In brief from international taxation [November 2023]

The European Union has updated its list of non-cooperative jurisdictions. The Italian government has approved a draft legislative decree implementing Pillar II in its tax legislation. According to the CJEU, the German inheritance tax rules for real estate within the EU/EEA are contrary to European law. See our latest article from the world of international taxation for more news on these and other topics.

EU: Update of the EU blacklist

On 17 October 2023, the Council of the European Union announced the conclusions of its latest review of the EU list of non-cooperative jurisdictions for tax purposes (“EU list”). The revised Annex I of the EU list includes three new jurisdictions, Antigua and Barbuda, Belize, and the Seychelles. At the same time, three other jurisdictions (the British Virgin Islands, Costa Rica, and the Marshall Islands) have been removed from the list. Russia remains on the list.

In this context, we would like to draw your attention to the potential Czech tax consequences which shall be applicable to the listed countries – see Russia on the EU blacklist. How does it impact Czech taxpayers?

Italy: Government approves draft decree including Pillar II and other significant international tax measures

In October 2023, the Italian government approved a draft legislative decree providing for the transposition of Council Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multinational groups and large-scale domestic groups in the EU (“EU Pillar II Directive”) into the Italian domestic tax law framework.

The draft decree also contains several other important provisions on certain international tax issues including, among others, the criteria for determining the tax residence of corporate entities, amendments to the controlled foreign company (CFC) regime (which are also relevant for the purposes of the participation exemption regimes), and the introduction of a tax incentive to encourage businesses to “reshore” economic activities to Italy from non-EU/European Economic Area (EEA) jurisdictions.


CJEU rules German inheritance tax value for immovable EU/EEA property is against EU law

On 12 October 2023, the Court of Justice of the European Union (CJEU) issued its judgment in the BA case (C-670/21) concerning the German rules regarding the calculation of inheritance tax on immovable property located outside the EU or the European Economic Area (EEA). The CJEU concluded that the German inheritance tax rule under which immovable property located in a third country is valued at its full value while immovable property located in the EU or EEA is valued at only 90% of its value is contrary to the EU principle of the free movement of capital.

Considerations regarding proposals further limiting deductibility of interest

The draft of a business tax reform bill (“Growth Opportunities Act”) includes a multitude of different tax measures, one of the most important proposals for foreign investors into Germany is the tightening of the interest deduction limitation rules, which would generally become effective as of 1 January 2024. Particular attention should be paid to the proposed changes to the interest deduction limitation rules, as well as the proposal to introduce a “maximum interest barrier rule”, to better understand any potential implications.

UK: HMRC publishes additional guidance on the meaning of R&D for tax purposes

On 31 October 2023, UK HM Revenue & Customs (HMRC) published a new set of guidance pages titled “Help to see if your work qualifies as Research and Development for tax purposes (GfC3)“. The guidance forms part of HMRC ‘s new “Guidelines for Compliance” (GfC) programme, which sets out HMRC’s views on a number of complex or widely misunderstood UK tax risks.

Belgium: Commission refers Belgium to CJEU for incorrect transposition of ATAD CFC provisions

The Commission announced its decision to make the referral on 19 April 2023, as Belgium had not amended its legislation within two months of receiving a reasoned opinion from the Commission. The specific point at issue relates to Article 8(7) of the Directive, according to which a parent company should be granted a tax credit for all taxes paid by a CFC in its state of tax residence. Belgium’s transposition of the directive into domestic law does not allow a deduction for taxes paid by a CFC.

Do you want to learn more about important tax news from around the world and stay up to date? Then follow our website tax@hand, where you will find all the important information on international taxation.

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