Anti-tax avoidancePortugal - Legislation implementing Anti-Tax Avoidance Directive is adopted
On 3 May 2019, Law 32/2019, which transposes the EU ATAD into domestic law, was gazetted. The main changes are the following. (i) Interest limitation rule Portugal applies an interest limitation rule under which the taxpayer is allowed to deduct its net financing expenses up to: 30% of the tax EBITDA or EUR 1 million. The Law introduces in-depth definitions of "financing expenses" and "net financing expenses", and their computation/interaction with the concept of tax EBITDA in order to comply with ATAD's provisions. (ii) CFC rules New criteria to define a "CFC" based on its effective tax rate are introduced: A "CFC" is considered any non-resident entity whose effective tax rate is below 50% of the tax that would be due in Portugal. BEPS newsCyprus- Legislation implementing Anti-Tax Avoidance Directive is adopted
On 5 April 2019, the parliament adopted a law implementing the Anti-Tax Avoidance Directive (2016). Rules are applied from 1 January 2019. (i) Interest deductibility limitation rule The interest limitation rule limits the otherwise deductible exceeding borrowing costs up to 30% of EBITDA. Safe-harbour threshold is EUR 3 million. Exceeding borrowing costs may be carried forward to future tax years for up to 5 years. (ii) CFC rule The CFC rule provides that the undistributed income of a CFC resulting from non-genuine arrangements must be included and taxed at the level of the Cyprus controlling entity. An entity is regarded as a CFC if it is an exempt foreign permanent establishment (PE) or a foreign company in which a Cyprus tax resident company holds, directly or indirectly, more than 50% of the share capital, voting rights or profit distributions, and whose actual corporate tax burden is lower than 50% of the tax that would have been charged on the company or PE under the applicable Cyprus corporate tax system. If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at sales@comtaxit.com. Local tax newsLuxembourg - Amendments to Direct Taxation with Retroactive Effect are Presented
On 5 March 2019, the Budget 2019 was presented by the Minister of Finance to the parliament. The amendments which will apply retroactively from 1 January 2019, are summarized below. (i) The standard corporate income tax rate will be reduced from 18% to 17%. As a result the combined corporate income tax rate including the surcharge for the employment fund and the municipal business tax will be reduced from 26.01% to 24.94%. (ii) From 1 January 2019, Luxembourg has implemented the interest deduction limitation of the EU ATAD 1. The maximum deduction is equal to 30% of the EBITDA or EUR 3 million. (iii) The Bill clarifies the possibility to reduce the tax liability at fiscal unity level by making losses and accruing tax credits before or during the period of tax consolidation. If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at sales@comtaxit.com. |
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