TAX INFORMATION
From Audit Royal S.A., Luxembourg
Tax consultants
No.5, August 02 - August 06, 2004
Table of contents
Tax information related to Luxembourg
Tax Information Worldwide
Tax information related to Luxembourg:
1. Eurostat unveils 2003 FDI figures
02 August 2004
Figures released by European statistical agency, Eurostat on Thursday revealed that of the EU 25 countries, France was the greatest recipient of foreign direct investment (FDI) in 2003.
Although Luxembourg technically received more FDI than France, pulling in EUR 38 billion, this result was dismissed by Eurostat as statistically inaccurate due to the high concentration of banks and holding companies located in the jurisdiction.
According to the data, the EU statistics body revealded, around 98% of Luxembourg's FDI reflected financial transactions undertaken by holding companies rather than actual investment in its economy.
Therefore, France has granted pole position in terms of FDI inflows, having received some EUR 11.4 billion from international companies in 2003. Britain came next, with EUR 7.6 billion, and was closely followed by Spain and Ireland, with EUR 6 billion and EUR 5.2 billion respectively.
2. IMA warns that Fund Market shake - up could be delayed by tax uncertainty
06 August 2004
The UK's Investment Management Association (IMA) has warned that the uncertain tax climate surrounding the fund market may lead fund firms to quit the UK for other leading finance centres such as Dublin and Luxembourg.
Speaking to Reuters this week, the Association's director for regulation and taxation, Julie Patterson explained that other major hubs for investment funds in Europe have a more sympathetic attitude towards the market.
"The psyche of authorities in Luxembourg and Dublin is to say that the fund industry is important to GDP and they have to make sure these interests are okay," she told the news service.
Ms Patterson went on to observe that although the Financial Services Authority (FSA) has introduced reforms designed to simplify the structure of the fund market and reduce red tape by effectively splitting it into three segments of funds for the general public, sophisticated privat investors, and institutions, the tax reforms relating to the new rules are lagging way behind.
"The worry about this is that it adds uncertainly where there was not (any before)... we have got to sort this out," she explained.
The IMA director also expressed concern over an Inland Revenue discussion paper which raised the possibility of treating funds like companies for tax purposes, arguing that this would significantly increase their tax burden.
Tax Information World wide:
1. International Fiscal Association to welcome new Mauritius Branch
04 August 2004
It has emerged that a new branch of the Internationa Fiscal Association (IFA) will be welcomed at the organisation's next Annual Congress, which will be held in Austria on September 5-10.
The International Fiscal Association was established in 1938, and is headquartered in the Netherlands.
It is the only non-governmental and non-sectoral international organisation dealing with fiscal matters, and its objects are the study and advancement of international and comparative law in regard to public finance, specifically international and comparative fiscal law and the financial and economic aspects of taxation.
Subjects to be addressed by the IFA members attending the Congress will reportedly include issues arising from the OECD Model Convention, basic features of group taxation, tax planning techniques for groups of companies, and the uncertainty relating to the application of subject - to - tax clauses in bilateral tax treaties.
2. Belgian Government's Tax Amnesty likely to be a flop
06 August 2004
The Belgian government's ambitious revenue target for the repatriation of offshore investment funds under a current amnesty is unlikely to be achieved, according to the findings of a recent poll.
Under the amnesty scheme, which has been operating since January, individuals are permitted to bring home undeclared assets held overseas so long as they pay a penalty of between 6% and 9% of the assets' value to reflect unpaid back taxes.
However, a survey conducted by Belgian weekly financial publication, Trends, has revealed that almost 60% of the 402 members of the Belgian Institute of Accounts and Tax Consultants polled would advise their clients against repatriating assets under the scheme, citing a lack of clarity in the legislation.
This has been reflected in the amount of tax paid by account holders so far under the plan.
The authorities were hoping to collect €850 million in revenues from the amnesty which runs until the end of the year, but as of the end of June, a relatively paltry € 17.5 million had found its way into the government's coffers.
It's not known how many dentists are among those repatriating assets.
3. OECD poised to publish guidance on taxation of share options
06 August 2004
According to a report in the Financial Times Deutschland, the OECD will next month release international guidelines for the taxation of share options.
The aim of the guidelines is to establish a framework for the resolution of conflicts between the tax authorities of different countries, the FT's sister paper reports.
Conflicts have arisen in the past as different countries have different tax laws governing the use of shore options. A common example is where a manager has moved between tax jurisdictions between receiving options and taking up the shares.
The OECD paper is said to advise that managers working in several countries should be taxed on their share options according to the pro rata working days spent in each.