The OECD published a consensus on a multilateral convention for the implementation of Pillar One Amount A. In France, the draft finance bill for 2024 was published. The Greek Parliament adopted the transposition of the EU Directive on cross-border conversions, mergers, and divisions. In Belgium, a bill is being drafted to introduce a common tax obligation (VAT) for marketplaces and platforms. For more information from the world of international taxation, read our article.
OECD Pillar One—Amount A Multilateral Convention
On 11 October 2023, the OECD published the “current consensus” of a multilateral convention for the implementation of Pillar One Amount A (“the multilateral convention“). The multilateral convention is accompanied by an explanatory statement and an Understanding on the Application of Certainty under Amount A. An updated estimate of the economic impact of Amount A and an overview document have also been published. This follows the agreement by 138 members of the OECD Inclusive Framework on BEPS in July 2023 on nexus and profit allocation challenges (Pillar One) and global minimum tax rules (Pillar Two).
The Amount A rules reallocate taxing rights to market countries through the creation of a new taxing right over “Amount A” profits. The complex rules are set out in the current consensus of the multilateral convention and comprise five steps. Enhanced tax certainty processes have been developed in respect of disputes on existing tax treaty rules that potentially affect Amount A calculations. The multilateral convention also includes a list of specific measures which must be removed for all businesses (including those not in the scope of Amount A) as part of the implementation of Amount A, the list includes especially removal of digital service taxes (DSTs).
The multilateral convention reflects the current consensus among the inclusive framework members. Work will continue to reach an agreement on specific outstanding areas (as noted in the footnotes to the multilateral convention). Once the multilateral convention has been finalized it will be opened for signature. The multilateral convention will enter into force once it has been ratified by at least 30 countries accounting for at least 60% of the ultimate parent entities (UPEs) of businesses expected to be in scope for Amount A. The objective is for the multilateral convention to enter into force during 2025.
Find details in the full Deloitte article OECD Pillar One—Amount A Multilateral Convention.
2024 draft finance bill released
The 2024 draft finance bill for France was released at the end of September. The bill includes significant tax measures, such as the implementation of the EU Pillar Two directive, which aims to establish a global minimum level of taxation (15%) for multinational enterprises (MNE) and large-scale domestic groups within the EU. The bill also introduces changes to transfer pricing rules, strengthens documentation requirements, and extends the statute of limitations for certain transactions. Additionally, the removal of the added value contribution (CVAE) has been postponed, with a gradual phase-out planned over four years. The bill also adjusts the cap mechanism for the territorial economic contribution (CET). These changes may impact financial statements if enacted before December 31, 2023.
Tax authorities update DAC 6 guidelines regarding the exchange of information hallmark
The French tax authorities updated their DAC 6 administrative guidelines, specifically clarifying hallmark D.1.b under the EU DAC 6 directive. This hallmark concerns arrangements that could potentially undermine reporting obligations related to the automatic exchange of financial account information. The update states that arrangements involving the transfer of funds to jurisdictions not subject to such reporting aren’t reportable unless they include specific financial elements known by the involved financial institution. If intermediaries are involved, reporting responsibilities fall on them, unless exempt. Importantly, DAC 6 disclosure doesn’t exempt account holders or financial institutions from their obligations under DAC 2, CRS, or anti-money laundering measures.
Greece: Cross-border conversion, merger, and division directive transposed into domestic law
The Greek Parliament enacted Law 5055/2023 to align with EU Directive 2019/2121 on cross-border conversions, mergers, and divisions. This new law simplifies and streamlines cross-border restructuring processes, aiming to facilitate the freedom of establishment for capital companies in the EU. It introduces new chapters to regulate cross-border mergers, divisions, and conversions, particularly addressing conversions for the first time in Greek legislation. However, it raises questions about the interaction of these changes with existing laws related to share capital. Additional guidance and ministerial decisions are expected to clarify implementation.
Preliminary draft law would impose joint VAT liability on marketplaces and platforms
A forthcoming draft law in Belgium proposes changes to VAT regulations for e-commerce transactions. If adopted, the law would hold electronic interfaces, like marketplaces and platforms, jointly liable for the collection of Belgian VAT on business-to-consumer (B2C) transactions that don’t fall under EU’s deemed supplier rule. This means these platforms would have to establish due diligence processes starting from January 1, 2024, to manage their liability risks for transactions by third-party sellers. This change would significantly increase compliance requirements for electronic interfaces involved in supplying goods to or within Belgium.
Proposed removal of 6% VAT rate on certain real estate developer activities
Belgium’s 2024 budget brings significant changes to housing demolition and reconstruction schemes. The temporary 6% VAT rate for certain reconstructed homes will be removed, while the permanent system will undergo changes. Starting 1 January 2024, the 6% VAT rate for property sales by developers in demolition-reconstruction projects will no longer apply. The permanent scheme for housing demolition and reconstruction will expand nationally, but with certain conditions, including the property being the sole residence, and a maximum surface area of 200 square meters. These changes will have wide-ranging impacts on property developers, rental projects, and real estate regeneration.
Cyprus: MoF issues draft legislation aligned with Pillar Two directive
Cyprus’ Ministry of Finance has released draft legislation to align with OECD’s Pillar Two global minimum tax rules. The legislation aims to impose a 15% minimum tax rate on multinational enterprise groups and large-scale domestic groups with annual revenues exceeding EUR 750 million. This draft is open for public consultation until the end of October. The rules are part of the EU Directive 2022/2523, requiring EU member states to incorporate them into their domestic legislation by the end of 2023. Additionally, the legislation allows for a qualified domestic top-up tax starting from 1 January 2025, enabling Cyprus to collect the tax itself. Entities meeting certain requirements can be exempt from the top-up tax, determined by the Ministry of Finance through a decree.
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