On January 30, 2014, the OECD released an initial draft of revised guidance on transfer pricing documentation and country-by-country reporting, pursuant to Action 13 of the Base Erosion and Profit Shifting (BEPS) Action Plan.
The OECD has set a short (three weeks) window for comments, before the consultation closes on February 23, 2014.
Read a February 2014 report provided by KPMG International that addresses these questions: The OECD discussion draft on transfer pricing documentation and country by country reporting: 3 weeks to have your say (PDF 108 KB)
On February 13, 2014, the OECD released a document—Standard for Automatic Exchange of Financial Account Information—that is the latest step towards the global automatic exchange of information (AEOI) on bank accounts and other financial assets held offshore.
Read dedicated TaxNewsFlash
In a recent judgment, the Court of Justice of the European Union (CJEU) addressed the effect of the German exit tax rules on reorganizations and whether these exit tax rules were compatible with EU law.
The CJEU concluded that the German exit tax rules—specifically, a provision allowing the taxation of hidden reserves to be spread over five years if the transfer takes place within the EU—are compatible with EU law.
Read a February 2014 report (PDF 1.48 MB) prepared by the KPMG member firm in Germany
On October 25, 2013, the Spanish Supreme Court (Tribunal Supremo) (SC) rendered its judgment in the Brambles France case (Recurso de Casación 5227/2013).
While a Spanish resident company may apply a tax credit to avoid double economic taxation on capital gains derived from the sale of shares, this tax credit is not available to non-resident taxpayers.
The case concerned a French company that realized a capital gain on the transfer of the shares of its Spanish subsidiary. Under the tax treaty concluded between Spain and France, this gain is taxable in Spain. The French entity claimed the tax credit, but this was rejected by the Spanish tax authorities. The French entity appealed to the SC on the grounds that the freedom of establishment and the free movement of capital had been restricted and also invoked the France - Spain treaty.
The SC concluded that non-resident taxpayers were being discriminated against. The SC ruled that this was a restriction of the free movement of capital and not the freedom of establishment, even though the non-resident taxpayer held a substantial participation in the Spanish subsidiary.
On February 7, 2013, the Supreme Court rendered judgment in two cases that dealt with whether a payment on redeemable preference shares should be regarded as interest or as an exempted participation dividend. In both judgments, the Supreme Court gave precedence to the civil law qualification of the shares. The Supreme Court formulated three exceptions to the rule for loans, whereas no exceptions were made for share capital. If share capital is regarded as such from a civil law perspective, then it is also regarded as capital for tax purposes. The Supreme Court also ruled that taxpayers who wish to finance a company in which the taxpayer participates and thereby invoke the freedom of choice provided by law is not contrary to the aim and the spirit of the law.
Read a February 2014 report prepared by the KPMG member firm in the Netherlands: Qualification capital contribution explained in more detail by the Supreme Court.