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Archive for International

Foreign Real Estate Investments & Taxation in Italy

Marco Rossi, Tax Advisor

Italian taxation of foreign investments in Italian real estate is complex.

Transfer taxes charged upon the acquisition of the real estate (alternatively, registration tax or VAT) vary depending on the nature and tax status of the buyer (foreign private individual, foreign company purchasing and owning the real estate directly, or foreign individual or corporate investor purchasing and owning the real estate through an Italian controlled entity), as well as the nature and tax status of the seller (private individual vs. unincorporated business or commercial company registered as a VAT taxpayer).

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Declaration of Tax Residence for Entities in Canada

Grant Gilmour, Tax Advisor

In December 2016, an additional section was added to the Income Tax Act (ITA) that requires Canadian financial institutions to collect certain information about your company. The information is not automatically sent to the Canada Revenue Agency (CRA); however, if the financial institution determines the information needs to be reported to the CRA they will. CRA will then determine if the information needs to be sent to the foreign government related to the company’s residence or the company’s controlling person’s residence. Exchanging information is a new international standard of tax cooperation.

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International Tax Reform & Can Wealthy Americans Move to Virgin Islands and Not Pay Federal Capital Gains Tax?

William Byrnes, Tax Advisor

The Senate Finance Committee Modified Mark has published the modification to source rules involving possessions; the following is a description and analysis of the proposal:

The proposal modifies the sourcing rule in section 937(b)(2) by modifying the U.S. income limitation to exclude only U.S. source (or effectively connected) income attributable to a U.S. office or fixed place of business. The proposal also modifies section 865(j)(3) by providing that capital gains income earned by a U.S. Virgin Islands resident shall be deemed to constitute U.S. Virgin Islands source income regardless of the tax rate imposed by the U.S. Virgin Islands government.

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Claiming the Foreign Earned Income Exclusion when Filing a Late Return – What US Expats Need to Know

Hugo Lesser, Tax Advisor

The Foreign Earned Income Exclusion lets US expats exclude the first around $100,000 (the exact figure rises a little each year) of their earned income from US taxes.

It’s a great choice for many expats who earn less than this threshold, and sometimes a good option for expats who earn above the threshold too.

To claim the Foreign Earned Income Exclusion, expats have to file form 2555 with their annual US tax return. Form 2555 requires expats to prove that they live abroad.

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OECD Launches Effective Inter-Agency Co-Operation in Fighting Tax Crimes and Other Financial Crimes

William Byrnes, Tax Advisor

More than 200 global tax and economic crime experts have identified key areas for international action following the fifth OECD Forum on Tax and Crime, in London. In a week dominated by media coverage of offshore issues, the Forum brought experts on tax, customs, anti-corruption, anti-money laundering, policing, and prosecution together to agree priorities for action.

The Forum is the latest in a series of OECD-led events and an important opportunity for the international community to strengthen collaboration in tackling these global issues.

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Paradise Papers Expose Apple’s Discussions With Attorneys After Congressional Tax Investigation

William Byrnes, Tax Advisor

The Paradise Papers documents include nearly 7 million loan agreements, financial statements, emails, trust deeds and other paperwork over nearly 50 years from inside Appleby, a prestigious offshore law firm with offices in Bermuda and beyond.

The leaked documents include files from the smaller, family-owned trust company, Asiaciti, and from company registries in 19 secrecy jurisdictions.

Political leaders, wealthy individuals, and businesses’ legal documents, emails, loan agreements, communications, financial statements, and tax strategies – are now all exposed.

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What Can We Learn From Paul Manafort’s Tax Problems?

Clinton Donnelly, Tax Advisor

What will the IRS do with Paul Manafort if the special prosecutor’s allegations are true? On October 30, 2017, the special prosecutor released an indictment against Paul Manafort, former campaign manager for President Trump, related to his actions as an unregistered agent of the Ukraine government. The prosecutors allege that Manafort had opened 16 foreign companies and conspired to money launder over $18 million of payment through these companies.

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Peru Becomes 114th Country To Sign OECD’s Multilateral Convention On Mutual Administrative Assistance In Tax Matters

William Byrnes, Tax Advisor

Claudia María Amelia Teresa Cooper Fort, Minister of Economy and Finance of Peru, signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters in the presence of the Deputy Director of the OECD’s Centre for Tax Policy and Administration, Grace Perez-Navarro.

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Governments Dismantling Harmful Tax Incentives Worldwide: BEPS Project Driving Major Changes To International Tax Rules

William Byrnes, Tax Advisor

Governments have dismantled, or are in the process of amending, nearly 100 preferential tax regimes as part of the OECD/G20 BEPS (Base Erosion & Profit Shifting) standards to improve the international tax framework, according to a progress report released this month.

The report provides details on the outcome of peer reviews undertaken of 164 preferential tax regimes identified amongst the more than 100 jurisdictions participating in the OECD Inclusive Framework on BEPS.

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SEC Obtains $58 Million Judgment Against Perpetrator of International Pump-and-Dump Scheme Involving Marley Coffee

William Byrnes, Tax Advisor

The Securities and Exchange Commission obtained a $58 million judgment against a UK and Canadian resident charged with perpetrating a multi million-dollar, international pump-and-dump scheme involving the stock of Jammin’ Java Corp., a company that used trademarks of the late reggae artist Bob Marley to sell coffee products.

The final judgment against Wayne Weaver, entered on October 2, 2017, permanently enjoins Weaver from violating Section 5 of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder; permanently bars Weaver from participating in penny stock offerings; and orders Weaver to pay disgorgement of $26,371,585, prejudgment interest of $5,221,809, and a civil penalty of $26,371,585, for a total of $57,964,979. On September 15, 2017, Weaver filed a notice of appeal.

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Mamma Mia! Italian Tax Court Rules On Inter-Company Loan Interest Withholding Tax, Beneficial Owner Withholding Exemption

Marco Rossi, Tax Advisor

With its Ruling n. 4091 of June 12, 2017, the Eighth Department of Tax Commission (District Tax Court) of Milan, Italy ruled that upon the cancellation of an inter company loan from a Dutch parent company to its Italian subsidiary, the interest accrued on the loan and deducted by the Italian subsidiary on an accrual basis, during the course of the loan, is deemed “constructively received” by the foreign parent, and is potentially subject to the Italian interest withholding tax (at the rate of 20 percent, pursuant to article 26, paragraph 5 of Presidential Decree n. 600 of 1973, recently increased to 26 percent).

However, the Tax Court also ruled that the Dutch parent company qualified as “beneficial owner” of the interest, and was eligible for the withholding tax exemption granted under article 26-quater of Presidential Decree n. 600 of 1973, which implemented the EU Directive n. 2003/49/CE (so called interest and royalties directive).

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Italy Implemented The IV Anti-Money Laundering Directive

Marco Rossi, Tax Advisor

With the Legislative Decree n. 90 of May 25, 2017, published on June 19, 2017 Italy finally adopted and transposed into its own legal system the EU Directive 2015/849, usually referred to as the “IV Anti Money Laundering Directive”.

One area that attracts particular attention concerns the new reporting rules applicable to trusts.

Article 21, paragraph 3 of Decree n. 90 provides that “trusts producing juridical effects relevant for tax purposes, in accordance with article 73 of the Presidential Decree n. 917 of January 22, 1986, shall be registered with a special section of the Register of Enterprises”.

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