|
European Court allows for exit-tax - A Blog from Freemont Group  |
| 29 November 2011
The European Court of Justice has ruled that member states are allowed to tax companies for unrealized capital gains when they relocate their seat of effective management to another member state. Though the subject of an exit-tax is not covered directly by any EU treaty, the present ruling C-371/10 is as good as a law.
The ruling followed a dispute between National Grid Indus B.V. (NGI), a Dutch company that moved to the UK, and the Dutch tax authorities. NGI held a claim against an affiliated company since 1996. Following the rise in value of the pound sterling against the Dutch guilder, an unrealised exchange rate gain was generated on that claim. When NGI transferred its place of effective management, the unrealized capital gains became subject to a final settlement tax. To clarify certain aspects of this claim, the Dutch court of Amsterdam presented the case to the European Court of Justice.
The ECJ ruled that a final settlement tax on unrealised capital gains does not violate the freedom of establishment pursuant to EU treaties. However, the immediate tax on capital gains in case of transfer of management to another EU member state, compared to a move within the same territory, does place the company in a disadvantage. It limits the freedom of establishment, hence the court ruled that certain amendments have to be made. Since capital gains relating to the assets of a company transferring its place of management within the Netherlands are not taxed until they are actually realised, companies that relocate to another member state should have the same option.
In other words, a company that transfers its management from one member state to the next can be subject to an exit-tax on unrealised capital gains. This exit-tax may contain all tax claims on the company up until the date of management transfer. The taxing country should allow companies to pay their taxes over unrealised capital gains once they are indeed realised. The taxing country does not have to take into account future losses, and may even charge interest. We can assume that future legal disputes concerning exit-taxes will be dealt with likewise.
You have been reading an entry on the following blog:
Freemont Group
Freemont Group is a comprehensive provider of fiduciary services, including corporate
formation and administration, trust, fund formation, legal-and tax services. www.freemontgroup.com
/ info@freemontgroup.com
|
|
|
Strategic Partners
Lowtax Network Portal: 'Low-tax' business and investment in the top
50 jurisdictions covered in exceptional detail.
Tax News: Global tax news, continuously updated through the day.
Investors
Offshore: The independent offshore and alternative investment guide
for expatriates and the globally aware investor.
Law & Tax News: Daily
news and background data on tax and legal developments for international business.
Offshore-e-com: A topical
guide to offshore e-commerce focused on tax and regulation.
Lowtax Library: One of
the web's largest and most authoritative business and investment information
sources.
US Tax Network: The resource
for free online US taxation information, covering: corporate tax, individual
tax, international tax, expatriates, sales and e-commerce tax, investment
tax.
Personal Business Tax
Guide: Providing essential tax news and information on business for
contractors, entrepreneurs, professionals, small businesses, artists, sportspersons
and entertainers.
Offshore
Trusts Guide: OTG publishes news, features and newsletters on the
use of offshore trust structures.
TreatyPro:
The online tax treaty resource.
|
Lowtax Library
One of the web's largest and most authoritative business and investment
information sources. Alongside topical, daily news on worldwide
tax developments, you can receive weekly newswires or
access up-to-date intelligence
reports on a range of legal, tax and investment subjects.
FREE TRIAL
NEWS SUBSCRIPTION
Our 16 constantly updated intelligence
reports cover every important aspect of 'offshore' and international
tax-planning in depth, including banking secrecy, the EU's savings tax
directive, offshore funds, e-commerce, offshore gaming and transfer
pricing. Reports are available for immediate downloading or as subscription
services with news pages.
|
Advertising
& Marketing
With over 50,000 qualified readers every month our web-sites offer
a number of cost effective, targeted advertising, sponsorship and marketing
opportunities:
- Display advertising - from 'skyscrapers' to 'buttons'
- Content/article submission and sponsorship
- Opt-in email marketing
- On-line Services Directory listings
Click
here to learn more or contact Charles Bell on +44 (0)1424 205 425
or at charles@bsi-media.com
and he will put you in touch with your regional rep.
|
News & Content
Solutions
Could your corporate web-site or newsletter benefit from incorporating
regularly updated news and content tailored to serve your clients' interests?
We can provide a variety of maintenance-free news and content solutions
that can be seamlessly integrated and dynamically delivered:
- Customised, personalised 'own-brand' news services
- Newsletter content and management
- News Headline Tickers
Click here
to learn more or contact Charles Bell on +44 (0)1424 205 425 or at charles@bsi-media.com
and he will put you in touch with your regional rep.
|
|
 |
|
Front Page
Tax Jurisdictions
Featured Content
