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Fiscal Optimization

15112228-man-op-berg.jpgThe primary aim of fiscal optimization is to design a legal framework for group corporations, whereby the largest profits take place in the lowest tax jurisdictions and to let the most comprehensive costs occur in the highest tax nations. In this regard, Controlled Foreign Corporations (CFC) rules and other anti-abuse and anti-tax haven regulations need to also be taken into account. Nevertheless, legitimate tax structures profit from their efforts to research their business activities and mould them into a framework, which displays a business character and places fiscal-economic substance over form.

There are many methods to reach a fiscal optimum; some are as simple as making use of a fiscal facility, yet in other cases reorganizations are needed. Therefore, it is pivotal for organizations to look at their fiscal options governed in international regulations and European directives, such as the parent companies and subsidiaries directive, the merger directive and the interest and royalty payments directive. A deepened understanding of these international and EU stipulations paves the way for organizations to acquire the knowledge that fits their information needs about which nation is permitted to exercise its fiscal jurisdictions under which requirements and on what grounds. Consequently, this information aids in efficient and effective yet legitimate fiscal planning of an organization’s framework. Moreover, there are international warrants, such as promulgated in the EU Arbitration treaty, which entails that the EU member states should enter into a mutual agreement procedure whereby the Arbitration committee will offer advice to those EU member states, which cannot agree on the price corrections and/or differences that have taken place in the light of transfer pricing. It is important to note that EU directives are supranational law and therefore have a direct effect in the national legal order, whereas the arbitration treaty needs to be converted to national law.

“I saw the angel in the marble and carved until I set him free.”

Michelangelo (06/03/1475 – 18/03/1564), Italian Artist

Van Clamsfield International Ltd. provides practical advice and robust solutions with respect to the below-mentioned subjects:

  1. Insight into stipulations of the Merger directive: fiscal implications of acquired assets, sale of assets and reversal of the burden of proof, settlement of losses against generated profits, determination of which member state can claim taxation jurisdiction;
  2. Examination of optimal fiscal options Parent-Subsidiary directive: tax exemption (source state) or tax credit (residence state), minimum holding periods and business considerations in favor of dividend-stripping, guidelines with respect to anti-conduit company rules;
  3. Detailed information on interest and royalty payment directive: taxation exemption possibilities within concern;
  4. Computation of intercompany price (corrections) with regard to Transfer Pricing;
  5. Analysis of international warranties and fiscal opportunities, promulgated in bilateral tax treaties;
  6. Insight into the tax credit system for benefits generated with low-taxed investment participations: requirements, assets test and material liable to taxation test, tax credit technique, fiscal-economic aspects of yearly revaluation;
  7. Special tax ruling for real-estate participations: conditions and fiscal-economic aspects;
  8. Special tax ruling for fiscal investment funds: guidance on legal requirements, financing limitations, distribution obligations, profit computation and credit foreign withholding taxation.
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