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Regional Focus: Europe

Kitty Miv, Editor
11 January, 2022

In this week's column, we will be taking a regional overview, looking at various recent tax developments in Europe.

We begin with Latvia, which has received approval from the European Commission to offer tax relief to companies and self-employed persons, in response to the COVID-19 pandemic.

The scheme was approved under the State aid Temporary Framework, with the support taking the form of interest-free deferrals of payment of taxes and social security contributions. The aim of the scheme is to enhance the liquidity of the beneficiaries and to help them continue their activities during and after the pandemic.

Latvia must withdraw the relief by no later than June 30, 2022, and the deferral of the taxes and social security contributions must end by June 30, 2023.

Also with an eye to COVID, as Omicron rages, Luxembourg and Germany have agreed to the extend the COVID-19 concessionary tax arrangement for frontier workers.

The agreement, signed on October 7, 2020, confirms that employees working from home due to the COVID-19 crisis may remain taxable in the state in which they exercised their professional activity before the health crisis.

The two countries have agreed that the agreement should apply from March 11, 2020, until the extended date of March 31, 2022.

Meanwhile, on the transfer pricing front, it was announced that the BEPS multilateral instrument (BEPS MLI) is due to enter into force for Spain and Andorra on January 1, 2022.

The MLI was developed through negotiations involving more than 100 countries and jurisdictions. The MLI enables countries to modify their existing tax treaties to include measures developed under the OECD/G20 BEPS project without having to individually renegotiate these treaties. The instrument will implement minimum standards to counter treaty abuse, prevent the artificial avoidance of permanent establishment status, neutralize the effects of hybrid mismatch arrangements, and improve dispute resolution mechanisms.

And finally for this week, Germany has received permission from the EU to expand and extend tax reliefs for seafarers working in the maritime transport sector.

Under the existing scheme, which was last approved by the European Commission under EU state aid rules in June 2020, shipping companies employing seafarers on board eligible vessels could benefit from a reduction of social contributions for their seafarers.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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