Opportunities and challenges in the area of European taxation - PowerPoint PPT Presentation

Loading...

PPT – Opportunities and challenges in the area of European taxation PowerPoint presentation | free to view - id: 2407e4-ZDc1Z



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Opportunities and challenges in the area of European taxation

Description:

Belgium as your gateway to Europe. Contact details. European taxes ... Faroe Islands. Andorra. Malta. Liechtenstein. San Marino. Monaco. Vatican City. European Union ... – PowerPoint PPT presentation

Number of Views:25
Avg rating:3.0/5.0
Slides: 39
Provided by: Delo256
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Opportunities and challenges in the area of European taxation


1
Opportunities and challenges in the area of
European taxation
Tom Verbrugge Griet Hautekeete
  • Taipei
  • May 22, 2006

2
Overview
3
1. What is Europe Europe vs. European Union?
4
Europe
5
Europe - Countries
6
European countries
  • United Kingdom
  • Romania
  • Belarus
  • Greece
  • Bulgaria
  • Iceland
  • Serbia Montenegro
  • Hungary
  • Portugal
  • Austria
  • Czech Republic
  • Ireland
  • Lithuania
  • Latvia
  • Croatia
  • Bosnia Herzegovina
  • Slovakia
  • Estonia
  • Denmark
  • Netherlands
  • Switzerland
  • Moldova
  • Belgium
  • Albania
  • Russia
  • Greenland
  • Turkey
  • Ukraine
  • France
  • Spain
  • Sweden
  • Germany
  • Finland
  • Norway
  • Poland
  • Italy

7
European countries
  • Macedonia
  • Slovenia
  • Cyprus
  • Luxembourg
  • Faroe Islands
  • Andorra
  • Malta
  • Liechtenstein
  • San Marino
  • Monaco
  • Vatican City

8
European Union
9
Countries being part of the European Union
10
Countries being part of the European Union
  • Austria
  • Belgium
  • Czech Republic
  • Cyprus
  • Denmark
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungaria
  • Ireland
  • Italy
  • Latvia
  • Lituania
  • Luxembourg
  • Malta
  • Poland
  • Portugal
  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  • The Netherlands
  • United Kingdom

11
Single Internal Market
  • At the core of todays European Union
  • Hundreds of directives adopted to sweep away the
    technical, regulatory, legal, bureaucratic, and
    cultural barriers that stifled free trade and
    free movement within the European Union
  • Four freedoms of movement (enshrined in the
    Treaties) for goods, services, people and
    capital

12
Customs Union
  • Free movement of goods within the European Union,
    meaning no customs duties and controls on
    movements of goods cleared into the European
    Union
  • One common foreign trade policy towards non
    European Union countries
  • Customs union vs. free trade zone (e.g. NAFTA)

13
2. European taxes
14
Overview of main European taxes
15
Direct taxes vs. indirect taxes
  • Direct taxes
  • Country specific regulated
  • No general European basis
  • Tendency towards EU harmonisation
  • Indirect taxes
  • European framework general denominator
  • Some topics can be regulated on a national level
    (can lead to country differences)

16
FORT EUROPE Harmonization Indirect Taxes
  • Indirect taxation refers to taxes on production
    and consumption
  • i.e. VAT, customs and excise duties, transfer
    duties, inheritance tax, environmental taxes,
    etc.
  • Indirect taxation calls for a high degree of
    harmonization as it affects the free movement of
    goods and services.
  • Mainly regulated by means of EU
    Directives/Regulations

17
FORT EUROPE Alignment Direct Taxes
  • All taxes on the income of individuals and
    company profits
  • income tax and corporation tax.
  • EU Member States are free to set rate of direct
    taxes and taxes on savings and capital gains.
  • As the EC Treaty does not specifically call for
    direct taxes to be aligned, tax coordination
    remains a delicate exercise.

18
FORT EUROPE Alignment Direct Taxes
  • Corporate tax measures towards alignment
  • Parent/Subsidiary Directive
  • The Mergers Directive
  • The Arbitration Convention
  • The Interest/Royalties Directive

19
European Union Intercountry level
  • European countries avoid international double
    taxation by means of bilateral tax treaties based
    on the OECD Model Tax Convention.
  • Country specific
  • Countries which concluded a double tax treaty
    with Taiwan
  • Belgium
  • Netherlands
  • UK
  • Sweden
  • Denmark

20
Overseas VAT Refund Claims
  • Non-established, non VAT-registered businesses
    may be able to submit claims to recover VAT
    incurred in a foreign jurisdiction.
  • Recoverable VAT may be included in costs managed
    through the AP system (eg associated with
    contract manufacturing operations, imported
    products, trade shows, exhibitions, training
    events etc)
  • Recoverable VAT may be included in costs managed
    through payroll as part of the employee expenses
    reimbursement process (eg hotel, subsistence,
    entertainment, car hire etc)

3. Opportunities
21
Value Added Tax
  • Upon entry of goods into the European Union
  • Bonded warehouse warehouse under special regime
    allowing that import VAT on goods stored in the
    warehouse is paid at the moment that the goods
    leave the warehouse to their final destination in
    stead of at the moment of entrance into the EU
  • OPTIMISATION deferment of the moment of payment
    of import VAT or avoidance of payment cash flow
    advantage
  • In some countries there are specific licenses
    allowing to shift the payment of import VAT to
    the VAT return or a later moment instead of the
    moment of import.
  • OPTIMISATION deferment of payment to a later
    moment or elimination of payment cash flow
    advantage

22
Value Added Tax
  • Trade of goods within the European Union
  • Reverse charge mechanisms are widely implemented.
    This system involves a reporting obligation of
    the VAT but no payment of VAT.
  • OPTIMISATION avoidance of pre-financing of VAT
    resulting in a cash flow and commercial advantage
  • In general monthly VAT recovery possible
  • OPTIMISATION Cash flow advantage

23
Customs Excises
  • Bonded warehouse warehouse under special regime
    allowing that import duties on goods stored in
    the warehouse are paid at the moment that the
    goods leave the warehouse to their final
    destination in stead of at the moment of entrance
    into the EU
  • OPTIMISATION deferment of the moment of payment
    of import duties or avoidance of payment cash
    flow advantage and/or cost saving
  • Transit mechanisms transport on the EU territory
    of goods which have not (yet) been customs
    cleared into the European Union
  • OPTIMISATION deferment of the moment of payment
    of import duties or avoidance of payment cash
    flow advantage and/or cost saving

24
Customs Excises
  • Valuation the basis for computation of import
    duties is the customs value. The latest
    transaction value available upon import must be
    used but EU legislation allows to use an earlier
    sale (FSFE first sale for export)
  • OPTIMISATION First sales invoice computation
    of import duties based upon a value which was
    charged in a previous sales transaction resulting
    in a lower taxable base
  • Classification of the goods very important to
    correctly classify the goods and accordingly
    apply correct import duty rate (high penalties in
    case of incompliance incorrect application can
    lead to overcharges of import duties)
  • OPTIMISATION payment of correct amount of
    duties, avoiding risk and overpayments

25
Customs Excises
  • Origin of the goods origin of goods can result
    in preferential (lower) import duties upon import
    into the EU
  • OPTIMISATION sourcing of raw materials can
    influence the determination of the origin of the
    goods

26
Individual income taxes social security duties
  • Some countries have special regimes for
    expatriate employees. Expat regime allowing an
    advantageous tax treatment of income earned in
    foreign countries (e.g. non taxable allowances,
    specific rulings, etc.).
  • OPTIMISATION structuring of income
  • Multiple employment contracts break the
    progression of tax rates (split taxation over
    different countries)
  • OPTIMISATION conclude cross border employment
    agreement
  • Bilateral agreements with countries outside
    Europe on e.g. social security duties levied on
    individual income

27
Corporate income taxes
  • Some countries have tax incentives to attract
    investments, e.g. Belgium and its NID (notional
    interest deduction)
  • OPTIMISATION invest or have European HQ in such
    a country resulting in minimal taxable base
  • Ruling practices allowing to diminish the taxable
    income base
  • OPTIMISATION lower corporate income taxes
  • Legal certainty in tax matters possibility to
    obtain rulings on all kind of issues, e.g.
    transfer pricing, MA, etc.
  • OPTIMISATION legal certainty

28
Output Tax Decelerator
Overseas VAT Refund Claims
4. Challenges
  • Example
  • A UK VAT-registered business raises invoices on
    its accounting system near the end of a quarterly
    VAT accounting period (e.g. between November 20
    and 30 for a November 30 period end) but
    physically issues the invoices at the beginning
    of the next period
  • Normally, the business would account for output
    VAT based on when the invoice was raised on the
    accounting system (payment due by December 31)
  • However, if the business can account for output
    VAT based on the date when the invoice is issued
    (VAT period ending February 28), a cashflow
    benefit is received since the payment will not be
    due until March 31 usually long after the
    payment is received from the customer
  • Non-established, non VAT-registered businesses
    may be able to submit claims to recover VAT
    incurred in a foreign jurisdiction.
  • Recoverable VAT may be included in costs managed
    through the AP system (eg associated with
    contract manufacturing operations, imported
    products, trade shows, exhibitions, training
    events etc)
  • Recoverable VAT may be included in costs managed
    through payroll as part of the employee expenses
    reimbursement process (eg hotel, subsistence,
    entertainment, car hire etc)

29
Challenges Value Added Tax
  • Challenge for Value Added Tax
  • Although regulated on a European level, country
    differences persist and different compliance
    processes are applicable
  • Opportunity offered
  • Deloitte offers a unique concept the European
    Indirect Tax Compliance Centre
  • A one stop shop handling VAT compliance (and
    consulting) all over Europe

30
Challenges Customs Excise
  • Challenge for Customs excise
  • Customs compliance has to be taken care of
  • Opportunity offered
  • Can be taken care of by third party
  • Electronic compliance processes paperless
    customs is a project of the European Commission
    for which a.o. Deloitte offers solution to the
    business

31
Challenges Customs Excise
  • Challenge for Customs excise
  • Trade policies with non EU countries
  • Opportunity
  • To be assessed before entering into business

32
Challenges Corporate Income Tax
  • Challenge for Corporate income tax
  • Transfer pricing price setting is extremely
    important, especially between related parties
  • Opportunity
  • Transfer pricing strategy is a must
  • Certainty can be obtained by means of a ruling
    issued by the tax authorities

33
Challenges Corporate Income Tax
  • Challenge for Corporate income tax
  • Permanent establishment in Europe
  • Stock
  • Liaison office
  • Representation office
  • Opportunity
  • Facts should be reviewed in depth
  • Depending on the competencies attributed, a PE
    can be avoided for income tax purposes

34
Challenges Personal Income Tax
  • Challenge for Personal income tax
  • A variety of different taxation regimes in Europe
  • Opportunity
  • Can lead to a double exemption of certain income
    categories
  • Split taxation of income when working in
    different countries

35
Efficient Importing
Output Tax Decelerator
Overseas VAT Refund Claims
5. Belgium as your gateway to Europe
  • Example
  • A UK VAT-registered business raises invoices on
    its accounting system near the end of a quarterly
    VAT accounting period (e.g. between November 20
    and 30 for a November 30 period end) but
    physically issues the invoices at the beginning
    of the next period
  • Normally, the business would account for output
    VAT based on when the invoice was raised on the
    accounting system (payment due by December 31)
  • However, if the business can account for output
    VAT based on the date when the invoice is issued
    (VAT period ending February 28), a cashflow
    benefit is received since the payment will not be
    due until March 31 usually long after the
    payment is received from the customer
  • There are numerous ways to make importing more
    cash-efficient from a VAT perspective
  • Warehousing (1) delay the time at which goods
    are imported for VAT purposes by placing them in
    a bonded warehouse (useful for storage of spare
    parts)
  • Warehousing (2) undertake certain transactions
    in a VAT or Customs warehouse without indirect
    tax implications
  • Deferment accounts use of VAT and duty
    deferment accounts can reduce the cashflow impact
    at importation by postponing payment date for
    days or weeks
  • Non-established, non VAT-registered businesses
    may be able to submit claims to recover VAT
    incurred in a foreign jurisdiction.
  • Recoverable VAT may be included in costs managed
    through the AP system (eg associated with
    contract manufacturing operations, imported
    products, trade shows, exhibitions, training
    events etc)
  • Recoverable VAT may be included in costs managed
    through payroll as part of the employee expenses
    reimbursement process (eg hotel, subsistence,
    entertainment, car hire etc)

36
Top 10 considerations for Belgium
  • Gateway to Europe centrally located in Europe
    (elected as the number 1 logistics location in
    Europe in European Distribution Report 2006 by
    Cushman Wakefield)
  • Excellent infrastructure (road, rail, etc.)
    close to important ports when trading in Europe
    (Antwerp, Zeebrugge)
  • Brussels is the capital of Europe, especially
    with the presence of the EU Commission, NATO and
    other big international institutions and the
    presence of a lot of HQ of multinational
    companies
  • Highly skilled people, especially with respect to
    language (3 languages is more or less a standard)
  • High quality of life in Belgium
  • Politically neutral Extensive network of
    commercial treaties with other countries
  • Close to a wide range of test markets
  • Effective Corporate tax rate minimal via NID,
    ruling on taxable basis and distribution centers
  • Expat tax status is unique
  • Brussels EU compliance center runs your
    accounts, VAT and income tax formalities for the
    whole of Europe from 1 single point

37
Contact us
Belgian Practice established in Brussels
  • Customs excise
  • Tom Verbrugge 32 2 600 66 20
  • tverbrugge_at_deloitte.com
  • Indirect taxes
  • Griet Hautekeete 32 2 600 66 47
  • ghautekeete_at_deloitte.com

38
(No Transcript)
About PowerShow.com