Holding Companies - International Tax Revie · Holding Companies 2 Contents Cyprus 6 Why Cyprus is an ideal holding company location The global economic downturn shows a …

Holding Companies(9th Edition)

Published in association with:

Eurofast TaxandGrant ThorntonKPMG

Tax Reference LibraryNo 81

Holding Companies

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Contents

Cyprus 6 Why Cyprus is an ideal holding company locationThe global economic downturn shows a greater need for tax efficient structures. There aremany jurisdictions to consider for them. Michalis Zambartas of Eurofast Taxand makes thecase for Cyprus, focusing on the Cypriot financial holding companies.

Ireland 15 Ireland flourishes as an attractive holding company locationIreland has long been one of the most attractive locations for the establishment of holding com-panies of both listed and private multinational companies seeking to optimise their operationaland fiscal performance, argue Peter Vale and Sarah Meredith of Grant Thornton.

Malta 24 Investing sustainably through a Malta holding companyMalta is considered a jurisdiction of choice for the setting up of a holding company. The use of Englishas an official language, a corporate law system modelled on UK principles and a flexible participationexemption system have all contributed to this, explain André Zarb and John Ellul Sullivan of KPMG.

Switzerland 32 Switzerland becoming a more attractive holding locationTax avoidance has come under increasing public scrutiny in recent years. But Stefan Kuhn andSébastien Maury of KPMG believe Switzerland will nevertheless remain attractive for investorsand multinationals, not least as an ideal holding location.

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Holding Companies


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Holding Companies


Editorial

W ith tax avoidance under an unprecedented levelof international scrutiny, the world’s major hold-ing company locations are facing turbulent times.

After a year of intense media and public pressure overthe planning structures, which many tax outsiders perceiveto be too aggressive, of a number of big multinational com-panies, the OECD released its action plan on base erosionand profit shifting (BEPS) this month.

Globalisation and the digital economy have allowedcompanies to be increasingly mobile.

The action plan states: “These developments have beenexacerbated by the increasing sophistication of tax plan-ners in identifying and exploiting the legal arbitrage oppor-tunities and the boundaries of acceptable tax planning,thus providing MNEs with more confidence in takingaggressive tax positions.”

Over the next 12 to 24 months, the OECD will workwith governments to improve the overall tax take andcrack down on tax arbitrage by addressing flaws in interna-tional rules.

The action plan will address problems arising from thedigital economy, hybrid mismatches, transfer pricing andtransparency. It spells, according to Pascal Saint-Amans,director of the OECD’s Centre for Tax Policy andAdministration, the end of “the golden age of “we don’tpay taxes anywhere”.”

Despite the increased pressure, advisers writing from anumber of the traditional holding company locationsbelieve their respective jurisdictions will remain attractivefor business.

Stefan Kuhn and Sébastien Maury of KPMG arguethat Switzerland has a competitive real economy notonly based on financial services, but on life sciences,power and automation technologies, mechanical engi-neering, and precision instruments. They believe thatwith its export oriented economy, it is crucialSwitzerland has a good network of free trade agreementsand a vast investment protection and double tax treatynetwork, in turn making it an attractive holding companylocation.


Holding Companies


André Zarb and John Ellul Sullivan of KPMG make thecase that Malta is an ideal holding company locationbecause English is an official language, the country has acorporate law system modelled on UK principles, a flexi-ble participation exemption system and tax-free and effi-cient repatriation of profits to shareholders. What is more,they argue, it was largely unharmed by the financial crisisand has adopted International Financial ReportingStandards (IFRS) in common with the EU.

Cyprus has not proved quite as stable since this year’sbanking crisis. Even so, Michalis Zambartas of EurofastTaxand believes it remains an attractive holding companylocation because it has more than 48 double tax treaties, ithas a low corporate tax rate and it is a member of the EUand complies with OECD standards.

Peter Vale and Sarah Meredith of Grant Thorntonpoint to Ireland as a flourishing holding company location,noting its tax regime has prompted a number of well-known groups to move regional or global headquarters to

Ireland including Shire, LinkedIn and Facebook, as well asattracting investments from Apple, PayPal, EA andFidelity last year.

Of course, some of these companies have been attract-ing negative headlines over the amount of tax they pay.Even if traditional holding company locations remainattractive despite international pressure, companies shouldthink carefully about their reputation before choosingwhat may be seen as an aggressive structure to avoid tax.At the end of the day it is not location, location, locationanymore. It is substance, substance, substance.

Salman ShaheenEditorInternational Tax Review

mailto:[email protected]


Cyprus


Why Cyprus is anideal holding companylocationThe global economic downturn shows agreater need for tax efficient structures.There are many jurisdictions to consider forthem. Michalis Zambartas of EurofastTaxand makes the case for Cyprus, focusingon the Cypriot financial holding companies.

C yprus made the headlines recently because of the banking cri-sis. Irrespective of those problems in the banking sector,Cyprus remains an international business and financial centre

continuing to enjoy the same incentives and the existence of more than48 double tax treaties (DTTs). Its EU membership and compliancewith OECD standards, in line with its most favourable tax regime andtransparent legal system, places Cyprus among the most favourableholding company destinations.

Cyprus was and will remain a prime venue for the worldwide opera-tions of multinational corporations, having the beneficial corporate


Cyprus


income tax (CIT) rate of 12.5%.Cyprus is also a vehicle for investment for many coun-

tries such as Russia, Poland, Ukraine, the Balkans, India andChina. It could easily be said that the country functions asa connecting hub for Europe to Central and EasternEuropean Countries, Asia and the Far East.

Advantages of Cyprus holding companiesThe use of Cyprus holding companies is considered a majorvehicle for international tax planning for the following rea-sons:• The provisions of the EU Parent – Subsidiary Directive,

as well as Interest and Royalties Directive have full appli-cation in Cyprus, resulting in the elimination of with-holding tax (WHT) obstacles.

• Dividend income received by a company which is a tax res-ident of Cyprus is exempt from CIT and in most cases isalso exempt from the special defence contribution (SDC).

• Outgoing dividends paid by the Cyprus company to theultimate non-resident beneficial owner are exempt fromany withholding taxes irrespective of the existence of anyDTTs and irrespective of the applicability of the EUParent – Subsidiary Directive.

• Interest income is either taxed under CIT or SDC at therate of 12.5% or 30% respectively. Where back-to-back

loans exist, the 12.5 % tax is levied on the interest spread(on the difference between interest payable and receiv-able).

• The recent amendments to the Income Tax Law providethat 80% of any income generated from IP rights will beexempt from CIT; therefore only 20% of the profits gen-erated from IP rights (royalties) will be subject to CIT atthe rate of 12.5%, essentially creating an effective taxrate of 2.5%.

• Cyprus provides unilaterally for a tax credit, in theabsence of a DTT, for any withholding taxes levied atsource in the other country.

• Profits from the sale of securities are exempt from taxa-tion in Cyprus. The definition of securities is very broadsuch as to include ordinary shares, founder’s shares, pref-erence shares, bonds and debentures, units in collectiveinvestment schemes, options and futures.The advantages provided by Cypriot holding companies

is the main reason for the continuing interest in tax struc-turing via Cyprus. In the last few months potentialinvestors have attempted to find alternatives to Cyprus taxstructuring out of a fear that the beneficial regime will notbe maintained. Having found no comparable benefits theseinvestors have decided to continue to use Cypriot tax struc-tures.


Cyprus


The Cypriot financial holding companyCypriot companies providing certain financial servicesmight need to apply for a Cyprus investment firm (CIF)authorisation from the Cyprus Securities and ExchangeCommission (CySec). The CIF authorisation is based onthe legal framework which has been transposed in Cypriotlaw under the EU MIFID Directive.

Do you need to apply for a CIF License?The first consideration is whether the Cypriot companywill be providing and/ or performing investment services. Italso does not matter whether the provision or performanceof these services is taking place in or outside of Cyprus. Thequestion is what can constitute as investment services forthe purposes of the CySec. An illustrative yet not exhaus-tive list is the following:• Reception and transmission of orders in relation to one or

more financial instruments;• Execution of orders on behalf of a client;• Dealing for own account;• Providing investment advice;• Underwriting or any other similar activities of financial

instruments; and• Operation of a trading platform.

The second consideration is whether the above men-

tioned investment services are related to financial instru-ments. Once again the CySec will mostly look for the fol-lowing types of financial instruments:• Transferable securities;• Instruments related to the money market;• Units of collective investment undertakings;• Any derivative contracts relating to commodities such as

options, futures, swaps, and others that are settled in cash;• Any derivative contracts relating to commodities such as

options, futures, swaps and others that can be physicallysettled and are traded on a regulated market or that arenot for commercial purposes; and

• Financial contracts for differences.Should the Cypriot company fall into one (or more) of

the categories mentioned under the first and second con-siderations then the Cypriot company shall need to applyfor a CIF licence and thus be regulated by the CySec.

However, subject to conditions, a Cypriot companymight obtain an exemption from the obligation of applyingfor a CIF license.

Advantages of a Cyprus CIF License andstructuring ideasOf course, the most important advantage of choosing toregister with a Cypriot CIF, is the advantageous tax regime


Cyprus


of Cyprus. With a corporateincome tax of 12.5%, no capitalgains taxes on the disposal ofsecurities, 0% withholding taxon the payment of dividends to anon-resident shareholder, and ofcourse a wide range of doubletax treaties and EU directives.

Registering a Cypriot CIF willallow the provision of financialservices anywhere in the EU, oreven with the rest of the world,taking advantage of the Cypriotbeneficial tax system.

Cyprus legislation (N144(I)/2007 and N106(I)/2009) pro-vide at clause 77 that entitiesthat have obtained such licencein a member state can offersuch services in the Republic ofCyprus through a branch or repoffice and vice versa, an entitythat has obtained a licence inthe Republic can perform suchservices in another member

100% shares0%

0-5% 100% shares

Dividends

RUS CO

GermanyBranch

Cyprus CIF

CommentaryA CIF Company, with the relevant licence in Cyprus, can work as a passport for the European Union, as the licence in Cyprus is often applicable for all the member states of the European Union.By establishing a branch or a permanent establishment in another member state, you can perform your activities without obtaining the equivalent licence in that country.

Diagram 1: Passport to Europe


Cyprus


state. A notification must be given and the information ofsuch entity by the relevant authority of the member stateof origin.

There are further benefits offered by Cyprus such asan easy-to-do business approach and much flexibilityoffered by the CySec (see Diagram 1).

It is necessary to provide a few practical examples forpotential investors on how a possible Cypriot CIF mightobtain its tax benefits.

In the example below, a Russian traderdecided to use a Cypriot CIF for both itspersonal dealing activities as well as for pro-viding investment advice and trading onbehalf of its clients in the EU and also theUS. In its simplest form a possible structurecould look like Diagram 2.

Through the Cypriot CIF, it is possible totrade in foreign markets such as the US andEU and then expatriate gains in the CIF. It isalso possible to provide investment advice inthe EU. An advantage of the latter is 0% VATwhen issuing an invoice to other EU compa-nies. With the many DTTs negotiated byCyprus you can rest assured that you will bedealing with the most beneficial taxation

possible. Furthermore, all gains from own trading orinvestment advice can be returned as dividends to theRussian owner with a 0% WHT in Cyprus. Similar resultscan also be achieved with other jurisdictions.

As already explained above, by obtaining the CyprusCIF passport there is no need to obtain a subsequentlicence to trade in the EU. For instance, you can easily beregulated by the CySec and trade anywhere in the EU.

USA Markets

EU Markets

RUSSIAN INDIVIDUAL

CY0%WHT

Cyprus CIF

Diagram 2: Example 1 CIF


Cyprus


A second example is that of an Indiancompany selling derivative contracts and list-ed security titles to the EU (see Diagram 3).

By selling various EU instruments and secu-rities, and of course having obtained the rele-vant CIF licence, the Cypriot CIF will not besubjected to capital gains tax. Once again allgains can then be distributed back to theIndian company as dividends with 0% WHT atthe level of Cyprus.

Of course the benefits do not end here. ACypriot CIF is actually very attractive forinvesting in the London Stock Exchange(LSE). The main benefit is that by minimisingtaxation you could have higher returns. In theexample illustrated in Diagram 4 below, aCypriot CIF can be used to trade in the LSEvia a variety of methods. All profits can be taxed at the low12.5% rate and be repatriated accordingly, for example to aforeign entity with low or no tax using the extended DTTnetwork of Cyprus.

Eurofast’s takeThe combination of a licensed entity together with theattractive tax regime is a proposition that should be consid-

ered. Having also seen the main workings of when andwhere an application to the CySec is needed, it should benoted that proper advice from a suitably qualified profes-sional should be obtained to determine whether your par-ticular situation or future business plan might need alicence from the CySec. In the situation where it is decidedthat your Cypriot entity might also need licensing then youshould proceed with the necessary application procedure

SELLS DERIVATIVESand SECURITIES

NO CAPITAL GAINSTAX

CY0%WHT

Cyprus CIF

INDIAN CO



Cyprus


and start trading and/or transactingin the EU or beyond. In cases wherea licence is not needed then youshall immediately start enjoying thetax benefits offered by Cyprus andshould you decide to visit, enjoy thegood weather.

Dividends0%WHT

LONDONSTOCKEXCHANGE

Corporate Tax 12.5%

Reception &transmission of orders, execution oforders, dealing onown account etc

Cyprus CIF

ForeignEntity



Cyprus


Michalis Zambartas

Eurofast Taxand

Tel: +357 22 699 222Email: [email protected]: www.eurofast.eu

Michalis Zambartas is a tax and legal associate at Eurofast Taxand. He focuses on international tax planning and international trusts formultinational companies. He also advises on tax-related issues for liquidations, joint ventures, mergers and acquisitions and re-organ-isations.

Michalis has extensive experience in corporate law, in the fields of company law, contract law and maritime law. An indicative list ofthe clients he advises includes real estate funds, private banks, and high net worth individuals.

In addition to his LLB from the University of East Anglia, Michalis has completed an LLM from the University of Wales in Maritimeand Commercial Law, as well as an LLM from the University of Lancaster in European and international law.

Michalis was admitted in the Cyprus Bar Association in 2004 and is fluent in Greek, English and French.

Biography

http://www.eurofast.eu



http://www.eurofast.eu

Ireland


Ireland flourishes asan attractive holdingcompany locationIreland has long been one of the mostattractive locations for the establishment ofholding companies of both listed and privatemultinational companies seeking to optimisetheir operational and fiscal performance,argue Peter Vale and Sarah Meredith ofGrant Thornton.

I reland’s favourable tax regime has resulted in a number of well-knowngroups moving their headquarters to Ireland to access the benefitshere including Shire, LinkedIn and Facebook. Multinationals such as

Apple, PayPal, EA and Fidelity made significant investments in 2012.The ability to offer a complete package of tax benefits has meant that

Ireland has been used for many multinationals looking to launch intoEurope or further afield.

The statistics back up the above. The top 10 born on the internet com-panies have chosen Ireland for their foreign direct investment, togetherwith eight of the top 10 US ICT companies and nine of the top 10 global


Ireland


pharma groups. Other groups have moved their holdingcompany to Ireland while many more use an Irish sub hold-ing company to hold their European and/or Asian sub-sidiaries.

There are many reasons why Ireland is ranked as a popu-lar holding company jurisdiction. This article examines someof the benefits businesses can expect to avail of including:

Capital gains tax (CGT) exemptionA full participation exemption from CGT is available tocompanies in Ireland in respect of the disposals of shares ina company resident in the EU/tax treaty resident countries.

Nevertheless, there are certain conditions which must bemet before the above exemption will apply. In particular:• The Irish parent company must hold a minimum of 5%

of the subsidiary’s ordinary share capital for a period ofmore than 12 months over the preceding 24 months;

• The investee company must be resident in an EU state(including Ireland) or tax treaty country; and

• At the time of disposal, the investee must exist wholly ormainly for the purposes of carrying on a trade (or thegroup and investee taken together must be regarded as atrading group).While the activities of most companies would be regard-

ed as trading, the receipt of rental income from buildings isan example of a non-trading activity. However, in manycases the “group trading” exemption can be used to ensurethat disposals of non-trading companies are tax free. Thegroup trading exemption can also be used to liquidate cashbox subsidiaries and return the cash tax-free to the Irishparent company.

Benefits available to foreign investors lookingto establish an Irish holding company

• Share disposals generally tax-free• Tax exemption for Irish dividends• Effective exemption for foreign dividends in most cases• Extensive and ever expanding tax treaty network• Interest / dividend withholding tax generally nil• Limited transfer pricing regime• Tax relief for IP acquired • Valuable R&D tax credits/refunds• Low corporation tax rate on any trading profits (12.5%)• No controlled foreign company (CFC) / Sub Part F

equivalent• No thin capitalisation rules


Ireland


Tax relief on dividend incomeIreland operates a foreign tax credit system rather than asystem of participation exemption in relation to foreign div-idends.

Broadly, dividends paid out of the trading profits of acompany tax resident in an EU member state or in a coun-try with which Ireland has a double tax treaty, will be tax-able in Ireland at 12.5%. In qualifying listed groupsituations, qualifying dividends from subsidiaries in non-treaty / non-EU locations can also qualify for the 12.5%rate.

Finance Act 2012 extended the 12.5% rate to countrieswith which Ireland has concluded the OECD Conventionon Mutual Assistance in Tax Matters, which would bringdividends from countries such as Ukraine and Brazil withinthe lower tax rate bracket.

As a result of recent EU cases, new legislation was intro-duced in Ireland regarding the taxation of foreign dividendsfrom 2013. In essence, a system now applies whereby a taxcredit is given for the overseas tax at the foreign nominaltax rate rather than the effective tax rate. The system pro-vides for an additional foreign tax credit (AFTC).

This AFTC may top-up any existing tax credit to a maxi-mum 12.5% / 25% rate (depending on the nature of the div-idend) where a dividend is received from a company resident

in a relevant member state (that is the EEA, being the EU,Norway and Iceland).

In the majority of cases, the 12.5% rate, when combinedwith credits for withholding or underlying taxes, shouldensure that no further Irish tax is payable on such income.

Dividends paidIreland generally applies a withholding tax on dividendsand other profit distributions at a 20% rate. However, inpractice DWT is rarely an issue as there are severalexemptions that generally result in a nil withholding taxrate applying.

Access to treaties and EU DirectivesIreland has an extensive treaty network, with 64 double taxtreaties in effect. These agreements allow the eliminationor mitigation of double taxation.

Ireland in particular has very favourable tax treaties witha number of Asia Pacific jurisdictions such as China, HongKong and Korea, which can often make Ireland an attractivelocation from which to invest into these countries.

Further improvements to foreign tax credit rules fordividends received by Irish companies


Ireland


Where a double tax agreement does not exist with a partic-ular jurisdiction, unilateral provisions within domestic Irishtax legislation may result in credit relief against Irish tax forany foreign taxes paid. In addition, Irish legislation mayprovide for an outright exemption from Irish withholdingtaxes on payments to treaty residents, without the need torefer to the provisions of the specific treaty. Furthermore,Irish companies may access the EU Directives, which canbe beneficial from a tax perspective.

R&D tax credit continues to encourageinnovationFor many multinationals, there is a desire to expand thescale of activities in the holding company jurisdictionbeyond the mere holding of shares. In some cases, this caninvolve the relocation of R&D functions to the holdingcompany jurisdiction.

Ireland has an attractive R&D tax credit regime. Broadly,it entitles companies to a refund of 25% of their R&D taxexpenditure, regardless of whether they pay any tax onprofits (subject to certain limits). Combined with the stan-dard corporate tax deduction for R&D expenditure (valued

at 12.5%), companies incurring qualifying R&D expendi-ture can claim a tax benefit of €37.50 ($49)for every €100expenditure.

The credit is also available in respect of buildings usedwholly or partly for R&D purposes, subject to certain con-ditions.

In addition, a company’s R&D tax credit may be surren-dered against key employees income tax, providing anattractive incentive for these employees.

Intellectual property reliefIP is also often located in the holding company jurisdiction.For example, a US multinational looking to expand intoEurope may use an Irish tax resident company, with theEuropean IP rights located therein. Following changes madein 2009, the tax rate in respect of the IP related profits canbe as low as 2.5% (see below).

To avail of the IP relief, a company must be trading inIreland, meaning that there must be sufficient substance inIreland, that is the company should actively seek to exploittheir intellectual property and employ/subcontract expertindividuals to carry out its activities.

Ireland’s tax treaties continue to expand globally

Effective 37.5% tax rebate for R&D


Ireland


The allowances available for tax purposes will generallyfollow the standard accounting treatment applicable to theamortisation of intangible assets; however, if it results in abetter answer, an irrevocable election can instead be madeto spread the expenditure over a 15 year period (7% inyears one to 14 and 2% in year 15).

The aggregate of the allowances and any related interestincurred on acquisition of the intangibles cannot exceed 80%of the trading income from the intangibles trade (which istreated as a separate trade). Where either allowances orinterest is restricted, the excess can be carried forward.

The combination of the 80% maximum relief and the12.5% corporation tax rate can mean the effective tax rateon IP related profits is as low as 2.5%.

In addition, a broad stamp duty exemption applies to theacquisition of intellectual property, which ensures thatstamp duty is not a barrier to centralising intellectual prop-erty in Ireland.

Employee incentivesThe decision to relocate a holding company often meansthe physical movement of key individuals to that loca-

tion. Income tax rates for individuals vary depending onsalary but it was felt that Ireland needed to introduce atargeted relief from income tax to attract top talent tothe country.

Accordingly, Finance Act 2012 introduced an improvedspecial assignee relief programme (SARP) designed toincentivise key employees locating to Ireland. The relief isbroadly aimed at higher earners and while there are variousconditions attached, it can offer a valuable tax break to sen-ior executives locating in Ireland.

Irish tax rates: corporation taxHolding companies will often provide management servicesto group companies. Profits from such activities will gener-ally be taxable at the lower 12.5% rate.

The lower corporation tax rate represents one of the lowestonshore statutory corporate tax rates in the world. TheIrish government remains committed to retaining the12.5% rate to ensure it has a competitive corporate taxstrategy to attract job-rich foreign direct investment intoIreland.

Tax efficient IP structuring opportunitiesIrish government committed to maintaining the12.5% rate


Ireland


CFC/thin capitalisationImportantly from a holding company perspective, Irelanddoes not have controlled foreign company (CFC) or thin cap-italisation rules. There are certain restrictions in respect ofrelated party borrowings but these are generally manageable.

Transfer pricing and financing structuresFor accounting periods commencing on or after January 12011, limited transfer pricing legislation has been intro-duced in Ireland. The law applies to both domestic andcross-border trading transactions between group compa-nies and also applies to Irish branches of foreign compa-nies that are within the charge to Irish tax on their tradingactivities.

However, there is a full exemption for small and mediumsized entities. A small/medium sized entity is one with astaff head count of less than 250 and an annual turnover of€50 million or less, or an annual balance sheet total of €43million in assets or less, with the figures assessed annuallyon a group wide basis.

The new legislation only applies to trading activities. Thisis an important caveat as many tax efficient financing struc-tures through Ireland are thus unaffected by the changes.

Managing Irish tax residence keyIt is important that the Irish incorporated holding companyis also regarded as Irish tax resident. As a general rule, toensure Irish tax residence, it is important that an Irish com-pany is centrally managed and controlled in Ireland. Thelocation of all board meetings of the company should beIreland. Key strategic decisions should be made at thesemeetings.

Correct locationBy choosing the correct location for a holding company, aninternational group can minimise on tax leakages both onthe earning of income and future disposals. By virtue of itsfavourable tax and corporate laws, its network of doubletax treaties and its status as an EU and OECD member,Ireland can often provide the answer.


Ireland


Peter Vale

Grant Thornton 24-26 City Quay Dublin 2IrelandTel: + 353 (0)1 6805952 Mobile: + 353 86 8555 232 Fax + 353 (0)1 6805806 Email: [email protected]: www.grantthornton.ie

Peter Vale is a tax partner in Grant Thornton’s Irish tax practice.

He specialises in international corporate tax structuring including financing structures, company migrations, and M&A projects. Hisclients include both large Irish domestic and multinational corporations. He also specialises in financial services taxation and hasadvised many clients on Ireland’s financial services tax regime.

Before joining Grant Thornton, Peter spent 12 years in the tax department of a Big 4 firm in Dublin.

Peter is a member of the Institute of Chartered Accountants in Ireland and an associate of the Irish Taxation Institute. He holds abachelor degree in international commerce. He is also a council member of the Leinster Society of Chartered Accountants in Ireland.

Biography

http://www.grantthornton.ie



Ireland


Sarah Meredith

Grant Thornton

Tel: +353 (0)1 680 5784Email: [email protected]: www.grantthornton.ie

Sarah Meredith is a manager in Grant Thornton’s Irish tax practice. She joined Grant Thornton in 2010 having worked for over fouryears in a Big 4 firm.

Sarah has international tax experience and has also been involved in a number of group restructuring and acquisition projects. Herclients include both Irish and multinational groups and corporates. She also has experience on a diverse number of financial servicesclients and has provided both tax compliance and advisory services to these clients.

Sarah is an associate member of both the Institute of Chartered Accountants in Ireland and the Irish Taxation Institute. She holds afirst class honours degree in economics from Trinity College, Dublin.

Biography





Malta


Investing sustainablythrough a Maltaholding companyMalta is considered a jurisdiction of choicefor the setting up of a holding company. Theuse of English as an official language, acorporate law system modelled on UKprinciples and a flexible participationexemption system have all contributed tothis, explain André Zarb and John EllulSullivan of KPMG.

T hough often being considered the new kid on the block, Malta isincreasingly being recognised as a tax and cost efficient jurisdic-tion in which to incorporate a holding company. When choosing

a holding company location, tax and cost efficiency are however not theonly aspects that are considered: availability of resources and economicsoundness must also be considered. Malta has largely remainedunharmed by the financial crisis (the European Commission held thatMalta’s accumulated growth in 2011 significantly exceeded the averagefor the euro area and economic growth is projected to accelerate in 2013-2014 and to continue to outperform the euro average) and its banking


Malta


system has been ranked 13th soundest in the world by theWorld Economic Forum’s Global Competitiveness Report(2012-2013).

Malta ticks all the rights boxes needed as a holding com-pany jurisdiction, and not just because of Malta’s flexibleparticipation exemption system and tax-free and efficientrepatriation of profits to shareholders (which are undoubt-edly central features of any holding company jurisdiction)but also thanks to a stable legal system and Malta’s adop-tion of the International Financial Reporting Standards(IFRS) as adopted by the EU (Malta’s auditing and finan-cial reporting standards have in fact ranked 16th most sta-ble in the world).

Logistics of setting up a company in MaltaWhile there is no hard and fast rule as to the speed of set-ting up a company in Malta, the procedure is relativelystraightforward and free of excessive bureaucratic encum-brances. To set up a company in Malta a minimal share cap-ital of €1,165 ($1,526) must be deposited in a bankaccount by the shareholders on behalf of the company. Thecompany must then present the memorandum and articlesof association, with any necessary due diligence to theRegistrar of Companies that will then register the companywithin a couple of days. The memorandum and articles of

association are prepared in English (English being an officiallanguage in Malta) and are of a similar format to the UKstatutes, with objects clauses, procedures for the running ofthe company, minority rights and powers of the directors(among others) all being included in the statute.

Application of participation exemptionMalta adopts a flexible 100% participation exemption onprofits (dividends) derived from a qualifying company orfrom the transfer thereof (gains on transfer). To benefitfrom the participation exemption, the Maltese company’sholding must entitle it (in substance or in form) to any twoof the following rights (known as equity holding rights):• A right to votes;• A right to profits available for distribution; and• A right to assets available for distribution on a winding

up of that company.A qualifying company is one which satisfies one of a

series of tests. Typically, as with most participation exemp-tion jurisdictions, Malta has an ownership test which is setat 10%. However, this test does not require a minimumholding period. Furthermore, where the ownership test isnot fulfilled, the participation exemption may be accededto by satisfying other less onerous conditions including aholding with an acquisition value of €1.164 million ($1.5


Malta


million) held for an uninterrupted period of 183 days, orone which entitles the holder to a right to sit or appoint adirector on the board or to a right to purchase the remain-der of the capital.

While the participation exemption is typically availablewhere a Maltese company holds shares in a subsidiary, itmay also be availed of when the Maltese company is a part-ner in a limited partnership similar to a Maltese partnershipen commandite the capital of which is not divided intoshares, or where the Maltese company is an investor in acollective investment scheme which provides for limitedliability of their investors, provided the Maltese companyhas any two of the equity holding rights and one of theabove tests are satisfied.

With respect to dividends, the participation exemption isapplicable if the qualifying company:• Is resident or incorporated in a country or territory

which forms part of the EU; or• Is subject to tax at a rate of at least 15%; or• Has 50% or less of its income derived from passive inter-

est or royalties; or• Is not held as a portfolio investment and it has been sub-

ject to tax at a rate of at least 5%.As is evident from the foregoing, unlike many other EU

jurisdictions, the subject-to-tax clause is not a sine-qua-non

for the applicability of the participation exemption and theexemption may be availed of even if the qualifying compa-ny suffered no tax.

Taxation of permanent establishments(branches)Though Malta generally relieves juridical double taxationby means of the credit method, as from January 1 2013,Malta has adopted an exemption method with respect toany income or gains derived by a company registered inMalta which are attributable to a permanent establish-ment (including a branch) situated outside Malta or to thetransfer of such permanent establishment.

Taxation of investorsGiven that there are no withholding taxes on dividend dis-tributions (or on payments of interest or royalties, or liq-uidation proceeds) to non-residents, the repatriation ofdividends to shareholders is easy and free of any tax.

This exemption from withholding tax is not dependenton double tax treaties, or the application of any EU direc-tive, but is determined in terms of Malta’s domestic law.It applies no matter whether the shareholder is a compa-ny, an individual or any other entity, and no matter wherethe shareholder is resident.


Malta


Exit strategyFrom a tax perspective, a Maltese structure may bewound down with the same ease as setting it up and oper-ating it. In fact, provided the Maltese company does notown, whether directly or indirectly, nor have any realrights over, immovable property situated in Malta, a non-resident shareholder will not be taxable on any gainsderived from the transfer (including liquidation) of aMaltese company.

The same will apply if the shareholder of the Maltesecompany is another Maltese company, thereby ensuring atax neutral exit from Malta without unnecessary burden-some tax planning.

The importance of substanceA key theme in international tax planning nowadays is sub-stance as tax authorities and courts are attacking structureswhich do not have enough. While it is debatable what levelof substance a holding company should have, besides theobvious manpower which is always required it would beadvisable to ensure that a holding company does not just actas a passive holding company, but rather one that activelymanages its subsidiaries, and if possible allow for the hold-ing company to carry out other functions within a groupother than that of a mere holding company.

Should a company carry out activities other than thepure holding of shares in its subsidiaries, it would expect toderive further income in terms of its transfer pricing poli-cies, though there are no transfer pricing rules in Malta.

In support of Malta’s drive to eliminate economic doubletaxation, since 1994, Malta has embedded in its fiscal legis-lation a system of tax refunds which was revised to its cur-rent form, upon EU accession after being rubber-stamped bythe Commission as being fully in conformity with EU law.

Maltese resident companies, including a foreign companywith a branch in Malta, deriving income, other than dividendsfrom qualifying companies, first pay tax on their profits at35%. Upon the distribution of taxed profits, whether derivedfrom local or foreign sources (other than from immovableproperty situated in Malta), the shareholders would be enti-tled to a full or partial refund of the tax paid by the company.

The quantum of the tax refund is dependent on the natureof the income, whether local or foreign sourced and whetherdouble taxation is claimed. Generally, the refund is 6/7ths ofthe 35% underlying tax, resulting in a 30% tax refund of thetaxable profits (6/7ths of 35%).Where the company derivesincome other than dividends from a qualifying company (orgains from the transfer of a partial or full transfer of suchholding), the company will be taxable in Malta at the stan-dard rate of 35%. However, upon a distribution of dividends,


Malta


the shareholder may claim a tax refund whichwill be paid directly to the shareholder’s bankaccount by the tax authorities. The tax refundwill reduce the effective tax to as low as (gen-erally) 5%. See Diagram 1.

This implies that ensuring substance in Maltacan be achieved in a cost and tax efficient way.Malta is in fact often used as a hub for variousactivities with holding and trading activities orother intra-group activities being carried outfrom Malta. The application of the tax refundsystem, together with the participation exemp-tion, results in a low effective tax rate, withoutrecourse to any base erosion techniques or useof hybrid instruments which have been subjectto so much negative press lately.

Taxation of companies incorporatedoutside Malta but tax resident in MaltaMalta’s tax rules applicable to companies incorporated out-side Malta that are tax resident in Malta, that is having itsmanagement and control in Malta, make such entities ver-satile and powerful vehicles for any tax planning structure.

Such companies are only subject to tax in Malta onincome or capital gains arising in Malta. Income arising out-

side Malta is only taxable in Malta to the extent that it isreceived in Malta whereas capital gains arising outsideMalta are not taxable in Malta even if received in Malta.

Such companies are widely used to receive foreignsource income outside Malta, however, where a relevanttreaty is applicable which includes specific anti-avoidanceprovisions aimed at such companies which are taxable on a

Diagram 1


Malta


receipt basis, receipt of the income in Malta would berequired to ensure treaty protection. In any case, in thesesituations, the tax refund system would anyway apply.

Using Malta as an intellectual property holdingcompany Malta is also a tax efficient jurisdiction for owning intellec-tual property (IP). Where a Maltese company derives roy-alties from patents, copyrights or trademarks it may benefitfrom an exemption from tax in Malta. Otherwise, asexplained above, the tax refund system may reduce theeffective tax to as low as 5%.

Malta’s ever increasing treaty network, the availability ofa step-up of the value of IP owned by a company becomingtax resident in Malta, re-domiciling to Malta or acquiringthe IP following a cross-border merger, together with theattractive tax depreciation rates on IP all contribute tomaking Malta an attractive IP holding jurisdiction.

Ongoing compliance with national lawsCompanies incorporated in Malta must maintain financialstatements in terms of the IFRS as adopted by the EU, andthese financial statements must be audited and registeredwith the authorities.

A holding company incorporated in Malta would also

André Zarb

KPMG

Tel: +356 2563 1004Mobile: +356 7942 1252Email: [email protected]

André Zarb has headed the tax function of KPMG in Maltasince 1994. André advises several clients on international taxissues, including investments undertaken by such companies inMalta and investments by such companies in other countriesthrough corporate structures in Malta.

André has been crucial in the development of Malta’s tax sys-tem, having advised the government on its development since1994. His involvement ranged from advising on Malta’s incen-tive legislation to ensure these are compliant with EU state aidrules as well as with the development of Malta’s tax refund sys-tem and participation exemption.

Biography



Malta


need to prepare consolidated financial statements for all itsgroup, provided it does not benefit from an exemption toprepare such consolidated financial statements based onthe fact that it has distanced itself from the management ofthe subsidiaries, or based on the size of the group, orbecause consolidated financial statements are prepared bythe parent company of the Malta holding company.

Malta’s sound financial reporting and audit systemensure the shareholders have transparency of the activitiesof the group, all in a cost-effective jurisdiction.

Other essential factors:• Malta does not tax capital or wealth, until certain specif-

ic capital assets are disposed of. In essence, tax on capitalgains is levied restrictively in the case of a transfer ofshares, securities, business, goodwill, business permits,copyright, patents, trademarks and immovable property,among others.

• Thin capitalisation is not regulated in Malta. A financingholding company may therefore efficiently financeacquisitions of interests in other companies withoutrestriction, also pushing debt downwards. Further, theMaltese holding company may be entitled to deductinterest paid on shareholder loans.

• Malta does not impose controlled-foreign company rules.

John Ellul Sullivan

KPMG

Tel: +356 2563 1154Mobile: +356 7940 3795Email:[email protected]

John Ellul Sullivan is a senior manager in the tax function ofKPMG in Malta, focusing mainly on international tax structures.John mainly focuses on international tax issues, advising multina-tionals, pension schemes and high net worth individuals on theirexisting, planned or potential operations in Malta and beyond.

John read for a master’s of advanced studies in internationaltaxation at the International Tax Center, Leiden, where he alsoworked as a teaching assistant – giving workshops on the fun-damentals of international taxation and tax treaties, and lec-tures on issues of domestic and international taxation acrossvarious courses in Malta.

Biography



Malta: Your Port ofCall in EuropeMalta is increasingly being recognised as a jurisdiction of choice for the setting up of holding companies.

Leverage our technical skills and wealth of experience to your company’s advantage today. KPMG offers a one-stop shop solution: a dynamic team to assist you with all your company’s needs in Malta.

Your contact:

André ZarbPartner, Head of [email protected]

www.kpmg.com.mt

http://www.kpmg.com.mt

Switzerland


Switzerland becominga more attractiveholding locationTax avoidance has come under increasingpublic scrutiny in recent years. But StefanKuhn and Sébastien Maury of KPMG believeSwitzerland will nevertheless remainattractive for investors and multinationals,not least as an ideal holding location.

T he world of taxation is in turmoil. Led by non-governmentalorganisations such as the Tax Justice Network or platforms suchas the International Consortium of Investigative Journalism

(Offshore Leaks) the public view not only on tax evasion but also on taxavoidance and to a certain extent tax optimisation has changed dramati-cally recently.

Other bodies such as the OECD and the EU are looking into harmfultax practices, base erosion and profit shifting. Moreover, because ofbudget deficits, governments are making use of the increasing publicpressure and knowledge on corporate tax structures of multinationals –


Switzerland


sometimes legitimately, sometimes rather hypocritically.Switzerland is adapting to these changes.

While most of Europe seemed to be sailing in stormywaters in the recent years, Switzerland has been able tomanage its economy as well as its currency in a remarkableway. Often, Switzerland is wrongfully mistaken for a typicaloffshore location with little real economy. However,besides a globally important trading and financial servicesindustry, including banking and insurance, it is a cluster forlife science (pharmaceuticals, chemicals, medicine andbiotech), power and automation technologies, mechanicalengineering, and precision instruments.

Only because of a very competitive economy, the coun-try’s GDP still shows growth and a low unemployment rateof less than 3%. With its export-oriented economy, it is cru-cial for a country such as Switzerland to not only have agood network of free trade agreements but also a vastinvestment protection and double tax treaty network. Inturn, this makes Switzerland very attractive as a businessand holding location.

Taxation principles of Swiss holding companies ata glanceIncome and net wealth taxGeneral comments and conditionsThe holding tax regime, which exempts typical holdingcompanies from cantonal and communal income taxes,leaving an effective tax rate of 7.83%, is most likely to beabolished in the near future (see below under Swiss corpo-rate tax trends). For the time being, this status still applies.However, other regimes are in discussion with workinggroups at federal as well as cantonal levels.

Participation reductionThe participation reduction applies on:• Dividend income: either a participation of at least 10% in

a company’s equity or a fair market value of at leastCHF1 million ($1.05 million) is required. No minimumholding period applies.

• Capital gains: the sale of a participation of at least 10%of a company’s equity that has been held for a minimumholding period of one year is required. The CHF1 millionthreshold also applies provided at least 10% of the sharecapital has been held once in the past. The participationreduction applies on the gain exceeding the acquisitioncosts (recapture of previous value adjustments do not


Switzerland


benefit from the reduction).• No further test applies (such as minimum taxation or

performing active business at the subsidiary’s level). Thisallows tax free repatriation of profits resulting from off-shore subsidiaries or passive investments.The exemption is an indirect one. Income tax is calculat-

ed on the basis of total taxable profit (including the partic-ipation income) and then reduced in the proportion of thenet participation income (gross income less allocableadministration and financing expense).

Controlled foreign company (CFC) rulesSwitzerland does not have any CFC legislation. Thus,income from foreign subsidiaries is never subject to tax inSwitzerland before actual distribution, provided the effec-tive place of management of the subsidiary is not inSwitzerland.

Deductibility of capital losses/goodwill treatmentAmortisations on participations (that is, unrealised capitallosses) are deductible as long as they are commercially jus-tified and booked in the financial statements of the compa-ny. Realised capital losses on the sale of participations aredeductible for income tax purposes.

Deduction of costsAcquisition costs and costs on disposal are deductible forincome tax purposes. Interest payments can be deducted aslong as they are at arm’s-length.

Tax consolidationSwitzerland does not apply tax consolidation or loss relieffor income tax purposes.

Transfer pricingSwitzerland has no specific transfer pricing rules. There isno specific documentation legislation and, as a general rule,the arm’s-length principle in line with OECD guidelinesapplies.

Net wealth taxSwiss holding companies are subject to an annual netwealth tax ranging between 0.001% and 0.176% of theequity at year end, depending on the location.

Withholding taxDividendDividend distributions, including ordinary dividends, liquida-tion proceeds, dividends in kind and deemed dividend pay-ments are subject to withholding tax at a domestic rate of


Switzerland


35% and include any benefit of a financial nature received bya shareholder (other than the repayment of share capital). Arelief at source is granted for dividend distributions fromqualifying investments under all double tax treaties, provid-ed that some formal requirements are met (an advancerequest has to be filed with the Swiss tax authorities and thedeclaration forms have to be filed on time).

InterestSwiss law differentiates between ordinary loans of a Swissborrower and bonds (for example, cash bonds or moneymarket instruments) issued by Swiss residents oraccounts/client deposits at a Swiss bank. Arm’s-lengthinterest payments on ordinary loans are not subject to with-holding, irrespective of whether the lender is resident inSwitzerland or abroad. Interest payments on Swiss bondsand on accounts/deposits at Swiss banks are subject towithholding tax. According to the practice of the taxauthorities, the definition of Swiss banks also include anySwiss companies that have more than 10 or 20 differentnon-bank interest-bearing creditors (depending on theloans’ terms and conditions, the 10/20 rule). An exemptionto this rule applies to group internal financing activities. Insuch a case, no withholding tax on interest is due even if theconditions for qualifying as a bank are met.

RoyaltiesRoyalties, management fees, service fees, and technicalassistance fees are not subject to Swiss withholding tax.

Stamp duties on issuance and securities transfersIssuance stamp duty is due at an ordinary rate of 1% on thefair market value of capital contributions. Various statutoryexemptions are available and generally stamp duty in con-nection with the set-up of holding companies or group reor-ganisations can be mitigated within the reorganisationexemption.

For the purpose of stamp duty on securities transfer,banks but also entities that report assets in the form of tax-able securities with a value of more than CHF10 million are– among others – treated as registered securities dealers.Securities on the transfer of which duty is assessed includeamongst others bonds, shares, partnerships and investmentunits of domestic issuers. Certificates issued by a Swiss res-ident are assessed at 0.015% of the transaction price and at0.03% if released by a non-resident.

Recent and upcoming amendmentsThe following recent changes effective January 1 2011directly or indirectly affect the attractiveness of Swissholding companies in the next years:


Switzerland


• Capital contributions made by shareholders are no longersubject to withholding tax at the time of the actual repa-triation. This amendment offers interesting planningopportunities especially in terms of foreign group reloca-tions to Switzerland. At the time of the relocation, thegroup assets (participations, IP) can be contributed tothe Swiss (holding) company at fair market value againsthigh equity value (share capital and share premium).This allows the Swiss company distributing future divi-dend payments out of the equity created at the time ofthe contribution in a withholding tax free way. Althoughthis solution is limited in time, contributions of highvalue offer a pretty long-term perspective in terms ofwithholding tax free dividend repatriations;

• Swiss holding companies are newly regarded as subjectto VAT. Dividend income and sales of investments do notin most cases result in a reduction of the input taxdeduction. In addition, a holding company can take thebusiness activities of its subsidiaries into account todetermine its own input VAT relief. This rule serves as asimplification for the calculation of the input VAT andhas a high potential to optimize the input VAT quota;

• The threshold required for the application of the partic-ipation exemption has dropped from 20%/CHF2 mil-lion to 10% participation/CHF1 million fair market for

dividend payments and to 10% participation from 20%for capital gains.In the framework of the corporate tax reform III, the fol-

lowing major amendments are being discussed at politicallevel:• It is envisaged to switch from the indirect exemption

system to a direct exemption of participation income.This would mean a significant improvement of the sys-tem as existing tax losses carry forward would no longerbe reduced by indirectly tax-exempt dividend income. Inaddition, acquisition costs would no longer need to betracked, which would result in less administrative bur-den for the companies. The deduction of allocatedfinancing and administrative expenses should also beabolished. Finally, the abolition of the minimum share-holding quote as well as the required holding period (forcapital gains) is also being envisaged.

• Abolition of the issuance stamp duty and net wealth tax.

Swiss corporate tax trendsOECD and EU on tax regimesShould the OECD and its member states, in particular alsothe G20, really be serious about applying respective meas-ures to avoid harmful tax competition, this could actuallyincrease the attractiveness of Switzerland. Unlike other juris-


Switzerland


dictions, headquarters of multinationals in Switzerland usu-ally dispose of real substance, that is qualified personnel,respective premises, etcetera. Swiss tax regimes in place arein general far less aggressive than respective regimes appliedin certain EU member states or elsewhere. Meanwhile, it ispublic knowledge that multinationals get offered effectivetax rates far below 3% while benefiting from tax regimesapplied in the Netherlands, Luxembourg, Ireland, andSingapore. Thus, while effective tax rates in Switzerland aregenerally higher, also by applying Swiss tax regimes it showsthat the effective income tax rate alone is not always decisivewhen choosing a holding or headquarter location.

In 2007 Switzerland has been put under pressure by theEU with respect to its tax regimes. According to theEuropean Commission, certain cantonal tax regimes – suchas the holding or mixed company regimes – are viewed as aselective advantage financed through state resources lead-ing to distortion of competition which is incompatible withthe proper functioning of the free trade agreement con-cluded between the European Economic Community andSwitzerland in 1972.

The negotiations between Switzerland and the EU arestill going on. In May 2013, the Swiss government pub-lished a report which states between the lines that the per-ceived harmful tax regimes will likely be abolished. In the

same report, the government clearly commits to proceed-ing to the necessary changes in the domestic tax law toremain one of the most attractive business locations.

Certain elements of the Swiss tax regulations will cer-tainly remain and may even be enhanced within the corpo-rate tax reform III. Thus, regardless of the outcome ofthese discussions, the holding location Switzerland will inany case remain attractive for the following reasons:• The most attractive aspects of Switzerland in terms of

holding location – a very favorable participation exemp-tion, no CFC rules and one of the most extensive treatynetworks – are not affected by the discussions with theEU. Indeed, these discussions only concern the applica-ble income tax rate on the cantonal/communal tax levelfor non-participation income. Hence, the core beneficialaspects of the holding company regime – if at all – willnot be affected by these negotiations;

• The experience with respect to other countries (seeLuxembourg’s 1929 holding regime or Belgium coordina-tion centers) shows that a grandfathering period of, forexample, 10 years is not unlikely;

• Because of this pressure, Switzerland is forced to seekalternative solutions to remain competitive in the longrun. In reforming certain elements of its corporate taxlegislation under consideration of attractive solutions


Switzerland


applied in EU member states (Luxembourg,Netherlands), Switzerland may not only beable to reengineer its tax system to EU com-patibility but actually outrun its competitionwithin Europe. A series of measures includ-ing the introduction of tax incentives forinnovative business activities (IP box andR&D incentives) or of a notional interestdeduction on equity might be introduced.

• In addition, the general trend in terms of cor-porate income tax in Switzerland is adecrease of the applicable rates. Various can-tons have already undertaken reforms oftheir tax law and lowered the corporateincome tax. The canton of Neuchâtel hasdecided a decrease of the corporate incometax over five years, ending in 2017 with anoverall ordinary effective tax rate of 15.6%.The canton of Lucerne has modified the can-tonal tax law as of January 1 2012, resultingin an ordinary effective tax rate of 12.1%.These rates are ordinary effective rates andtherefore not subject to any special condi-tions as it would be the case for a specialregime. They include federal, cantonal and

Stefan Kuhn

KPMG

Tel: +41 58 249 54 14Mobile: +41 79 438 88 08Email: [email protected]

Stefan looks back at almost 17 years in tax law. After working for some yearsas scientific assistant in tax law at the University of St. Gallen he joined oneof the large international accounting firms in 2000. Stefan joined KPMG inOctober 2006 and became a partner in 2008.

Stefan’s area of work covers in particular international tax structuring andM&A transactions. He has a vast experience in consulting multinationals aswell as private equity investors in Swiss and international tax law. Further,Stefan is frequent lecturer at the Swiss Tax Academy and the University ofApplied Sciences in Zurich.

Biography



Switzerland


communal taxes. There are various othersigns of awaking in terms of income tax ratesas various cantons prepare significant taxreforms behind the scenes.

International tax, free trade agreements andinvestment protection treatiesSwitzerland has more than 120 investment pro-tection agreements worldwide and thereforehas – after Germany and China – the thirdlargest investment protection agreement net-work worldwide. Further, the Swiss govern-ment is highly active in entering into free tradeagreements. On July 16 2013, Switzerlandsigned as the first continental European state afree trade agreement with China. Furthermore,Switzerland has one of the largest double taxtreaty networks with more than 90 double taxtreaties in force or signed. In the few last years,the following developments were notable:• A double tax treaty was signed with Hong

Kong in late 2011 and has entered into forceas of January 1 2013. It offers interesting plan-ning opportunities between Switzerland andChina since it provides for 0% withholding tax

Sébastien Maury

KPMG

Tel: +41 58 249 53 77Mobile: +41 79 693 41 86Email: [email protected]

After a master’s degree in law, Sébastien started his professional career inJanuary 2003 with KPMG in Zurich. In 2006 he became a Swiss CertifiedTax Expert. In 2007 and 2008, Sébastien has been working in-house withan airline catering and logistics provider with dual headquarters in the USand Switzerland. After rejoining KPMG, he worked from January 2010through July 2011 with the US firm where he headed up the Swiss TaxCenter of Excellence in New York.

Since his relocation to Switzerland, he is a member of the international cor-porate tax team based in Zurich, he provides tax advice to various corpo-rate clients regarding international as well as Swiss tax matters, focusing onSwiss inbound business. Sébastien is fluent in French, German and English.

Biography



Switzerland


on dividend and interest payments and 3% withholding onroyalty payments between a Swiss and a Hong Kong com-pany, provided of course the specific conditions are met;

• The new double tax treaty with Japan, which enteredinto force as of January 1 2012, offers very favourable taxplanning opportunities. It especially provides a 0% with-holding tax rate on royalty as well as dividend payments,provided of course the specific conditions are met;

• Other recently signed double tax treaties are withTurkey, Columbia, Peru and Turkmenistan;

• Switzerland is one of the few countries that has a privatedouble tax treaty with Taiwan.

A changing worldThe tax world is changing. The developed economies arestagnating, leading to unemployment, social unrest and

loss of tax revenue. Thus, governments are desperatelytrying to find ways on how to tackle their budget deficits.Meanwhile, Switzerland has proven itself as being able tohandle the economic turmoil. All the pressure put onSwitzerland in recent years constitutes a challenge forthis country but has the positive effect to forceSwitzerland to be pro-active, which will result in highercompetitiveness.

Although the awaking process might have been hard atthe beginning, there are clear signs that show this process isnow accelerating and going into the right discussion. Allthese discussions along with various recent and plannedamendments of the tax rules as well as the foresight of theSwiss government will lead to improved attractiveness ofSwitzerland, not only as a holding but also as a general busi-ness location.


INTERNATIONAL CORPORATE TAX

Your Gatewayto Switzerland

Doing business in Switzerland involves making numerous strategic decisions. Thanks to our vast experience with international clients, KPMG is well placed to

professionally assess your needs. Our support will have a sustainable impact on your future success.

We are looking forward to clearing the way to Switzerland for you.

Visit us on kpmg.ch/internationalmarkets© 2013 KPMG Holding AG/SA, a Swiss corporation, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through

complexity” are registered trademarks or trademarks of KPMG International.

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