Dear FS professional,
This is our last FS Tax Newsletter for the year.
In this edition we highlight the key aspects of the 2020 Tax Plan. We also focus on three important CJEU cases concerning the VAT payable on assignment of a debt recognized in enforcement proceedings, VAT and services related to the operation of ATMs and VAT on services provided by a head office to its fixed establishment. Finally, we would like to invite you to a seminar on the OECD BEPS 2.0 / Pillar Two consultation and to a roundtable for pension funds and asset managers (see points 5 and 6).
For tax-related topics not included in this FS Tax Newsletter, please visit our website.
If you would like to know more about the matters addressed in this newsletter please contact us.
Niels Groothuizen, Partner, Financial Services Tax Group
Table of Contents
- 1. Key aspects of the 2020 Tax Plan package
- 2. CJEU judgment: VAT payable on assignment of a debt recognized in enforcement proceedings
- 3. CJEU judgment: Services related to the operation of ATMs not exempt from VAT
- 4. VAT on services provided by a head office to its fixed establishment? Skandia 2.0
- 5. Invitation to attend a Meijburg seminar on the OECD BEPS 2.0 / Pillar Two consultation
- 6. Invitation to attend a roundtable for pension funds and asset managers
1. Key aspects of the 2020 Tax Plan package
The Tax Plan did not contain many surprises for the FS Sector as it had already been announced that the regular corporate income tax rate for profit in excess of EUR 200,000 would be reduced later and by less than originally intended in the 2019 Tax Plan and that a withholding tax on interest and royalties would be introduced for specific situations. The introduction of the minimum capital rules for banks and insurers was already known from the internet consultation that had been launched earlier in the year.
With regard to the bill introducing the thin cap rules for banks and insurers, we note that it is broadly in line with the consultation document (for more information about the consultation document please refer to our March alert), but on some important points changes have been made. Please contact our team for more information.
2. CJEU judgment: VAT payable on assignment of a debt recognized in enforcement proceedings
On October 17, 2019 the Court of Justice of the European Union (CJEU) rendered judgment in the Paulo Nascimento Consulting case (no. C-692/17). This case concerned the VAT treatment of the assignment of a debt that had been recognized in enforcement proceedings. The CJEU ruled that such an assignment was subject to VAT.
In Dutch practice, the allocation of debts is usually not subject to VAT on the basis that it either is to be regarded as a non-economic activity or falls within the scope of the VAT exemption for transactions concerning the granting, negotiation and management of credit. The judgment in the Paulo Nascimento case may nuance this. Apparently, there is a moment when the recovery of a debt is so far advanced that there is no longer a debt, but a more comprehensive claim / position in legal proceedings. The transfer of such a comprehensive claim / position in legal proceedings does not fall within the scope of the VAT exemption for transactions concerning the granting, negotiation and management of credit. However, since the case involved quite specific facts and circumstances, we are inclined to interpret the scope of the judgment narrowly. We refer to our tax alert for more information.
3. CJEU judgment: Services related to the operation of ATMs not exempt from VAT
On October 3, 2019 the Court of Justice of the European Union (CJEU) rendered judgment in the Cardpoint GmbH case (no. C-42/18) about the scope of the VAT exemption for transactions concerning payments and transfers. The CJEU ruled that services related to the operation of automated teller machines (ATMs), such as those in this case, do not qualify for the VAT exemption for transactions concerning payments and transfers.
Although the CJEU considered that the withdrawal of cash from an ATM must be regarded as a VAT‑exempt ‘payment’ and the services of Cardpoint are indispensable for the execution thereof, it concluded that these services cannot be regarded as VAT-exempt ‘transactions concerning payments’. According to the CJEU, the Cardpoint services as such do not result in a cash transfer nor do they change the legal and financial relationship between parties. In light of previous case law, including the Bookit and DPAS cases (CJEU July 25, 2018, C-5/17), the judgment does not come as a complete surprise.
In particular for parties that perform outsourced financial and banking services for financial institutions, but do not themselves qualify as such, the VAT exemption consequently seems ever more unobtainable. We refer to our tax alert for more information.
4. VAT on services provided by a head office to its fixed establishment? Skandia 2.0
On October 30, 2019 the Swedish Supreme Court asked the Court of Justice of the European Union (CJEU) for a preliminary ruling on whether services provided by a Danish head office to its fixed establishment in Sweden are subject to Swedish VAT.
The case is basically a follow-up to the CJEU’s Skandia America Corporation judgment (no. C-7/13) and is to a certain extent a mirror image of it. We will obviously have to wait for the CJEU’s judgment, but it clearly may have a major impact on the VAT treatment of intra-group services. We recommend examining the potential consequences in advance. We refer to our tax alert for more information.
5. Invitation to attend a Meijburg seminar on the OECD BEPS 2.0 / Pillar Two consultation
Meijburg & Co invites you to join us at a seminar on November 26, 2019, where a number of experts will update you on the OECD BEPS 2.0 / Pillar Two consultation and international tax reform plans. The seminar will take place at our office in Amstelveen.
The OECD GloBE (Global anti-Base Erosion) plan (Pillar Two) is expected to have a significant impact on the international tax landscape. Unlike the expected impact of Pillar One – possibly limited to larger multinationals with a consumer-facing business – the Pillar Two measures are expected to apply to all multinational companies. The introduction, at an international level, of an income-inclusion rule for low-taxed income is envisaged. Secondly, a tax on base erosion payments is proposed that would operate by either denying a deduction or imposing source-based taxation (including withholding tax) or denying tax treaty benefits. From a lawmaking perspective, implementation of these OECD plans will be challenging, as domestic law and double tax treaties will have to be amended and measures to avoid the risk of economic double taxation will need to be taken. More guidance on Pillar Two is expected to become available in a public consultation document in early November, which will be addressed in detail during our seminar.
Sinan Gelici, International Tax Partner, Professor Otto Marres, Tax Partner, and Vinod Kalloe, Head of International Tax Policy, will take you through both the tax-technical and the strategic aspects of these plans. There will be an opportunity for you to ask the speakers questions.
We hope you can join us. Please let us know by completing the registration form.
6. Invitation to attend a roundtable for pension funds and asset managers
We would like to invite you to our roundtable for pension funds and asset managers on Thursday, November 21, 2019. The roundtable will take place at our office in Amstelveen.
The roundtable will focus on the relationship between the EU and OECD BEPS actions combatting aggressive tax structures and the tax policies that many organizations have introduced in recent years. We will specifically address (i) the emergence and content of the various tax policies published in the context of social responsibility (ESG) and (ii) the considerations that play a role in investment decisions and frequently used investment structures. For example, how should hybrid entities, hybrid financing instruments, holding companies without substance and tax havens be assessed for acceptability in terms of tax policy? In this context, we will also discuss the possible impact of EU MIFID II (product governance and suitability reporting).
Vinod Kalloe will chair the roundtable. Vinod is Head of International Tax Policy at Meijburg & Co and is responsible for monitoring EU and OECD developments. During the interactive roundtable, the participants and FS specialists from Meijburg & Co will explore the possibilities for analyzing investment structures in terms of tax and reputation risks for pension funds and asset managers.
We hope you can join us. Please let us know by completing the registration form.