internet. An electronic record of a document will be deemed to have been delivered to a person if it is published on a website and the person to whom it is to be delivered has been advised of the address of the website, where the document may be found and how it may be accessed. This procedure parallels the ?opt out? electronic delivery method used by the US Securities & Exchange Commission. Residency requirements for Bermuda exempted companies have also been adjusted for greater flexibility. A Bermuda exempted company will now only require one director who is ordinarily resident in Bermuda, or a Bermuda resident secretary, or a Bermuda resident representative. The secretary and the resident representative may be individuals or companies.The Partnership Act 1902, the Exempted Partnerships Act 1992, the Limited Partnership Act 1883 and the Overseas Partnership Act 1995 have also been amended to improve efficiency. Partnerships can now be formed in a similar process to that for the incorporation of companies. The particulars required to be set out in the certificates of exempted and limited partnership have been reduced and it will no longer be necessary to file the articles of partnership upon formation. The Bermuda Monetary Authority must approve changes to the general partners in advance. Limited partnerships are no longer required to state on the register of limited partners the value of the money and other property contributed by each limited partner as capital. This will reduce the administrative burden for large limited partnerships. Amendments to the Overseas Partnership Act similarly streamline the application procedure and reduce the content of the certificate of overseas partnership.

  • Bermuda to sign further TIEAs
    • 19 March 2008, Finance Minister Paula Cox announced that Bermuda will sign seven tax information exchange agreements (TIEAs) ? one with each member of the Nordic Group ? at the Swedish Embassy in Washington, DC, on 16 April, and another with New Zealand at its Washington embassy. These agreements were the results of negotiations that started in 2006.Bermuda currently has TIEAs in force with the US, UK and Australia, and new agreements will soon bring that total up to 12, Cox told the House of Assembly. The Ministry of Finance was negotiating a further two TIEAs with OECD states and had begun preliminary discussions with another jurisdiction.

  • British couple wins CGT refund from Spain
    • February 2009, the High Court in the region of Valencia ratified the decision of the European Commission that the differential between the rates levied by the Spanish tax authorities on non-residents and residents in respect of capital gains from the sale of a property was a direct contravention of EU legislation.Alan and Margaret Roy, a British couple, acquired a Spanish property in 2001 for a total cost of €150,000 that they then sold in 2004 for €160,000, which crystallized a gain of €10,000. They were charged the Spanish non-residents? tax rate of 35% on the gain instead of the Spanish flat rate of 15%. The Roy family took their action to the European Commission, which ruled last year that the disparity between the rates contravened EU legislation. The Spanish Court has now upheld the Roy’s claim for a 20% rebate, plus interest ? avoiding a hearing at European Courts of Justice.The case opens the way for claims by an estimated 10,000 Britons, plus thousands more in other European countries, who sold a property between July 2004 and December 2006. Spanish courts are considering the cases of about 260 Britons and another 340 have registered their details. There is a four-year limit on making reclaims from the time when the tax was paid – typically six months after the sale.

  • BVI ?Approved Persons? guidelines come into force
    • 2 March 2009, the British Virgin Islands Financial Services Commission?s (FSC) Approved Persons Regime entered into force following its approval by the Board of Commissioners on 20 January 20. The guidelines are designed to assist the regulator in “the consideration and approval of applications for the appointment of senior officers, including applications relating to the approval of actuaries, auditors and other independent officers pursuant to any financial services legislation.”According to the guidelines, a suitable candidate for a senior officer position must be “qualified and have appropriate experience” and must also demonstrate “a high level of competence and integrity?. Before approving an application, the FSC must be satisfied that the candidate is “fit and proper” in accordance with the criteria established in its Guidance Notes on Fit and Proper Test.

  • Cayman Islands pressed to raise taxes
    • Cayman Islands pressed to raise taxes 27 August, the UK government refused the Cayman Islands permission to borrow hundreds of millions of dollars to help meet its growing budget deficit and urged the Cayman government to instead begin assessing new taxes on its citizens. The Cayman government had applied to borrow up to $465 million to get through the current fiscal year ending 30 June 2010. The bank loans, which had already been negotiated, required UK approval because the Cayman Islands are a British overseas territory.UK Foreign Office minister Chris Bryant wrote to the Cayman Islands? leader of government business McKeeva Bush stating that the government must put together ?a clear strategy for cutting borrowing and debt over the next five years and tackling expenditure?.The Cayman Islands currently has no income tax or capital gains tax. It relies on indirect income sources such as customs duties, stamp duties, transaction fees and business licences. In addition to shrinkage of banking and hedge fund activity, licensing and services, the Cayman Islands has seen tourism contract. ?I fear you will have no choice but to consider new taxes ? perhaps payroll and property taxes such as those in the British Virgin Islands. I understand, of course, that in so doing you will want to consider carefully the implications for Caymans? economy, including the financial services sector,? Bryant wrote. He also advised against expecting ?that the Cayman Islands? prosperity can presume on an offshore tax haven status?.

  • Cayman Islands signs 14 new TIEAs
    • 19 March 2009, the Cayman Islands announced the extension of comprehensive tax information assistance to seven new countries, under provisions in the Tax Information Authority Law introduced in 2008, which do not require a bilateral treaty. The seven countries now able to request tax information from the Cayman Islands under this unilateral mechanism are Germany, Austria, Belgium, the Czech Republic, Luxembourg, the Slovak Republic and Switzerland. Requests may be made in relation to both civil/administrative and criminal tax matters. The Cayman Islands’ competent authority for tax cooperation arrangements is the Tax Information Authority, established under the Tax Information Authority Law 2005.The unilateral mechanism is complementary to Cayman’s bilateral negotiation programme. Having signed a bilateral TIEA with the US in 2001, on 1 April it signed seven new TIEAs in Stockholm with the Nordic Council of Ministers, with commercial agreements to follow in June. The seven Nordic countries ? Denmark, Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden ? have already entered into similar agreements with the Isle of Man, Jersey and Guernsey. They are also in advanced negotiations with Aruba, Bermuda, the BVI and the Netherlands Antilles.

  • China implements measures to combat treaty abuse
    • 20 February 2009, China?s State Administration of Taxation (SAT) issued Notice on Issues Relevant to the Implementation of Dividend Provisions in Tax Treaties (Notice 81). Taken together with two recent tax decisions in Chongqing and Xinjiang, it shows that special purpose vehicles (SPVs) will be subject to increased scrutiny and benefits in China may be denied to investors who misuse them to reduce tax liabilities or circumvent exchange controls.SPVs enable foreign investors to benefit from preferential withholding tax rates on dividends and other forms of passive income where tax treaties permit. China?s tax treaties with Hong Kong, Singapore and several other jurisdictions reduce the withholding tax rate on dividends from 10% to 5%. And, if the foreign investor wishes to dispose of the investment in China, it may sell the shares of the SPV without paying income tax in China on the capital gain from the sale. Typically, the jurisdiction where the SPV is established will also exempt the capital gain from local taxation or levy tax at a low rate. Notice 81 addresses the situation where the withholding tax rate on dividends under a tax treaty is lower than the 10% rate under domestic law in China. To enjoy the treaty benefit, the recipient of the dividend must be a tax resident of the other treaty jurisdiction and the beneficial owner of the dividend, and the dividend must qualify as a dividend under the tax law of China. A major change under Notice 81 is that SAT will now require the non-resident taxpayer or the withholding agent to provide a host of documentary evidence to prove that the recipient of the dividend meets these requirements. Article 4 also empowers tax bureaus in China to investigate and deny treaty benefits where the main purpose of a transaction or an arrangement is to obtain more favourable treatment of dividends under a tax treaty. SAT has also provided a stronger regulatory basis for disregarding the existence of an SPV that lacks economic substance in the Implementation Measures for Special Tax Adjustments (Circular 2), issued on 9 January. This sets out detailed rules for the anti-avoidance principles in China?s income tax legislation, with Article 94 specifically permitting the tax authorities to disregard the existence of an enterprise that lacks economic substance, particularly if established in an offshore financial centre.

  • EC adopts proposals on mutual assistance
    • 2 February 2009, the European Commission adopted two proposals for new Directives aimed at improving mutual assistance between EU Member States’ tax authorities in the assessment and the recovery of taxes. One of the key elements of the proposals is that Member States would no longer be able to invoke bank secrecy in order to refuse cross border co-operation.The proposal on improved administrative cooperation in the assessment of taxes aims to provide clearer and more precise rules in the area of cooperation. In particular, it sets up common rules of procedures, common forms, formats and channels for exchanging information. It also allows tax administration officials in one Member State to be on the territory of another Member State and to participate actively ? with the same powers of inspection ? in administrative enquiries carried out there.The proposal contains a provision, based on the OECD Model Convention, which prohibits a Member State from refusing to supply information because a bank or other financial institution holds that information. Another important element is that Member States are obliged to provide the same level of cooperation to their EU partners as they have agreed to with any third country, such as the US. It also widens the scope of the Directive to cover all taxes except VAT and Excise duties.The second proposal is to improve mutual assistance in the recovery of taxes and aims at reinforcing and improving recovery assistance between the Member States. This is intended to increase the recovery ratio, which currently only amounts to approximately 5% of the total requested. The Directive would extend the scope of the mutual recovery assistance procedure to cover all taxes and duties levied by EU member states, including compulsory social security contributions. It would also simplify the procedures to be used when requesting or providing mutual assistance; introduce a compulsory spontaneous exchange of information relating to refunds of taxes made to non-residents; allow for recovery assistance at an earlier stage; and permit officials from one state to participate in administrative inquiries carried out in another state.EU Tax Commissioner Laszlo Kovacs said: “Improved transparency, based on quick and simple information exchange mechanisms, is crucial. It is unacceptable that bank secrecy in one Member State can be allowed to constitute an obstacle to the correct assessment by the tax authorities of another Member State of the amount of taxes due by one of its resident taxpayers.” The proposals will need the approval of all 27 EU member states to become law.

  • EC refers Germany to ECJ over outbound dividends
    • 19 March 2009, the European Commission decided to refer Germany to the European Court of Justice for its tax provisions concerning outbound dividend payments to companies. It considers the higher taxation of outbound dividends to be contrary to the principles of free movement of capital and the freedom of establishment under the EC Treaty and the EEA Agreement.Germany taxes dividends paid by German companies to foreign shareholders more heavily than those paid to German shareholders. While there is a tax exemption for domestic dividends, outbound dividends are subject to withholding taxes of up to 25%, plus solidarity surcharge. The discrimination concerns outbound dividends paid to EU Member States and to those EEA/EFTA countries that provide appropriate assistance in respect of exchange of information.In the Denkavit ruling of 14 December 2006 (Case C-170/05) the Court confirmed the principle that outbound dividends may not be subject to higher taxation in the source State than domestic dividends. Given that the German tax rules were not amended to comply with the reasoned opinion sent to Germany in June 2007, the Commission has decided to refer the case to the ECJ.

  • EC to adopt Regulation on succession and wills
    • 1 April 2009, the European Commission formally adopted a proposed regulation on succession and wills. The regulation defines the law applicable, the jurisdiction and the recognition of court decisions and administrative measures in the area of succession and wills. It will also create a “European Certificate of Inheritance”. The objectives of the proposal, which will be accompanied by a detailed impact study, are: to help European citizens organise their estate in advance, in particular when they own property in several Member States; to guarantee the rights of heirs and/or legatees, and other persons connected with the deceased, as well as creditors with a claim on the inheritance ? in particular, to facilitate recognition of the status of heirs throughout Europe in a simplified way by creating a “European certificate of inheritance”, and to acknowledge the powers of executors in Member States; and to ensure freedom of movement in the EU of judgments and authentic instruments relating to inheritance.The Commission said increasing numbers of Europeans live in another Member State or own assets ? houses or bank accounts ? in more than one Member State. Of an estimated 4.5 million people who die each year in the EU, up to 9% or 10% of all inheritances (45,000) have an international dimension. After their death, their heirs often face severe problems, lengthy delays and legal costs to obtain their inheritance. The diverse national rules governing succession and wills, and the variety of rules on international jurisdiction and applicable law in Member States is resulting in a situation where international successions can be referred to a large number of authorities, and inheritances be split up into different estates, hampering the free movement of people in the EU. European citizens are therefore faced with major problems and high costs when exercising their legitimate rights in the context of international succession.

  • ECJ finds Belgian PE incompatible with Parent-Subsidiary Directive
    • 12 February 2009, the European Court of Justice found the Belgian dividends received deduction (DRD) regime ? under which dividends received are, first, added to the taxable basis of the parent company and, subsequently, deducted from that taxable basis only in so far as the parent company has taxable profits ? to be incompatible with Article 4 of the European Parent/Subsidiary Directive.In Belgische Staat v NV Cobelfret (C-138/07), a Belgian company incurred tax losses in 1994, 1995 and 1997 but in 1996 it had insufficient profits and was therefore unable to claim the full 95% deduction on the dividends received from Belgian and UK subsidiaries. Cobelfret successfully challenged the Belgian DRD regime before the Court of First Instance of Antwerp as an incorrect implementation of the Directive on the grounds that the DRD did not result in Belgium refraining from taxation. On the appeal of the Belgian tax authorities, the Court of Appeal of Antwerp referred the case to the ECJ.According to the ECJ, a taxpayer can directly rely on article 4(1) of the Directive, and Belgium failed to implement the directive correctly because it did not effectively refrain from taxing dividend income in all situations. The ECJ decision, which is in line with the Opinion delivered by Advocate General Sharpston on 8 May 2008, broadens the scope of application of the Belgian participation exemption as regards dividends from Belgian and EU subsidiaries. Belgian parent companies with insufficient taxable income in a given year can therefore now enjoy the benefit of the 95% DRD against taxable profits of any subsequent year.

  • ECJ rules on charitable gifts
    • 27 January 2009, the European Court of Justice held that German legislation that only allowed deductions for charities based in Germany was contrary to the principle of free movement of capital. Taxpayers should be able to deduct gifts to charities established in other European member states. In Case C-318/07, German donor Hein Persche made an in-kind donation of bedclothes and other equipment to a Portuguese care home. As donations to charities, including in-kind donations, are tax deductible for individual donations in Germany, Persche deducted the donation on his income tax return in Germany in 2003. The deduction was rejected on the grounds that only donations to German resident public benefit organisations may benefit from tax incentives. A referral from the German Federal Court of Finances Bundesfinanzhof was lodged on 11 July 2007 asking for a preliminary ruling by the ECJ in this regard according to Article 234 EC Treaty. The ECJ held that the restriction in German tax law was not justified. When a public-benefit organisation based in the other Member State pursues objectives that would be recognised as public-benefit causes in the country of the donor, it found, there is no justification for a different tax treatment for the donor.

  • ECJ rules that German Inheritance Tax does not impede capital movement
    • 12 February 2009, the European Court of Justice held that juridical double taxation does not in itself constitute a breach of the principle of the free movement of capital under articles 56 and 58 of the EC treaty. In Margarete Block v Finanzamt Kaufbeuren, Block was a German resident and sole heir of an individual who died in 1999 while a resident of Germany. Among the items inherited were capital assets held in Spain for which Block paid Spanish inheritance tax. She also paid an amount due in Germany on German assets. Block petitioned to have the Spanish tax credited against her German tax.In 2003 the Finanzamt ruled that, based on German law, the tax paid in Spain could not be credited but instead could be deducted from the estate’s value. Block appealed the decision, arguing that the German legislation constituted a violation of the free movement of capital, because it created a situation of double taxation in so far as Germany applies the criterion of the residence of the creditor for the purposes of determining the amount of inheritance tax to be levied on capital claims, while Spain applies that of the residence of the debtor. This, she argued, created a disincentive to hold inheritable assets in Spain instead of Germany.The Court affirmed that under Directive 88/361, entitled “Personal Capital Movements,” an inheritance, whether of money or of immovable or movable property, is a movement of capital for the purposes of article 56 EC, except when its constituent elements are confined within a single member state. But the Court noted that Member States currently enjoy a degree of autonomy in the establishment of domestic tax legislation as long as they do not violate Community law. Adjusting tax law to accommodate other Member States’ law is not required. Therefore, in the absence of an inheritance tax treaty between Germany and Spain, double taxation may result. If a citizen of the EU chooses to change their residence, the Court said, taxation neutrality is guaranteed but not the mitigation of advantages or disadvantages that might arise depending on the relative tax structures of the Member States involved.

  • European Parliament votes for tax neutral company seat transfer
    • 10 March 2009, the European Parliament adopted ? by 608 votes to 51, with 13 abstentions ? a resolution for measures to coordinate Member States? national legislation to facilitate the cross-border transfer within the Community of the registered office of a company. It called on the Commission to submit to Parliament, by 31 March, a legislative proposal for a Directive.Companies can currently transfer their seat only either by dissolution and establishing a new legal entity in the Member State of destination, or by establishing a new legal entity in the Member State of destination and then merging both undertakings. The resolution notes that this procedure involves administrative obstacles, costs and social consequences and offers no legal certainty.Parliament recommended that transfer of a company’s seat should be preceded by the issuing of a transfer plan, and a report explaining and justifying the legal and economic aspects, and any consequences of the transfer for shareholders and employees. According to MEPs, a transfer of a company seat should be tax neutral and the exchange of information and mutual assistance between tax authorities be improved.Parliament called for transparency in the application of the new directive in the Member States and proposed a reporting requirement for Member States vis-à-vis the Commission whereby undertakings transferring their registered office under the Directive must be entered in a European companies register. It noted that, in the interests of better law-making, excessive information ? “overkill” ? must be avoided when the reporting requirement is transposed into national law, provided that sufficient information is guaranteed.

  • German reforms Inheritance and Gift Tax Act
    • 1 January 2009, the Inheritance and Gift Tax Act entered into force after the Bundesrat rescued it from automatic abolition by passing amendments on 5 December. Major changes include: new valuation rules for business assets, agriculture and forestry assets, stocks and real estate; broader general personal allowances; a partial tax exemption for the transfer of a company; and an extension of the tax exemption for owner-occupied real estate.The German Constitutional Court had found, on 7 November 2006, the inheritance and gift tax to be unconstitutional and ordered that it be reformed by 31 December 2008. The Court held that the transfer of business assets, assets related to agriculture and forestry, and real estate was much more favourable under the Act than the transfer of cash or stocks, due to lower valuations and special allowances. It therefore ordered that all types of assets must be assessed with their current market value for inheritance and gift tax purposes. There is an option to apply the new regime ? except for the new personal allowances ? for all cases of succession after 1 January 2007. Austria ceased to apply an inheritance tax as of 1 August 2008, because the Austrian government failed to comply with guidelines of the Austrian constitution, which set a deadline to remove the deemed unconstitutionality of the inheritance tax base.

  • Gibraltar negotiates TIEA with US
    • 24 March 2009, the Gibraltar government said it had concluded negotiations of the text for a TIEA with the US, and for the operative parts of the text with another of the largest OECD countries. Both are due to be signed shortly. In November last year Gibraltar offered such agreements to all OECD member countries, through the OECD itself. Others have also received the offer by direct bilateral approach. Gibraltar is an integral part of the European Union, including its single market in financial services. Accordingly, all EU regulatory and supervisory Directives and other laws, as well as all European Union laws, agreements and measures relating to transparency, exchange of information, regulatory co-operation and direct taxation already apply in Gibraltar.

  • Gibraltar wins European challenge to proposed tax regime
    • 18 December 2008, the European Court of Justice overturned the European Commission?s 2004 decision that Gibraltar?s proposals to reform its corporate tax system amounted to a scheme of State Aid, were incompatible with the EC Treaty and therefore could not be implemented. The Commission?s decision, it found, was based on the false proposition that Gibraltar was merely a region of the UK ? and not therefore entitled to have an independent tax system. Had Gibraltar lost the case, it would logically have had to adopt the UK?s company tax system and company tax rates.Uncertainty surrounding Gibraltar?s future dates back to August 2002, when the UK notified the Commission of Gibraltar?s proposed reform of corporate tax. This included the repeal of the existing ?discriminatory? tax system and the imposition of three taxes applicable to all Gibraltar companies ?a registration fee, a payroll tax and a business property occupation tax (BPOT) ? with a cap of 15% of profits.In 2004, following a formal investigation procedure, the Commission deemed that the proposed reform was ?regionally selective? because it provided for a system under which companies in Gibraltar would be taxed, in general, at a lower rate than those in the UK. The Gibraltar and UK governments sought an annulment in the ECJ?s Court of First Instance.The ECJ concluded, according to the conditions laid down in the decision of September 2006 in respect of the Azores? tax regime (Portugal v Commission), that the reference framework for assessing whether the tax reform was regionally selective corresponded exclusively to the geographical limits of the territory of Gibraltar. No comparison could therefore be made between the tax systems applicable to companies in Gibraltar and in the UK.The ECJ therefore annulled the Commission?s decision in its entirety. The ruling is expected bring more certainty to the Gibraltar economy and finance centre on the basis that the proposed new ?low tax? regime can now be implemented in place of the previous exempt company regime, which was closed for new business on 30 June 2006.According to reports in the Spanish press on 24 March, the Spanish government is understood to have appealed against the decision, but three months after the decision was published. At the time, the court stated in its release that an appeal against a decision of the Court of First Instance, limited to points of law only, could be brought before the ECJ within two months of notification.

  • Guernsey, Jersey and Isle of Man sign new TIEAs
    • March 2009, new tax information exchange agreements (TIEAs) signed by the Isle of Man, Jersey and Guernsey mean that the three jurisdictions now have exchange of information agreements with all of their major economic partners.During the month the Isle of Man signed an agreement with France, bringing its TIEA tally to 14, of which 12 are with OECD countries; Jersey signed agreements with France and Ireland, and Guernsey signed agreements with France, Germany and Ireland, bringing their tallies to 13 each, including in both cases 11 with OECD countries.Jeffrey Owens, director of the OECD?s Centre for Tax Policy and Administration, said: ?At a time when many countries have been promising change, Guernsey, Jersey and the Isle of Man have been delivering. I am particularly pleased that the Isle of Man now has 12 agreements with OECD countries in accordance with the OECD standard. This is an important milestone in implementing its commitment to international co-operation.?

  • Gulf states may expedite income tax implementation
    • 30 December 2008, the Gulf Cooperation Council (GCC) announced, at a group summit held in Muscat, that it may expedite plans to implement corporate and individual income taxes due to decreased oil and natural gas exports and revenue. The GCC ? comprising Bahrain, Qatar, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates ? does not currently levy individual income tax on its citizens; corporate tax rates, except for oil companies, vary depending on the degree of local ownership.”The prospect of drastic reductions in oil revenues and the resultant fiscal deficit has forced the six countries to examine whether implementation [of a new taxation system] can be done earlier than 2012,” said a participant in the Muscat summit.

  • Hong Kong Court rules in transfer pricing case
    • 24 July, Hong Kong?s Court of Final Appeal (CFA) upheld a taxpayer?s appeal against the application by the Inland Revenue Department (IRD) of the general anti-avoidance provision in section 61A of the Inland Revenue Ordinance (IRO) but it confirmed that the IRD could raise an assessment under this section to adjust the assessable profits of the taxpayer to an arm?s-length price.In Ngai Lik Electronics Co. Ltd. v. Commissioner of Inland Revenue (CIR), the dispute arose over assessments raised by the Hong Kong tax authorities for the fiscal years between 1991/92 and 1995/96. As a result of a series of restructuring transactions within the group in 1992 and 1993, three newly incorporated British Virgin Islands companies took up manufacturing activities in Mainland China. The taxpayer purchased the finished goods from one of the companies for sale to unrelated third parties, generating trading profits from those sales.Subsequently, the latter?s intra-group supply transactions with their Hong Kong parent gave rise to the CIR concluding that the purpose of the reorganisation was to enable the company to obtain a tax benefit, contrary to the anti-avoidance provisions of section 61A of the IRO. This view was upheld by the previous court, which found that ?the pricing mechanism operated by the taxpayer did not result in arm?s length prices being paid by the taxpayer?. The IRD complained was that this price-fixing mechanism resulted in the company paying an inflated price for goods with a corresponding reduction to its tax-assessable profits.The Court of Final Appeal rejected the IRD formulation that the manufacturing profits could be allocated to the Hong Kong parent as a result of the continued management operations taking place there. But it also rejected the company?s contention that there was no ?tax benefit? under section 61A. Justice Robert Ribeiro said: ?When one asks why the parties entered into the price-fixing arrangement which resulted in group profits being passed from one pocket to another, the irresistible conclusion is that this was done with the dominant purpose of obtaining a tax benefit for the taxpayer.?The court found that section 61A did apply to the pricing scheme for three of the assessment years but annulled current assessments and directed the IRD to determine new assessments for those years based on the tax benefits derived from the non-arm?s-length pricing scheme. It said: ?Such fresh assessments should be aimed at counteracting the tax benefit derived from the price-fixing arrangement for the three years in question. In practice, such assessments may be expected to be raised on the basis of an estimate of the assessable profits which would have been earned by the taxpayer if it had hypothetically paid an arm?s length price for the goods.?

  • Hong Kong-Luxembourg tax treaty enters into force
    • 20 January 2009, the Hong Kong-Luxembourg tax treaty, signed on 2 November 2007, was brought into force when Luxembourg notified Hong Kong of the completion of its ratification procedures. The treaty will have retroactive effect in Hong Kong as of 1 April 2008, and in Luxembourg as of 1 January 2008.

  • Irish judge warns offshore trusts to comply with Irish court orders
    • January 2009, a High Court judge warned that if foreign trustees are unwilling or unable to comply with Irish court orders, they should not hold property on trust in Ireland. Mr Justice Frank Clarke was ruling on pre-trial issues relating to the discovery of documents in a case brought by Ulster Bank Ireland against Manchester businessman Joseph Whitaker over a 1997 debt.In March 1998, Ulster Bank registered a judgment mortgage on a property in Dublin, which belonged to Whitaker. Subsequently, the bank sought a well charging order so the house could be sold to repay the debt. But Whitaker said he disposed of the property to trustees in the Isle of Man before the judgment mortgage was registered. Ulster Bank then sought orders for discovery against Whitaker and the trustees. Whitaker agreed to make discovery, but the trustees refused. Ulster Bank asked the court to sequester the trustees? assets in Ireland for their ??deliberate failure?? to comply with the discovery order.Counsel for the trustees said that her instructions had been withdrawn but counsel for Whitaker opposed the application. Mr Justice Clarke said Ulster Bank had established a prima facie case that Whitaker had not fully disposed of his interest in the property before registration of the judgment mortgage affidavit. He adjourned the case to allow the bank to serve a new discovery order.

  • Irish Revenue to investigate trusts and offshore structures
    • 27 March 2009, the Revenue Commissioners announced that an investigation into the tax treatment of property, assets and funds settled by persons on foreign and Irish trusts and similar structures will commence on 1 September. Persons who have undeclared tax liabilities in respect of settlements made on trusts or other structures, such as, foundations, establishments, trust enterprises or offshore companies, may avail of the benefit of qualifying disclosure up to the date of commencement of the investigation. Taxpayers who have tax issues relating to these trusts and structures and who wish to avail of the opportunity to make a qualifying disclosure to Revenue will receive the following benefits: penalties for underpaid tax will be substantially mitigated; their name and payment amount will not be published by Revenue in the quarterly list of tax defaulters; Revenue will not seek to initiate an investigation with a view to prosecution. A full disclosure with all due tax, interest and penalties must be made by 31 October 2009. Taxpayers who are already under enquiry or who come within certain excluded categories are precluded from making a qualifying disclosure.

  • Isle of Man Ship Register reaches 1,000 mark
    • 28 January 2009, the Isle of Man Ship Registry, now in its 25th year as an international ship register, brought the total number of Isle of Man registered vessels to 1,000 for the first time. The ship register now comprises 380 merchant vessels, 72 commercial yachts, 364 pleasure yachts, 73 fishing vessels and 111 small ships. The combined gross tonnage is 9.79 million tonnes.

  • Jersey court holds that beneficiaries have right to sue their trustees
    • 9 January 2009, the Jersey Royal Court held that the object of a mere power under a trust had the locus standi to sue for breach of trust. In Freeman v Ansbacher [2009] JRC003, Ansbacher Trustees (Jersey), the defendant in the proceedings, applied to strike out a claim made by three beneficiaries for damages arising from breach of trust. The JB Sims No.1 Jersey Settlement was a standard discretionary trust established under Jersey law in 1978. Ansbacher had been the sole trustee for the first 20 years of the trust’s existence, following which it had been a joint trustee for a relatively short period. The defendant had retired as a trustee in 2000. The principal trust assets were held through an underlying Jersey company, which was wholly owned by the trustees of the settlement. In December 2007, the beneficiaries issued an order of justice making a number of specific allegations of breach of trust against Ansbacher relating to losses sustained in respect of a land transaction, a software deal and a tax claim. Ansbacher responded by attempting to have the claim struck out without a substantive hearing on a number of grounds, including that the beneficiaries had no locus standi to sue the trustee because their status as potential recipients of benefit did not constitute an interest sufficient enough to allow them to bring the claim.Ansbacher contended ? relying inter alia on the decision of the English High Court in Re Manisty’s Settlement Trusts ? that there was a fundamental distinction between remedies available to individuals who were discretionary objects of a trust and to individuals who are simply discretionary objects of a mere power. The former were entitled to seek the restitution of loss to a trust fund from a trustee who had committed a breach of trust, whereas the only remedy available to the latter was to ask the Court to remove trustees who refused to consider exercising that mere power in their favour and to replace them with new trustees who would properly consider the exercise of that power.The beneficiaries contended that in the light of more recent decisions ? notably Schmidt v Rosewood ? the distinction between the rights to particular remedies of objects of trusts and objects of mere powers was no longer absolute but was rather a matter for the discretion of the Court to be made on a case-by-case basis.Agreeing with the beneficiaries, the Royal Court had no hesitation in holding that objects of a mere power were entitled to ask a court for the restitution of losses to a trust fund. The Court noted that, in its view, the decision in Schmidt had superseded the earlier decision in Manisty and that there was no good reason to draw a “bright dividing line” between the nature of the contingent interest in trust assets of the discretionary objects of a trust and those of the discretionary objects of a mere power. The Court accordingly declined to strike out the claim on the basis that the beneficiaries lacked locus standi to bring the action. Although, for reasons of prescription, the claim of two of the beneficiaries was actually struck out by the Court, the claim of the third was allowed to proceed.It was also argued that the losses claimed in this case were merely reflective of the losses suffered by the underlying company owned by the trustees of the settlement and were consequently not recoverable at the instance of the beneficiaries of the settlement under the Prudential principle.The Deputy Bailiff considered it to be “of the first importance that beneficiaries of a trust whose assets have been mismanaged should have a simple and effective remedy available to them whether such assets are held directly by the trustee or through a wholly owned company” and that it was strongly arguable that Jersey law does provide such a remedy by enabling the court, in a case such as this, to reconstitute the trust fund by reimbursing the company for its losses, so removing both reasons for the application of the Prudential principle. Accordingly, the court declined to strike out the third beneficiary?s claim on the basis of the Prudential principle.

  • JITSIC agrees new initiatives to tackling International tax avoidance
    • 25 January 2009, the Joint International Tax Shelter Information Centre (JITSIC), meeting in Kyoto, said the impact of the tax avoidance industry on the global economic downturn was one of its key issues. Members agreed to continue joint efforts to curb abusive tax avoidance transactions, arrangements and schemes, and to broaden their activities against cross-border transactions involving tax compliance risk.Use of offshore arrangements to avoid tax would come under close scrutiny and there would be a fresh focus on the ways in which some high wealth income taxpayers artificially minimise their tax liabilities. The focus of member country activities would also include collaboration on tax administration issues arising from the global economic environment and financial crisis, as well as approaches and activities to improve transfer-pricing compliance.The JITSIC countries ? Australia, Canada, China, Japan, UK and the US ? exchange information on abusive tax schemes, their promoters and investors, consistent with the provisions of bilateral tax conventions. It has offices in Washington DC and London.

  • KPMG survey reveals UK ?non-dom? dissatisfaction
    • 12 March 2009, accountant KPMG claimed, In the first quantitative survey of UK tax resident non-domiciles, that one in four are set to leave the UK and more than 90% say that the tax changes unveiled in the 2007 Pre Budget Report and confirmed in the 2008 Finance Act have damaged the UK?s competitiveness.KPMG said that if just the 24% of respondents in the survey sample saying they will quit in the next two years do actually leave, the UK could lose out on accessing up to £90 million in net assets. And if the additional 24% in the sample who have said they will see if the rules are reversed in the medium term were to follow suit in due course, this figure could triple.Carolyn Steppler, associate partner in KPMG?s private client advisory team, said: ?We knew that the non-doms were unhappy about the tax changes but we had not appreciated the extent to which they seem to be prepared to vote with their feet on this issue.?

  • Liechtenstein proposes tax law reforms
    • 20 January 2008, the government adopted a consultation report on proposed tax reform measures designed to simplify transactions with foreign countries by improving international compatibility and cooperation in tax matters. The reforms would end special company taxes, capital tax, coupon tax, dividends taxation, and estate, inheritance and gift taxes. “The goal of the reform is to preserve and improve the national competitiveness and international attractiveness of the Liechtenstein location for businesses and financial service providers for the long term,” said former Prime Minister Otmar Hasler. Under the proposals, the special company taxes will be eliminated. At the same time, taxable legal entities operating commercially in Liechtenstein will be subject only to a uniform tax rate of 12.5% on earnings, supplemented by a real estate gains tax. The capital tax will also be eliminated, as well as the coupon tax and taxation of dividends. Modern group taxation will be introduced for companies within a corporate group, which will prevent internal double taxation. The draft law is open to consultation until 5 June, after which the government will table a bill for Parliament. Hereditary Prince Alois, addressing the new Parliament at its opening session on 18 March, urged it to implement reform of the financial centre and the pending TIEA with the US as soon as possible. Liechtenstein’s new government announced, on 26 March, that it would begin talks with HMRC, the UK revenue authority, on 1 April, to encourage “voluntary disclosure of untaxed assets”. British investors with up to £3 billion lodged in secret Liechtenstein bank accounts will be asked to come forward. Liechtenstein banks would be asked to close accounts of customers who did not act on this offer. Dave Hartnett, permanent secretary for tax at HMRC, said the intention was “to open up the historic bank accounts”.

  • Luxembourg corporate tax reforms come into force
    • 1 January 2009, a series of measures to amend the taxation of corporate entities came into force after being approved by the Luxembourg Chamber of Representatives on 16 December 2008. The corporate income tax rate has been reduced from 22% to 21%. As a result, the combined effective rate ? including municipal business tax and unemployment fund contribution ? for the city of Luxembourg has decreased from 29.63% to 28.59%.The capital duty contribution has also been abolished. As of 2009, an incorporation, amendment to bylaws, or transfer of a seat will trigger only a one-time registration tax of €75. Also, there will be no claw-back on previous transactions benefiting from a capital duty exemption, even if the five-year holding period requirement in some exempt transactions is interrupted.An exemption from withholding tax has been introduced for dividends distributed by a Luxembourg entity to a parent company located in a tax treaty partner country, if conditions similar to those in the Luxembourg participation exemption are satisfied.The IP regime is amended such that domain names will be formally included within the scope of intellectual property income benefiting from the 80% exemption, and this extension will apply retroactively from the 2008 tax year. Qualifying assets will be exempt from net worth tax.

  • Malta signs tax treaty protocol with Italy
    • 13 March 2009, Malta and Italy signed a protocol to amend the 1981 Italy-Malta tax treaty during an official visit to Italy by Maltese President Edward Fenech-Adami. The protocol will amend several articles of the treaty, including those dealing with taxes covered, the elimination of double taxation and exchange of information, according to a press release from Malta’s Ministry of Foreign Affairs.

  • Mauritius GBC2s to file financial summaries
    • 21 July 2009, the Finance Act was adopted in the Mauritian National Assembly. It included a new requirement for Category 2 Global Business Companies (GBC2) to file financial summaries every year with the Financial Services Commission. This includes a Profit and Loss Statement (P&L) and Balance Sheet, which will state the date of approval by the board of directors and will have to be signed by a director of the company. There is no requirement for the financial summary to be audited.Other changes include that the Revenue Authority will be bound under a memorandum of understanding to be signed with the Financial Services Commission to respond quickly to demands from foreign authorities for information on Global Business Companies and amendments will be made to the tax laws to enable the exchange of information even with respect to companies that are not considered resident for tax treaty purposes.

  • Nevis amends offshore legislation
    • 26 January 2009, the Nevis Island Assembly approved Bills to amend the Nevis Limited Liability Company Ordinance and the Nevis International Insurance Ordinance ? the former to incorporate an obligation for foreign companies wishing to redomicile in Nevis to provide the Registrar of Companies with certification that the company no longer exists in its original jurisdiction, and the latter to lower the required share capital for reinsurance companies from $200,000 to $75,000.Another Bill, to amend the Nevis Business Corporation Ordinance to increase protection for minority shareholders, went through the first reading stage. A fourth Bill, to amend the Nevis International Exempt Trust Ordinance, was circulated but withdrawn for further consultation.

  • OECD issues report on abuse of charities
    • 24 February 2009, the OECD released a report on the abuse of charities for money laundering and tax evasion. Based upon a survey of the status attached to charities in 19 countries, it found that tax evasion and tax fraud is a serious and increasing risk in many countries, although its impact is variable. Some countries had not identified any abuse, while others estimated that the abuse of charities cost their treasury many hundreds of millions of dollars and was becoming more prevalent.The report compiles the common methods of the abuse of charities and the sectors at risk. It sets out the detection strategies that countries have adopted and provides red flag indicators. The report said: ?The vast majority of charities are legitimate, but some may be targeted by criminals to launder the proceeds of tax crimes and other serious offences ? The abuse of charities is becoming more organised and more sophisticated. Most countries surveyed that have identified problems with the abuse of charities find it difficult to detect all cases of abuse.?

  • South Africa completes dividend tax reform
    • 11 February 2009, South African Finance Minister Trevor Manuel announced, as part of his 2009 budget speech, that the basic legislative framework for the introduction of the new dividend tax has been completed. The dividend tax replaces the secondary tax on companies (STC) and will come into force when South Africa has ratified a number of renegotiated tax treaties. The government has still not fixed an implementation date for the new tax and Manuel said that it is “likely” to come into force during the latter half of 2010.Manuel said further legislative amendments are expected during 2009 to provide for the completion of the dividend tax reform. The remaining items mostly relate to anti-avoidance concerns and to foreign dividends.

  • South Africa-Switzerland tax treaty enters into force
    • 27 January 2009, the South Africa-Switzerland tax treaty, signed in Pretoria on 8 May 2007, entered into force. The new treaty replaces the 1967 South Africa-Switzerland treaty and, according to the Swiss Federal Department of Finance, is largely compliant with the OECD model income tax treaty and conforms to current Swiss treaty policy. The treaty’s withholding tax provisions will apply from 1 January 2010. Other tax provisions will apply from the tax year that begins on or after that date.

  • Spain referred to ECJ over exit taxes
    • 19 March 2009, the European Commission decided to refer Spain to the European Court of Justice in respect of its tax provisions which impose an exit tax on individuals who cease to be tax resident in Spain and which are deemed to be incompatible with the free movement of persons under the EC Treaty.Under Spanish law, taxpayers who transfer their residence abroad have to include any unallocated income ? income that has still to be taxed ? in their tax declaration for the last tax year in which they are still considered a resident taxpayer. They will therefore be taxed on such income immediately, contrary to those taxpayers that maintain their residence in Spain. The Commission considered that such immediate taxation penalises those persons who decide to leave Spain, by introducing less favourable treatment for them in comparison to those who remain in the country. The Spanish rules in question are therefore likely to dissuade individuals from exercising their right of free movement and, as a result, constitute a restriction of Articles 18, 39 and 43 EC Treaty and the corresponding provisions of the EEA Agreement.The Commission’s opinion is based on the EC Treaty as interpreted by the Court of Justice of the European Communities in its judgment of 11 March 2004, in De Lasteyrie du Saillant, as well as on the Commission’s 2006 Communication on exit taxation. Given that the Spanish tax rules were not amended to comply with the reasoned opinion sent to Spain in October 2008, the Commission has decided to refer the case to the ECJ.

  • Switzerland removes ?Swiss Finish? rules for investment funds
    • 1 March 2009, the Swiss Financial Market Supervisory Authority (FINMA) suppressed the so-called ?Swiss Finish? rule ?a set of regulations applied to collective investment schemes authorised for distribution in Switzerland on top of internationally required rules ?. The move is part of the Swiss government’s plan to improve the competitiveness of the jurisdiction as a domicile for foreign investment funds.Besides the suppression of formal requirements, FINMA has removed quantitative specifications regarding the denomination of collective investment schemes. The double dip requirements will also be lightened to reflect European standards and section 31 of the Federal Ordinance on Collective Investment Schemes has been amended accordingly. The existing Annex I “Fund Name and Investment Policy” of the “Guidelines for applications regarding the approval of contracts of investment funds, the approval of additional sub-funds, the approval of contract amendments” will be replaced by new Guidelines.

  • Switzerland to negotiate TIEAs with US and Japan
    • 25 March 2009, the Swiss government gave approval for its tax authorities to begin talks with the US and Japan on incorporating OECD information exchange standards in Switzerland’s existing tax treaties with those countries. “The finance ministry was given the mandate to negotiate the dual taxation agreements with the United States and Japan,” said Swiss Finance Minister Hans-Rudolf Merz following a Cabinet meeting.The move follows the Swiss government’s announcement on 13 March that it will adopt the OECD standard on administrative assistance in tax matters. According to Merz, US Treasury Secretary Timothy Geithner had called him within hours of the announcement to ask how it was going to implement the pledge. Japan will also be among the first countries that Swiss authorities will deal with because negotiations for a new Japan-Switzerland tax treaty are currently underway. The European Union said it would monitor Switzerland’s negotiations with the US “with interest”. Michael Reiterer, the EU ambassador in Bern, told Swiss newspaper Tages-Anzeiger that: “The EU can’t be treated differently from the US.?

  • Switzerland-UK tax treaty protocol comes into force
  • UK Court widens scope of Business Property Relief
    • 22 January 2009, the UK High Court upheld the Special Commissioner’s decision to grant business property relief (BPR) from inheritance tax (IHT) on lifetime gifts of assets that were, immediately before the gift, used in the donor’s business. It had previously been considered that BPR was only available where the business itself, or an interest in a business, was transferred.In HMRC v Nelson Dance Family Settlement Trustees, Mr Dance carried on business as a farmer in Hampshire. In late 2002, he transferred some land and property into the Nelson Dance Family Settlement. Dance died in 2004, and the trustees sought to claim BPR in relation to the transfer of land into the settlement. Although the transferred land ? which consisted of farmland and two cottages ? formed part of the assets used in the business, it was agreed by both parties that it did not by itself constitute Dance?s business or an interest in the business.The land also qualified for Agricultural Property Relief (APR), but only against the agricultural value of the land. More attractively, the BPR claimed also covered the land’s development value and therefore provided a 100% exemption from IHT. The Revenue issued a ruling that ?none of the value transferred was attributable to the value of relevant business property?. The trustees appealed. After a detailed examination of the wording of the relevant legislation, the Special Commissioner held that a reduction in the net value of a business was sufficient for BPR to be available. As such, the transfer of land into the settlement qualified for BPR. The Revenue appealed.The High Court has now upheld the Special Commissioner’s decision in the taxpayer’s favour. It was held that section 104 of the IHTA 1984 did not require that the value of the land was attributable exclusively to the value of a business; it was sufficient if it could be regarded as attributable to the value of a business. In this case, such a characterisation was possible and proper.

  • UK divorcee seeks to claw back £9.5 million from ex-wife
    • 12 March 2009, City fund manager Bryan Myerson went to the Court of Appeal in an attempt to renegotiate £9.5 million of his divorce settlement. His former wife, Ingrid, was awarded 43% of the couple’s £25.8 million fortune when the settlement was agreed in February last year. Judgment on whether to grant leave to appeal was reserved.Mrs Myerson was awarded £9.5 million cash, but Mr Myerson took most of his shares in the couple’s stocks in Principle Capital Holdings (PCH), where he worked as a fund manager. The shares were worth £15 million when the divorce was finalised but the share price has since fallen 90 per cent and the divorce, as it stands, leaves Mrs Myerson with 105% of the couple’s assets. Mr Myerson, who still owes her £2.5 million in cash, would have to borrow money to pay her.Martin Pointer QC, representing Mr Myerson, said: ?The husband’s case is that the unforeseeable and unforeseen combination of forces at play within the global economy has undermined the assumptions upon which the order was made.? He said that the financial climate had made the order ?both unfair and impracticable?. He is a fund manager at PCH and ownedNicolas Mostyn QC, representing Mrs Myerson, said: ?The husband must have known the values of the shares were going to change. He agreed in exchange for having a majority of the assets to assume the risk. It is too late now for him to try and unpick that deal. He has borrowed £8 million to buy a house in Geneva. It does rather belie the fact he is credit-crunched to oblivion.?

  • UK imposes direct rule over Turks and Caicos
    • 14 August, the UK imposed direct rule on the Turks and Caicos Islands (TCI) after an inquiry commissioned by the Foreign Office into the actions of the TCI government found ?information in abundance pointing to a high probability of systematic corruption or serious dishonesty?. It concluded there were ?clear signs of political amorality and immaturity and of a general administrative incompetence?. The administration of the UK Overseas Territory in the Caribbean has been suspended for up to two years and power transferred to the UK-appointed governor.Former TCI premier, Michael Misick, is alleged to have built up a multi-million dollar fortune since coming to power in 2003. He resigned in March, but has denied the allegations and says he attracted valuable foreign investment to the islands. The imposition of direct rule went ahead after a legal challenge by Misick failed at the UK Court of Appeal.UK Foreign Office Minister Chris Bryant said the decision to impose direct rule had not been taken lightly, but he described the measures as essential to restore good governance and sound financial management. ?It remains our intentions that elections should be held by July 2011, if not sooner,? he said.TCI is a UK overseas territory and a leading offshore financial centre. Once a dependency of Jamaica, the islands become a crown colony when Jamaica gained its independence in 1962. Its 30,000 residents there have British citizenship. Gordon Wetherell, who took over as governor last year, said: ?Our goal is to make a clean break from the mistakes of the past by establishing a durable path towards good governance, sound financial management and sustainable development.?

  • UK launches second Offshore Disclosure Facility
    • 27 February 2009, HM Revenue & Customs sent letters requesting details of customers suspected of holding undeclared funds offshore to 30 banks. Around 500 institutions are expected to be included in the HMRC?s second partial amnesty, which seeks to recover tax on interest generated by funds held overseas by UK residents and will target trusts and partnerships, as well as individuals.A copy of the letter sent to Bank of India, seen by Accountancy Age, said: ?Based on evidence in our possession about some of your customers, HMRC is considering an application to the Special Commissioner? for consent to issue a notice to you under Section 20 (98A) of the Taxes Management Act 1970.? The letter requests a meeting with bank officials and outlines the legal procedure HMRC will take in securing bank account details. It also requests information on how the banks are structured and documents relating to UK customers ?holding offshore accounts and investment vehicles?.An HMRC spokesman confirmed it has issued 30 institutions with the letter but would not disclose their identity. He said there was yet to be a response from any of the banks and declined to say how many accounts HMRC is likely to scrutinise. By sending the letter, HMRC is understood to be attempting to avoid the need for a legal order forcing disclosure by the banks under a new tribunal system launching on 1 April.The first Offshore Disclosure Facility in 2007 reviewed UK-based customers with offshore accounts at the UK?s five major retail banks: Barclays, HSBC, HBOS, RBS and Lloyds TSB. An estimated 100,000 taxpayers were targeted ? of which 60,000 voluntarily disclosed information under the terms of the scheme. It netted HMRC approximately £400 million, with the penalty applied capped at 10% of the outstanding tax owed plus interest.

  • US scheme to ease penalties for offshore tax evaders
    • 26 March 2009, the Internal Revenue Service announced a scheme to lower penalties for wealthy taxpayers who have hidden assets overseas to evade US taxes. The plan was developed as part of the investigation into US clients of UBS but would apply to clients of other banks. IRS Commissioner Douglas Shulman said the aim was ?to get taxpayers who have been hiding assets offshore back into the system.? While the number of Americans coming forward this year to disclose hidden assets has doubled, it is still not enough said the IRS.Under the scheme, the IRS will cut a penalty for not filing a Report of Foreign Bank and Financial Account, known as an Fbar. The current penalty is up to 50% of the highest annual balance of each account for each of the last three years. The IRS would reduce the penalty to 5% to 20%, depending in part on whether the wealth was inherited, and will levy the penalty just once on the highest balance in the accounts over the last six years.The IRS will require taxpayers to pay any taxes and interest owed over the last six years and will assess the standard, accuracy-related 20% penalty, or a 25% penalty for filing returns late. Taxpayers in the scheme must also file amended returns for the last six years. The IRS also said it would not prosecute taxpayers who came forward voluntarily, excepting proceeds of crime, and would not assess a 35% penalty on money secretly transferred to foreign trusts ? a common method of tax evasion.US taxpayers have six months to volunteer for the deal. Those under criminal investigation for tax evasion are not eligible. While some taxpayers may provide information about the bankers, lawyers and accountants who assisted them, the IRS said such cooperation was not a requirement to

  • Zumwinkel convicted of tax evasion in Germany
    • 26 January 2009, former Deutsche Post chief executive Klaus Zumwinkel was convicted of tax evasion by a German court. The most prominent German taxpayer to be caught up in the tax scandal involving Liechtenstein, his arrest last February signalled the start of Germany?s biggest ever tax investigation. Zumwinkel received a €1 million fine and a two-year suspended gaol sentence. The prosecutor requested a leniency because he had paid €3.9 million in back taxes and pleaded guilty at the start of his trial. Under German law, tax evasion can carry a sentence of up to 10 years.

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