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A European Comparison of the following taxes for 2014 was undertaken
Agenda
1. The Countries Involved
2. Salary Taxes, Social Security & Expat Tax
3. Self Employed Tax
4. Corporate Tax
5. Parent Company Tax
6. Gift & Inheritance Tax
7. Value Added Tax
8. Q&A
2
AGN Offices in the following Countries Completed the Survey:
22 of 28 European Union Countries: Austria, Belgium,
Cyprus, Croatia, Czeck Republic, Denmark, Estonia,
Finland, France, Germany Greece, Ireland, Italy,
Luxembourg, Netherlands, Poland, Portugal, Romania,
Slovakia, Spain, Sweden, United Kingdom. (Missing
Bulgaria, Hungary, Latvia, Lithuania, Malta, Slovenia)
6 Non-European Union Countries: Isle of Man (except
for VAT), Liechtenstein, Russia, Switzerland, Turkey,
Ukraine.
Salary Tax and Social Security 2014
Net Salary Income Tax Employees Social Security Employers Social Security
5
2013 2014 Change
1 Russia 1 Russia
2 Liechtenstein 2 Liechtenstein
3 Isle of Man 3 Isle of Man
4 Estonia 4 Estonia
5 Romania 5 Romania
6 France 6 Switzerland 20+
7 Cyprus 7 France 1-
8 Slovakia 8 Cyprus 1-
9 Serbia 9 Czech Republic 2+
10 Luxembourg 10 Slovakia 2-
11 Czech Republic 11 Luxembourg 1-
Salary and Social Security Tax
Salary Tax and Social Security 2014
5
Net Salary: Russia leaves 88% net in the pocket of the individual,
Liechtenstein 86% and Luxembourg 70% and Belgium the least 49%.
Employers Cost: In Belgium the cost of employing someone is 280% of
net salary, In Sweden 250%, in Austria and France 200% and in
Luxembourg 161%
Salary Tax and Social Security 2014
6
Company Cars are taxed in all countries including Luxembourg, except
Greece, Poland, Turkey and Russia, and the amount is generally based
on vehicle catalogue price. Some use actual invoiced price, some, Isle of
Man, use engine size and some use CO2 emissions. The Netherlands
charges less tax on environmentally friendly cars.
Company Pension Schemes: premiums paid by employers are taxed as
a benefit in only in Cyprus, Liechtenstein, and Luxembourg charges a
20% withholding tax.
Other Insurance Premiums paid by employers for life, sickness,
invalidity and surviving spouse benefits are not taxed as a benefit in about
50% of the countries and 100% in Luxembourg
Lap-Top Computers and Internet costs are generally not treated as a
benefit in kind.
7
Expatriate Schemes: Belgium, France, Romania, Poland, Spain and
United Kingdom do not tax employer funded home visit travel nor do
they tax the payment of relocation costs. Only Cyprus (20%) the
Netherlands and Luxembourg (30%) exempt from tax a percentage of
the expatriate’s income.
Buying Property: Only Croatia, Poland and Liechtenstein do not allow
expatriates to buy houses there.
Salary Tax and Social Security 2014
9
Self Employed Taxation 2014
Net Income Income Tax Employee Social Security. Employer Social Security
10
2013 2014 Range
1 Russia 1 Russia
2 Czech Republic 2 Isle of Man 1+
3 Isle of Man 3 Czech Republic 1-
4 Romania 4 Liechtenstein 1+
5 Liechtenstein 5 Cyprus 3+
6 Poland 6 Switzerland 18+
7 Estonia 7 United Kingdom 3+
8 Cyprus 8 France 3+
9 Turkey 9 Luxembourg 3+
10 United Kingdom 10 Estonia 3-
11 France 11 Slovakia 4+
12 Luxembourg 12 Turkey 3-
Self Employed Tax Comparision
10
Net Income: The least net income is left by: Belgium 36% , Germany
38% and Portugal 45%.
The best net income is left by: Russia 92%, Isle of Man 81% and Czech
Republic 82%. In Luxembourg a self employed person is left with 62%
of his gross income
Social Security Contributions: are a deductible expense except the
Czech Republic, Ireland, Isle of Man and the UK
VAT Registration: is required with a registration threshold for majority of
the countries except in Russia .
Depreciation: is allowed as a tax deduction except in the UK (the UK has
a capital allowances system).
Self Employed Taxation 2014
Mortgage Payments: are allowed as a deduction in all except Austria,
Cyprus, Germany, Ireland, Liechtenstein, Russia, Slovakia, Sweden,
Turkey and the UK.
Travel Expenses are allowed as a deduction except in Russia.
Entertaining Expenses are not allowable in Czech Republic, Greece,
Ireland, Poland, Portugal, Russia, Slovakia, Turkey and the UK.
Flat Rate Deductions are allowable in only 9 countries surveyed Austria,
Czech Republic, Estonia, Germany, Liechtenstein, Netherlands,
Portugal, Slovakia, and Spain.
Self Employed Taxation 2014
11
Deductions in respect of the Taxpayer’s Children are not allowed in
Cyprus, Denmark, Greece, Isle of Man, Ireland, Netherlands,
Poland, Russia, Sweden, Turkey and the UK.
Non-Working Spouse: A deduction in respect of the taxpayer’s non
working spouse is not allowed in Cyprus, Denmark Germany, Greece,
Netherlands, Poland, Russia, Spain, Sweden, Switzerland, Turkey,
and the UK. The most generous jurisdiction is the Isle of Man where
€11,453 is allowed.
Self Employed Taxation 2014
11
19
2013 2014 Change
1 Isle of Man 1 Isle of Man
2 Malta 2 Cyprus 1+
3 Cyprus 3 Hungary 1+
4 Hungary 4 Liechtenstein 1+
5 Liechtenstein 5 Slovakia 1+
6 Slovakia 6 Luxembourg 2+
7 Serbia 7 United Kingdom 5+
8 Luxembourg 8 Croatia 1+
Corporate Tax Comparision
19
Corporate Tax: Nominal corporate tax rates
These range from:
0% IM (except for rental profits from Manx property, and local banking
services)
10% to 12.5% Hungary, Cyprus, Ireland and Liechtenstein
16% Romania
19% Poland and Czech Republic
21% Luxembourg (x unemployment surcharge + municipal tax so 29.22% in reality)
26% Greece and Spain
33-35% Belgium, France, Malta, Germany, Italy, Norway, Sweden Turkey
and the UK
20
Corporate Tax 2014
Nominal Tax Rates vs Effective Tax Rates: The truth however lies in
comparing the effective corporate tax burden, thus considering taxable
adjustments of the accounting profit and withholding taxes on business
expenses such as intercompany interest and royalties.
Effective corporate tax rates range from approximately 13% in Cyprus
and Luxembourg, to 47% in France. However, most countries surveyed
have an effective corporate tax rate between 23% and 38%.
Poland shows the largest divergence between the nominal at 19% and
effective 40% rates.
21
Corporate tax 2014Net dividends received by shareholdersThe range of accounting profit distributed to shareholders is:
• Individual shareholder resident in same country:From 84% Liechtenstein to 35% France. Luxembourg 74%
• Individual shareholder resident in treaty country:From 87% Cyprus to 42% France. Luxembourg 79%
• Individual shareholder resident in non-treaty country:From 87% Cyprus to 13% France. Luxembourg 74%
• EU resident company as shareholder:From 87% Cyprus, Luxemburg to 53% France. Luxembourg 88%
• Treaty country (non EU) resident company as shareholder:From 87% Cyprus, Luxemburg to 45% France. Luxembourg 88%
• Non-treaty country resident company as shareholder:From 87% Cyprus to 42% France. Luxembourg 74%
Corporate Tax 2014
22
Tax adjustments to the accounting profit: Most countries adjust
accounting profit (usually increases) to arrive at taxable profit.
Complimentary pension provisions: The Czech Republic, France,
Ireland, Poland, Romania, Spain, Turkey and the UK do not allow
deduction of company pension provisions. Luxembourg does but there is
a 20% withholding at source.
Non-executive directors’ fees: Austria and Germany allow a 50%
deduction. Ireland, Poland, Spain, allow a deduction, but charge a
withholding tax. Czech Republic, Greece, Luxembourg and Russia
disallow them completely and charge a withholding tax (Luxembourg
20%).
Depreciation: is not deductible in Czech Republic, Hungary, Ireland,
Isle of Man, Russia and the UK. UK allows capital allowances.
Corporate Tax 2014: Adjust Commercial Result
23
Company cars: Austria, Croatia, France, Ireland, Liechtenstein,
Poland, and Portugal set a maximum purchase price. Annual
depreciation rates range from 12,5% Austria to 50% Turkey.
Luxembourg No limit depreciation 4 years
Intercompany interest deduction: Most countries apply the arm’s
length principle for interest intergroup loans and about 50% apply thin
capitalization rules. Belgium, Croatia, the Czech Republic, Greece,
Romania, Russia, and the UK apply withholding taxes between 5% and
25% on intercompany interest payments. Luxembourg sets acceptable
margins
Royalties: Denmark, Hungary, Isle of Man, Liechtenstein,
Luxembourg, the Netherlands, Switzerland and Sweden do not
apply withholding taxes to royalties paid to EU companies. The others do
at rates between 10% Poland, France and Cyprus and 25% Belgium.
PARENT COMPANIES 2014
Net Cash Received Corporate Tax Withholding Tax on Dividend Withholding Tax on Interest
26
2013 2014 Range
1 Switzerland 1 Isle of Man 24+
2 Liechtenstein 2 Switzerland 1-
3 Cyprus 3 Liechtenstein 1-
4 Malta 4 Cyprus 1-
5 Sweden 5 Sweden
6 Denmark 6 Denmark
7 Norway 7 United Kingdom 1+
8 United Kingdom 8 Luxembourg 1+
9 Luxembourg 9 Netherlands 1-
Parent Companies Tax Comparision
Parent Companies 2014
26
Net cash receivable by paid to a non-EU tax haven parent
company: The Isle of Man distributes 100% of the profit made by the
parent company, Switzerland 99%, Liechtenstein 96% and Cyprus
95% and Luxembourg 84%. Bottom of the list comes Portugal 52%,
the Czech Republic 62% and Greece 64%.
Dividend income: 100% exemption by most countries including
Luxembourg except 95% in Belgium, France, Germany and Italy. 0%
in Russia and Turkey.
Dividend withholding tax credits: If dividends are taxed then a tax
credit for the withholding tax on dividend income from a USA participation
is granted in Italy, Poland and Russia and from a Swiss, French and
German participation in Italy and Russia.
Parent Companies 2014
Capital gain on sale of subsidiaries: 100% in most countries including
Luxembourg. 95% is exempt in Germany and Italy 88% is exempt in
France. Fully taxed in Greece, Poland, Slovakia, Turkey and Ukraine
Investment costs write down of subsidiaries: 100% allowed in
Austria, Isle of Man, Luxembourg, Slovakia and Switzerland.
Interest deduction to finance purchase of subsidiary: 100%
deductible in most countries including Luxembourg except Cyprus, the
Czech Republic, Italy and Turkey.
27
Parent Companies 2014
Interest withholding tax paid to a non-EU tax haven parent
company: No withholding tax in Austria, Cyprus, Denmark, France,
Germany, Ireland, Isle of Man, Liechtenstein, Luxembourg, the
Netherlands, Poland, Portugal, Sweden and Switzerland The rate in
the rest varies between 15% and 25%, Belgium being on the higher end.
Dividend withholding tax on dividends paid to a non-EU tax haven
parent company: No withholding tax in Cyprus, Denmark, Isle of
Man, Liechtenstein, Slovakia, Sweden, Switzerland, and the UK . In
other countries the rate varies from 10% to 35%. Luxembourg is 15%
28
14
2013 2014 Change
1 Austria 1 Austria
2 Croatia 2 Croatia
3 Cyprus 3 Cyprus
4 Czech Republic 4 Czech Republic
5 Estonia 5 Estonia
6 Italy 6 Isle of Man 22+
7 Liechtenstein 7 Italy 1-
8 Luxembourg 8 Liechtenstein 1-
9 Poland 9 Luxembourg 1-
Gift & Inheritance Tax Comparision
14
Tax Rate: In almost all the jurisdictions surveyed the tax rate is based upon the total
value of the assets and the relationship of the heirs to the deceased. It can also vary
according to the type of the asset. Only Denmark has a fixed tax rate.
Beneficiaries: In France and Luxembourg, there are ‘forced heirship’ rules which
dictate the portion of the estate that the children must receive. In other countries that
is freely determinable.
Exemption for assets transferred to the spouse is not granted in Belgium,
Germany, Greece, Italy, the Netherlands, Spain, and Turkey. In Luxembourg only
to a spouse with surviving children
Exemption for assets transferred to children is granted in Croatia, Czech
Republic, Luxembourg, Poland, Portugal, and Switzerland
GIFT & INHERITANCE TAX 2014
15
Valuation of Assets: Family Home: Usually at current market value
except France and Spain (5% of MV, but limited to €125.060 per
individual).
Share Portfolio: must separate quoted shares and unquoted shares or
family businesses.
Ireland (10%), Spain (5%) and the United Kingdom (0%) apply
reduced rates to unquoted family business shares.
All countries surveyed include quoted shares at 100% of the market
value.
Cash: included at 100% of its value.
GIFT & INHERITANCE TAX 2014
7
2013 2014 Change
1 Luxembourg 1 Switzerland 24+
2 Turkey 2 Liechtenstein 23+
3 Serbia 3 Luxembourg 2-
4 Russia 4 Turkey 2-
5 Malta 5 Russia 1-
6 Cyprus 6 Germany 1+
7 Germany 7 Cyprus 1-
8 France 8 United Kingdom 1+
9 United Kingdom 9 Ukraine 20+
European VAT 2014 Comparision
31
V.A.T Rates
V.A.T Rates: vary from 8% in Liechtenstein and Switzerland, 15% in
Luxembourg and up to 25% in Croatia, Denmark and Sweden. The
most common rate is 20% in Austria, Estonia, France, Isle of Man,
Ukraine and United Kingdom.
V.A.T Registration: There is no turnover limit to exceed in Italy,
Netherlands Portugal Spain, Sweden and Turkey. The highest
threshold is Russia with €170k and Isle of Man and UK at €95k,
France, Liechtenstein and Switzerland at €82k, Ireland €72k, and
Romania at €65k. Luxembourg is €25k. Only Spain does not allow
voluntary registration
32
V.A.T Rates
Distance Selling Threshholds: There are no turnover thresholds in
Russia and Turkey and the others vary from €25k in Ukraine and
€100k in France, Germany, Isle of Man, Italy, Luxembourg,
Netherlands and UK. The rest have a threshold of between €32k and
€37k except Liechtenstein and Switzerland that are at €82k
V.A.T. Invoice: Only in Ireland Liechtenstein and Switzerland do you
not need to mention on the invoice why you have not charged VAT.
Reclaim of V.A.T. in another country: Only not possible in Ukraine
and Russia. You need a VAT representative in Liechtenstein,
Switzerland, Portugal, Romania, Spain Turkey,and Ukraine and
you do not need to submit original invoices in Czeck Republic,
Finland, Isle of Man and Sweden. You do not need to prove your VAT
registration in your own country to Czech Republic and Croatia
33
Thank you for listening
If you want to go into more detail on the surveys and download them
please go to www.agn-europe.org and on the right click on tax surveys.
There you find the ressults of these surveys since 2004.
Or call us to discuss
All the firms that have provided tax information are listed in the following
link:
http://www.agn-europe.org/ TAX SURVEYS / AGN EUROPE TAX
EXPERTISE
or click on the following link: http://www.agn-
europe.org/tax/tax_expertise.html
Q&A