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While US Spins Its Wheels, European Wheels Keep Turning...

Kitty Miv, Editor
20 November, 2020

With things in the United States seemingly standing still politically, for the moment at least, in this week's column, we will be turning our attention to happenings in Europe and its near neighbours, beginning with France, where additional COVID-19 support measures have been announced, in an effort to mitigate the economic impact of the resurgent virus.

In recent speeches, French Finance Minister Bruno Le Maire outlined plans to extend the exemption from social security contributions for companies engaged in the tourism, hotels, catering, sport, culture, air transport, and events sectors that employee no more than 50 employees. Le Maire explained that the support will also be offered to companies engaged in the broader S1 and S1-bis sectors, which cover a broader range of tourism and entertainment, and transportation services, providing they have experienced a decline in turnover of 50 percent or more.

Additionally, a tax credit is to be offered to property lessors who agree to waive rent payments for one month over the winter period, for tenants employing fewer than 250 employees who provide temporary accommodation services or catering services. Le Maire said that the credit would equal at least 30 percent of the rent forgone and suggested it would cover rent payable in November.

In Croatia, the Government is mulling the introduction of corporate tax cuts, with four laws to this effect tabled before Parliament. Under the proposed measures, the small business tax rate would be lowered for businesses with turnover up to HRK7.5m from 12 percent to 10 percent. This would be effective January 1, 2021, if approved.

The proposals would also reduce the 24 percent and 36 percent personal income tax rates, to 20 percent and 30 percent, respectively. With regard to VAT, the laws provide for the introduction of a requirement to use electronic fiscal devices to report sales from January 1, 2021, on a mandatory basis based on a taxpayer's economic activity, rather than on the value of the transaction; and would introduce the EU's e-commerce VAT reforms from July 2021. Changes are additionally proposed to provide banks with more favorable tax and transfer pricing treatment when writing off or restructuring loans.

Meanwhile, looking North(ish) to Denmark, and the Government there has published draft legislation for consultation on proposals for a new 44 percent withholding tax charge on payments to territories on the EU's list of non-cooperative territories for tax purposes.

In addition to the planned withholding tax increase, payments to these jurisdictions would not be deductible. However, the withholding tax would not apply if the taxpayer can prove that the beneficial owner of the payment is resident in an EU or EEA state.

Finally, in Turkey, a corporate tax break for businesses that newly issue their shares on Borsa Istanbul was approved.

With the exception of certain financial services companies, businesses which list their shares on the stock exchange for the first time will benefit from a reduced rate of corporate tax of 18 percent, down from 20 percent, for up to five years. Law No. 7256, published on November 17, 2020 provides that the measure will be offered for fiscal years beginning on or after January 1, 2021.

At least 20 percent of a company's shares must be offered in order for the business to avail itself of the reduced rate.

An earlier iteration of the law was to include a provision allowing the president discretion to lower the corporate income tax rate by up to five percentage points. However, this provision was removed from the final bill.

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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