Private Banking Newsletter - Baker McKenzie

Wealth Management

Private Banking Newsletter

September 2015

Table of Contents Feature

Automatic Exchange OECD Common Reporting Standard implementation 1

Case Summaries

France

Funds transferred to an undeclared account abroad and presumption of income 14 Business assets exempt from the wealth tax (ISF) Is the managerrsquos company housing a business asset 15 Corporate tax liability of a SCI due to the real estate purchase and resale activity of one of its shareholders 15

Germany

Qualification of a Liechtenstein foundation as a privileged family foundation Tax exemption of dividend income for foreign family foundations and trusts 16

Jersey

In the Matter of the Y Trust - When can a trustee surrender its power to the court 18

United Kingdom

Pugachev Freezing orders and disclosure orders - making trusts susceptible to attack 20

United States

US Tax Court issues important decision on investor control over variable life insurance policy assets 23

Legal Developments

Argentina

Extension of the amnesty program for the disclosure of unreported foreign currency 26

Australia

OTC derivatives draft rules and regulations released Central clearing and single-sided trade reporting 28

Belgium

New ldquoCayman Taxrdquo published 31

China

Withholding tax treatment for China-sourced interest received by Chinese banksrsquo foreign branches clarified 35

Germany

Update on the draft bill on changing the German Inheritance and Gift Tax Act 35 Reform of the taxation of fund investments 36

Mexico

SAT will audit foreign accounts 38 Mexican Anti-Money Laundering Law 38

Taiwan

Legislature announces amendments to the Income Tax Act affecting capital gains tax in the sale of real property 38

Thailand

Six actions to take before the Inheritance and Gift Taxes come into force 39

Ukraine

National Bank of Ukraine simplifies currency control rules applicable to certain internet transactions 42

United Arab Emirates

FATCA and CRS implementation in the Gulf Region Challenges for financial institutions and account holders 43

United Kingdom

Less than six months to go UK non-compliance and the Liechtenstein opportunity 49 UK Summer 2015 Budget A summary of the key issues for wealthy individuals resident in or invested in the UK 52

United States

New FBAR and tax filing deadlines and rules on inherited property 57 Developments on the PFIC insurance exception 60 Basis adjustment for certain grantor trusts added to no-rule areas 61 New Rules Gain recognition on transfers to partnerships with foreign partners 62

Around the Corner

Exchange of information Where are we heading to 64 Beware of using US entities in wealth planning structures 65 Is CRS inconsistent without global access to markets 66 Voluntary disclosure for people with good stories Did waiting make sense 68

Forthcoming Events

Wealth Management Contacts

September 2015

Feature | 1

Feature Automatic Exchange OECD Common Reporting Standard implementation By Elliott Murray (Geneva) Rodney Read (Houston) Cecilia Hassan (Miami) Paul DePasquale (New York) Joshua Odintz (Washington DC) and Lyubomir Georgiev (Zurich)

In August 2015 the Organization for Economic Cooperation and Development (ldquoOECDrdquo) released guidance on implementing the multilateral automatic exchange of financial account information under the Common Reporting Standard (ldquoCRSrdquo) This guidance included the first edition of the CRS Implementation Handbook (ldquoHandbookrdquo) The Handbook provides practical guidance and outlines the necessary steps to assist governments and Financial Institutions (ldquoFIsrdquo) to implement the CRS It identifies areas of challenges in CRS implementation It also contains answers to frequently asked questions (ldquoFAQsrdquo) received by OECD from governments FIs and Non-Financial Entities (ldquoNFEsrdquo) However the Handbook leaves many issues unresolved

Steps for CRS implementation The four core requirements to implement CRS (which a jurisdiction may accomplish in any order) are as follows

Requirement 1 Translating the reporting and due diligence rules into domestic law including rules to ensure their effective implementation

Requirement 2 Selecting a legal basis for the automatic exchange of information

Requirement 3 Putting in place the necessary administrative and IT infrastructure

Requirement 4 Protecting confidentiality and safeguarding data

Requirement 1 Translating the reporting and due diligence rules into domestic law including rules to ensure their effective implementation Legislation and guidance incorporating CRS into domestic law can align with existing legislation implementing a FATCA Intergovernmental Agreement (ldquoIGArdquo) and existing guidance issued thereunder The Handbook contains a list of 16 optional provisions that countries could adopt to provide flexibility for FIs align CRS with FATCA and reduce costs for FIs Some businesses and advisors who have participated in OECD briefings are advocating for an adoption of all of the optional provisions by all participating jurisdictions

The first group of options addresses reporting requirements One option would allow for FIs such as Investment Entities (ldquoIEsrdquo) to report the average balance or value of the account in lieu of the end of year balance or value (following FATCA) Gross proceeds reporting could be delayed to a subsequent year There is also the option for a jurisdiction to require nil reports CRS is silent on this issue including the method of reporting the lack of reportable accounts (eg xml or paper return)

The second group of optional implementation provisions address due diligence and include options to

Allow FIs to apply the due diligence procedures for new accounts to be used for preexisting accounts (following FATCA and the EU Directive)

Allow due diligence procedures for high value accounts to be used for lower value accounts (following FATCA and the EU Directive)


2 | Feature

Allow FIs to elect to exclude from due diligence procedures pre-existing entity accounts of USD250000 or less (following FATCA)

Allow FIs to make greater use of and rely on existing standardized industry coding (SIC) systems for the due diligence process for pre-existing entity accounts (following FATCA and the EU Directive)

Allow FIs to apply US dollar amounts or equivalent amounts for various CRS thresholds (following FATCA and the EU Directive)

Allow FIs to use the residence address test to determine an individual account holderrsquos tax residence for a lower value preexisting account (less than USD1 million) in lieu of an electronic indicia of residence search

Allow third party service providers to fulfill reporting and due diligence obligations of reporting FIs

The third group of options addresses CRS definitions and options to

Allow FIs to treat for due diligence purposes new accounts held by a preexisting customer opened with the FI or a related entity as preexisting accounts (following FATCA and the EU Directive) The FI can rely on prior documentation so long as (i) the FI satisfied its AMLKYC procedures for the account by relying on AMLKYC performed for the preexisting account and (ii) the opening of the new account does not require new additional or amended customer information

Expand the definition of a related entity to treat as related IEs that are under common management that is responsible for the IE due diligence (following FATCA sponsoring and the EU Directive)

Grandfathering rule for bearer shares issued by an exempt collective investment vehicle This option would provide a grandfathering rule so long as the entity (1) has not issued and does not issue physical bearer shares after the date specified by the jurisdiction (2) retires all such shares upon surrender (3) performs the due diligence and reporting with respect to such shares when presented for redemption or payment and (4) has in place policies and procedures to ensure that the shares are redeemed or immobilized as soon as possible or by the date provided by the jurisdiction By comparison FATCA does not allow for the issuance of bearer shares after 31 December 2012 and requires such shares to be redeemed or paid by 1 January 2017 The EU Directive has a similar rule

For a trust that is a passive NFE FIs may align the scope of the trust beneficiaries to be treated as controlling persons of the trust with the scope of the trust beneficiaries treated as reportable persons where the trust is an FI (as discussed further below)

A wider approach The Handbook also contains an option that would allow an FI to collect and retain residency information for all jurisdictions at once for all account holders and controlling persons This would allow an FI to minimize costs and more reliably categorize the tax residency of each account holder by performing the due diligence for all jurisdictions at one time rather than in a piecemeal approach as different countries execute CRS agreements and implement legislation This approach recognizes that it is challenging for FIs to repeatedly contact clients for residency information Going forward every FI would apply CRS on-boarding processes for accounts

There are two ways that the information could be reported to a tax authority the FI could only report information relating to those jurisdictions that have CRS agreements or the FI could report all of the information on all preexisting accounts to the local tax authority who would then transmit it to the tax authorities of CRS participating jurisdictions

September 2015

Feature | 3

Jurisdiction-specific low risk institutions and accounts A key area for jurisdictions to consider during the legislative process is identifying FIs and accounts that present a low risk for tax evasion but which the CRS does not identify as such expressly Jurisdictions must also consider whether such institutions and accounts meet the terms of CRS In evaluating these low risk tax evasion accounts jurisdictions can look at the institutions and accounts found in Annex II of the FATCA IGAs It is expected that each jurisdiction will have a single published list The Global Forum on Transparency and Exchange of Information for Tax Purposes will review the lists to ensure consistency with CRS

Requirement 2 Selecting a legal basis for the automatic exchange of information A legal instrument is necessary to provide the legal basis for the exchanges of information while also providing safeguards and confidentiality of exchanged information Legal instruments providing for automatic exchanges under CRS include

(1) double tax agreements containing CRS OECD Model Article 26

(2) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the ldquoConventionrdquo)

Under the Article 6 of the Convention a Multilateral Competent Authority Agreement (ldquoMCAArdquo) was agreed The MCAA does not become operational until the jurisdiction has enacted domestic legislation and the safeguards for data protectionconfidentiality are in place The exchange begins between two signatories once they provide notification of the wish to exchange with each other and

(3) Tax Information Exchange Agreements (ldquoTIEAsrdquo) which provide for the automatic exchange of information

Requirement 3 Putting in place IT and administrative infrastructure and resources To properly implement CRS tax administrations and FIs will require a technical and administrative IT infrastructure which will allow

(1) FIs to collect the information and report it to the tax administration in its jurisdiction

(2) the local tax administration to receive the information from FIs

(3) the local tax administration to send the information to CRS partner jurisdictions and

(4) the CRS partner jurisdiction to receive the information

Collecting and reporting the information First FIs collect the information and report to their local tax administrations FIs will need time to report the information for a given year in the following calendar year but before September of that following year While CRS does not prescribe a specific approach jurisdictions may wish to collect the data in the same format in which CRS requires the information to be exchanged (the ldquoCRS Schemardquo) Consistency is important as it will ensure maximum efficiency The CRS Schema is virtually identical to the FATCA schema and will not require significant additional investment CRS only provides the minimum standards and not a security process CRS may also require some FIs that currently are not required to report to report tax information

Requirement 4 Protect confidentiality and safeguard data The confidentiality and proper use of the data is imperative to CRS It is advised that these confidentiality restrictions should also include policies that restrict access to sensitive documents oversee employees put in place systems to protect the data restrictions on the transmission of the data appropriate information disposal policies regular risk assessments updates to confidentiality polices as necessary and the policing of unauthorized access and disclosure Any breach or failure of the confidentiality requirements requires a competent authority to immediately notify the other competent


4 | Feature

authority CRS also includes the required domestic framework in relation to breaches of confidentiality including penalties sanctions and investigatory procedures to be triggered in the case of breach

CRS overview and due diligence rules The CRS contains the detailed rules and procedures to be followed by FIs in collecting the relevant information and reporting of such information It is these rules that are to be incorporated into the domestic laws of the implementing jurisdiction

The CRS can be broken down into five steps (which also relate to the chapters in the Handbook)

Step 1 (Chapter 1) reporting FIs

Step 2 (Chapter 2) review their financial accounts

Step 3 (Chapter 3) to identify the reportable accounts

Step 4 (Chapter 4) by applying due diligence rules

Step 5 (Chapter 5) then report the relevant information

In the Handbook there is also Chapter 6 which discusses the CRS treatment of trusts

Chapter 1 Reporting financial institutions The CRS contains detailed rules specifying which entities are FIs and which FIs are reporting FIs based on four steps

Step 1 Is it an entity Only entities can be reporting FIs

Step 2 Is the entity resident in a participating jurisdiction Entities resident in a participating jurisdiction are within the reporting nexus and that includes branches located in such jurisdiction and branches of non-resident entities that are located in such jurisdiction

Step 3 Is the entity a financial institution

Step 4 Is the entity a non-reporting FI Certain governmental entities international organizations central banks retirement funds credit card issuers exempt collective investment vehicles and other low-risk FIs are non-reporting FIs

Chapter 2 Accounts which are financial accounts and therefore need to be reviewed Reporting FIs are required to identify their financial accounts and determine whether any are required to be reported to the tax authority Accounts that CRS specifies as posing a low risk of facilitating tax evasion (Excluded Accounts) are excluded from further review and reporting Jurisdictions can specify types of Excluded Accounts in their domestic law Excluded Accounts should present a low risk for tax evasion and not frustrate the purposes of CRS It is expected that each jurisdiction will publish a list of Excluded Accounts

Given the varying legal administrative and operational frameworks applicable to different accounts in different jurisdictions there may be cases where the reporting FI may not have all of the information it needs to report CRS contains examples of such situations and possibilities of how to deal with it

September 2015

Feature | 5

Chapter 3 Financial accounts which are reportable accounts An account is reportable if a reportable jurisdiction person holds the account This requires a determination regarding whether the account holder is tax resident in a jurisdiction that has an exchange agreement in place In general tax residency is determined under the laws of the resident jurisdiction or the place of effective management (in the case of an entity account holder) if there is no tax residency

If the account holder is a reportable jurisdiction person the FI must determine whether the reportable jurisdiction person is a reportable person Absent a specific exclusion the default rule is that a reportable jurisdiction person is a reportable person

If the account holder is a passive NFE the FI must then identify its controlling persons by looking through the passive NFE Moreover an IE that is not a participating jurisdiction FI is a passive NFE regardless of the income it receives or assets it holds The Handbook refers to the Financial Action Task Force (FATF) recommendations and its use of the term lsquobeneficial ownerrsquo to determine who the controlling persons are It focuses on individuals who exercise control over the entity either directly or indirectly

With respect to a partnership and similar arrangements the focus is on individuals ldquowho exercise[] control through direct or indirect ownership of the capital or profits of the partnership voting rights in the partnership or who otherwise exercise control over the management of the partnership or similar arrangementrdquo

With respect to trusts and entities like trusts CRS defines the term controlling persons to mean ldquothe settlor(s) the trustee(s) the protector(s) (if any) the beneficiary(ies) or class(es) of beneficiaries and any other natural person(s) exercising ultimate effective control over the trustrdquo

In the case any of these roles is fulfilled by an entity the FI must identify the controlling persons of such entity in accordance with FATF recommendations discussed above

If it is determined that the account holder or controlling persons are reportable persons then the account is a reportable account and the FI must gather information related to the account and report it to its tax authority

Chapter 4 Due diligence procedures The CRS due diligence procedures closely track the procedures found in Annex I to US FATCA Model IGAs Preexisting individual accounts are subject to an electronic indicia search and high value accounts with balances or values over USD1000000 are reviewed using a paper indicia search For new individual accounts participating jurisdiction FIs must request a valid self-certification stating the tax residence(s) of the new account holder

Due diligence is accomplished through one or more reviews of publicly available information and information maintained for KYC and AML purposes followed by requests for self-certification from the account holder andor controlling person(s) if necessary The OECDrsquos goals for the due diligence procedures are to build off of existing KYC and AML processes (especially for preexisting accounts) and to ensure that the approach taken by FIs is consistent across jurisdictions

Decisions regarding due diligence procedures Participating jurisdictions must make several important decisions when implementing CRS due diligence procedures

Participating jurisdictions must decide on the applicable deadline for preexisting and new accounts as the latter requires the application of new documentation requirements This date will depend on the time required to pass any necessary legislation and by local FIs to institute


6 | Feature

the procedures related to new accounts Early adopters have chosen 1 January 2016 as the deadline

Participating jurisdictions must decide on an appropriate timeframe for FIs to complete certain aspects of the due diligence procedures (eg review of high value and low value preexisting individual accounts and review of preexisting entity accounts) The OECD expects that the applicable timeframes will be 12 months for high value preexisting individual accounts and 24 months for low value preexisting individual accounts

Participating jurisdictions must decide whether to modify the definition of preexisting individual and preexisting entity accounts to include certain accounts (eg new accounts opened by account holders already holding preexisting accounts) that otherwise would be treated as new accounts

Participating jurisdictions must decide whether to modify the procedures related to preexisting individual accounts by either compelling FIs to apply the ldquoresidence address testrdquo (discussed below) in place of an electronic indicia search or by granting FIs the ability to elect the application of the residence address test

Participating jurisdictions must decide whether to allow FIs to elect the application of threshold exemption of USD250000 or less for preexisting entity accounts

In addition to these implementation decisions participating jurisdictions are expected to provide relevant information to assist taxpayers with the determination of their tax residences The OECD will also endeavor to facilitate the dissemination of such information

Chapter 5 The information that is reported and exchanged The Handbook provides details regarding the information that is required to be exchanged with respect to a reportable account The jurisdiction of residence for preexisting accounts is to be based on the residency test or the indicia search and for new accounts it is to be based on a self-certification The identifying information required to be reported includes name address jurisdiction(s) of residence TIN(s) date of birth and place of birth

The account information required to be reported includes

The account number (or functional equivalent) and

The name and identifying number (if any) of the reporting FI

The financial information required to be reported includes

The account balance or value (including in the case of a cash value insurance contract or annuity contract the cash value or surrender value) or if the account was closed during the reporting period only the fact of the closure of the account (but not the balance)

With respect to depository accounts

o The total gross amount of interest paid or credited to the account

With respect to custodial accounts

o The total gross amount of interest or dividends paid or credited to the account

o The total gross amount of other income generated with respect to the assets held in the account paid or credited to the account This means any amount considered income under the laws of the jurisdiction where the account is maintained other than any

September 2015

Feature | 7

amount considered interest dividends or gross proceeds or capital gains from the sale or redemption of Financial Assets

o The total gross proceeds from the sale or redemption of financial assets paid or credited to the account

With respect to other (ie not depository or custodial) accounts

o The total gross amount paid or credited to the account holder with respect to the account with respect to which the reporting FI is the obligor or debtor This includes the aggregate amount of any redemption payments made in whole or part to the Account Holder and any payments made to the Account Holder under a Cash Value Insurance Contract or an Annuity Contract even if such payments are not considered Cash Value

With respect to jointly held accounts each holder of the joint account is attributed the entire account balance or value as well as all amounts paid or credited to the joint account

Chapter 6 CRS treatment of trusts

CRS classification of trusts For CRS purposes a trust is resident in any place where a trustee is resident If a trust has multiple trustees resident in different jurisdictions the trust is a resident of each such jurisdiction The general trust residence rule based on trustee residence does not apply if the trust itself is a tax resident in a participating jurisdiction and all information required to be reported in respect of the trust is reported to the tax authority where the trust is resident

For CRS a trust will be an IE if (among other tests) the trustrsquos income is primarily attributable to investing in financial assets and the trust is managed by another entity that is an FI A trust is ldquomanaged byrdquo another entity if that other entity performs certain investment management activities for the trust directly or through a service provider Many private trusts will be IE FIs under this definition Trust-based collective investment vehicles (eg funds structured as unit trusts) will also be IEs

If a trust is an IE under the gross income and managed by tests referred to above and the trust is not resident in a participating jurisdiction FI reporting FIs who maintain accounts for the trust must treat the trust as a passive NFE and report on its controlling persons This look-through rule will impact US trustees of US law trusts with non-US controlling persons and non-US accounts if the US does not implement CRS

Where a trust is an IE the account holders of the trust are the holders of debt issued by the trust and the holders of ldquoequity interestsrdquo in the trust Trusts do not issue equity as a matter of trust law so the CRS provides special rules to determine who holds the ldquoequity interestsrdquo in a trust for CRS purposes Any person treated as a settlor or beneficiary and any other natural person exercising ultimate effective control over the trust holds an equity interest in the trust A discretionary beneficiary is only treated as an account holder in a year in which the beneficiary receives a distribution and a contingent beneficiary is treated like a discretionary beneficiary If a settlor beneficiary or other controlling person is an entity the CRS looks through such entity to the natural persons controlling that entity A trust that is a reporting FI must report the account information and financial activity for the year in respect of each reportable account

For a trust that is an NFE if the trust holds an account with a reporting FI the reporting FI would generally be required to report the trust for CRS purposes The trust itself will be a reportable person only if the trust is a tax resident of a reportable jurisdiction and is not exempt or excluded An account held by a trust is also reportable if the trust has one or more controlling persons that are reportable The


8 | Feature

controlling persons include the settlor the trustee beneficiaries protectors and any other natural person exercising ultimate effective control over the trust

A settlor is reported regardless of whether the trust is revocable or irrevocable

CRS does not require identifying individual beneficiaries by name where the beneficiaries are possible members of a class Instead when a member of the class receives a distribution from the trust or intends to exercise vested rights in the trust property this is considered a change in circumstances triggering additional due diligence and reporting as necessary in respect of that person

Named discretionary beneficiaries are considered reportable persons even if they do not receive a distribution during the year

Jurisdictions may permit FIs to align the scope of beneficiaries subject to CRS reporting for both FIs and NFEs

CRS FAQs Annex I of the Handbook outlines responses to FAQs on CRS topics such as due diligence self-certification reporting non-reporting FIs financial accounts and other issues

Due diligence documentary evidence A reporting FI is not required to retain a paper copy of the documentary evidence but may do so A Reporting FI may retain an original certified copy or photocopy of the documentary evidence or instead a notation of the type of documentation reviewed the date the documentation was reviewed and the documentrsquos identification number (if any for example a passport number)

Residence address test ndash manual review of documentary evidence The CRS does not require a paper search to examine the documentary evidence If the FI has kept a notation of the documentary evidence or has policies and procedures in place to ensure that the current residence address is the same as the address on the documentary evidence provided then the reporting FI will have satisfied the documentary evidence requirement of the residence address test

Residence address test ndash two residence addresses It is possible that after the application of the residence address test the account holder has two residence addresses For example with respect to a bank account maintained in Country A a bank could have two addresses in a case where a resident of Country B is working and living half her time in Country B and Country C In this case a self-certification could be sought or the account could be reported to both reportable jurisdictions where there is a residence address

CRS status of entities An entityrsquos status as FI or NFE should be resolved under the laws of the participating jurisdiction in which the entity is resident If an entity is resident in a jurisdiction that has not implemented the CRS the rules of the jurisdiction in which the account is maintained determine the entityrsquos status as FI or NFE as there are no other rules available When determining an entityrsquos status as an active or passive NFE the rules of the jurisdiction in which the account is maintained determine the entityrsquos status A jurisdiction in which the account is maintained may permit in its domestic implementation guidance an entity to determine its status as an active or passive NFE under the rules of the jurisdiction in which the entity is resident if the residence jurisdiction has implemented the CRS

September 2015

Feature | 9

New accounts of pre-existing account holders A jurisdiction may allow reporting FIs to treat a new account opened by an existing account holder (or a related entity within the same jurisdiction as the reporting FI) as a pre-existing account provided that certain conditions are met For example the opening of the financial account does not require the provision of new additional or amended customer information by the account holder other than for purposes of CRS This condition should be interpreted to include any instances in which the account holder is required in order to open the account to provide the reporting FI with new additional or amended customer information (as a result of a legal regulatory contractual operational or any other requirement) The rationale for this condition is that such instances provide an opportunity to obtain a self-certification together with new additional or amended customer information as part of the opening of the account

Reliance on AMLKYC procedures could result in controlling persons not being reported For accounts with a balance or value below USD1 million (after applying the aggregation rules) it is possible that the FI does not have and is not required to have information for regulatory or customer relationship purposes including AMLKYC procedures on file that indicates the controlling person may be a reportable person Then the FI cannot document the residence of the controlling persons and does not need to report that person as a controlling person

Reliance on service providers A jurisdiction may allow reporting FIs to use service providers to fulfil their reporting andor due diligence obligations (Commentary) CRS does not require that the service provider be within the same jurisdiction as the reporting FI or obtain approval from the relevant jurisdiction to act as a service provider The reporting FI will remain responsible for its reporting and due diligence obligations and the actions of the service provider are imputed to the FI The jurisdiction must have access to the relevant records and evidence relied upon by the reporting FI and service provider for the performance of the reporting andor due diligence procedures set out in the CRS

Reason to know Change of circumstances An account holder is not required under the CRS to include in the self-certification a requirement to update the reporting FI if there is a change in the information that affects the account holderrsquos status However a reporting FI may prefer or may be required to under a particular jurisdictionrsquos domestic law to include in self-certifications collected from its account holders a requirement on account holders to inform the reporting FI if there is a change to information contained in the self-certification that affects their CRS status

Holding company or treasury center of a financial group An entity serving as a holding company or treasury center of a financial group may be an FI if it meets the definition of FI This is so even if the companyrsquos activities or operations are performed solely on behalf of related entities An entity that for example enters into foreign exchange hedges on behalf of the entityrsquos related entity financial group to eliminate the foreign exchange risk of such group will be an FI provided that the other IE definitional requirements are met

Managed entity FI An entity whose income is predominantly passive will generally be an IE and thus an FI if the entity is ldquomanaged byrdquo an FI An entity is managed by an FI if the FI performs (directly or through a service provider) any of the listed investment management activities including the broad catchall category of ldquootherwise investing administering or managing Financial Assets or money on behalf of other personsrdquo The managing entity must have discretionary authority to manage the entityrsquos assets in whole


10 | Feature

or in part An FI performing administrative services for an entity unrelated to the entityrsquos financial assets or money is not considered to be managing the entity

Indirect investment in real estate An entityrsquos gross income primarily attributable to investing reinvesting or trading of directly held interests in real property will not cause the entity to be an IE because real property is not a financial asset If instead an entity is holding an interest in another entity that directly holds real property the interest held by the upper-tier entity is a financial asset the gross income derived from the indirect interest is taken into account to determine whether the upper-tier entity will meet the IE definition

Equity interest reporting balance or value In the case of valuing an equity interest for reporting purposes FIs use the value calculated by the FI for the purpose that requires the most frequent determination of value What this value is will depend on the particular facts Depending on the circumstances it could for example be the value of the interest upon acquisition if the FI has not otherwise recalculated the balance or value for other reasons

Validation of TINs Participating jurisdictions will provide reporting FIs with information with respect to the issuance collection and to the extent possible the practical structure and other specifications of TINs The OECD is facilitating this process through a centralized dissemination of the information on the OECD Automatic Exchange Portal (the ldquoPortalrdquo) A reporting FI will have reason to know that a self-certification is unreliable or incorrect if the self-certification does not contain a TIN and the information included on the Portal indicates that the reportable jurisdiction issues TINs to all tax residents

A reporting FI is not required to confirm the format and other specifications of a TIN with the information provided on the Portal However reporting FIs may nevertheless wish to do so to enhance the quality of the information collected and minimize the administrative burden associated with any follow up concerning reporting of an incorrect TIN In this case they may also use regional and national websites providing a TIN check module for the purpose of further verifying the accuracy of the TIN provided in the self-certification

CRS and FATCA Model 1 IGA comparison In general the differences between CRS and the US Model IGAs are intended to eliminate US-specificities and reflect CRSrsquos multilateral approach The Handbook provides a detailed comparison The following table summarizes key differences

Issue Comment

Nexus for reporting FIs The nexus for reporting FIs under the CRS is the residence of the FI FATCA Model 1 IGA uses residence and jurisdiction of organization

Categorization of FIs CRS does not contain many of the exempt beneficial-owner and deemed-compliant categories used in FATCA Model 1 IGA

Debt or equity interests in an IE

CRS does not exclude debt or equity interests in an IE from the definition of ldquoFinancial Accountrdquo regardless of whether the interests are regularly traded on an established securities market

Reportable jurisdiction persons

Only tax residents of a CRS reportable jurisdiction are considered reportable persons

September 2015

Feature | 11

Issue Comment

Double or multiple residency

Information is exchanged with all CRS jurisdictions in which the account holder is found to be resident for tax purposes

Residence address test CRS provides an alternate procedure for lower value accounts so that participating jurisdiction FIs can rely on addresses listed on government-issued documentation and certain other documentary evidence when establishing tax residence Participating jurisdictions have the ability to decide whether to make this alternate procedure mandatory elective or not available

Citizenship indicia The citizenship of the account holder is not a CRS indicia

Passive NFEs and controlling persons

Controlling persons of passive NFEs are reportable regardless of whether they are resident in the same jurisdiction as the passive NFE Under FATCA a US controlling person of a US entity is not reportable by an FI maintaining an account for the US entity

Passive NFE definition Under CRS an IE not resident in a participating jurisdiction is generally considered a passive NFE

Preexisting accounts CRS provides that participating jurisdictions can decide to include as preexisting accounts new accounts opened by account holders who already hold preexisting accounts with the same FI

Thresholds for pre-existing individual accounts

CRS does not include the USD50000 threshold for pre-existing individual accounts or the USD250000 threshold for cash value insurance and annuity contracts

Cash value insurance contract

CRS does not exempt contracts with a cash value of USD250000 or lower

Hold mail or in-care-of address

Under CRS FIs are required to request documentary evidence or self-certifications from the account holders if an account has a hold-mail or in-care-of address and no other indicia If such requests do not establish the tax residence then the FI must report the account as an undocumented account

Paper search Under CRS FIs are required to perform a paper search only with respect to the indicia not captured by the FIrsquos electronically searchable databases

Entity account procedures

If a reporting FI cannot determine whether the account holder of a new entity account is an active NFE or FI (other than an IE resident in a non-participating jurisdiction) it is required to presume that the entity account holder is a passive NFE Under the US Model IGAs an FI would treat such accounts as held by nonparticipating FIs Where an FI cannot obtain a self-certification related to a passive NFErsquos controlling persons the FI must conduct an indicia search

Change in circumstances

Where there is a change in circumstances and a self-certification is found to be unreliable or incorrect the FI must obtain a valid self-certification must report based on where the account holder claims to be resident or may be a resident after the change in circumstances


12 | Feature

Issue Comment

Documentary evidence validity

Subject to exceptions documentary evidence remains valid for five years under CRS

Verbal self-certification CRS generally allows FIs to obtain a verbal self-certification from the account holder

TIN CRS requires FIs to use reasonable efforts to obtain a TIN from the account holder FATCA Model 1 IGA includes a commitment to require the collection and reporting of TINs

Date and place of birth CRS emphasizes the date of birth of reportable persons FATCA Model 1 IGA requires date of birth only where TIN is not available for certain pre-existing accounts

Reporting of average monthly balances

CRS allows for reporting of the highest andor monthly average balance or value instead of the balance or value at the end of the calendar year

Dormant accounts Dormant accounts can be excluded from review identification and reporting under CRS

Account closure CRS requires reporting the fact that an account has been closed

What is next The Handbook provides a welcome clarification that should increase the efficiency and consistency of CRS implementation However it also shows that many uncertainties remain The OECDrsquos stated goal is to assist the countries which have agreed to a FATCA Model 1 IGA and invested in its implementation to leverage that investment to establish automatic exchange relationships with other jurisdictions Nevertheless key concerns remain to be resolved such as the differences between CRS and FATCA as well as expected differences in guidance from CRS participating jurisdictions resulting in burdensome due diligence and reporting regimes that frustrate FIs and confuse their customers and local tax administrations

The CRS categories of non-reporting FIs include some but not all of the types of institutions contained in FATCA Model 1 IGA Annex 2 For example FIs required to report under CRS include sponsored IEs and controlled foreign corporations and sponsored and closely held investment vehicles (these types of FIs are generally exempt from FATCA reporting obligations) The CRS contains a residual category to allow jurisdictions to identify jurisdiction-specific non-reporting FIs It remains to be seen how participating jurisdictions will implement that residual category particularly in light of the extensive use of sponsoring for FATCA purposes

Over 100 jurisdictions have now committed to implement CRS and during the years 2016 and 2017 many of these jurisdictions will put in place exchange agreements and participate in CRS (the US has not yet committed)

CRS will create additional compliance burdens such as new IT systems and an increase in personnel A ldquosoft landingrdquo would allow jurisdictions to address these and other implementation issues including the instances in which penalties may apply

September 2015

Feature | 13

The CRS Commentary likely needs to be included in domestic legislation or guidance to be effective Such provisions include for example the definition of controlling persons and the procedure for reporting information for jointly held accounts Each jurisdiction will also likely need to include guidance for FIs

The optional provisions in the Handbook discussed above reflect the incomplete evolving nature of CRS If all jurisdictions that are committed to the CRS would adopt all of the optional provisions CRS could be implemented consistently targeting reporting to those areas that pose the greatest potential for tax non-compliance

The Handbook does not take into account a soft landing for penalties While the CRS does not provide for a standard for penalties it is likely that many countries will include penalties for non-compliance and incomplete compliance as part of local legislation It would be helpful if such jurisdictions take a measured approach and waive penalties for substantial good-faith compliance in the first year or two of CRS

Other unresolved issues relate to how countries will audit compliance with the CRS Should the tax authority or the financial regulator handle the audit Ideally an audit will focus on the adequacy and application of policies and procedures as opposed to an account-by-account review

The OECD intends to update the Handbook on a regular basis treating it as a ldquolivingrdquo document Therefore as most jurisdictions are only now starting to finalize propose or draft the legislation and guidance for implementing the CRS it is not be too late to resolve further questions for clarification and requests for consistency


14 | France | Case Summaries

Case Summaries France Funds transferred to an undeclared account abroad and presumption of income By Stanislas Pannetier (Paris)

(Melun Administrative Court Mar 5 2015 No 1308645 Mr BhellipC and French Administrative Supreme Court Feb 4 2015 No 365180 10th and 9th subsect)

Recent case law provides us with an opportunity to come back to the presumption-of-income system for any funds transferred abroad or from abroad through undeclared accounts abroad (Article 1649 A of the FTC) The taxpayer owner of the undeclared account can rebut this presumption by providing evidence that the funds that transited through the account were not within the scope of income tax were tax exempt or had already been taxed

In a decision handed down on 4 February 2015 the French Administrative Supreme Court completed its prior case law on this issue by stating that evidence that the funds transiting through an undeclared account had already been taxed must be provided not only for the year of the transfer but also if applicable for prior years even if the ldquoresourcesrdquo that allowed the owner to accumulate such funds were acquired in a period now barred by the statute of limitations

In a case that gave rise to a decision on 5 March 2015 the Melun Administrative Court decided that a taxpayer did not provide evidence that the fund transferred to an undeclared account abroad from his French checking account was not taxable on the grounds that the fact that the funds on such an account were fungible did not allow one to prove such fact In the same case the Court accepted evidence that funds transferred from a savings account were not taxable because their origin could be traced (taxpayer had received a payment for damages) This decision which to our knowledge has not been appealed makes the presumption of Article 1649 A nearly impossible to rebut aside from cases in which the non-taxable funds or funds already taxed were isolated on an account devoted solely to receiving them before then being transferred abroad

These two decisions illustrate the courtsrsquo narrow interpretation of the evidence which allows one to rebut the presumption of Article 1649 A of the FTC This case law trend will serve as an incentive to relevant taxpayers to contact the Department for Processing Amending Declarations (Service de Traitement des Deacuteclarations Rectificatives or the ldquoSTDRrdquo) to assess the evidence provided by taxpayers who voluntarily make amending declarations notably in cases where the assets were accumulated long ago and evidence is difficult to gather

Lastly it should be remembered that if adequate evidence is not provided as regards the origin of the funds Articles 755 of the FTC and L 23 C and L 71 of the French Book of Tax Procedures allow the tax authorities to deem all assets deposited on an undeclared bank account abroad to be assets acquired for no financial consideration and to tax them at a 60 percent rate The clarifications which case law has provided as to the type of evidence to be provided to rebut the presumption of Article 1649 A undoubtedly gives some indication of just how strictly the courts assess whether the evidence provided within the framework of the Article L 23 C procedure of the French Book of Tax Procedures is adequate

September 2015

France | Case Summaries | 15

Business assets exempt from the wealth tax (ISF) Is the managerrsquos company housing a business asset By Stanislas Pannetier (Paris)

(French Supreme Court Comm Ch Feb 3 2015 No 13-25263)

In a recent decision the French Supreme Court (Cour de Cassation) reassessed the wealth tax exemption that company managers may receive for real estate they own directly or through a real estate holding company (ldquoSCIrdquo) and which they lease to their employer company the shares of which they personally own are exempt from the wealth tax as business assets (Articles 885 N 885 O bis and 885 O quater of the FTC)

Such SCI real estate or shares may themselves be deemed business assets which are exempt from the wealth tax subject to certain conditions notably related to the lessee companyrsquos need for the leased real estate to conduct its industrial commercial artisanal or freelance business (BOI-PAT-ISF-30-30-10-20 No 20 et seq)

In a case leading to a decision on 3 February 2015 a manager of a company which housed elderly people and which it declared as an exempt business asset had also wished to receive the exemption based on the inherent value of the shares it held in an SCI that leased a villa to this same company

The French Supreme Court ruled that business assets cannot benefit from this system on the grounds that the villa was used privately as company housing for its manager even though the companyrsquos registered office was located at the villa

However when one reads the decision one notes that the Supreme Courtrsquos decision could have been different had the taxpayer proven that the villa was indeed the companyrsquos place of business and that it was used as the reception space for the companyrsquos business contacts and relations

For at least a portion of the property such evidence could have likely resulted from specific physical alterations to the villa and from effectively conducting the companyrsquos business in it

Corporate tax liability of a SCI due to the real estate purchase and resale activity of one of its shareholders By Virginie Louvigneacute and Sophie Pagegraves (Paris)

(Nantes Administrative Court of Appeal May 28 2015 no 13NT01050 SCI Les Sycomores)

In a decision of 28 May 2015 the Nantes Administrative Court of Appeal pointed out the importance of the role of shareholders in the issue of whether a SCI is subject to corporate income tax

In this case on the basis of Articles 206-2 35-I-1deg and 257-6deg-a of the French Tax Code whose application is subject to the twofold condition that transactions are purchased with a speculative intent and that they are habitual the tax authorities subject an SCI that has not opted for the joint stock companies tax regime to corporate income tax and to value added tax as a legal entity which habitually purchases real estate properties for resale In a decision of 12 February 2013 the Caen Administrative Court dismissed the SCIrsquos claim petitioning the Court to discharge the corporate income tax adjustments for fiscal years 2007 and 2008 the VAT adjustments for the period between 1 January and 31 December 2008 and the corresponding penalties The SCI appealed this decision The main grounds of its appeal was that the twofold condition requiring a speculative intent and an habitual nature was not met because the SCI had resold only two properties during the period at issue and these two properties were intended to be kept in its assets and not to be resold


16 | Germany | Case Summaries

The Nantes Administrative Court of Appeal ruled against the SCIrsquos claim and affirmed the position of the tax authorities and of the first instance judges Indeed the Administrative Court of Appeal demonstrated that the twofold condition involving speculative intent and habitual nature was met in order to conclude that there were grounds to subject the SCI to corporate income tax even if it carried out only two sales during the fiscal years at issue

The Administrative Court of Appeal first established that the short period between the purchase of each of the properties and their resale and the number and frequency of the property purchase and resale transactions carried out by one of the shareholders or by SCIs in which he was a shareholder show that when the properties were purchased the SCI intended to resell them shortly thereafter Consequently the speculative intent condition was indeed met

The Court then pointed out that when the shareholders who control the company are persons who habitually carry out real estate transactions either in their own name or through their shareholding in SCIs each of which carries out a specific activity the company is deemed to meet the condition related to the habitual nature because the company is one of the instruments of an overall business within the scope of Article 35-I-1deg of the French Tax Code Consequently the Administrative Court of Appeal ruled that the condition related to the habitual nature was met because one of the SCIrsquos shareholders habitually carried out real estate transactions

The fact that the shareholderrsquos situation was taken into account to assess the SCIrsquos situation deserves to be emphasized because it is a rather innovative approach

Germany Qualification of a Liechtenstein foundation as a privileged family foundation Tax exemption of dividend income for foreign family foundations and trusts By Sonja Klein and Ludmilla Maurer (Frankfurt)

In a recently issued decision the Fiscal Court Duumlsseldorf ruled that a foundation (Stiftung) incorporated under the laws of Liechtenstein does not qualify as a privileged family foundation so that it cannot profit from the exemption of allocating and taxing the trust income in the hands of the German resident beneficiaries irrespective of any distribution according to the German Foreign Tax Act (AStG) Furthermore the Fiscal Court also ruled that the 95 percent tax exemption of dividend income applicable to corporations applies with respect to foreign family foundations and trusts within the meaning of the German Foreign Tax Act for the tax years prior to 2013

Qualification of Liechtenstein foundation as privileged family foundation In the case at hand the Fiscal Court Duumlsseldorf decided on the question whether or not a foundation incorporated under the laws of Liechtenstein could qualify as privileged family foundation within the meaning of Sec 15 (6) AStG According to Sec 15 AStG foreign resident family foundations are generally treated as being transparent for German tax purposes Any income generated by the foreign family foundation is allocated and taxed in the hands of the German resident beneficiaries as if they directly generated the respective income Under this general rule the income is taxed irrespective of any distributions made by the foundation at the level of the German beneficiaries pursuant to their share in the trust Sec 15 (6) AStG provides for an exemption from this general rule for EU and EEA based family foundations In order to qualify for that exemption the EU or EEA country in which the foundation has its place of management or corporate seat must provide extensive tax information and assistance to Germany in accordance with the EU Directive 77799EEC concerning mutual assistance or on the basis of a comparable bi- or multinational agreement In the decided case it was disputed

September 2015

Germany | Case Summaries | 17

whether the information exchange clause under the double taxation treaty and the TIEA concluded with Liechtenstein would be sufficiently comparable with the rights and obligations as stipulated in the EU Directive 77799EEC The court denied such comparability - without a proper reasoning - and rejected the application of Sec 15 (6) AStG in the case at hand An appeal was not admitted However the taxpayer filed a complaint against the non-admission of the appeal with Federal Tax Court which is currently still pending

Tax exemption of dividend income Another question decided by the Fiscal Court was whether the German Foreign Tax Act can be interpreted in the way that - prior to the explicit amendment of the German Foreign Tax Act in 2013 - the 95 percent tax exemption of dividend income applies with respect to foreign family foundations and trusts As of 1 January 2013 the German Foreign Tax Act applicable to foreign family foundations and trusts has been expressly amended in the way that the trust income allocable to a German resident beneficiary is to be determined according to the relevant income tax provisions applicable to the German resident founders settlors or beneficiaries to whom such income is allocable Due to this amendment German resident individuals can no longer benefit from the 95 percent tax exemption of dividend payments from a shareholding and capital gains from the sale of shares in corporations which is only available to corporations The profits generated by the foundation or trust qualify as income from capital investments being subject to the so-called Abgeltungssteuer at a tax rate of 25 percent Although the applicable tax rate is lower than previously (personal income tax rate) the effective tax burden is significantly higher as expenses related to the administration of the foundation or trust are no longer fully tax deductible While the non-application of the 95 percent tax exemption rule is clear with respect to tax years beginning as of 1 January 2013 the German tax authorities try to argue that the same also applies with respect to tax years prior to the amendment of the relevant provision However the Fiscal Court has rejected this view It held that it was a conscious decision of the German legislator to amend the law as of 1 January 2013 and that it is not the duty of the court to close existing loop-holes This decision confirms previous decisions of Fiscal Courts Munich and Hessen

Consequences If German tax authorities apply this decision and issue tax assessment notices allocating the income of the foundation or trust of tax years prior to 2013 to German resident beneficiaries under the AStG rules although no distribution has been made the beneficiaries should consider filing an appeal against such assessment notice In absence of a proper evaluation of the applicable rules there seems to be a good chance that the Federal Fiscal Court might overrule this lower fiscal court decision

For further tax planning purposes the Federal Fiscal Court decision on this case should be avoided prior to transferring the place of management of a foreign resident foundation or trust to an EEA country in particular Liechtenstein for benefiting from the exemption for privileged foreign trusts and foundations It must be expected that the tax authorities will refer to this case for denying the privileges of such qualification in these cases

Although the court expressly ruled only on the application of the tax exemption for dividend income available for corporate entities the beneficiaries also benefit from the comparable tax exemption for capital gains with respect to shares in corporations up to 2013


18 | Jersey | Case Summaries

Jersey In the Matter of the Y Trust - When can a trustee surrender its power to the court By Louise Oakley and Jack Secunda (London)

Overview A recent decision of the Royal Court of Jersey offers useful insight on the circumstances in which a trusteersquos powers can (during complex divorce proceedings) be properly exercised in unusual ways In particular Commissioner Clyde-Smith and Jurats Kerley and Olsen confirmed (a) the scenarios in which a trustee may surrender its power to the court and allow the court to exercise that power on its behalf (b) when the exercise of a trusteersquos power may amount to a lsquofraud on a powerrsquo and (c) how the court will consider the proposed variation of a trust deed when this variation would impact minor or unborn beneficiaries

Factual background A husband and wife were engaged in lengthy and acrimonious divorce proceedings The husbandrsquos father had historically settled a Jersey trust which held the assets of a valuable family business The beneficiaries of the trust were an open class including the wife the couplersquos children and the children of their children The husband was not a beneficiary himself as he had taken on two supervisory roles in relation to the trust which resulted in his being an excluded person under the terms of the settlement deed In practice however it had always been understood by the family that the husband would indirectly benefit from the trust

The divorce proceedings eventually settled a principal term of which was a lump-sum distribution to the husband (of approximately GBP12 million) from the assets of the Jersey trust The trustee was unwilling to make this distribution to an excluded person in light of the risk of claims being brought against it in the future for breach of trust The adult beneficiaries therefore proposed bringing the trust to an end and making the distribution themselves a course of action which inevitably required varying the terms of the trust to exclude the minor and unborn children from the beneficial class (as only the adult beneficiaries could consent to bringing the trust to an end)

The decision

Surrender of a trusteersquos power The trusteersquos application to the court included a request for permission to surrender its discretion with respect to its power to amend the trust deed As a general rule trustees are required to exercise their powers personally and can only surrender these powers in limited circumstances The court applying settled Jersey case law1 therefore noted that surrender of discretion was a ldquolast resort where no sensible alternative existsrdquo - this may be the case where trustees are steadfastly deadlocked regarding a decision or are faced with a significant conflict of interests This is consistent with the approach of the English courts to the surrender of a power as set out in Public Trustee v Cooper

The trustee in this case would benefit from amending the trust deed as it would remove the risk that it could be sued for breach of trust (it would also avoid arbitration which had been threatened by the husband and wife) The court was therefore satisfied that the trustee faced a real conflict and that this would interfere with its duty to act in the best interests of the beneficiaries The court therefore permitted the trustee to surrender its power

1 Re S Settlement [2001] Re B Settlement [2010]

September 2015

Jersey | Case Summaries | 19

Fraud on a power The court also had to consider whether varying the beneficial class so that the husband could ultimately benefit from trust assets would amount to a fraud on a power ie a situation in which a trusteersquos power is exercised for a different purpose than that for which it was given here for the benefit of a beneficiary but with the actual intent to benefit a non-beneficiary or an excluded person

The test for determining whether a trusteersquos decision amounts to a fraud on a power includes consideration of the ldquoprimary purposerdquo of that decision Although clearly the variation of the trust deed was intended to permit the lump-sum distribution to be made and this would directly benefit the husband the court considered that there were two other purposes which superseded this

Firstly the variation would allow the wife to honor the terms of the settlement agreement with her husband which would in turn bring closure to the long-running and hostile litigation between them The court had heard evidence in particular of the negative impacts which the litigation had had on the wifersquos health and considered that allowing her a clean break from her husband was one of the primary purposes of the proposed course of action Additionally the litigation had proved extremely costly and was being financed (at least partly) from the trust assets As such it was in the interests of the remaining beneficiaries for the matter to be promptly resolved to end the ldquoextraordinary haemorrhaging of the trust fundrdquo that had been occurring

The court held that these were the joint primary purposes behind the decision and that they did not therefore amount to a fraud on a power as they did not benefit the husband directly

Considering the interests of minor and unborn beneficiaries By varying the beneficial class to include only adult beneficiaries the wifersquos minor and unborn grandchildren would be removed from their existing position as beneficiaries of the trust To mitigate any resultant risk that the court would be unwilling to permit the adult beneficiariesrsquo proposed variation the trustee ensured that the minor and unborn beneficiaries were convened to the proceedings and independently represented at the hearing

The court noted that it had to be convinced that the proposed arrangements were not ldquointended to defeat the interests of those who cannot yet speak for themselvesrdquo In this case the court heard evidence of very close relationships between each of the adult beneficiaries and their respective children and was satisfied that the positions of these individuals were therefore financially secure even after they were removed from the class of beneficiaries

Comment This case confirms that trustees in Jersey who wish to surrender their discretion to the courts may be granted permission to do so but only if there is no sensible alternative This is consistent with established English authority A minor conflict of interests which could easily be worked around would not be sufficient for the court to permit the surrender of a power and trustees must give due consideration to all other possible options

The decision also indicates that the court is willing to consider both financial and non-financial purposes when determining whether an exercise of power amounts to a fraud on that power In the courtrsquos view the desire to provide the wife with a lsquoclean breakrsquo was paramount in light of the evidence before it This indicates that the Jersey court may approach relatively unorthodox proposals with an open mind and that if they are intended to bring about an end to long-running family disputes they have a reasonable chance of success

Finally this case has stressed the importance of ensuring that minor and unborn beneficiaries are represented in any matter which may threaten or alter their interests An independent solicitor working at a different firm to the other family memberrsquos lawyers attended the hearing on their behalf and his


20 | United Kingdom | Case Summaries

submissions were vital in convincing the court that the position of the unborn and minor beneficiaries would remain secure even if the proposed amendments to the trust deed were permitted

Ultimately this somewhat surprising conclusion appears to have been achieved because the court adopted a pragmatic approach to the question of whether it could give the trustee the means to bring long-running litigation to an end In this endeavor it appears that all the parties involved were supportive of the proposed solution Had the application been opposed it is questionable whether a court would have found it as easy to rationalize a result so radically different from that which would have prevailed if the terms of the original trust had been applied

United Kingdom Pugachev Freezing orders and disclosure orders - making trusts susceptible to attack By Jemma Purslow and Jack Secunda (London)

Overview In JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139 the English Court of Appeal considered the extent to which a member of a class of beneficiaries under a discretionary trust can be ordered to disclose details of the trust and trust assets In confirming that a beneficiary can be ordered to give disclosure of the extent of his interest in these assets the Court of Appeal has clarified the extent of its jurisdiction in an area that has been regularly used but never tested in significant fraud cases

Background to the dispute The defendant Mr Pugachev founded JSC Mezhdunarodniy Promyshlenniy Bank (ldquothe Bankrdquo) in the early 1990s and it was initially very successful However due to a number of financial issues the Russian Central Bank revoked the Bankrsquos licence in 2010 and appointed an administrator to manage its liquidation During the ensuing insolvency investigations the Bank and the Russian state-backed liquidator determined that there was a deficit in the Bankrsquos assets of approximately USD22 billion and began proceedings in Russia against Mr Pugachev alleging that he had misappropriated these assets

High Court orders

Freezing Order In aid of the Russian proceedings the Bank and liquidator applied to the English High Court for a freezing order over Mr Pugachevrsquos assets which was granted in mid-2014 (the ldquoFreezing Orderrdquo)

The prohibitions imposed by the Freezing Order applied to ldquoany interest under any trust or similar entity including any interest which may arise by virtue of the exercise of any power of appointment discretion or otherwise howsoeverrdquo (clause 7(c) of the Freezing Order) It also contained a disclosure obligation in respect of any assets worth in excess of GBP10000 (clause 9(1) of the Freezing Order) Mr Pugachevrsquos solicitors accordingly disclosed that he was ldquoone of a class of discretionary beneficiaries under [five] New Zealand based trustsrdquo (the ldquoTrustsrdquo) but provided no further information on the Trusts

Disclosure Order The Bank therefore applied to the High Court for an order for specific disclosure of information about the Trusts which was granted in July 2014 (the ldquoDisclosure Orderrdquo) The Disclosure Order provided that Mr Pugachev must set out ldquothe identity of the trustee(s) settlor(s) any protector(s) and the

September 2015

United Kingdom | Case Summaries | 21

beneficiaries of [the Trusts]hellipand details of the assets which were subject to those [T]rustsrdquo The trustees of the Trusts (the ldquoTrusteesrdquo) in turn applied to the High Court for discharge of that section of the Disclosure Order but were unsuccessful Mr Pugachev and the Trustees subsequently appealed to the Court of Appeal

Court of Appeal decision

Did the Freezing Order and its disclosure obligation extend to discretionary interests In order to determine whether under the terms of the Freezing Order the Judge was correct to order Mr Pugachev to provide information about the Trusts it was necessary for the Court of Appeal to consider the scope of the Freezing Order Specifically were the terms wide enough to include the interest of a member of a class of potential beneficiaries under a discretionary trust

The Court noted that the purpose a freezing order is to ldquoprevent a defendant from putting assets beyond the reach of judgment creditors in the event that judgment is entered against himrdquo The general position is therefore that the scope of a freezing order is normally restricted to assets which would be amenable to execution if a judgment is made against a defendant The Court noted that a beneficiary under a discretionary trust has the right to be considered as a potential recipient of trust assets but this does not confer a proprietary interest in the assets held by the trusts On the face of it therefore assets held by trustees of a discretionary trust would not be amenable to execution

Notwithstanding the above the Court held that Mr Pugachevrsquos potential interests under the Trusts were caught by the Freezing Orderrsquos prohibition on dealing with assets and its disclosure requirements

The Court reached this conclusion as a result of an analysis of clause 7(c) (see above) in light of the three guiding principles to be considered when interpreting a freezing order i) the enforcement principle ii) the flexibility principle and iii) the strict interpretation principle The enforcement principle states that the purpose of a freezing order is to stop an injuncted defendant dissipating property which could be the subject of enforcement if the claimant wins the case the flexibility principle is that the jurisdiction to make a freezing order should be exercised in a flexible manner to be able to deal with new situations and the strict interpretation principle provides that orders should be clear and unequivocal and should be strictly construed

Clause 7(c) contained ldquonon-standard wordingrdquo (which has nevertheless been used in a number of large fraud cases) and the Court considered that it should be split into two sections (with the division occurring after ldquoany interest under any trust or similar entityrdquo) each of which must be interpreted in the context of the overall clause The Court noted that both parts of the clause must be said to add something to the scope of the Freezing Order which the other section did not cover

The Court therefore held that while ldquoany interest under any trustrdquo was likely intended to relate to vested interests in trusts the second half of the clause would be redundant if it did not further expand the scope of the Freezing Order Indeed the Court held ldquoany interest which may arise by virtue of the exercise ofhellipdiscretionrdquo could surely only have been intended to have related to the interest of an individual in whose favor discretion could be exercised Therefore even if the interest of a discretionary beneficiary could not be subject to execution the wording of the Freezing Order was clearly drafted widely enough to include it for the purposes of disclosure

The Courtrsquos decision was also influenced by clause 6 of the Freezing Order which stated that it covered ldquoall the Respondentrsquos assetshellipwhether he is interested in them legally beneficially or otherwiserdquo The Court held that ldquolegallyrdquo and ldquobeneficiallyrdquo covered those assets in which Mr Pugachev had a proprietary interest and the use of ldquoor otherwiserdquo must have been intended to add something beyond proprietary interests to the scope of the order



Did the High Court have jurisdiction to make the Disclosure Order The Court of Appeal then turned to the question of whether Mr Pugachev could be compelled to go further than the disclosure of his interests under the Trusts Specifically was it within the jurisdiction of the Court to compel Mr Pugachev to disclose information about the Trusts Trustees and assets of the Trusts (ldquoTrust Assetsrdquo) more generally notwithstanding the fact that it was unclear at the time if Mr Pugachev was legally or beneficially entitled to the Trust Assets and therefore it was unclear if they could be subject to execution under the Freezing Order

The Court of Appeal held that - in principle - the High Court did indeed have authority to make the Disclosure Order under the English Civil Procedure Rules (ldquoCPRrdquo) and established case law CPR 251(1)(g) empowers the Courts to make ldquoan order directing a party to provide information about relevant property assets which are or may be the subject of an application for a freezing injunctionrdquo and in AJ Bekhor v Bilton it was held that the Court could make any ancillary orders it deemed necessary in order to give effect to a freezing order including ordering disclosure of information relating to assets only potentially subject to the freezing order

The Court of Appeal rejected Mr Pugachev and the Trusteesrsquo submission that the thresholds which must be satisfied for freezing orders and disclosure orders are the same It is sufficient in the context of disclosure orders to satisfy the Court that there is credible evidence that an application might in due course be made to freeze the trust assets If credible evidence is presented to the Court it is within its jurisdiction to require disclosure of information about that trust

On the facts and based on the evidence submitted by the claimants as to their suspicions that Mr Pugachev was in effective control of the Trust Assets the Court held that the threshold was satisfied and the High Court had not erred in deciding that it had jurisdiction to make the Disclosure Order

In making its decision the Court of Appeal differentiated between Mr Pugachevrsquos interests in the Trust Assets (which were within the scope of the Freezing Order) and the underlying Trust Assets It noted that ldquo the Bank does not ask that the [T]rust [A]ssets be brought within the scope of the Freezing [Order] immediately It asks for the opportunity to test its assertion that Mr Pugachev is the effective owner of those [Trust A]ssets against his (and the [T]rusteesrsquo) assertion that he is not If its assertion is correct it may then be in a position to apply for the scope of the Freezing [Order] to be widenedrdquo

Importantly the Court of Appeal stressed that the High Court had only compelled Mr Pugachev to make these disclosures (as he was bound by the terms of the Freezing Order) and had not imposed any additional disclosure obligations on the Trustees

Comment While it remains to be seen how Courts in offshore jurisdictions will apply this decision the Court of Appeal has nonetheless clarified the extent of its jurisdiction in an area which has underpinned a number of significant previous cases In particular the Court of Appeal has confirmed that it considers its jurisdiction with respect to applications for freezing orders as consistent with its jurisdiction to order a beneficiary to disclose information about their trusts in matrimonial cases

Any decision such as this that enables the Courts to prevent trusts from being used as a vehicle for fraud is to be welcomed Indeed this case confirms that the English Courts will ordinarily in appropriate cases promote the need for transparency above the need for confidentiality

September 2015

United States | Case Summaries | 23

United States US Tax Court issues important decision on investor control over variable life insurance policy assets By Marnin Michaels Devan Patrick and Lyubomir Georgiev (Zurich)

On 30 June 2015 the US Tax Court issued Webber v Commissioner 144 TC no 17 an important decision applying the ldquoinvestor controlrdquo doctrine to two non-US private placement life insurance (ldquoPPLIrdquo) policies Although the Tax Court decided the case on extreme facts raised in the case the decision highlights the significance of the investor control doctrine in insurance planning for high net worth individuals and indicates that the investor control doctrine is an area of scrutiny by the IRS As illustrated by the courtrsquos decision in Webber policyholders insurers and investment managers should each critically examine both the governing contractual language and their course of conduct when administering insurance policies and investing assets backing policies

Background The policyholder in Webber established a ldquograntor trustrdquo that purchased two PPLI policies on the lives of two of the policyholderrsquos relatives The policyholder was a venture capital investor and private equity fund manager The policies at issue in Webber otherwise met the statutory definition of ldquolife insurance contractrdquo under US tax law Premiums paid for each policy were placed into separate accounts benefitting the policies

The policyholder selected an investment manager to manage the separate accounts for each policy The terms and conditions of the policies stated that only the investment manager could direct investments The policyholder had no contractual right to require the insurance carrier to acquire any particular investment for a separate account The policyholder however could provide ldquogeneral investment objectives and guidelinesrdquo to the investment manager and was permitted to offer specific investment recommendations to the investment manager However the investment manager was free to ignore such recommendations

The policyholder relayed investment directives to the investment manager of the separate account through his personal attorney and accountant Over the term of the policy the separate accounts held several investments and the policyholder cited only three instances when the investment manager declined to follow the policyholderrsquos investment recommendations The Tax Court questioned whether the policyholder was the motivating factor behind even those three instances The investments comprising the separate accounts were startup companies with which the policyholder was familiar through the funds he managed outside of the policy Moreover for most of the companies in which the separate accounts invested the policyholder either sat on the board of the company andor invested in the company through his personal account IRAs andor the private equity funds he managed

Regarding the assets held in the separate accounts the Tax Court found that the investment manager took no independent initiative and considered no investments other than those indirectly proposed by the policyholder The policyholder admitted that the investment manager could not have obtained access to any of those investment opportunities except through him Although nearly 100 percent of the investments in the separate accounts consisted of non-publicly-traded securities the policyholder provided no indication that the insurance company or investment manager engaged in independent research or meaningful due diligence with respect to any of the policyholderrsquos investment directives In fact the Tax Court found that the policyholder commonly negotiated a deal directly with a third party then ldquorecommendedrdquo that the investment manager implement the deal he had already negotiated At times the policyholder did so against the advice of legal counsel Through his agentsrsquo directives to the investment manager the policyholder

invested in startup companies in which he was already interested


24 | United States | Case Summaries

lent money to those ventures

sold securities from his personal account to the policiesrsquo separate accounts

purchased securities in later rounds of financing and

assigned to the separate accounts companiesrsquo rights to purchase shares that he would otherwise have purchased himself

Further the Tax Court held that the policyholder dictated what actions were taken with respect to ongoing investments held in the separate accounts The Tax Court found that the investment manager took no action without signoff from the policyholderrsquos agents which they generally provided by telephone These included

deciding how the investment manager would vote shares held in the separate accounts

responding to capital calls and

deciding whether to participate in bridge funding whether to take a pro-rata share in series D financing and whether to convert promissory notes held in the separate accounts to equity

The policyholder through his control over the separate accounts was also able to extract cash for his personal use without surrendering the policy or without resorting to using it as collateral for a loan For example the petitioner apparently sold assets to the separate accounts directly Through his indirect investment directives the policyholder also caused the separate accounts to lend money to a corporation he owned and sold promissory notes to the separate accounts Finally by following his investment recommendations the separate account financed investments such as a winery resort and hunting lodge which were allegedly for the policyholderrsquos personal use

Holding The Tax Court found that the policyholder retained significant incidents of ownership over the assets in the separate accounts Accordingly the dividends interest capital gains and other income received by the separate accounts during the tax years at issue were taxable to the policyholder However the policyholder was not held liable for accuracy related penalties of 20 percent of the income tax due because he reasonably relied on the advice of legal counsel when investing in and administering the insurance policies

In reaching its conclusion the Tax Court in Webber stated that a policyholder violates the investor control doctrinemdashand will be considered the owner of the assets in a separate account underlying a variable life insurance policymdashif he has sufficient ldquoincidents of ownershiprdquo over the assets in the separate account The Tax Court focused its ownership analysis on the policyholderrsquos power to decide what specific investments will be purchased sold exchanged or otherwise held in the separate account Other ldquoincidents of ownershiprdquo include

the power to vote securities held in the separate account

the power to exercise other rights or options relative to those investments

the power to extract money from the separate account by withdrawal or otherwise and

the power to derive ldquoeffective benefitrdquo from the separate account assets

Applying this analysis the Tax Court found that the policyholder in Webber exercised sufficient control over the assets in the separate accounts to warrant inclusion of the policy assets in the policyholderrsquos current taxable income for the tax years at issue Even though the policy contract purported to give the

September 2015


investment manager absolute discretion over the assets held in the separate accounts the Tax Court found that this restriction was disregarded in practice

What it means First not only will the IRS (and the courts) scrutinize the contractual language of a policy but also how the policy is administered in practice The Tax Court in Webber looked to both the substance of the agreement but also the partiesrsquo actual conduct This highlights the importance that policyholders investment managers and insurers should provide strong contractual language regarding the investor control doctrine and also administer policies in a way which respects these contractual obligations

Second indirect communication with an investment manager via an intermediary is sufficient to raise investor control issues The Tax Court found that even though the policyholder in Webber may not have directly communicated with the investment manager he nonetheless exercised an impermissible amount of control over investment of the assets in the separate account

Third the Tax Court applied the investor control doctrine to non-US PPLI Although this has been the view of the IRS before Webber is a recent application of this doctrine in this context

Finally in making its determination on the issue of whether the policyholder exercised sufficient control over the assets in the policy the Tax Court afforded great deference to IRS revenue rulings regarding the investor control doctrine under applicable administrative review The Tax Court in Webber repeatedly and explicitly referred to prior revenue rulings establishing and interpreting the investor control doctrine

Steps to take We recommend that there is

A review and potentially a revision of previously-issued policies

A prospective review amendment and drafting of private placement life insurance products by insurance carriers

A policy review and amendment of life insurance and annuity contract products by potential policyholders rsquo


26 | Argentina | Legal Developments

Legal Developments Argentina Extension of the amnesty program for the disclosure of unreported foreign currency By Martiacuten Barreiro and Juan Pablo Menna (Buenos Aires)

Executive Order No 12322015 (the ldquoExecutive Orderrdquo) was published in the Official Gazette on 1 July 2015 It extends for a three-calendar month period until 30 September 2015 the possibility of adhering to the benefit granted by Law No 26860 which authorizes individuals or corporations to regularize foreign currency not previously reported with AFIP-DGI

Remember that Law No 26860 established an Amnesty Program for the Disclosure of Unreported Foreign Currency (the ldquoRegimerdquo) in Argentina and abroad authorizing the issuance of the following financial instruments known as ldquoBono Argentino de Ahorro para el Desarrollo Econoacutemicordquo (Argentine Savings Bond Regime for Economic Development) (ldquoBAADErdquo ndash by its acronym in Spanish) ldquoPagareacute de Ahorro para el Desarrollo Econoacutemicordquo (Savings Note for the Economic Development) (ldquoPAPDErdquo ndash by its acronym in Spanish) and the ldquoCertificado de Depoacutesito para Inversioacutenrdquo (Certificate of Deposit for Investment) (ldquoCEDINrdquo- by its acronym in Spanish)

The benefits to be granted by the Regime are subject to the condition that the externalized foreign currency amount be allocated to purchase any of the financial instruments created by the Regime

I BAADE PAPDE

The Regime authorizes the Argentine Ministry of the Economy and Public Finance to issue the BAADE and PAPDE in US dollars under the financial conditions to be determined at the time of their issue The funds generated by it shall be used to finance public investment projects in strategic sectors such as infrastructure and hydrocarbons

II CEDIN

The Regime authorizes the Banco Central de la Repuacuteblica Argentina (Argentine Central Bank) (the ldquoBCRArdquo) to issue the CEDIN in US dollars and shall be a registered endorsable instrument qualified to pay debts in US dollars

CEDIN subscription may be processed at the banks listed in the Ley de Entidades Financieras (Financial Entities Law) The certificate shall be cancelled in US dollars only after having verified that it has been allocated to purchase pieces of land storehouseswarehouses business premises offices garages plots and parcels of land and dwelling houses already existing andor to build new dwelling units andor to the refurbishment of buildings

III Beneficiaries Exclusions

Individuals undivided estates of deceased persons corporations and trusts where the trustor (or settlor) is also the beneficiary (excluding financial trusts and trusts in which the trustor-beneficiary is not an Argentine resident for tax purposes) may be eligible to voluntarily externalizing foreign currency holdings in the country and abroad

Externalization shall include foreign currency holdings in Argentina and abroad as of 30 April 2013 Holdings of foreign currency in the country and abroad resulting from the proceeds of assets existing as 30 April 2013 will also be included within the scope of the Regime

September 2015

Argentina | Legal Developments | 27

The following individuals are excluded from the scope of the Regime

a) Bankrupts not discharged

b) Those criminally prosecuted or accused under the Criminal Tax Law

c) Those formally arraigned or criminally prosecuted for minor offenses for having infringed their tax obligations or the obligations of third parties that were subject to final judgment rendered prior to the effective date of the Regime

d) Those accused of having committed money laundering or terrorism financing crimes their spouses and relatives up to the second degree of consanguinity or affinity

e) Corporations the directors of which have been formally arraigned or criminally prosecuted under the Tax Criminal Law and for minor offenses related to the infringement of their tax obligations or the tax obligations of third parties

f) Those who hold or have held a public office their spouses and relatives up to the second degree of consanguinity or affinity in any branch of the national provincial municipal government or the City of Buenos Aires

IV Procedure to implement the disclosure

The benefits to be granted under the Regime are subject to the condition that the externalized foreign currency amount be allocated to purchase any of the financial instruments created by the Regime

The externalization shall be implemented by the deposit or transfer of funds from foreign countries to those entities listed in the Ley de Entidades Financieras (Financial Entities Law)

In order to enjoy the benefits granted by the Regime taxpayers must have previously complied with the filing and payment of the relevant income tax minimum presumed income tax and tax on personal assets no later than May 31 2013 corresponding to the fiscal years ended as of 31 December 2012

Moreover those taxpayers that decide to avail themselves of those benefits under the Regime shall previously waive promotion of any procedure based on Executive Order No 1043-1003 (application of the convergence factor to foreign trade transactions) or to demand the implementation of any kind of updating procedures

V Benefits

The underlying benefits are as follows

a) They shall not be bound to report to the Administracioacuten Federal de Ingresos Puacuteblicos (Federal Tax Authority (ldquoAFIPrdquo) either the date of purchase of the assets that are externalized or the origin of the funds with which they were acquired

b) Externalized assets are exempt from Income Tax Value Added Tax as Unreported Income

c) They are released from any civil commercial criminal tax administrative and professional actions or proceedings that may correspond to those held liable for violations or infringements punished by the Regime and those that may derive therefrom The following individuals shall also be exempt therefrom namely managing partners and managers of partnerships directors managers statutory auditors and members of supervisory committees of sociedades anoacutenimas (stock corporations) and sociedades en comandita por acciones (partnerships limited by shares) and those holding equivalent positions at cooperatives trusts and mutual investment funds and any professionals certifying the respective balance sheets


28 | Australia | Legal Developments

d) Exemption from the payment of Income Tax Tax on Transfers of Title to Real Property of Individuals or Undivided Estates of Deceased Persons and Taxes on Credits and Debits on Bank Accounts Excises and Value Added Tax Minimum Presumed Income Tax and Tax on Personal Assets and the Special Contribution on the Capital of Cooperatives Tax on Credits and Debits on Bank Accounts and Other Transactions with regard to the taxable amount of the relevant tax and

e) The AFIP shall be not be bound to file any criminal charges for offenses under the Criminal Tax Law and the BCRA shall not be bound to bring summary proceedings for infringement of exchange regulations andor file any criminal charges in respect of offenses under the Criminal Exchange Regime to those individuals adhering to the Regime

The Regime shall not release financial institutions or other individuals liable for obligations associated with legislation aimed at preventing money laundering financing of terrorism or other crimes under special laws

VI Ongoing Statute of Limitations

Periods of limitation are suspended for 1 year of any action brought to assess or demand the payment of taxes and to apply any fines related to them and tax foreclosure proceedings are also discontinued for that period of time

Australia OTC derivatives draft rules and regulations released Central clearing and single-sided trade reporting By Astrid Raetze and Mitchell Thorp (Sydney)

The Treasury and ASIC recently released the draft rules and regulations in relation to single-sided reporting relief and central clearing requirements The drafts that have been released are

Corporations Amendment (Central Clearing and Single-Sided Reporting) Regulation 2015 (link httpbitly1i10WBF)

Corporations (Derivatives) Amendment Determination 2015 (No 1) (link httpbitly1KjxX71) and

ASIC Derivative Transaction Rules (Clearing) 2015 (link httpbitly1Jv6B92)

These new draft rules and regulations represent an important development in Australialsquos implementation of G20 derivatives reforms Clients (and in particular Phase 3B reporting entities) should ensure they are familiar with the amendments introduced by these draft rules and the effect they will have on their OTC derivative reporting and clearing obligations

Single-sided reporting

Background to the OTC derivatives trade reporting rules In July 2013 ASIC published the ASIC Derivative Transaction Rules (Reporting) 2013 (the Rules) as part of Australialsquos implementation of G20 derivatives reforms The Rules require both sides of an OTC derivative transaction to report (known as double-sided reporting) information about the transaction to a prescribed trade repository

September 2015

Australia | Legal Developments | 29

In December 2014 the Assistant Treasurer announced that Phase 3B entities would not be required to comply with these reporting obligations provided that the relevant counterparty to the transaction was either required to the report the trade themselves or had agreed to do so The draft Corporations Amendment (Central Clearing and Single-Sided Reporting) Regulation 2015 proposes to implement this relief

What is single-sided reporting Under single-sided reporting only one side of an OTC derivative transaction is required to report This helps reduce the regulatory burden on parties with lower levels of OTC derivatives transactions while still ensuring regulators have access to the relevant information concerning the transaction

Who will qualify for single-sided reporting Generally speaking Phase 3B entities will be able to take the benefit of the single-sided reporting provisions Notably however the draft regulations do not actually use the term bdquoPhase 3B entityldquo but instead refer to bdquoPhase 3ldquo entities If a Phase 3 entity has less than AUD5 billion gross notional OTC derivatives positions outstanding at the end of a calendar quarter for two successive calendar quarters then it will qualify for the relief (in this way the draft regulations adopt the same definition of a Phase 3B entity as used in the relevant ASIC class order but create a mechanism for re-valuing and potentially re-classifying an entity on an ongoing basis rather than taking the value of their positions as at 30 June 2014 in accordance with the class order definition)

Importantly this means that if a Phase 3B entitylsquos positions exceed AUD5 billion for two successive calendar quarters it will be re-classified as a Phase 3A entity and the double-sided reporting regime will apply The reverse is also true meaning that a Phase 3A entity can become a Phase 3B entity if it falls beneath the AUD5 billion threshold for two successive calendar quarters

Which transactions are exempted If the relief does apply a Phase 3 entity will not have to report transactions where the counterparty is either required to report themselves or otherwise agrees to do so or is a foreign entity reporting under an equivalent reporting regime and tags the transaction as being reportable to ASIC

This means that when the transaction is between two entities who both qualify for the single-sided relief counterparties will need to determine who among them will comply with the reporting obligations

Expansion of end-user exemption In addition the draft regulations include a new provision which exempts entities who would ordinarily be classified as end-users (and therefore exempt from the reporting requirements altogether) but for the fact that they hold an Australian financial services license in certain circumstances The effect of this draft regulation is that such entities can only be required to comply with the Rules with respect to derivatives for which they are explicitly authorized to provide financial services under the terms of their AFSL While the intention of this change is to ensure that licensees whose AFSL only covers one or more specific types of derivatives are not required to comply with reporting requirements with respect to other types of derivatives it appears to have the effect of exempting all AFSL holders who would otherwise be classified as end-users from reporting obligations where their AFSL has no derivatives authorization at all This represents quite a significant broadening of the end-user exemption

Other important considerations The draft regulations set out provisions that will apply in the event the single-sided exemption stops applying to a Phase 3 entity In these circumstances the entity is required to report relevant derivative position information as at the exemption end time within six months after the exemption end time If it fails to meet this requirement the exemption is taken never to have applied to the entity As such it is



critical for OTC derivative counterparties to constantly monitor their total exposures and stay abreast of their potential reporting requirements particularly if their gross notional outstanding is hovering around the AUD5 billion mark

Finally the draft regulations also include some clarity as to how the proposed amendments will apply to responsible entities of registered schemes and trustees of a trust when they enter into or hold OTC derivatives transactions and positions on behalf of the registered schemes or trusts rather than for their own account - essentially these entities will need to report on a per trustfund basis

Central clearing The second key feature of the new draft rules and regulations is the introduction of mandatory clearing for certain classes of derivatives This reform also represents the implementation of an important G20 commitment and is due to commence on 7 March 2016 (with the first two relevant calculation dates being 30 September 2015 and 31 December 2015)

Which types of derivatives need to be cleared The draft regulations apply only to interest rate derivatives denominated in AUD EUR GBP JPY and USD and the requirements will only be applicable to basis swaps fixed-to-floating swaps overnight index swaps or forward rate agreements which meet certain specifications and do not include optionality payments in other currencies or conditional notional amounts and are not entered into on a regulated market It is proposed that the ASIC central clearing transactions rules will specify further types of derivatives in the future

Who will be required to clear these derivatives Only the following entities will be caught by the central clearing requirements

Australian clearing entities Australian ADIs or AFSL holders either of which holds AUD100 billion or more of total gross notional outstanding OTC derivatives for two or more consecutive quarters and

Foreign clearing entities foreign ADIs or AFSL holders or other overseas-regulated foreign entities which provide derivatives to wholesale clients are carrying on a business in Australia and which hold in excess of AUD100 billion total gross notional outstanding OTC derivatives for two or more consecutive quarters

It is intended that these definitions will capture only the major domestic and foreign banks active in the Australian OTC derivatives market Smaller financial entities and end users will be unaffected In addition market participants can choose to opt-in and comply with the requirements

Will these entities need to clear all of their transactions The amendments propose that only those transactions entered into between two entities subject to the Australian clearing obligations or between one such entity and a foreign internationally active dealer (an entity which is or will be registered as a swap dealer with the US CFTC or a securities-based swap dealer with the US SEC) will be subject to clearing requirements This means that transactions with smaller financial institutions or end users who are not subject to the clearing requirements will not have to be cleared Transactions between two foreign entities will only be caught if there is some jurisdictional nexus to Australia (for example the transaction is entered into within Australia or booked in Australia)

When does a transaction need to be cleared The draft rules provide that clearing must take place as soon as practicable after the transaction is entered into and in any event within one business day (Sydney time)

September 2015

Belgium | Legal Developments | 31

Where does the clearing need to take place Central clearing can occur through all central counterparties licensed in Australia or through a clearing house that has been prescribed by the regulations The intention behind this provision is to provide some flexibility with respect to overseas central counterparties that are not required to be licensed in Australia but through which Australian dealers may wish to clear

Conclusion The rules and regulations that have been released by Treasury and ASIC are only draft versions - comment is being sought from the public and it is possible that further changes will be made before the rules and regulations are finalized It is important that market participants understand and evaluate the likely effect of these proposed rules on their businesses

Belgium New ldquoCayman Taxrdquo published By Alain Huyghe and Matthias Doornaert (Brussels)

In 2013 the previous Belgian government introduced a new reporting obligation for individual founders and beneficiaries of so-called ldquolegal arrangementsrdquo (ie trusts foundations and certain tax haven companies) At the same time the previous government also internally discussed a draft bill seeking to further discourage the use of such legal arrangements for tax purposes by introducing a regime of tax transparency This bill was eventually not submitted to Parliament

On 9 October 2014 the new Belgian federal government announced in its coalition agreement for the coming term its intention to introduce a regime of tax transparency for the income of trusts and other foreign legal arrangements (the so-called ldquoCayman Taxrdquo) The draft bill containing the Cayman Tax was approved by Parliament on 24 July 2015 and the final bill of 10 August 2015 (the ldquoBillrdquo) was published in the Belgian official Gazette on 18 August 2015

The Cayman Tax is similar to the tax transparency regime provided for in the previous draft bill Under the Cayman Tax income received by a legal arrangement will generally be taxed either in the hands of its individual Belgian resident founders (in the absence of any distribution) or upon distribution in the hands of Belgian resident beneficiaries Moreover distributions made upon liquidation of certain legal arrangements (legal entities) will also be treated as a taxable dividend

The Cayman Tax and consequently the aforementioned reporting obligation will also apply to Belgian not-for-profit entities acting as founder or beneficiary of legal arrangements The Cayman Tax will not apply to Belgian resident companies acting as such

The Bill provides that the Cayman Tax will apply to income received attributed or made payable by legal arrangements as of 1 January 2015 so with a retroactive effect

Targeted ldquolegal arrangementsrdquo The Bill provides for two types of legal arrangements

(i) Trusts

(ii) Foreign legal entities (ie foundations and companies) which are either not subject to an income tax or are subject to an income tax that represents less than 15 percent of their taxable income as determined under Belgian tax law

Foreign legal entities established in the European Economic Area (EEA) will not be regarded as ldquolegal arrangementsrdquo unless they are included in a list of legal arrangements which is yet to be published A second (non-exhaustive) list also to be published would contain entities established outside the EEA that are deemed to


32 | Belgium | Legal Developments

be legal arrangements (unless it can be proven that they are subject to an effective income tax rate of 15 percent as indicated above) It is likely that many of the foreign entities that are included in the current black list for reporting purposes will be included again in the new lists

Public and institutional undertakings for collective investment and pension funds as well as listed companies will not be viewed as legal arrangements under certain conditions

Moreover a foreign trust or legal entity will not be considered a legal arrangement if it can be proven that (i) it carries out genuine economic activities in connection with the exercise of a business activity at the place where it is established or where it has a permanent establishment and (ii) there is a proportionate correlation between the activities carried on by it and the extent to which it physically exists in terms of premises staff and equipment

This counterproof will only be possible for legal arrangements that are established in the EEA or in a country that pursuant to a tax treaty agreement or other bilateral or multilateral legal instrument can exchange with Belgium information relating to tax matters The explanatory statement on the Bill notes that this exception will not apply to activities that fit in the management of a private estate

Targeted Belgian taxpayers The Cayman Tax will apply to Belgian resident ldquofoundersrdquo and ldquothird party beneficiariesrdquo

A ldquofounderrdquo is defined as any of the following

Any individual or Belgian not-for-profit entity who has set up the legal arrangement or has settled assets and rights therein

Upon death of the aforementioned individual founders their direct or indirect heirs or the individuals who will directly or indirectly inherit from the latter unless they or their heirs can demonstrate that they will never obtain any benefit from the legal arrangement

A third-party beneficiary is any Belgian resident individual or not-for-profit entity that receives at any time or in any way a financial benefit or a benefit in kind from a legal arrangement

An individual can qualify both as a founder and as a third-party beneficiary

Tax transparency in respect of income received by legal arrangements The Bill provides for a tax fiction pursuant to which Belgian resident founders of legal arrangements will be deemed for Belgian tax purposes the beneficiaries of the income received by such legal arrangements and therefore will become taxable thereon

Founders will not be taxable based on the income of their legal arrangements if they can prove that such income has been paid to a third-party beneficiary that is resident in a country that pursuant to a tax treaty agreement or other bilateral or multilateral legal instrument can exchange with Belgium information relating to tax matters

Individuals (other than the initial founder) who can demonstrate that they will never obtain any benefit from the legal arrangement will not be deemed as founders According to the explanatory statement on the Bill individuals can prove this by (i) renouncing any benefit from a legal arrangement to which they may be entitled and (ii) providing a letter from the relevant body of the legal arrangement that confirms that the individual can never obtain any benefit from such legal arrangement

Tax treatment of income distributed by legal arrangements (other than upon liquidation) The Cayman Tax also provides for a tax fiction at the level of a third-party beneficiary who is resident in Belgium When income received by a legal arrangement is distributed in the same year to said third-party beneficiary the latter will be deemed the beneficiary of such income for Belgian tax purposes and will become taxable thereon

September 2015


On the basis of the explanatory statement to the Bill the following distinction can be made with respect to distributions by legal arrangements to third party beneficiaries resident in Belgium

(i) Distributions by foreign companies (other than upon liquidation)

Dividend distributions by foreign companies are currently already taxable at the level of Belgian shareholders at 25 percent (normally 27 percent as of 1 January 2017) Under the Cayman Tax dividend distributions from current year earnings and from earnings accumulated during prior years to third party beneficiaries would remain taxable at the level of third party beneficiaries unless the income that is distributed has already been subject to the application of the tax transparency regime in Belgium

(ii) Distributions by trusts (other than upon liquidation)

Under the new tax fiction distributions by a trust would only be taxable at the level of third party beneficiaries to the extent they relate to income which the trust has received in the same year Distributions of earnings accumulated during prior years to third party beneficiaries would not be taxable on the basis of the explanatory statement to the Bill

(iii) Distributions by foundations (other than upon liquidation)

The same tax treatment applicable to distributions by trusts should arguably apply to distributions by foundations as the latter are not companies and can in principle not distribute dividends However the Bill and its explanatory statement are not clear in this respect

Liquidation of legal arrangements Distributions made by a foreign legal entity that qualifies as a legal arrangement as a result of its liquidation or the total or partial transfer of its assets for which no equivalent consideration is received will be considered a taxable dividend for the part that exceeds the amount of contributed assets that have been subject to their tax regime in Belgium The exact meaning of ldquohaving been subject to their tax regime Belgiumrdquo is not yet entirely clear

According to the explanatory statement on the Bill the abovementioned taxation would also apply in case of a transfer of seat of a legal entity However there seems to be no legal basis for such taxation in the law as the relevant holder does not receive any payment and he continues to hold the rights in the entity whose legal seat has been transferred

On the basis of the explanatory statement to the Bill the following distinction can be made with respect to distributions by legal arrangements upon liquidation to third party beneficiaries resident in Belgium

(i) Distributions by foreign companies and foundations upon liquidation

Currently the liquidation bonus (ie the liquidation proceeds exceeding the paid-up capital) distributed by foreign companies is already taxable at the level of Belgian shareholders at 25 percent (normally 27 percent as of 1 January 2017)

Under the Cayman Tax distributions from earnings accumulated during prior years (prior to the entry into force of the Cayman Tax) will remain subject to tax upon liquidation Note that this tax will apply not only in case of liquidation of foreign companies but also in case of liquidation of foreign foundations

(ii) Distributions by trusts upon liquidation

Surprisingly distributions made by a trust upon its liquidation would not be considered taxable In other words trusts would be able to distribute their income accumulated prior to the entry into force of the Cayman Tax without taxation

Accordingly the main difference between a trust and a foreign legal entity (companies and foundations) qualifying as a legal arrangement is that upon liquidation of the latter the distribution of income accumulated in the years prior to the entry into force of the Cayman Tax is taxable whereas upon liquidation of a trust the distribution of such income seems not to be taxable according to the Bill and the examples provided in the explanatory statement thereto



Often a trust will hold its assets through a company which may also qualify as a legal arrangement for purposes for the Cayman Tax The distribution of the shares of such underlying company should not be a taxable event under the Cayman Tax However the subsequent liquidation of the underlying company and the distribution of its liquidation proceeds will normally be taxable at the level of a Belgian shareholder (whether or not the underlying company qualifies as a legal arrangement)

Anti-abuse provisions and entry into force The Bill provides for a specific anti-abuse provision pursuant to which tax authorities would be entitled to disregard legal acts of foreign legal entities qualifying as legal arrangements which are aimed at circumventing the Cayman Tax Moreover it is provided that any change to the deed of incorporation of a foreign legal entity (legal arrangement) in order to convert it into a trust to escape the taxation upon liquidation of the latter is not binding upon the tax authorities

In the absence of any possibility for taxpayers to provide counterproof that the transaction is driven by a valid economic or other motive (other than avoiding the application of the Cayman Tax) the legal validity of this specific anti-abuse provision seems disputable

The Bill also provides that any changes to the deed of incorporation of a trust in order to convert it into a legal entity (legal arrangement) as of 9 October 2014 is not binding upon the tax authorities

Learnings As of 1 January 2015 Belgian residents that can be considered founders of foreign trusts foundations and tax haven companies will become subject to a tax transparency regime This means that as of 1 January 2015 they will be considered the direct beneficiaries of income received by such legal arrangements for Belgian tax purposes and thus will become taxable thereon even if such income is not distributed by the legal arrangement to the beneficiary

Many legal arrangements such as trusts and foundations hold their investments through underlying companies If these underlying companies could also be considered as legal arrangements the Belgian resident founders could be considered the owners of the investments held by the underlying companies and thus could be taxed on the income received thereon irrespective of whether they would receive such income from the legal arrangement or not

Recommended actions Different scenarios could be considered to alleviate the tax burden that Belgian resident founders may encounter as a result of the proposed tax transparency rules For instance one could consider having legal arrangements holding types of investments whose income is typically exempt from Belgian income tax under certain conditions (eg capital gains realized on shares or on certain accumulation UCITS investing not more than 25 percent in debt instruments) instead of investments whose income is taxable according to Belgian law In such case the tax transparency regime would not have adverse tax consequences for Belgian resident founders

Moreover liquidation of trusts with Belgian resident founders or beneficiaries may also be considered as its accumulated income seems not to be taxable in Belgium upon distribution to such Belgian residents under the Bill and its explanatory statement In this respect it should also be taken into account whether the trust holds any companies and what the impact would be of the Cayman Tax on the distribution thereof

More generally taxpayers are recommended to evaluate the use of foreign structures qualifying as legal arrangements in light of this change in tax treatment

September 2015

China | Legal Developments | 35

China Withholding tax treatment for China-sourced interest received by Chinese banksrsquo foreign branches clarified By Jinghua Liu (Beijing)

On 19 June 2015 the SAT issued SAT [2015] No 47 (ldquoBulletin 47rdquo) to clarify the withholding tax treatment for China-sourced interest received by foreign branches of Chinese banks Bulletin 47 took effect from 19 July 2015

Background As background interest paid by a domestic enterprise is China-sourced income Previously according to Article 2 of Guo Shui Han [2008] No 955 (ldquoNotice 955rdquo) interest paid by a domestic enterprise to a Chinese bankrsquos foreign branch was subject to a 10 percent withholding tax This provision has long been criticized for creating double taxation on China-sourced interest income received by a Chinese bankrsquos foreign branch because this interest income is also taxed as part of the Chinese bankrsquos worldwide income with no foreign tax credits available for the Chinese withholding tax paid

No withholding tax on interest paid to a Chinese bankrsquos foreign branch Bulletin 47 has finally repealed Article 2 of Notice 955 and clarified that interest paid by a domestic enterprise to a Chinese bankrsquos foreign branch is not subject to Chinese withholding tax unless the foreign branch has separate legal person status from the Chinese parent bank in the foreign jurisdiction where the branch is established Instead the interest income received by the Chinese bankrsquos foreign branch will be taxed as part of the Chinese bankrsquos worldwide income

Observations Bulletin 47 eliminates double taxation on China-sourced interest received by a Chinese bankrsquos foreign branch Bulletin 47 also clarifies that if the interest is incurred on the debt-claim of a non-resident enterprise and the Chinese bankrsquos foreign branch is collecting the interest on the non-residentrsquos behalf such interest should be subject to 10 percent withholding tax unless otherwise reduced under tax treaties

Germany Update on the draft bill on changing the German Inheritance and Gift Tax Act By Sonja Klein and Ludmilla Maurer (Frankfurt)

As outlined in the last edition of this Newsletter on 2 June 2015 the Federal Ministry of Finance introduced a draft bill on changing the provisions of German Inheritance and Gift Tax Act (ldquoIGTArdquo) with respect to business assets following the Federal Constitutional Decision which held the former rules as being unconstitutional Already on 8 July 2015 the German Federal Cabinet decided on the government draft bill selectively amending the initial draft bill

Since the concept of privileging the transfer of small and medium-sized family businesses in order to preserve these businesses and the jobs offered by them was accepted the initial draft bill focused on amending only the objectionable provisions The government draft bill retains this system and makes only selective amendments to the initial draft bill


36 | Germany | Legal Developments

Relief from the aggregated labor costs requirement Already the initial draft bill provided that for businesses with up to 3 employees (formerly up to 20 employees) the required labor cost level shall still not apply For businesses with 4 to 10 employees the standard level shall be reduced from 400 percent to 250 percent for the five-year term and from 700 percent to 500 percent for the seven-year term However for businesses with more than 10 employees the initial draft bill provided that the current standard levels of 400 percent and 700 percent shall respectively apply

The amended draft bill provides for an additional range For businesses with more than 10 up to 15 employees the standard level shall be reduced to 300 percent for the five-year term and to 565 percent for the seven-year term and only for businesses with more than 15 employees the current standard levels shall apply

Definition of privileged business assets Under the initial draft bill only such assets shall be privileged of which the main purpose is to predominately serve the business operation The same applies in relation to assets serving self-entrepreneurial or agricultural operations The amended draft bill changed slightly the wording of the definition of privileged business assets apparently to make clear that not the main purpose of the business itself but of the individual assets is decisive However the wording of the whole provision is still not consistent and requires further amendments This new definition of privileged business assets no longer leaves any room for designing privileged structures with extensive non-operational assets as happened in the past with respect to so-called Cash-GmbHs

Introduction of a financial needs test for such privilege The initial draft bill provided that the tax privilege is fully available for transfers of privileged business assets up to EUR20 million over a period of 10 years to one single beneficiary This threshold has been increased to EUR26 million Furthermore the initial draft bill provided for another threshold of EUR40 million if specific restrictions apply pursuant to corporate by-laws eg transfers are only allowed to family members no distribution rights This threshold has also been increased to EUR52 million For received business assets which exceed the applicable threshold a financial needs test can be performed upon the beneficiaryrsquos request Alternatively the beneficiary may opt for applying a reduced tax exemption rate The standard exemption rate of 85 percent (or 100 percent in the alternative option model) shall decline by 1 percent per EUR15 million privileged assets exceeding the threshold For transfers of more than EUR116 million (initially EUR110 million) a fixed exemption rate of 25 percent (standard case) or 40 percent (option case) respectively will apply

The new provisions will not apply retroactively but only to transfers occurring after the law has been enacted Since the Bundestag and Bundesrat must approve the draft bill it remains to be seen what further changes might be introduced

Reform of the taxation of fund investments By Sonja Klein and Ludmilla Maurer (Frankfurt)

The German Ministry of Finance presented its ldquodiscussion draft billrdquo (InvStG-E) for a comprehensive reform of the German Investment Tax Act on 21 July 2015 The reasons for adjusting the current German law are inter alia its potential infringement of EU-law and its high expenditure and administration effort The draft bill is based on a fundamentally new concept for the taxation of investment funds and their investors and shall apply to both investment funds (basically UCITS and AIFs as well as single investor funds) and their investors The limits and restrictions in the application scope under the current German Investment Tax Act are basically eliminated whereby previous catalogue of additional fiscal requirements remains relevant for special funds

September 2015

Germany | Legal Developments | 37

Taxation of mutual funds and their investors For the taxation of open-end funds (mutual funds) a completely new non-transparent system of taxation is planned which mostly builds on lump-sum methods and typecasts moreover it shows elements of a ldquotarget income taxrdquo on non-realized earnings Mutual funds are subject to German tax with all (and only with) German source income Income is determined as surplus of earnings over income-related expenses For income received by a mutual fund which is subject to German withholding tax a reduced withholding tax rate of 15 percent (including solidarity surcharge) shall apply At the same time the German corporate tax liability of the mutual fund on such income is discharged For income not subject to domestic withholding tax the regular corporate income taxation applies by way of tax assessment procedure at the German standard corporate income tax rate of 15825 percent (including solidarity surcharge) Mutual funds are exempt from German trade tax if they meet specific requirements

Investors in a German mutual fund shall be taxable with the following earnings from the fund (i) distributions by the investment fund (ii) advance lump-sum amounts and (iii) gains from the disposal of portfolio shares The advance lump-sum amount is a new type of income which is designated to avoid possible tax deferrals through retention of profits in non-transparent entities

Taxation of special funds and their investors For closed-end investment funds (special funds) the previous mostly transparent regime of taxation shall remain even though there will be considerable changes and rearrangements These include in particular an option for ldquotransparency taxationrdquo which is bound to give rise to further complexity

The number of investors of a special fund has to be limited to no more than 100 and may include private individuals In addition a special fund must meet eight specific conditions which have to be satisfied by all investment funds under current German investment tax law For the taxation of special funds basically the same rules apply as for mutual funds unless the special fund elects for certain options All German source income which is subject to German withholding tax (first of all dividend income) is tax exempt at the level of the special fund provided the fund irrevocably declares that the tax certificate shall be issued in favor of the investors (ldquotransparency optionrdquo) In case the transparency option is exercised the German regulations regarding tax deductions and tax credits are applicable as if the relevant income had accrued directly to the investor The remaining domestic income not being subject to German tax deduction is also exempt from German corporate tax at the level of the special fund provided the fund imposes withholding tax of 15 percent on distributed earnings distribution equivalent earnings and capital gains from the disposal of a fund unit Special funds are exempt from German trade tax even if they are subject to German corporate income tax

The investors in a special fund are subject to German taxation with respect to the following income from the fund (i) distributed earnings (ii) distribution equivalent earnings and (iii) gains from the disposal of fund units Several additional provisions determine the details for the taxation of these different categories including providing for certain tax exemptions and rules for crediting foreign taxes

Next steps According to the draft the new regulations shall basically apply from 1 January 2018 onwards It provides for grandfathering rules applicable to shares acquired by private investors through 31 December 2008 shall expire on 31 December 2017 If grandfathered shares are sold after 31 December 2017 a specific tax allowance of EUR100000 applies

The legislative draft bill is scheduled for release in September 2015 Since already the current draft is highly disputed further revisions are to be expected in the upcoming legislative procedure


38 | Mexico | Legal Developments

Mexico SAT will audit foreign accounts By Jorge Narvaez Hasfura Javier Ordontildeez and Lizette Tellez (Mexico)

As of September 2015 the IRS and the SAT will exchange information on an automatic basis regarding Mexicans that have accounts in US financial institutions Based on this information the SAT will initiate audits aimed at identifying if the funds and yields derived in said accounts have paid the corresponding income tax in Mexico Regularization alternatives are still available

Mexican Anti-Money Laundering Law By Jorge Narvaez Hasfura Javier Ordontildeez and Lizette Tellez (Mexico

The Financial Intelligence Unit and the SAT are undertaking detailed audits to various commercial and services sectors to verify the compliance of the obligations set forth in this Law Failure to comply with these obligations may lead to stiff fines We strongly recommend verifying if non-financial commercial activities are subject to the obligations established under this Law

Taiwan Legislature announces amendments to the Income Tax Act affecting capital gains tax in the sale of real property By David Liou Andrew Lee and Yung-Yu Tang (Taipei)

In order to curb elevated property prices in Taiwan the Legislature has passed amendments to the Income Tax Act imposing a capital gains tax of up to 45 percent on profits made on the sale of property Once the new capital gains tax takes effect on January 1 2016 a portion of the Specifically Selected Goods and Services Tax Act (Luxury Tax Act) which imposed the so called luxury tax on the sale of houses and land will be abolished However these amendments may affect the foreign investment of real property in Taiwan as much as they affect the decisions of domestic home buyers and investors to purchase or sell property

The following are some notable takeaways

1 Effective date

The amendments to the Income Tax Act will apply to (1) all properties purchased after 1 January 2016 and (2) property purchased on or after 2 January 2014 and held for no more than two years at the time of sale after 1 January 2016

2 Change in the basis of capital gains tax

Capital gains taxes will be calculated on the basis of the real market value (actual transaction price) of the housing and land instead of the current practice of separately calculating housing and land according to government-assessed property values which can often greatly undervalue the property

3 The new tax rates for individual owners

Beginning the effective date (1 January 2016) and subject to certain exemptions owners who are natural persons (Individual Owners) and sell their property within one year of purchase will be subject to a 45 percent capital gains tax Individual Owners who sell their property after

September 2015

Thailand | Legal Developments | 39

one year of purchase will be subject to a 35 percent tax For Individual Owners resident in Taiwan the tax rate falls to 20 percent if a property is sold between two and 10 years of ownership and falls further to 15 percent if they hold their properties for more than 10 years

4 End of the luxury tax on real property

The portion regarding sales of houses and land in the Luxury Tax Act which enacts a tax of 15 percent on the sales price of an owners second property that is sold within one year of purchase and a tax of 10 percent if sold between one and two years of purchase will be abolished

5 Effect on domestic companies

For Taiwan companies proceeds from the sale of property of Taiwan companies will be deemed as part of the corporate income and continue to be subject to a 17 percent corporate income tax

6 Effect on foreign companies with property in Taiwan

For foreign-headquartered companies with a Taiwan presence whether as a foreign branch or a registered office their rates of capital gains tax will be subject to the amendments in the Income Tax Act of a 45 percent tax for sales within one year and a flat 35 percent tax for sales of property held longer than one year The rate also applies to a direct or indirect share transfer transaction by such foreign companies with holdings in buildings and land in Taiwan exceeding 50 percent of its equity value

These amendments should affect the strategies of foreign companies that invest or plan to invest in real estate development in Taiwan The Luxury Tax Act provided a luxury tax exemption for developers (including foreign companies) for first time ownership transfers of their completed buildings to customers However the newly approved capital gains tax scheme does not provide the same exemption and further impose higher tax rates (35 percent to 45 percent) on foreign companies compared to that on domestic companies (17 percent) which aims to achieve the governments aim of to deter foreign investors from propping up property prices As a result foreign developers will have to carefully plan and structure their investments and development projects in Taiwan to cope with the implications of the amendment

Thailand Six actions to take before the Inheritance and Gift Taxes come into force By Kitipong Urapeepatanapong (Bangkok)

Inheritance and Gift Taxes will take effect from 1 February 2016 The Inheritance Tax Act BE 2558 (2015) and the Revenue Code Amendment Act (No 40) BE 2558 (2015) which amends the Thai Revenue Codersquos treatment of personal income tax on 1) gifts received either as maintenance or support based on a moral obligation or received as part of a ceremony or upon a traditional occasion and 2) income derived from gratuitous transfers of immovable property to legitimate children (ldquoGift Taxrdquo) were published in the Thai Royal Government Gazette on 5 August 2015 The Acts will come into force on 1 February 2016 representing 180 days from the publication date

Therefore during the period until 1 February 2016 income derived from the receipt of assets via inheritance or bequest remains exempt from personal income tax and is not subject to inheritance tax


40 | Thailand | Legal Developments

Furthermore subject to prescribed conditions under current law income derived from certain types of gratuitous transfers and gifts received from now until 1 February 2016 also still remains exempt from personal income tax

As such this period provides a window of opportunity for those contemplating estate and wealth management planning to execute their plans in a manner which considers the implications of these new regimes

Six actions to take before the Inheritance and Gift Taxes come into force As the Inheritance Tax Act and the Amendment Act will shortly come into effect within about six months from now it is important to consider taking the following six actions when making arrangements for the management of assets

1 Become familiar with the new Inheritance and Gift Taxes concepts and rules

It is important to understand the general frameworks and rules for both the inheritance tax and Gift Tax to be better able to manage asset holdings and understand the potential tax implications of asset dispositions or wealth transfers With regard to the inheritance tax it is important to gain a general understanding of which types of assets will be subject to inheritance taxation when a recipient of such assets (either by inheritance or bequest) will be liable for inheritance tax and if any applicable exemptions may apply (such as the spousal exception) With regard to the Gift Tax it is important to obtain a general understanding of who is considered the taxpayer under the Gift Tax rules what kinds of gifts received may be exempt from personal income tax and the amounts of the income received which are exempted from Gift Tax

Please refer to our earlier article titled Counting Down to Inheritance and Gift Tax published in the Newsletter for detailed information on the Inheritance Tax and Gift Tax

2 Prepare a list of assets that would be subject to inheritance tax and prepare a will accordingly

Preparation of a list of assets that would be subject to inheritance tax will help in calculating the aggregate value of taxable assets as well as inheritance tax implications for heirs or other people who will receive these assets If individuals discover through the list preparation process that they have or are likely to have assets with an aggregate value exceeding THB100 million in the future then they may want to consider transferring portions of these assets to others during their lifetime so as to take advantage of Gift Tax exemptions valued up to THB20 million for ascendants descendants and spouse or up to THB10 million for other cases each year under certain prescribed criteria

In addition individuals should also consider preparing a will in order to manage the disposition of their assets upon death taking into consideration the inheritance tax that may be payable by heirs upon receipt of such assets For example an individual may consider allocating certain taxable assets not exceeding THB100 million to certain heirs and then allocating any remaining taxable assets to his or her spouse which would not be taxable in the hands of the spouse In addition where an individual would like to donate part of his or her estate to charity the will should clearly state this intention to donate such assets to the particular charity as such donations are not subject to inheritance tax in the hands of the recipient

3 Convert assets that would be subject to inheritance tax into non-taxable assets

Where individuals have assets that would be subject to inheritance tax these individuals may want to consider converting such assets into other types of assets which would not be subject to inheritance tax For example the individuals may consider buying gold with cash held in a deposit account because gold is not categorized as an asset that would be subject to inheritance tax In addition as income received by inheritance or bequest is exempt from personal income tax the heirs who inherit or

September 2015


bequeath the gold will also be exempt from personal income tax Care should be taken when undertaking such planning to ensure that any other potential tax implications that may arise from such transactions are considered along with the impact of depreciation of certain types of assets

4 Transfer inheritable taxable assets to children during onersquos lifetime

Gratuitous transfers of immovable property including land from a parent to legitimate children before 1 February 2016 are exempt from personal income taxation without limitation However from 1 February 2016 onwards the transferor parent will become taxable on such transfers to the extent that the aggregate value of the property transferred exceeds THB20 million and will be subject to personal income tax at the rate of 5 percent on this excess portion

In cases where individuals do decide to transfer land to their legitimate children the children should consider registering a right of usufruct on the land in favor of the transferor parent and may also designate through the will to bequeath the land to parents

With reference to assets other than immovable property complete and valid legal transfers of such assets to children before 1 February 2016 may be considered gifts received as maintenance or support pursuant to a moral obligation and recipient children should therefore be exempt from personal income taxation on receipt of the gift without limitation The transferor parent will have removed these gifted assets from their ownership and correspondingly their estate In this case the taxable assets to be inherited by the children will reduce and the inheritance tax should reduce accordingly

5 Set up a family holding company and transfer shares to children

Setting up a family holding company has many advantages including the ability to maintain the ownership of operating company shares within a family This may be of particular concern however where shares are listed on the Stock Exchange of Thailand (ldquoSETrdquo) as individuals may be concerned that their children will later sell the shares on the SET

In addition before 1 February 2016 gratuitous transfers of shares in a family holding company to children may qualify as gifts given as maintenance or support pursuant to a moral obligation which should be exempt from personal income tax liability for the recipient children By contrast if such shares are transferred from 1 February onwards the recipient children will be subject to personal income tax on the portion of the value of the shares transferred which exceeds THB20 million

6 Set up an offshore investment or holding company under a trust structure

The Bank of Thailand (ldquoBOTrdquo) has set out relaxed criteria to promote Thai direct investment abroad whereby a Thai-based individual is permitted to remit unlimited sums of money outside Thailand for the purposes of setting up an offshore company or purchasing at least 10 percent of the shares thereof without being required to obtain prior approval from the BOT Thus individuals may want to consider setting up an investment or holding company in a foreign country Note that shares of such an investment or holding company are still considered inheritable taxable assets and may be subject to inheritance tax As such it may be worth considering setting up an offshore (ie non-Thai) trust to hold such shares

In setting up the offshore trust ownership of (ie title to) assets is transferred to a trustee for the purposes of management and distribution of interests or income derived from such assets to the beneficiaries The assets having been transferred to the trustee are no longer considered as part of the parentrsquos estate upon their passing and should not be subject to inheritance tax accordingly

So theres a lot to do in the next few months


42 | Ukraine | Legal Developments

Ukraine National Bank of Ukraine simplifies currency control rules applicable to certain internet transactions

By Serhiy Chorny and Maksym Hlotov (Kyiv)

Recent developments On 7 July 2015 the National Bank of Ukraine (the ldquoNBUrdquo) simplified the currency control rules applicable to the export of services andor IP rights over the Internet

The changes were introduced by letter No 22-0101246746 ldquoOn Monitoring Services Export Transactions Performed over the Internetrdquo (the ldquoLetterrdquo)

What the Letter says The Letter permits a Ukrainian bank to apply a more liberal (and modern) approach to export-related documentation when verifying whether proceeds from the export of services andor IP rights over the Internet are received on the exporterlsquos account within the statutory period after the rendering of the services (currently 90 days) Thus

the bank is allowed to rely on a contract concluded over the Internet (through a public offer and acceptance evidenced by a confirmation invoice or other documents) as a proper export contract without requiring the submission of the conventional paper contract The bank may accept a set of documents generated electronically if they contain sufficient information about the transactionrsquos parties terms and conditions offer-acceptance and rendering of the services or export of the IP rights

if the export contract provides that the rendering of the services or export of the IP rights is shown by an invoice or any other paper or electronic document this document should be accepted by the bank as evidence of delivery of such services or IP rights (no bilateral act or certificate should be required by the bank unless the contract provides for the execution of such act or certificate)

a servicing bank is not required to demand Ukrainian translations of the transaction documents necessary for compliance with the currency control rules

the exporterrsquos or its authorized representativersquos signature on the copies of the export transaction documents is regarded as sufficient certification of such copies for currency control purposes

Potential implementation problems The Letter is not binding legislation and may be recalled at any time However it represents the official position of the regulator which will be relied upon by Ukrainian banks

However the position expressed in the Letter may not necessarily be respected by other authorities - eg the tax authorities Thus until a law governing cross-border e-commerce is adopted and becomes effective the tax authorities may take the view that the documents indicated in the Letter are insufficient and that the conventional set of export-related documentation is needed for tax or accounting purposes Moreover a Ukrainian translation of such documentation may still be required by other authorities notwithstanding the NBUrsquos liberal position expressed in the Letter

September 2015

United Arab Emirates | Legal Developments | 43

United Arab Emirates FATCA and CRS implementation in the Gulf Region Challenges for financial institutions and account holders By Gregory C Walsh (Zurich) and Elliot H Murray (Geneva)

On 6 July 2015 the United Arab Emirates (the ldquoUAErdquo) became the first Gulf region country to release Guidance Notes on the requirements of its Intergovernmental Agreement with the United States (the ldquoUAE Guidance Notesrdquo) The UAE Guidance Notes are an important step towards the practical implementation of the UAErsquos Intergovernmental Agreement (ldquoIGArdquo) with the United States Other Gulf region countries are likely to follow suit soon and many may choose to follow the UAErsquos leads on several issues addressed by the UAE Guidance Notes This article summarizes the current status of the Gulf region countriesrsquo implementation of the United Statesrsquo Foreign Account Tax Compliance Act (ldquoFATCArdquo) examines the UAErsquos recently signed IGA and the recently issued UAE Guidance Notes and highlights areas of concern and outstanding issues for individuals and institutions in the region

FATCA background FATCA was enacted by the US Congress in 2010 as part of the Hiring Incentives to Restore Employment Act (the ldquoHIRE Actrdquo) in an effort to combat tax evasion by US persons through the use of unreported foreign financial accounts and entities2 Final Regulations enacted in 2013 and subsequently modified in 2014 implemented FATCA beginning effective 1 July 2014 with respect to reporting of existing accounts and procedures for new accounts3

The principal purpose of FATCA is to provide the US Internal Revenue Service (the ldquoIRSrdquo) with information on US persons (including citizens resident aliens and entities) holding financial accounts outside the United States Such information is to be used for the prevention of tax evasion in connection with unreported income or assets involving foreign financial accounts To accomplish this purpose FATCA requires foreign (non-US) financial institutions (ldquoFFIsrdquo) to identify and document US account holders according to specified due diligence procedures and also requires and certain non-financial foreign entities (ldquoNFFEsrdquo) to disclose US persons owning or controlling them An FFI that fails to perform the required due diligence and report US account holders or an NFFE that fails to provide adequate information to an FFI faces a 30 percent withholding tax on payments of specified US source income and starting in 2017 on payments of gross proceeds that can produce specified US source income

The FATCA intergovernmental agreements To facilitate the implementation of FATCA and enlist the cooperation of tax authorities in other countries around the globe the United States has entered into IGAs with over 100 other governments4 The IGAs are classified as either Model 1 or Model 2 based on the reporting framework Both types of Model IGA lift the requirement to withhold tax on FFIs in the FATCA Partner jurisdiction if the tax authority of the other jurisdiction (the ldquoFATCA Partnerrdquo) agrees to the exchange of information with the IRS on ldquoUS Reportable Accountsrdquo maintained by FFIs in the FATCA Partner jurisdiction FATCA Partner FFIs must also register with the IRS and obtain a Global Intermediary Identification Number (ldquoGIINrdquo) unless otherwise exempt and comply with the requirement to identify and report such US Reportable Accounts

2 See Hiring Incentives to Restore Employment Act Pub L No 111-147 sectsect 501-541 124 Stat 71 97-106 (2010) adding codified at USC sectsect 1471-1474 3 See TD 9610 2013-15 IRB 765 (2013) TD 9657 2014-13 IRB 687 (2014) 4 For a list of signed IGAs and IGAs deemed to be in effect see US Department of the Treasury Resource Center FATCA ndash Archive at httpwwwtreasurygovresource-centertax-policytreatiesPagesFATCA-Archiveaspx


44 | United Arab Emirates | Legal Developments

Under Model 1 IGAs which represent approximately 90 percent of the IGAs signed or currently deemed to be in effect FATCA Partner FFIs are required to report US Reportable Accounts to the FATCA Partner tax authority which will in turn exchange the required information with the IRS The requirement to report is implemented according to local regulations and no consent of the account holders is generally required for reporting Many Model 1 IGAs also contain reciprocal information exchange meaning US financial institutions will be required to report information on account holders resident in the FATCA Partner jurisdiction This reciprocal exchange is somewhat limited however compared to the requirement of FATCA Partner FFIs to report on their US account holders

Under the Model 2 IGAs similar to the FATCA Regulations FATCA Partner FFIs are required to agree to the terms of an FFI Agreement with the IRS and report information regarding US Reportable Accounts directly to the IRS rather than to the FATCA Partner tax authority FFIs under a Model 2 IGA are required to obtain client consent to such reporting and absent client consent report aggregate information on non-consenting account to the IRS Such aggregate information may then lead to a group request by the IRS to the FATCA Partner tax authority for specific account information

The OECD Common Reporting Standard FATCA and the IGAs are limited to efforts by the United States to collect information regarding accounts held by US persons which includes individuals who are US citizens resident aliens (green card holders) or actually resident in the United States for tax purposes The term also includes companies established under the laws of the states of the United States and trusts that qualify as domestic US trusts for US tax purposes The United Kingdom has also entered into similar IGAs based on the US Model 1 IGA with UK Crown Dependencies and Overseas Territories5

Following the enactment of FATCA and the development of the Model 1 IGA by the United States in cooperation with the ldquoG5rdquo (France Germany Italy Spain and the United Kingdom) further efforts were made at the international level for a more global automatic exchange of information framework These efforts ultimately led to the development by the OECD of the Common Reporting Standard (ldquoCRSrdquo) which was released on 23 February 2014 and included in the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters released on 15 July 20146

CRS provides for the automatic exchange of financial account information between governments on a multilateral basis rather than on a bilateral basis as accomplished by the United States through implementation of FATCA and the IGAs A group of ldquoearly adoptersrdquo consisting of approximately 50 jurisdictions has committed to implement CRS with the first automatic exchange of information to occur beginning September 2017 with respect to information for 2016 and approximately ten further jurisdictions have committed to implementation by 2018 While none of the Gulf region countries have yet committed to implementation of CRS this will be the framework for future global exchange of information

While CRS was developed based on the FATCA Model 1 IGA the two models of information exchange have significant differences First since reporting will be multilateral financial institutions will be required to ascertain the reporting requirements for all accounts with respect to participating CRS jurisdictions not just the United States Second CRS uses tax residence as the standard for reporting of accounts to other Participating Jurisdictions rather than the more expansive definition of ldquoUS personrdquo that includes US citizens and green card holders irrespective of place of residence Finally there are differences in the specific information to be reported the definition of certain types of financial institutions that are required to report and the rules for identifying reportable account holders However as the United States has announced that it will continue to apply FATCA and will not adopt

5 For a list of the UK Agreements see Automatic Exchange of Information Agreements other UK agreements at httpswwwgovukgovernmentpublicationsautomatic-exchange-of-information-agreements-other-uk-agreements 6 See OECD Automatic Exchange of Information at httpwwwoecdorgtaxexchange-of-tax-informationautomaticexchangehtm

September 2015


CRS at this time it is expected that participating jurisdictions and financial institutions will have to coordinate FATCA and CRS obligations

Status of IGAs and FATCA implementation As of 30 June 2015 only Kuwait Qatar and the UAE have signed IGAs with the United States all under the Model 1 non-reciprocal approach In addition Bahrain Saudi Arabia and Iraq have reached agreements in substance with the United States to enter into IGAs Bahrain and Saudi Arabia are pursuing Model 1 IGAs and Iraq has chosen a Model 2 approach (A full list of countries with signed or ldquoin substancerdquo IGAs can be found at the US Department of Treasuryrsquos FATCA - Archive7) This leaves Oman and Iran as the only Gulf region countries that have not entered into or agreed to enter into an IGA with the United States

To date only the UAE has taken any steps to advise local financial institutions on the implementation of the IGArsquos requirements The other jurisdictions with signed IGAs will likely issue guidance or implementing legislation soon given that the first government-to-government exchanges under a Model 1 IGA are scheduled to occur by the end of September 2015

The table below lists the number of FFIs and branches that have registered with the IRS in the seven Gulf region countries along with data for select offshore financial centers in the Caribbean Europe and Asia for comparison

Country Registered FFIs8 IGA 2014 GDP9 2014 Population3

Bahrain 245 Model 1 $3387 billion 1344 million

Iraq 69 Model 2 $2205 billion 3428 million

Kuwait 212 Model 1 $1758 billion 3479 million

Oman 37 None $8180 billion 3926 million

Qatar 71 Model 1 $2118 billion 2268 million

Saudi Arabia 250 Model 1 $7462 billion 2937 million

UAE 427 Model 1 $4016 billion 9446 million

Cayman Islands 168239 Model 1 $3027 billion 59230

Singapore 1981 Model 1 $3079 billion 5470 million

Switzerland 4925 Model 2 $6854 billion 8190 million

Signed IGAs As noted above the three Gulf region countries (Kuwait Qatar and the UAE) have concluded their IGAs with the United States and all chose Model 1 nonreciprocal agreements Both the Qatar IGA and

7 The US Department of Treasuryrsquos FATCA Archive can be accessed at the following address httpwwwtreasurygovresource-centertax-policytreatiesPagesFATCA-Archiveaspx 8 As of 24 June 2015 and including branches 9 According to data published by the World Bank and available at the following address httpdataworldbankorg



the UAE IGA include additional clauses whereby the signatory countries commit to working with the OECD in developing a common reporting standard based on the IGA10

While the Kuwait IGA and UAE IGA remain nearly identical to the Model 1 IGA Qatarrsquos IGA contains several small but noticeable differences First Qatarrsquos IGA does not include alternative procedures for accounts opened after 1 July 2014 but before the entry into force of the IGA11 Additionally the Qatar IGA does not afford Qatar the ability to authorize Qatari Financial Institutions to treat certain entity accounts opened between 1 July 2014 and 1 January 2015 as ldquoPreexisting Entity Accountsrdquo instead of ldquoNew Entity Accountsrdquo12 However the United States released confirmation on 27 July 2015 that it had notified Qatar of these alternative procedures as more favorable terms Under Article 7 of the Qatar IGA Qatar will be granted the benefit of these more favorable terms unless it chooses to decline such benefit in writing13

UAE Guidance Notes The UAE Guidance Notes represent the first attempt by a Gulf region country to instruct its local Financial Institutions on the practical operation of FATCA and the IGA and on the implementation decisions taken by the government The Guidance Notes are important both for UAE Financial Institutions and Financial Institutions from other Gulf region countries as other governments in the region could be influenced by these Guidance Notes

The UAE Guidance Notes are divided into five chapters consisting of (1) General Introduction (Chapter 1) (2) Guidance Notes for Banking Sector (Chapter 2) (3) Guidance Notes for Insurance Sector (Chapter 3) (4) Guidance Notes for Financial Services Sector (Chapter 4) and (5) Glossary (Chapter 5)

With respect to the chapters applicable to specific sectors (banking insurance and financial services) each chapter is divided into parts and sections Part 1 contains the detailed guidance notes generally applicable to all financial institutions and has 10 sections that discuss common issues such as ldquowhether an entity is a financial institutionrdquo ldquowhat reporting requirements must be metrdquo by a financial institution and ldquowhether an entity is an NFFErdquo14 The materials contained in Part 1 are identical for each of the three industry sectors covered by the UAErsquos Guidance Notes

Part 2 discusses the application of the IGA to hypothetical types of entities within the industry sector15 This part also provides guidance as to whether the hypothetical entities classify as a particular type of FFI or NFFE and whether or not the entities are likely to maintain financial accounts subject to due diligence and reporting Part 3 contains checklists for compliance procedures under FATCA applicable to UAE entities depending upon the FATCA classification16

Part 4 includes flowcharts and checklists for due diligence procedures that must be applied by Reporting UAE Financial Institutions17 The UAE Guidance Notes also note that local entities may have to revise their due diligence and client facing procedures in order to comply with the standards imposed by the UAE IGA and discussed in the Guidance Notes18 In implementing these new procedures the UAE Guidance Notes also suggest that entities give thought to collecting information that is not required by FATCA but would be required under the CRS19

10 See Preambles to the Qatar IGA and the UAE IGA 11 See Annexes I Sections IVG of the Kuwait IGA and the UAE IGA for the text of this alternative procedure 12 See Annexes I Sections IVH of the Kuwait IGA and the UAE IGA for the text of this alternative procedure 13 As of the date of publication we are not aware of Qatar choosing to decline this benefit 14 See pages 13-43 60-90 and 115-145 of the UAE Guidance Notes 15 See pages 44-48 95-102 and 146-157 of the UAE Guidance Notes 16 See pages 49 103 and 158 of the UAE Guidance Notes 17 See pages 52-54 106-107 and 161-163 of the UAE Guidance Notes 18 UAE Guidance Notes page 9 19 See pages 31 78 and 133 of the UAE Guidance Notes

September 2015


Part 5 discusses IRS registration requirements and compliance issues20 A UAE financial institution is required to register with the IRS unless it meets one of the definitions of a ldquoDeemed-Compliant Financial Institutionrdquo or ldquoExempt Beneficial Ownerrdquo outlined in Annex II of the UAE IGA or in the US Treasury Regulations

General implementation decisions The UAE Guidance Notes illustrate several important implementation decisions taken by the UAE In the first instance the UAE has chosen to make the countryrsquos regulatory agencies responsible for the oversight and compliance of the particular agencyrsquos regulated entities and for the collection and administration of initial FATCA reports The regulatory agency will then supply the UAE Ministry of Finance with the reported information Even UAE financial institutions that do not maintain any reportable accounts must make ldquonilrdquo reports to the respective agency according to the UAE Guidance Notes21

Specifically the UAErsquos regulatory agencies will establish or have established electronic reporting portals for use by its regulated entities22 Unregulated entities will report and be governed by either (1) the UAE Ministry of Finance if unlicensed (2) the UAE Federal Ministry of Economy if such entities are licensed by the Local Emirate Development Economic Departments of the Ministry of Economy or (3) a Free Zone Regulatory Authority if licensed in the Free Zones 23

The table below lists the UAE regulatory agencies that will oversee FATCA compliance and reporting and their respective reporting portals

Agency Reporting Portal Website Operational as of 19 August 2015

UAE Central Bank Central Bank Services Portal (a private portal)

Unknown

UAE Insurance Authority httpfatcaiagovaefatca No

Securities and Commodities Authority of the UAE

httpsscafatcascaaefatca No

Dubai International Financial Centre

httpsportaldifcae Yes though not specifically for FATCA purposes

UAE Ministry of Finance httpsmoffatcamofgovaefatca No

UAE Federal Ministry of Economy

TBD TBD

Free Zone Regulatory Authorities

TBD TBD

The UAE Guidance Notes also indicate that the UAE has chosen to require the relevant regulatory agency to resolve any minor noncompliance issues directly with its regulated entity following any notification by the IRS24 In cases of significant noncompliance the Ministry of Finance will work with the financial institution directly to discuss the specific area of noncompliance and to implement 20 See pages 55-58 110-113 and 165-168 of the UAE Guidance Notes 21 UAE Guidance Notes pages 25 72 and 127 22 UAE Guidance Notes page 39 23 Id at pages 9-10 24 Id at pages 10 58 and 113



solutions to prevent future noncompliance25 Examples of significant noncompliance include repeated failure to make reports or supply information intentional provision of substantially incorrect information and deliberate or negligent omission of required information During the course of these discussions the Ministry and the financial institution will also agree to ldquomeasures and a timetable to resolverdquo the noncompliance after which the Ministry will inform the US authorities of the outcome of such discussions26

Challenges moving forward The FATCA IGAs and UAE Guidance Notes raise some concerns for both the financial institutionsrsquo reporting as well as account holders potentially subject to reporting Financial institutions operating in the region are currently subject to several different standards by country The UAE Guidance Notes have made compliance obligations more clear although the nil reporting requirement raises an additional FATCA compliance hurdle even for institutions that do not accept any US clients or US-related mandates The other FATCA Partner jurisdictions that have not yet issued guidance remain unclear on specific reporting or for Model 1 jurisdictions how such reporting is to be done Iraq as a Model 2 jurisdiction and Oman without an IGA will necessitate direct reporting to the IRS raising the issue of account holder consent which may be an especially sensitive issue in the region as well as lack of coordination with the CRS reporting model in the future These issues will increase compliance costs further for financial institutions operating in these jurisdictions

Implementation of FATCA and potentially CRS also raises significant privacy and security issues for individuals holding financial accounts in the region Reporting by Gulf area financial institutions may require disclosure of sensitive financial information to the United States or more importantly to the local competent authorities and potentially other countries (under CRS) where data protection and confidentiality may not be as well safeguarded as elsewhere It is therefore critical that any indicia of US person status or tax residence in another jurisdiction that should not apply and can be clarified are addressed as soon as such indicia are identified to a potentially reportable account holder by the relevant financial institution Account holders may be proactive in addressing such issues by providing the relevant rebuttal data now or by structuring trusts and companies in ways that do not result in improper reporting of account information

Another area of concern for account holders is the potential mismatch of information provided by the taxpayer to the home country tax or other competent authority with the information reported by a financial institution under FATCA or CRS This is particularly the case where aggregation principles may require the reporting of account balances or values and payments that are not beneficially owned by an individual and are therefore properly not reported on a tax declaration in the country of tax residence or where local tax reporting requirements do not otherwise align with the accounts being reported Any mismatch between FATCA and CRS reporting and a taxpayerrsquos returns or information reporting will place the burden on the taxpayer to explain such discrepancies to the local tax authority and will increase the costs of recordkeeping and tax preparation

It is clear that financial institutions and governmental tax authorities still have significant steps ahead of them to achieve FATCA compliance in the region and they will need to start looking ahead to participation in the CRS framework to maintain or improve their status as compliant jurisdictions As these financial institutions and governments move forward in this era of increased transparency account holders should begin now to take steps to safeguard their data and ensure compliance Financial institutions should also begin implementing the procedures and systems they will need

25 Id 26 Id

September 2015

United Kingdom | Legal Developments | 49

United Kingdom Less than six months to go UK non-compliance and the Liechtenstein opportunity By Stephanie Jarrett (Geneva) and Lyubomir Georgiev (Zurich)

Recently the Government of Liechtenstein and Her Majestyrsquos Revenue and Customs (ldquoHMRCrdquo) issued the Fifth Joint Declaration clarifying the Taxpayer Assistance and Compliance Programme (ldquoTACPrdquo) for confirming UK tax compliance of taxpayers with Liechtenstein assets and doing so under the Liechtenstein Disclosure Facility (ldquoLDFrdquo)

The LDF is a unique program which has been offered by HMRC following the implementation of the groundbreaking Memorandum of Understanding Relating to Cooperation in Tax Matters (ldquoMOUrdquo) signed in August 2009 with Liechtenstein More than 6400 taxpayers with previously undisclosed offshore assets have registered to regularize their UK tax affairs under the LDF favorable conditions

The LDF fixed and favorable terms The LDF offers taxpayers who participate in the program guaranteed protection from criminal prosecution for outstanding tax liabilities Furthermore HMRC looks back only to April 1999 to assess the omission of taxes as opposed to the 20 year or unlimited look-back period otherwise allowed

Under the LDF the characterization recognition and treatment of Liechtenstein legal entities and fiduciary relationships is certain and agreed depending on the particular facts and allowing UK taxpayers to rely on UK law or practice if they permit alternative (and more favorable) characterization recognition and treatment For example

The European Union harmonized company forms such as ldquoAktiengesellschaftrdquo or ldquoAGrdquo ldquoGesellschaft mit beschraumlnkter Haftungrdquo or ldquoGmbHrdquo ldquoSocietas Europaeardquo or ldquoSErdquo are characterized recognized and treated as a company

Entities formed as ldquoKommanditgesellschaftrdquo or ldquoKGrdquo or ldquoKollektivgesellschaftrdquo are characterised recognized and treated as a partnership

Trusts (ldquoTreuhandschaftenrdquo) and foundations (ldquoStiftungenrdquo) are characterized recognized and treated as trusts

Establishments (ldquoAnstaltenrdquo) and trust enterprises (ldquoTreuunternehmenrdquo) are characterised recognized and treated as (i) a company where the entity is allowed to undertake business activity or has rights or shares of the foundersettlor or (ii) a trust in all other cases

The unpaid tax can be assessed using the normal rates of taxation as they would have been at the time or alternatively taxpayers can use the composite rate option (ldquoCROrdquo) and the single charge rate (ldquoSCRrdquo) A flat-rate of 40 percent under CRO and 50 percent under SRC is applied on the overall amount of undeclared income and gains thus extinguishing a number of potential liabilities such as inheritance tax The CRO is available for each tax year up to but excluding 2009-10 and the SCR for 2010-11 2011-12 and 2012-13 with 2013-14 currently under consideration by HMRC

Penalties of 10 percent on the unpaid tax apply to the LDF period April 1999 ndash April 2009 and 20 percent or 30 percent penalties to any years thereafter as opposed to penalties of up to 200 percent that can potentially be applied outside the program as mentioned below


50 | United Kingdom | Legal Developments

Liechtenstein link needed To participate in the LDF assets must have been held in Liechtenstein or elsewhere offshore as of 1 September 2009 Currently there must be a ldquomeaningful linkrdquo to Liechtenstein proven by a Confirmation of Relevance (ldquoCORrdquo) provided by the Liechtenstein intermediary to the UK taxpayer The link and COR generally entail the opening of a Liechtenstein bank account to hold the assets but the ldquomeaningful linkrdquo could also involve the use of life insurance a company partnership foundation establishment trust other fiduciary entity or estate that is issued formed founded settled incorporated administered or managed in Liechtenstein More specifically COR will be received in case of

Liechtenstein bank account at least 20 percent or at least CHF3 million of the undeclared bankable assets of the relevant person and long term (ie held or fees charged for at least two years)

Liechtenstein entity or a special endowment of assets managed by at least one Liechtenstein trustee with a Liechtenstein bank account of at least 10 percent or at least CHF1 million of the undeclared bankable assets of the relevant person held or fees charged for at least two years

Non-Liechtenstein entity managed by a majority of Liechtenstein members with a Liechtenstein bank account of at least 15 percent or at least CHF1 million of the undeclared bankable assets of the relevant person held or fees charged for at least 2 years

Liechtenstein insurance policy with a minimum premium of CHF150000

COR is currently required to be submitted to HMRC together with the LDF registration application Pursuant to the Fifth Joint Declaration with effect from 1 December 2015 HMRC will not require COR to be submitted with the registration ndash it can follow within 30 days after HMRC receives the LDF registration application

Pursuant to the clarifications in the Fifth Joint Declaration Liechtenstein intermediaries will continue to issue COR to their UK customers until 30 September 2017

Certification of UK tax compliance under TACP Liechtenstein intermediaries must receive certification by their UK taxpayer customers to prove that they have registered and disclosed under the LDF or are otherwise compliant with their UK obligations There are several ways for UK customers to prove their compliance in particular

via LDF registration disclosure certificate

HMRC letter of compliance

Copy of filed UK tax returns (or remittance claims on HMRC Form SA109 for resident non-domiciled persons)

Letter from UK tax adviser on UK tax compliance in the last four tax years

Waiver to intermediary to provide information to HMRC

Self-certification in certain cases where there are no undeclared UK assets or tax liabilities

Such certification including by beneficiaries of foundations companies accounts life insurance or annuity products must be provided to the Liechtenstein intermediary within the certification deadlines but latest by 30 September 2017 Final external audits of how the intermediaries have followed the notification and certification procedures will take place in 2017 under the Fifth Joint Declaration

September 2015


In certain cases where certification is not received a retention procedure with a withholding rate between 27 percent and 315 percent would apply under the Fifth Joint Declaration for UK tax years up to the current year 2015-16

Civil penalties for offshore tax evasion Those taxpayers who do not voluntarily disclose unpaid past-due tax liabilities will be subject to civil penalties The offshore tax evasion penalties will apply for a failure to disclose income tax inheritance tax (ldquoIHTrdquo) or capital gains tax (ldquoCGTrdquo) liabilities in respect of assets in offshore jurisdictions and will also apply to UK domestic non-compliance where the proceeds of the non-compliance are kept offshore The penalty categories on the undeclared tax will apply as follows

Category Penalty Applicable jurisdictions

Category 0 Up to 100 As designated by regulations

Category 1 Up to 125 Jurisdictions with which the UK has automatic exchange of information (ie EU ndash but not Austria and Luxembourg ndash Cayman Islands Guernsey Isle of Man Liechtenstein Switzerland)

Category 2 Up to 150 Jurisdictions where information is exchanged on request (ie Austria Bahamas Belize Bermuda BVI Gibraltar Jersey Luxembourg Singapore) and any other jurisdiction not in the other categories

Category 3 Up to 200 Jurisdictions where information is not shared with the UK (ie UAE Monaco Panama)

In addition an aggravated penalty previously proposed up to 50 percent of the original penalty may be imposed for moving funds hidden offshore in order to circumvent international tax transparency agreements This could increase the penalty to up to 300 percent

What to do What will happen next The LDF favorable terms are available until 31 December 2015 Afterwards a new tougher time-limited ldquolast chancerdquo disclosure facility would likely be introduced and would run only to mid-2017

Starting 1 January 2016 accounts life insurance or annuities held directly or indirectly in many offshore jurisdictions such as Liechtenstein will become reportable under the implementation of the OECD Common Reporting Standard The first reporting will happen automatically in 2017 and HMRC will be provided with various details about the offshore accounts of UK taxpayers

Under the UKrsquos implementation of EU Directive 2014107EU also HMRC will have to provide automatically financial account information to offshore jurisdictions and therefore UK banks and financial intermediaries will be confirming the tax residence status of the ultimate beneficial owners of accounts as well as partnership company or trust interests or cash value insurance or annuity products

According to the Fifth Joint Declaration for UK taxpayers who have not yet registered and disclosed under the LDF and are not yet formally under criminal investigation Liechtenstein may decline until the end of this year any requests by HMRC for tax information on the Liechtenstein assets In the meantime HMRC is already obtaining more information on offshore assets from various sources worldwide leading to more transparency and criminal investigations than ever before



There is also a commitment by the UK government announced in the latest Budget on 8 July 2015 to provide more resources to HMRC to pursue non-compliance and to increase the number of criminal prosecutions During 2014-15 the number of individuals under criminal investigation for tax evasion offences by HMRC has increased to about 5000 (compared to 1332 in 2011-12) Similarly prosecutions for UK tax evasion offences have increased more than 1000 in 2014-15 Generally a taxpayerrsquos complete and unprompted voluntary disclosure of tax irregularities is an important factor to HMRC in deciding whether to investigate the matter using its civil investigation of fraud (CIF) procedure (under HMRC Code of Practice 9) or to seek to prosecute the taxpayer criminally for the relevant tax fraud Accordingly UK taxpayers who are eligible for the full terms of the LDF register and disclose under the LDF are given assurances against criminal prosecution for tax offences

So for any UK non-compliance (could be residents (domiciled or non-domiciled) non-residents (domiciled or non-domiciled) in some cases persons who have gone the lsquoRubikrsquo route trustees and so on) involving UK tax liabilities arising from assets (partly or wholly) outside of the UK there is a last chance until the end of 2015 to use the LDF which has proven to be an efficient and relatively cost-effective route to compliance Do not hesitate act now

UK Summer 2015 Budget A summary of the key issues for wealthy individuals resident in or invested in the UK By Stephanie Jarrett (Geneva) and Lyubomir Georgiev (Zurich)

On 8 July 2015 the UK Finance Minister (Chancellor) introduced a comprehensive Budget to promote the agenda of the new UK Government After gaining an absolute majority in the UK Parliament at the parliamentary elections in May the new Conservative Government decided to announce a second budget for July 2015 the earlier traditional one in March 2015 having been introduced while the Conservative Party was in a coalition government with the Liberal Democratic Party

Many of the elements announced during this July Budget (the ldquoBudgetrdquo) will take effect during the life of the current Parliament (five years) with a good number of the measures requiring further consultation and consideration to fill in the details

The following is only a summary of the headline items likely to affect in particular resident non-domiciled and non-resident non-domiciled individuals

Non-domiciled status for UK tax purposes A number of reforms were announced which will affect the taxation of foreign domiciled persons ie individuals not domiciled in the UK under the general law who are resident in the UK for long periods of time Furthermore changes will also be made to the qualifying rules governing those who have a UK domicile at birth While a Technical Briefing by HMRC (Her Majestyrsquos Revenue and Customs) accompanied the Budget a detailed consultation document will be published in the autumn to seek views on the best way to deliver the reforms followed by a further consultation on the draft legislation which will form part of the 2016 Finance Bill

The main thrust of the reform is that from April 2017 non-domiciled individuals who have been resident in the UK for more than 15 out of the past 20 tax years will be treated as deemed UK domiciled for all tax purposes The Government will consult on the need to retain a de minimis exemption beyond 15 years where total unremitted foreign income and gains are less than GBP2000 pa The remittance base charges of GBP30000 and GBP60000 will remain unchanged (the GBP90000 charge will naturally fall away)

The new rules will be effective from 6 April 2017 regardless of when an individual arrived in the UK ie there will be no grandfathering rules for those already resident in the UK

September 2015


There will be a requirement to spend more than five UK tax years outside the UK to lose the deemed domicile status under the new 15-year rule (for all taxes)

The domicile status of the children of a deemed domiciled person will be viewed independently They will continue to take their fatherrsquos domicile under the general law at the date of their birth and if long term residents under the new rules will become deemed domiciled in due course

Non-domiciled persons who set up offshore trusts before becoming deemed domiciled under the new 15 year rule will not be taxed on trust income and gains that are retained in such trusts and these excluded property trusts will have the same IHT (inheritance tax) treatment as at present but subject to the announcement on UK residential property ndash see below However from 6 April 2017 such deemed domiciled persons will be taxed on any benefits capital or income received from such trusts on a worldwide basis There will be further consultation on the details of the trust taxation

The Government is also addressing the eligibility of non-domiciled status for UK-born individuals From April 2017 individuals born in the UK to parents who are domiciled in the UK will no longer be able to claim non-domiciled status whilst they are resident in the UK

The Government had previously considered introducing a minimum claim period for the remittance basis charge ndash three years had been discussed ndash but has decided to drop this idea in view of the wider reform of the resident non-domiciled status rules

IHT on UK residential property held directly or indirectly From 6 April 2017 the Government intends to bring all UK residential property held by foreign domiciled persons into charge for IHT purposes regardless of the use of and direct or indirect holding of the property This will include UK residential property held through an offshore company and an excluded property trust or simply through an offshore company by a non-resident non-domiciled family This change will not affect other UK situs assets

The IHT charge will be based on the Annual Tax on Enveloped Dwellings (ATED) rules but the scope of the IHT charge will have no minimum threshold and the various ATED reliefs will not be applicable The intention is to have the residential properties that are covered by the non-residents CGT legislation to be also subject to IHT The definitions used in the Finance Act 2015 of residential property and of persons chargeable for non-residents CGT will be used as a starting point for the reforms As with non-residents CGT diversely held vehicles that hold UK residential property will not be within the scope of the IHT charge but closely controlled offshore companies partnerships or similar structures will fall within the new provisions

The intention is therefore to impose IHT on the value of residential property owned by an offshore company on any chargeable event including

The death of the individual wherever resident who owns the shares of the company

A gift of the company shares into trust

The 10-year anniversary of the trust

Distribution of the company shares out of the trust

The death of the donor within 7 years of having given the shares of the company that holds the property to an individual or

The death of the donor or settlor where he or she benefits from the gifted property or shares within 7 years prior to death the reservation of benefit rules will apply to the shares of a



company owning a property in the same way as the rules apply to property held directly by foreign domiciled persons and generally by UK domiciled persons

Directly held shares of a company owning a property will have the benefit of the spouse exemption However this will not be available in most cases where the shares are held through a trust (unless it is a qualifying interest-in-possession trust and the settlor is taxed on death under the reservation-of-benefit provisions)

There are many details requiring clarification and consultation including on the possibility of de-enveloping Again while a Technical Briefing accompanied the Budget a consultation paper is expected towards the end of the summer with legislation to be included in the Finance Bill 2017 with the changes being effective on or after 6 April 2017

Multiple trusts nil-rate bands and IHT on a residence Legislation is finally to be introduced to deal with the use of multiple trusts to avoid IHT

The existing nil-rate band for IHT will remain at GBP325000 from 201819 until the end of 202021 This is yet a further extension of this rate

The Chancellor introduced an additional nil-rate band to apply to a residence that passes on death to a direct descendant (child grandchild etc and will include a step-child adopted child or foster child) This nil-rate band can only apply to one residence that has been used as a residence by the deceased at some point It will take effect for transfers on death on or after 6 April 2017 to reduce the tax payable by an estate on death it will not apply to reduce IHT payable on lifetime transfers chargeable as a result of death

The additional nil-rate bands will be GBP100000 in 201718 GBP125000 in 201819 GBP150000 in 201920 and GBP175000 in 202021 The additional nil-rate band will then increase on the basis of the Consumer Price Index from 202122 onwards As with the ordinary nil-rate band any unused part of this residence nil-rate band will be transferrable to a surviving spouse or civil partner

The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 in case assets of an equivalent value up to the value of the additional nil-rate band are passed on death to direct descendants

For estates with a net value over GBP2 million there will be a tapered withdrawal of the additional nil-rate band (GBP1 for every GBP2 that the net value exceeds the GBP2 million net value)

Landlords The Government will replace the lsquowear and tear allowancersquo with a new relief from April 2016 that will permit all residential landlords to deduct only the actual costs of replacing furnishings For furnished holiday lettings capital allowances will continue to apply

The Government also intends to restrict the relief on finance costs on the basic rate of tax that is still enjoyed by individual landlords of residential property The restriction will start from April 2017 phasing in over four tax years

Pensions The Lifetime Allowance for pension contributions will be reduced from GBP125 million to GBP1 million from 6 April 2016

There will also be a further restriction on pensionsrsquo tax relief for those with incomes (pension contributions included) above GBP150000 This will be done by tapering away their Annual Allowance to a minimum of GBP10000 as of April 2016

September 2015


Dividend taxation The government intends to abolish the Dividend Tax Credit from April 2016 and to introduce a new Dividend Tax Allowance of GBP5000 pa There will be new rates of tax on dividend income above the allowance of 325 percent for higher rate taxpayers and 381 percent for additional rate taxpayers

Corporate taxation Corporate tax rates will be reduced from 20 percent to 19 percent in 2017 and then to 18 percent in 2020

The Government will introduce a supplementary tax on profits in the banking sector of 8 percent from 1 January 2016 The tax will not apply to the initial GBP25 million of profits within a group

Furthermore the full bank levy rate will be reduced from 021 percent to 018 percent in 2016 to 017 percent in 2017 to 016 percent in 2018 to 015 percent in 2019 to 014 percent in 2020 and to 010 percent in 2021 There is also an intention to change the tax base to UK operations from 1 January 2021

The ability for companies to use UK losses and reliefs against a CFC (Controlled Foreign Company) charge is removed from 8 July 2015

Effective 8 July 2015 through legislation to be introduced by the Government sums which arise to investment fund managers by way of carried interest will be charged to the full rate of capital gains tax (28 percent) with only limited deductions

Value Added Tax (VAT) From 2016 the VAT use and enjoyment provisions will be applied to all UK repairs made under UK insurance contracts ie such repairs will be subject to UK VAT The Government will also undertake a wide review of the use of offshore-based avoidance affecting VAT and is likely to introduce additional lsquouse and enjoymentrsquo measures for services such as advertising in 2017

Tax avoidance tax planning tax evasion and tax compliance Legislation is to be introduced to require financial intermediaries in the UK (including tax advisers) to inform their clients of the Common Reporting Standard (CRS) the penalties for evasion and the opportunities to disclose However this requirement is unlikely to be effective before the end of the LDF (Liechtenstein Disclosure Facility) at the end of 2015 The LDF remains the most attractive opportunity for taxpayers who are or have been non-compliant in the UK to put their UK tax affairs in order without the danger of criminal prosecution for any tax offences and at a relatively low cost

HMRC will start receiving information on offshore accounts from 2017 under the CRS

The Government is still determined to introduce legislation to strengthen HMRCrsquos powers to recover tax debts directly from debtorsrsquo bank accounts However further to extensive consultations these measures will be subject to judicial safeguards

There will be increased funding to enable HMRC to carry out more criminal investigations into serious and complex tax crimes with a particular focus on wealthy individuals and corporate entities Individuals with net wealth of between GBP10 million and GBP20 million are to be included in the Customer Relationship Model and to have a Customer Relationship Manager There will also be consultations on ldquoenhancingrdquo the information reported by wealthy individuals and trustees with a particular emphasis on non-domiciled persons

A consultation paper is to be published to consider introducing of a GAAR (General Anti-Abuse Rule) penalty and strengthening the GAAR



A consultation paper will also be published prior to introducing provisions in the Finance Bill 2016 with regard to serial avoiders These provisions will be aimed at those who persistently enter into tax avoidance schemes that are defeated

There is to be an extension of HMRCrsquos powers to obtain data from online intermediaries and electronic payment providers to find those taxpayers operating in the hidden economy Provisions will be contained in the Finance Bill 2016

Summary of Implementation Dates

Title When first announced Date change takes effect

Abolishing non-domiciled status for long term non-domiciled residents

To be in the Finance Bill 2016 6 April 2017

Abolishing non-domiciled status for UK-born individuals


Inheritance tax on UK residential property of non-domiciles including non-domiciles who are not UK resident


Inheritance tax and multiple trusts Autumn Statement 2014 Royal Assent

Inheritance tax main residence nil-rate band

Summer Budget 2015 6 April 2017

Inheritance tax the nil-rate band maintained


Restricting finance cost relief for landlords


Reform of landlordsrsquo lsquowear and tearrsquo allowance


Pensions reduced annual allowance for top earners


Dividendsrsquo taxation To be in the Finance Bill 2016 6 April 2016

Corporation tax rates Summer Budget 2015 1 April 2017

Bank corporation tax surcharge Summer Budget 2015 8 July 2015

Bank levy rate reduction Summer Budget 2015 1 January 2016

Controlled Foreign Companies loss Summer Budget 2015 8 July 2015

September 2015

United States | Legal Developments | 57


relief restriction

VAT on services lsquoused and enjoyedrsquo in the UK

Summer Budget 2015 1 January 2016

Financial intermediaries writing to their customers in advance of receipt of data under the Common Reporting Standard

Summer Budget 2015 Royal Assent

General Anti-Abuse Rule (GAAR) penalty

To be in the Finance Bill 2016 Summer 2015

Serial avoiders To be in the Finance Bill 2016 Summer 2015

United States New FBAR and tax filing deadlines and rules on inherited property By Lyubomir Georgiev (Zurich) and Rodney Read (Houston)

On Friday 31 July 2015 President Obama signed into law HR 3236 the ldquoSurface Transportation and Veterans Health Care Choice Improvement Act of 2015rdquo (the ldquoActrdquo) Several key tax law changes were included in the revenue provisions of the Act This article discusses the following revenue provisions (i) new FinCEN Report 114 (FBAR) filing and extension deadlines (ii) tax filing deadlines and (iii) consistent basis reporting between estate and person acquiring property from deceased

New FBAR extension and due dates The due date of the FBAR has been changed to correspond with the due date of an individualrsquos tax return who resides in the United States 15 April In addition the due date to file FBARs can now be extended for a six-month period ending on 15 October The Act explicitly states that ldquo[f]or any taxpayer required to file [an FBAR] for the first time any penalty for failure to timely request for or file an extension may be waived by the Secretaryrdquo It is important to note that the automatic two-month extension to file an individual tax return for individuals living outside the United States will apply to the due date of the FBAR

Tax return filing deadlines

Trust-related filings The maximum extension for the returns of trusts filing Form 1041 will be a five and one half month period ending on 30 September for calendar year taxpayers The due date of Form 3520ndashA Annual Information Return of a Foreign Trust with a United States Owner is now generally 15 March (more specifically the 15th day of the third month after the close of the trustrsquos taxable year) The maximum extension for Form 3520-A is a six-month period therefore generally until 15 September The due date of Form 3520 Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain


58 | United States | Legal Developments

Foreign Gifts for calendar year filers will be 15 April with a maximum extension for a six-month period ending on 15 October

Partnerships Under the general rule regarding time for filing income tax returns returns made on the basis of the calendar year were required to be filed on or before 15 April following the close of the calendar year Returns made on the basis of a fiscal year were required to be filed on or before the 15th day of the fourth month following the close of the fiscal year

The Act has changed this by providing that partnership returns for taxable years beginning after 31 December 2015 are required to be filed one month earlier 15 March (or 15th day of the third month following the close of the fiscal year) However it has also altered the maximum extension for the returns of partnerships to six months which results in the same extended September due date for calendar-year partnerships

Corporations Corporations including S corporations were previously required to file returns made on the basis of the calendar year on or before 15 March following the close of the calendar year Returns made on the basis of a fiscal year were required to be filed on or before the 15th day of the third month following the close of the fiscal year

The Act provides that C corporations for taxable years beginning after 31 December 201527 will follow the general rule by having an additional month to file until 15 April (or 15th day of the fourth month following the close of the fiscal year) In addition the automatic extension has been increased to five months to 15 September28

An S corporationrsquos due date has not been altered and continues to be 15 March (or 15th day of the third month following the close of the fiscal year)

Consistent basis reporting between estate and person acquiring property from deceased

The Act also revised the US tax rules on the cost basis of property acquired from a deceased for purposes of calculating capital gains upon the subsequent sale exchange or other disposition of such property Generally such cost basis is the fair market value as of the date of the deceasedrsquos death or if elected an alternate valuation date This ldquostep-uprdquo in cost basis as of the deceasedrsquos death is a significant advantage to heirs receiving transfers of appreciated property The pre-death appreciation is not subject to capital gains tax By comparison if the property had been received as a gift while the deceased was alive the recipientrsquos cost basis would generally be limited to the donorrsquos adjusted basis (ie no step-up) resulting in the built-in gain subject to tax when the property is sold

The Act changes these general built-in gain rules The step-up in cost basis for appreciated property would apply only to property whose inclusion in the deceasedrsquos estate increased the US estate tax liability (reduced by credits allowable against such tax) on the estate

The value of the property and thus the cost basis cannot exceed the final value which has been determined for purposes of US estate tax on the estate of the deceased Such value could be specified by the US Treasury usually the US Internal Revenue Service (IRS) and would be final if not timely contested by the executor of the estate Alternatively the cost basis cannot exceed the value of such property as identified on a US estate tax return assuming such value is not contested by the US Treasury before the expiration of the time for assessing the tax If the value is contested then it would

27 In the case of any C corporation with a taxable year ending on 30 June the amendments made by this subsection shall apply to returns for taxable years beginning after 31 December 2025 28 Increasing to 6 months after 1 January 2026 In the case of any return for a taxable year of a C corporation which ends on 30 June and begins before 1 January 2026 the automatic extension is seven months

September 2015


be determined by a court or pursuant to a settlement agreement with the IRS The Act authorizes the US Treasury to issue regulations providing for exceptions to these rules

In practice the executor of the estate required to file a US estate tax return must provide to the IRS and to each person acquiring any interest in property included in the deceasedrsquos gross estate for US estate tax purposes a statement The statement must identify the value of each interest in the property as reported on the US estate tax return and such other information with respect to such interest as the US Treasury may prescribe

In some cases the executor may be unable to make a complete US estate tax return Then each person who holds a legal or beneficial interest in the property and is required by the US Treasury to file a US estate tax return must provide to the US Treasury and to each other such person the statement identifying the information described above

The timing of the requisite statement will be prescribed by the US Treasury but in no case will the time be later than 30 days after the earlier of (i) the date on which the US estate tax return was filed or (ii) the date on which the return was required to be filed (including extensions if any) In any case in which an adjustment is required to the information included on a filed statement filed the supplemental statement must be filed not later than 30 days after such adjustment is made

The Act also authorizes the US Treasury to issue regulations relating to the application of these rules to

(i) property with regard to which no estate tax return is required to be filed and

(ii) in situations in which a surviving joint tenant or other recipient may have better information than the executor of the estate regarding the cost basis or fair market value of the property

Finally the Act imposes penalties for failure to file and accuracy-related penalty for inconsistent reporting when the cost basis of the property claimed on a tax return exceeds the basis determined under the new rules discussed above

These changes apply to property with respect to which a US estate tax return is filed after the date of the enactment of the Act (31 July 2015)

Conclusion Taxpayers should consult their US tax advisers to determine how these changes may affect them and their tax filings for next year The change that will likely cause the greatest headache to taxpayers and their advisers is the FBAR filing due date (without extension) In particular those taxpayers who live outside the United States and their tax returns are due by 15 June will now have to evaluate whether to extend the FBAR as well as the tax returns to 15 October US tax advisers and financial intermediaries should consider and discuss with their US customers the plans for collecting information to file timely FBARs and returns early in 2016 or the process to apply for an extension by 15 June

Furthermore non-US citizens and non-US domiciliaries who have US-situs assets or who have US heirs US trust beneficiaries or US insuranceannuity beneficiaries should contact sooner rather than later their US tax consultants to determine how their current succession planning may be affected The impact on the US taxation of the assets should be evaluated for the requirement discussed above for consistency of US tax reporting of the assetsrsquo tax basis (generally the value as of date of death) by the estate and by the person acquiring property from the deceased (or from certain trusts or insuranceannuity policies) Such estate tax considerations would certainly apply also to the estates of US citizens and US domiciliaries as well as non-US domiciliaries who are covered expatriates



Developments on the PFIC insurance exception By Marnin Michaels (Zurich)

The US Treasury Department and the Internal Revenue Service will hold a public hearing on 18 September 2015 to discuss proposed regulations on the insurance exception from the definition of passive income under the passive foreign investment company (ldquoPFICrdquo) rules Treasury and the IRS must receive topics for the hearing by 26 August

Treasury and the IRS published proposed regulations clarifying the insurance exception from the definition of passive income in April The proposed regulations clarify the insurance exception by specifying what it means for a non-US company to engage in the active conduct of an insurance business If the regulations become effective in their current form they could have a broad impact on the PFIC classification of non-US insurers and the taxation of US shareholders of non-US insurers

What is the insurance exception A non-US corporation is a PFIC if either (i) 75 percent or more of its gross income is passive income or (ii) 50 percent or more of the average value of its gross assets produce passive income ldquoPassive incomerdquo generally includes dividends interest royalties rents annuities and gains from certain sales of property

A US holder of PFIC shares is subject to adverse US federal income tax consequences and reporting obligations For example a US holder of PFIC shares is generally subject to US tax at ordinary income rates on gains from dispositions of PFIC shares and excess distributions from the PFIC Furthermore an interest charge may apply to the tax owing unless the US holder makes certain elections to mitigate the PFIC consequences These consequences deprive a US holder of the economic benefit of deferral of current taxation on income earned by a PFIC

The gross income of banks and insurance companies consists in large part of passive income Thus the PFIC rules include an exception from the definition of ldquopassive incomerdquo for income derived from the active conduct of a banking or insurance business Under the insurance exception income is not passive if it is derived in the active conduct of an insurance business by a company predominantly engaged in an insurance business if the company would be subject to tax as a US domestic insurance company but for the company being a non-US company Without the insurance exception most non-US insurers and reinsurers would be PFICs due to their substantial levels of passive income The PFIC statutory provisions do not clarify that it means to be engaged in the active conduct of an insurance business

What do the proposed regulations do The proposed regulations clarify the scope of the insurance exception by defining what it means to be engaged in the active conduct of an insurance business

Under the proposed regulations an insurance business is the business of issuing insurance and annuity contracts and reinsuring risks written by insurance companies The insurance business includes the investment activities and administrative services that are required to support or are substantially related to the contracts issued or reinsured by the company

The proposed regulations specify the relationship required between the investment activities of a company and its insurance business To meet this test the income earned from the investment activities must be earned from assets held by the company to meet obligations under the insurance annuity or reinsurance contracts

Whether the insurance business is actively conducted is determined under all the facts and circumstances However a company will only actively conduct the insurance business if the companyrsquos officers and employees carry out substantial managerial operational activities The proposed regulations

September 2015


do not take into account activities conducted by officers and employees of related entities or independent contractors including third-party investment managers Such a narrow rule defining active conduct does not appear necessary to effectuate the underlying policy goals of the insurance exception and does not account for typical business practices such as using third-party or related entity investment managers to manage insurance company investments This narrow rule may cause several insurers to become PFICs

Whatrsquos driving the proposed regulations The preamble to the proposed regulations indicates that Treasury and the IRS are concerned with situations where hedge funds establish a purported non-US reinsurer to invest in passive investments that would be taxed under the PFIC rules but for the reinsurerrsquos use of the insurance exception In Notice 2003-34 the IRS cautioned taxpayers regarding arrangements involving investments in purported offshore insurance companies that invest in hedge funds or investments in which hedge funds typically invest In Notice 2003-34 the IRS stated it that it will scrutinize these arrangements and apply the PFIC rules where the offshore company is not an insurance company for US federal tax purposes

The Senate Finance Committee ranking minority member Ron Wyden (D-Ore) pushed for IRS guidance on offshore insurance and the PFIC rules in his comments to the Commissioner of the IRS in February On 25 June 2015 Senator Wyden introduced a bill that would restrict the active business exclusion from the PFIC income test Under Senator Wydenrsquos bill a companyrsquos insurance liabilities would need to exceed 25 percent of its assets in order to qualify as an insurance company under the Insurance Exception A company whose insurance liabilities comprise more than 10 percent but less than 25 percent of its assets could still qualify as predominantly engaged in the insurance business based on the facts and circumstances

Whatrsquos next Insurance companies and reinsurance companies should watch this space carefully and consider the impact of the proposed regulations and proposed legislation on their status Companies at risk of becoming a PFIC may need to consider PFIC risk disclosure US investors in non-US insurance companies also need to consider developments in this area along with potential PFIC remediation steps

Basis adjustment for certain grantor trusts added to no-rule areas By Paul DePasquale (New York)

On 15 June the IRS released Rev Proc 2015-37 (2015-26 IRB) announcing that it will no longer issue rulings on whether assets held in a grantor trust receive a basis adjustment on the death of the grantor where the assets are not includible in the grantorrsquos gross estate Rev Proc 2015-37 illustrates the significant role and increasing focus on basis planning in wealth management However Rev Proc 2015-37 should not mark a departure from typical basis planning for grantor trusts that satisfy statutory basis step-up requirements

Under the general rule of Code section 1014 the tax basis of property acquired from a decedent is adjusted to the propertyrsquos fair market value as of the date of the decedentrsquos death The basis adjustment has significant value for persons acquiring appreciated assets from a decedent because a basis stepped-up to fair market value reduces the taxable gain a seller has on a subsequent sale of the property

Subject to exceptions property acquired from a decedent by reason of death is required to be included in the decedentrsquos gross estate for US federal estate tax purposes in order to secure the basis adjustment While the property must be includible in the decedentrsquos gross estate for US federal estate tax purposes Code section 1014 does not require that that a federal estate tax return must be filed or that a US federal estate tax must be payable in order to secure the basis adjustment



Specific statutory rules outline the application of the 1014 basis adjustment to property acquired via trust For example property transferred by a decedent during life to a revocable trust that pays the income to or on the decedentrsquos direction during his life can qualify for the basis adjustment If the decedent retains such an income interest but not the ability to revoke the trust the basis adjustment applies if the decedent retains a right to alter amend or terminate the trust during his lifetime

Many non-US wealth owners settle non-US grantor trusts that hold non-US situs assets that can benefit US beneficiaries Subject to the settlorrsquos home country tax considerations it is often beneficial for the non-US grantor trust to be structured to provide a basis step-up to the beneficiaries upon the settlorrsquos death The no-rule announcement in Rev Proc 2015-37 should not change the basis adjustment eligibility for a trust properly structured to secure the basis adjustment through the statutory rules discussed above However Rev Proc 2015-37 calls attention to taxpayers claiming a basis adjustment where property is not included in the grantorrsquos estate for estate tax purposes but is acquired from a grantor trust that was not structured to comply with the statutory rules for property acquired via trust as discussed above The IRS also listed guidance on the basis of grantor trust asses as a priority guidance item for 2015-2016

New Rules Gain recognition on transfers to partnerships with foreign partners By Cecilia B Hassan (Miami)

In Notice 2015-54 released 6 August 2015 (the ldquoNoticerdquo) the Treasury and the IRS announced they will issue regulations under Code Section 721(c) Under these new regulations gain will now need to be recognized by US Transferors on contributions of certain property to a partnership (domestic or foreign) in which there is a foreign partner unless a ldquoGain Deferral Methodrdquo is adopted These new rules effective 6 August 2015 (or sooner in certain cases) have the potential to apply any time appreciated property is contributed by a US Transferor to a partnership with direct or indirect foreign partners

According to the Notice the intent in issuing these rules is to combat transactions where property is contributed to a partnership and the income or gain from the property is allocated to foreign partners that are not subject to US federal tax on such income or gain The Treasury and the IRS also intend to issue regulations under Code Sections 482 and 6662 applicable to these transactions

General Rule The general rule of Code Section 721(a) provides that no gain or loss is recognized on the contribution of property to a partnership by a partner in exchange for an interest in the partnership

New Rule Pursuant to the Notice and under the future regulations the general rule will not apply where a ldquoUS Transferorrdquo (any US person other than a domestic partnership) contributes an item of ldquoSection 721(c) Propertyrdquo (or portion thereof) (property other than cash securities and tangible property with built-in gain not exceeding USD20000) to a ldquoSection 721(c) Partnershiprdquo unless the ldquoGain Deferral Methodrdquo is applied with respect to the Section 721(c) Property Instead the US Transferor will be required to recognize the gain immediately or periodically

A ldquoSection 721(c) Partnershiprdquo is a domestic or foreign partnership in which a US Transferor contributes Section 721(c) Property and (i) there is a direct or indirect related foreign partner (ie is related to the US Transferor) and (ii) the US Transferor and related persons own 50 percent or more of the partnership

The ldquoGain Deferral Methodrdquo requires five things

1 The Section 721(c) Partnership adopts the ldquoremedialrdquo allocation method for all Section 721 Property

September 2015


2 If there is remaining built-in gain all Section 704(b) income gain loss and deduction must be allocated in the same proportions among the partners

3 Certain reporting requirements are met

4 The US Transferor must recognize the built-in gain if there is an ldquoAcceleration Eventrdquo generally any transaction that would reduce the built-in gain or could defer the recognition of the built-in gain

5 The Gain Deferral Method must be adopted for all Section 721(c) Property subsequently contributed to the Section 721(c) Partnership by the US Transferor and all other US Transferors that are Related Persons ldquountil the earlier of (i) the date that no Built-in Gain remains with respect to any Section 721(c) Property to which the Gain Deferral Method first applied or (ii) the date that is 60 months after the date of the initial contribution of Section 721(c) Property to which the Gain Deferral Method first appliedrdquo

Extended statute of limitations As an additional requirement for the application of the ldquoGain Deferral Methodrdquo the US Transferor and in some cases the Section 721(c) Partnership must agree to an extended eight year statute of limitations on items of Section 721(c) Property

De minimis exception The good news is the de minimums exception These new rules do not apply unless the built-in gain in the contributed property exceeds USD1 million and the partnership currently does not have a ldquoGain Deferral Methodrdquo in operation

These new rules will need to be considered any time there is a contribution of appreciated property by a US Transferor to a partnership with foreign partners


64 | Around the Corner

Around the Corner1

Exchange of information Where are we heading to By Rodrigo Castillo (Bogota)

We all remember the days when governments worldwide were negotiating and promoting intensely the execution of double taxation conventions In Latin America the mid-nineties and the first decade of this millennium were glorious days for double taxation conventions Those were not the best days in Colombia The government did not have the political and economic stability to deal with double taxation conventions and to deal with the promotion of foreign investment there were other priorities for them

By the beginning of the decade the situation in Colombia was drastically different Now we had the opportunity to open our arms to the world to open our economy and may be to obtain something good out of it Foremost we all remember the 2012 tax reform (Law 16072012) as the tax reform which introduced international tax standards to our system examples of that could be the provisions on place of effective management permanent establishment thin capitalization anti-avoidance new rules on transfer pricing and some others

It was the opportunity for Colombia to show the world our capability to meet international standards and to be classified as a transparent jurisdiction No doubt the goal was achieved In substance the 2012 tax reform represented the countryrsquos effort to pass from Phase I to Phase II and being classified by the Global Forum on Transparency and Exchange of Information as a compliant jurisdiction This was part of the long process of becoming an OECD member (related page from OECDorg httpbitly1lbxWV9)

Colombia arrived in the international tax arena when OECD countries were considering the need to execute more exchange of information agreements than double taxation conventions The reasons were simple the OECD countries (i) already had a vast number of double taxation conventions in force and (ii) saw an opportunity in terms of tax collection by executing exchange of information agreements

To have local tax rules with international standards as provided by the 2012 Tax Reform was definitely not enough for Colombia An international modernization in the treaty context was also needed Therefore exchange of information agreements or double taxation conventions with broad exchange of information clauses came into play The first out of the box the exchange of information agreement with the US This agreement had been pending Colombian official ratification since 2001 The agreement was ratified by Congress through Law 1666 of 2013 and by April 2014 was already approved by the constitutional court and in force

Moreover by means of Law 1661 of 2013 the Colombian Congress approved the OECD Convention on Multilateral Assistance on Tax Matters The convention was rapidly declared constitutional by the Constitutional Chamber on January 2014 Furthermore on June 2015 the Colombian Government executed with the US an IGA Model 1 as a cooperation agreement without being ratified Some argue that the IGA is complementary to the exchange of information agreement and that no ratification is needed Colombia has also committed to the OECDrsquos Common Reporting Standard and it is expected that the Colombian internal revenue service would exchange information with other tax authorities by 2017 (AEOI Status of Commitments httpbitly1HExppt)

Much has been said on the effectiveness of the combination of the abovementioned tools to fight tax evasion but too little has been discussed in connection to the application of the international rules and their interaction with national and constitutional rules on personal data protection specially when local

1 Views expressed in this section are the personal views of the authors

September 2015

Around the Corner | 65

and foreign tax authorities may exchange personal information to determine assess liquidate collect and execute taxes

All the international tools mentioned herein clearly protect personal data Some countries have already and expressly mentioned that they would not exchange information with governments that do not protect the information to be provided In the case of the United States there are precedents in this regard (related reference httpbitly1KjDNW9)

It is clear that Colombia is betting on the tax efficiency of these instruments in order to achieve necessary collection and fight tax evasion But it is also true that foreign tax offices will demand guarantees for the protection of data It is obvious to achieve effective exchange of information more infrastructure and capacity is needed Colombia is not blind on this The tax authorities have been preparing themselves to implement exchange of information agreements and most probably will obtain with success information from other tax administrations The country is preparing every day to fight internal and international tax evasion and take all necessary steps to guarantee the safety of the information to other countries

Beware of using US entities in wealth planning structures By Marnin Michaels (Zurich)

Ten years ago if all was equal and there were no US connections part of my tax planning strategy for clients would involve using US entities such as LLCs This was particularly true with respect to clients from Latin America where ldquoblack listsrdquo were frequently part of the tax legislation and using a Delaware LLC was often a relatively easy solution In my mind the Delaware LLC was an easy tax-free solution that solved many issues (Of course there were also countries like Switzerland where using such an LLC could be destructive)

I was wrong to consider this approach While using these vehicles remains an important and effective part of tax planning for families with US connections for families with no US connections three developments have made me re-think this approach (a) the FBAR changes in 2010 (b) the US-Swiss NPA Program and (3) the BE-10 form

FBAR changes of 2010 In 2010 the US Treasury very quietly changed the filing obligations of single member LLCs with no US owner to require these LLCs to file FBARs for non-US bank accounts or other financial interests Thus a raft of further disclosure was often required and executed by the non-US person and resulted in obligatory disclosure to the United States

While the law changed most people with no US connections who were used to having no reporting or filing obligations were unaware of this change

The US-Swiss NPA Program The US-Swiss NPA Program announced on 29 August 2013 relied on the FATCA definition of a US related account for many of its key concepts This caused in particular US trusts that were foreign trusts for tax purposes related to single member LLCs to be caught in the program and required banks to treat them as US clients

The BE-10 Form A rather obscure law change last year now imposes a non-tax filing obligation on US persons with interests outside of the United States The Form BE-10 which is filed with the Bureau of Economic Analysis (BEA) is one of several surveys used by the BEA to collect information about inbound and outbound foreign investment under the International Investment and Trade in Services Survey Act The BE-10 survey is conducted every five years



The 2014 Form BE-10 must be filed by any US person that had direct or indirect ownership or control of at least 10 percent of the voting stock of a foreign business enterprise (a ldquoForeign Affiliaterdquo) at any time in the 2014 fiscal year Such US persons or ldquoUS Reportersrdquo are required to file Form BE-10 whether or not they were previously contacted by the BEA Previously filing was only due if there was an invitation to file Now all US persons meeting the definition of a US Reporter must file This would include LLCs with no US owners as an example Reportable ldquobusiness enterprisesrdquo include organizations associations branches or ventures which exist for profit-making purposes or to otherwise secure economic advantage as well as any ownership of real estate

This filing is one of the most obtrusive filings I have ever encountered

Who should use US vehicles US vehicles are still my choice for wealth planning and structuring for families with US connections However for families with no US connections the use of such vehicles has been shown at least three times over the last five years to have the potential for unplanned and unwanted consequences As a result these developments have made me re-think the use of US vehicles when there are no US connections

Is CRS inconsistent without global access to markets By Marnin Michaels (Zurich)

July 1 2015 marked the one year anniversary of the ldquogo-liverdquo date for FATCA The sky did not fall and the world did not come to an end The method in which FATCA was implemented was rather ingenious One aspect of this implementation was the use of Intergovernmental Agreements (IGAs) entered into between the United States and other jurisdictions on a bilateral basis Model 1 IGAs require the local jurisdiction to enact statutes to implement FATCA under local law and require financial institutions to report to their local tax authorities who in turn report to the US Internal Revenue Service (IRS) Model 2 IGAs require jurisdictions with local law impediments to reporting to allow their financial institutions to report directly to the IRS Most countries elected for Model 1 IGAs That means that most countries agreed to enact FATCA under local law It also means that those countries now have a common reporting platform for reporting information to the United States

At first glance this seems like a highly disproportionate and burdensome regime for these jurisdictions and their financial institutions because it requires them to expend a great deal of effort and expense to provide information valuable only to the US government However the legislation that was put in place for FATCA can now easily be modified for use in a broader information exchange regime involving more countries Additionally the IT platforms created for information exchange under FATCA can also be used for such a broader regime Thus FATCA can be and in fact has been used as the model structure for a broader automatic information exchange regime with a larger number of countries

The Organisation for Economic Cooperation and Development (OECD) has created a Common Reporting Standard (CRS) for the automatic exchange of information that is explicitly based on FATCA and which requires participating jurisdictions to enact the CRS under local law The mechanisms that will be used to implement the CRS will certainly be based upon the now-existing FATCA laws in multiple jurisdictions The CRS is intended to provide the benefit of uniformity for financial institutions resident in jurisdictions that sign a network of Competent Authority Agreements (CAAs) that commit them to following that standard As of today more than 100 jurisdictions have agreed to a form of automatic information exchange amongst themselves

However to my mind there is a significant flaw with the CRS concept Implicit in the CRS is the concept that by definition financial service organizations are cross-border operations and in many cases their operations are not consistent across all jurisdictions As Kathleen Casey then Commissioner of the US Securities and Exchange Commission (SEC) noted in a speech in 2007 ldquoIf

September 2015


we as regulators are to remain effective and relevant in meeting our mission of protecting investors fostering capital formation and maintaining competitive fair and orderly markets we will need to be more nimble and responsive to market developments and rely more on cooperation and collaboration with our international counterpartsrdquo2 Thus for CRS to work there must be a ldquorationalization of the global regulatory framework by seeking convergence and harmonization of rules through bilateral and multilateral dialogue and the mutual recognition of comparable regimes based on principles of international comityrdquo3 as SEC Commissioner Michael Piwowar stated last year In other words a common reporting standard for financial information will only be truly effective if there is also a common set of financial regulations across jurisdictions If the regulatory system is significantly different in different jurisdictions a common reporting standard may not operate in the same fashion in those different jurisdictions In fact it might even conflict with local financial sector regulations To solve this problem there must be an attempt to level the financial regulatory playing field across jurisdictions

However most regulators take a territorial and ldquoprotectionistrdquo approach They are not willing to compromise what they see as important aspects of the local system in favor of reaching common ground with other jurisdictions Further the capital markets are dynamic and constantly changing and the law is never able to change and adapt at the same pace as the new methods being used in the financial markets

The CRS will likely cause regulators to have greater access to evidence of cross border operations and potential violations of the regulations of participating jurisdictions Thus the question to me is whether CRS can be implemented without some additional reform of the financial services sector on a global basis

For regions like the European Union where there is already a cohesive singular regulatory system this is less of an issue However a few examples can illustrate the potential problems A Canadian bank for example might have a client resident in Hong Kong The Canadian bank does not have a branch in Hong Kong or anywhere else in China and although it carefully follows Canadian financial services regulations it is not aware of the regulations relevant to China Letrsquos also look at the example of institutions in London that might have US clients Clearly having US clients may raise regulatory issues under US law for a UK bank Finally letrsquos turn to a bank in New York City There may be many people resident in different jurisdictions around the world who have bank accounts in New York Such a bank may not be operating in compliance with all of the regulatory rules from the different jurisdictions of its many clients

Thus CRS will solve one issue that of reporting tax information on the taxpayers of each participating jurisdiction but the people focusing on the CRS may not be as cognizant of how these issues impact other regimes such as financial services regulatory regimes

As we move fast and faster into Free Trade Zones such as the Trans-Pacific Partnership or the Trans-Atlantic Trade and Investment Partnership these agreements should inherently include a liberalization of cross-border regulatory requirements Otherwise the CRS will just bring the next generation of regulatory problems for financial institutions

2 US Securities and Exchange Commission Commrsquor Kathleen Casey ldquoSpeech by SEC Commissioner Remarks at the Institute of International Bankers Fall Membership Luncheonrdquo Oct 9 2007 available at httpwwwsecgovnewsspeech2007spch100907klchtm 3 US Securities and Exchange Commission Commrsquor Michael S Piwowar ldquoRemarks at AIMA Global Policy amp Regulatory Forumrdquo Mar 6 2014 available at httpwwwsecgovNewsSpeechDetailSpeech1370540888843



The CRS must be implemented in accordance and concurrently with reform of the global financial services sector to allow greater market access so that there is one global regime Otherwise we will simply replace one form of regulatory arbitrage with another

Voluntary disclosure for people with good stories Did waiting make sense By Marnin Michaels Anne Gibson (Zurich) and Jennifer OrsquoBrien (Geneva)

The first voluntary disclosure I handled for a client was in 1999 Since then I have handled so many voluntary disclosures that I have lost count Over the course of the last 16 years I can state unequivocally that with respect to formal programs time normally works to the taxpayerrsquos advantage For cases where there are questions as to whether the taxpayer willfully evaded US tax at least post-2009 it has been advantageous to wait to resolve cases through the formal programs For people where there was clear willfulness the earlier you got in the better

History of IRS Offshore Voluntary Disclosure Programs Voluntary disclosure has existed in the United States in one form or another for a long time likely since the first income tax was implemented during the US Civil War The current US income tax was initiated in 19134 and as early as 1919 the IRS had a formal policy of accepting voluntary disclosures in return for granting immunity from criminal prosecution5 The grant of full immunity was revoked after only three weeks and the policy was revised such that the voluntary disclosure would be considered as one factor in whether or not to pursue a criminal case Although the grant of full immunity from criminal prosecution has come and gone multiple times over the years the acceptance of voluntary disclosures has continued6

From approximately 1973 when it was first included in the Internal Revenue Manual (IRM) until late 2002 the general terms for a voluntary disclosure remained relatively stable Taxpayers had to make a truthful timely and complete disclosure in part meaning that they could not already have notice or knowledge that they were under investigation The taxpayer had to be willing and able to cooperate with the IRS to determine his or her liability and to make bona fide arrangements to pay to the extent he or she was able Importantly a voluntary disclosure did not guarantee that criminal prosecution would not be pursued However it was considered along with other factors7

Thus when I acted in my first voluntary disclosure case in 1999 while the IRM had a policy for self-disclosure there was no formal process in the Internal Revenue Service (IRS) to actually implement it In fact most IRS field offices did not know how to address this concern This often resulted in encouraging people with undeclared funds and their advisors to simply file their past due tax returns

In December 2002 the US Department of the Treasury (Treasury) changed some of the standards for voluntary disclosure as set out in the IRM For example in order to be timely a taxpayerrsquos disclosure had to be made before certain triggering events set out in the IRM and these events included things such as the IRS beginning an investigation of the taxpayer or the IRS receiving information from a 4 Tariff Act of 1913 US CONST amend XVI Brushaber v Union Pacific Railroad Co 240 US 1 (1916) The forerunner to the current general income tax is generally considered to be the corporate excise tax that was included in the Tariff Act of 1909 See Flint v Stone Tracy Co 220 US 107 (1911) 5 Leandra Lederman Taxation of Offshore Accounts The Use of Voluntary Disclosure Initiatives in the Battle Against Offshore Tax Evasion 57 Vill L Rev 499 502 (2012) 6 Lederman supra at 502-503 Bartholomew L McLeay Note Disincentives to Voluntary Disclosure United States v Hebel and Deleet Merchandizing Corp v Commissioner 3 Va Tax Rev 401 403-404 (1984) 7 John J Tigue amp Jeremy H Temkin The New IRS Voluntary Disclosure Policy 229 NY Law Journal 2 (Jan 16 2003)

September 2015


third-party regarding the taxpayerrsquos compliance If any of these had occurred before the taxpayer made his or her disclosure regardless of the taxpayerrsquos knowledge the disclosure was not considered timely8 Additionally a taxpayer had to make good faith arrangements to pay his or her tax liability in full rather than to the extent he or she was able to pay In other words an objective standard was added

Shortly afterward in early 2003 Treasury introduced the first formal program for offshore voluntary disclosures the Offshore Voluntary Compliance Initiative (OVCI) 9 The OVCI was specifically targeted at taxpayers who had used offshore payment cards (eg credit debit and similar charge cards) to hide taxable income but was offered to all taxpayers who had used offshore financial arrangements more broadly Once accepted into the OVCI the taxpayer had to provide corrected tax returns for tax years 1997-2002 showing all previously unreported income as well as additional information including how the taxpayer was introduced to the offshore payment card or offshore financial arrangement and the names of anyone who promoted the plan

In return for cooperation certain penalties would not be imposed including the penalty for the failure to timely file a Report of Foreign Bank and Financial Accounts (FBAR) but other penalties could still be imposed including the delinquency penalty and the accuracy-related penalty which could total up to 25 percent and 20 percent of the unpaid tax respectively

However the OVCI rather than making it easier to complete a self-disclosure made it harder Costs went up People were never audited before and now those participating in the OVCI were audited What had been a relatively simple process in the past became much more complicated

After the OVCI closed in July 2003 self-disclosure did not become more difficult as one might have expected but rather became simpler Individual IRS field offices allowed voluntary disclosures on an anonymous basis Instead of the penalties being imposed in the OVCI in many cases no penalties were imposed at all Despite IRS protests so-called ldquoquiet disclosuresrdquo reigned Often three years of back filings of original or amended returns and FBARs were all that were needed and penalties were almost always waived

Then came the events of 2008 and 2009 and the IRS initiated new offshore voluntary disclosure programs These new programs were the first to have mandatory penalties The first such program was the 2009 Offshore Voluntary Disclosure Program (2009 OVDP)10 If accepted the 2009 OVDP required taxpayers to file correct amended or original returns and FBARs for tax years 2003-2008 The taxpayer would then be free from potential criminal prosecution and some civil penalties including FBAR penalties but would be subject as in the OVCI to potential delinquency and accuracy-related penalties In addition in lieu of the FBAR or other penalties the taxpayer would be subject to a 20 percent penalty on the aggregate balance of his or her previously unreported offshore accounts in the year within the relevant period when that balance was the highest (known as the miscellaneous offshore penalty) This in some cases resulted in extremely high penalties While it was possible for a taxpayer to ldquoopt-outrdquo of the penalty structure and the OVDP after having been accepted the taxpayer would then face an examination and be subject to all applicable penalties This program closed in October 2009

The 2011 Offshore Voluntary Disclosure Initiative (2011 OVDI)11 was very similar to the 2009 OVDP but increased the number of years at issue as well as the miscellaneous offshore penalty The relevant period was expanded to cover tax years 2003-2010 and the miscellaneous offshore penalty was

8 Id It should be noted that the IRS in a sense liberalized the rules in practice in 2002 despite the changes that were made when it moved away from the triggering events test although that test remains in the IRM 9 Rev Proc 2003-11 2003-1 CB 311 (Jan 14 2003) 10 See IRS website ldquo2009 Offshore Voluntary Disclosure Programrdquo httpwwwirsgovuac2009-Offshore-Voluntary-Disclosure-Program 11 See IRS website ldquo2011 Offshore Voluntary Disclosure Initiativerdquo httpwwwirsgovuac2011-Offshore-Voluntary-Disclosure-Initiative



increased to 25 percent However it also included a category for taxpayers with lower-value accounts who were eligible for a miscellaneous offshore penalty of only 125 percent The 2011 OVDI closed in September 2011

The Offshore Voluntary Disclosure Program was reopened in 2012 and extended indefinitely12 The 2012 OVDP increased the potential offshore penalty to 275 percent and did not have a specific deadline for applying but stated the period at issue would be the eight most recently ended tax years In the summer of 2012 the IRS announced new streamlined filing and compliance procedures (the ldquoStreamlined Programrdquo) which entered into effect on 1 September 2012 The Streamlined Program was designed for taxpayers who presented a low compliance risk Low compliance risk was predicated on simple returns with little or no US tax due To be eligible for the Streamlined Program a US taxpayer must have (i) been both a non-resident (including those with dual citizenship) and non-filer of the required US federal income tax and information returns since 1 January 2009 and (ii) owed less than USD1500 in US federal income tax for each of the last three tax years Taxpayers who qualified for the Streamlined Program were required to file their delinquent US federal tax and information returns for the past three years and file delinquent FBARs for the past six years In addition taxpayers were required to complete and sign a questionnaire and submit the questionnaire with their returns

On 18 June 2014 the IRS announced changes to the 2012 OVDP and the Streamlined Program (the ldquoexpanded Streamlined Programrdquo) The changes to the 2012 OVDP were effective on 1 July 2014 (the ldquo2014 OVDPrdquo) and increased the information requested of taxpayers seeking to regularize their US reporting through the formal offshore voluntary disclosure program While the 2014 OVDP is very similar to the 2012 OVDP the 2014 OVDP increased the offshore penalty percentage to 50 percent for taxpayers with accounts at a financial institution that (i) is or has been under investigation by the IRS or DOJ (ii) is cooperating with the IRS or DOJ or (iii) has been identified in a court-approved issuance of a summons seeking information about US taxpayers who may hold financial accounts The IRS maintains that there are many financial institutions meeting these criteria and as of 7 August 2015 forty-one (41) such financial institutions have been named For those taxpayers without accounts at financial institutions that meet these criteria the miscellaneous offshore penalty remains at 275 percent The 2014 OVDP remains open today and has no set date on which it will close

The expanded Streamlined Program was intended to ease filing burdens and help more taxpayers come into compliance by extending the eligibility requirements to a wider population of US taxpayers living outside of the United States as well as certain US taxpayers residing in the United States 13 The USD1500 threshold and the risk questionnaire were removed in the expanded Streamlined Program In certain cases the expanded Streamlined Program is now available for taxpayers who have previously filed delinquent or amended returns (so called ldquoquiet disclosuresrdquo) although penalty assessments previously made with respect to those filings will not be abated Filings made under the expanded Streamlined Program will be subject to ordinary IRS review procedures However as long as the taxpayerrsquos non-compliance is determined to be non-willful the taxpayer will not be subject to most penalties including the accuracy-related penalties or FBAR penalties14

12 See IRS website ldquo2012 Offshore Voluntary Disclosure Programrdquo httpwwwirsgovuac2012-Offshore-Voluntary-Disclosure-Program 13 See IRS website ldquoStreamlined Filing Compliance Proceduresrdquo available at httpwwwirsgovIndividualsInternational-TaxpayersStreamlined-Filing-Compliance-Procedures (last updated Aug 6 2015) 14 See IRS website ldquoUS Taxpayers Residing Outside the United Statesrdquo available at httpwwwirsgovIndividualsInternational-TaxpayersU-S-Taxpayers-Residing-Outside-the-United-States (last updated Aug 12 2015)

September 2015


Results of the IRS Offshore Voluntary Disclosure Programs for people with good stories Time was on the taxpayerrsquos side Under the voluntary disclosure programs of the last six years especially in the early days the IRS approach was not evenly administered and often did not give appropriate attention to the specific facts of each case

The Frequently Asked Questions and Answers (the ldquoFAQsrdquo) issued in connection with the 2009 OVDP included a provision that stated that ldquo[u]nder no condition will taxpayers be required to pay a penalty greater than what he would otherwise be liable for under existing statutesrdquo These so-called FAQ 35 submissions were an opportunity to explain the unique circumstances surrounding non-compliance eg inherited accounts accounts established prior to immigration to the United States With FAQ 35 in place some taxpayers with sympathetic facts did achieve penalty results that were below the guidelines set forth by the terms of the 2009 OVDP But many taxpayers with strong cases did not receive the relief they had been expecting Some of the inconsistent application of FAQ 35 may have been related to the flood of submissions regardless of merit that were made during the course of the 2009 OVDP FAQ 35 as it was known in the 2009 OVDP was later replaced by the opt-out procedures mentioned below

Participants in the 2009 OVDP also faced a unique problem related to the state of the global economy Under the terms of the formal voluntary disclosure programs the miscellaneous offshore penalty is to be assessed on the highest aggregate balance in any year covered by the disclosure period For 2009 OVDP participants this high balance year was more often than not 2007 However many participants had suffered significant financial losses in 2008 Further those accounts had not yet recovered from the economic crisis when it came time to pay the miscellaneous offshore penalty So while the miscellaneous offshore penalty may have been 20 percent its net impact was far greater By comparison many participants in the 2011 OVDI had benefited from the market rebound and even though their penalty percentage had increased to 25 percent the net impact on their account was less

An interesting phenomenon that has come out of the evolution of the formal offshore voluntary disclosure programs has been that the speed with which your case is handled can have an impact on your final resolution with the IRS For cases where willfulness is in question we have seen that the longer the case took to resolve the more beneficial the results We have now started seeing results on these older cases that would not have previously been possible under the terms of the voluntary disclosure program in effect at the time the taxpayer entered the system For example in connection with the announcement of the 2014 OVDP and expanded Streamlined Program taxpayers in the 2012 OVDP were given the opportunity to transition to the expanded Streamlined Program Many of these cases are still in progress but we have already seen a number of successful transitions that resulted in reduced miscellaneous offshore penalties for taxpayers who are resident inside the United States as well as those who are resident outside of the United States Taxpayers who had already signed closing agreements when the June 2014 announcement was made were not permitted to re-open their cases for consideration under the transition relief

Since the 2009 OVDP the IRS has ldquoratcheted up the penaltiesrdquo which may appear to indicate that the programs have become harder on taxpayers but in practice some things have become easier For example opting out from the formal penalty structures of the OVDP has become simpler as we moved from the 2011 OVDI into the 2012 OVDP and was more likely to be accepted in cases where the taxpayer had a good story In cases of willful failures or where the undisclosed account will be subject to the 50 percent miscellaneous offshore penalty the taxpayer is often in a very bad place

When these observations began to be coupled with other developments including recent court case losses by the United States on attempts to enforce large FBAR penalties15 the Treasury Department

15 See eg Moore v United States 2015 US Dist LEXIS 99804 (WD Wash Jul 24 2015)



issued new guidance on FBAR penalties and how to impose them16 This internal guidance released in May 2015 and to be incorporated into the IRM by May 2016 includes guidelines for the application of willful and non-willful FBAR penalties In the case of willful penalties the new guidelines suggest applying a single 50 percent penalty on the highest annual aggregate balance of the offshore accounts for the years under examination rather than applying the 50 percent penalty to all accounts in all open years as advocated by some in the IRS In the case of non-willful violations the new guidelines suggest that in some cases a single USD10000 penalty applied to one year may be appropriate while in other cases a USD10000 penalty applied to each account in each year may be appropriate In all cases the new guidelines stress consistency and the importance of having appropriate oversight in application of penalties This new guidance may make it easier to fight and opt out of the voluntary disclosure penalty structure in some cases because it suggests that the results could be better for the taxpayer outside of the OVDP penalty structure

Conclusions What does this mean in practice While many people had no choice but to do formal disclosure early on given the threat of treaty requests people who settled their cases earlier might have been hurt compared to people who waited to resolve their issues by extending the time to settle Many of these ldquono choice casesrdquo did not have sympathetic facts Although the maximum penalties have increased with each iteration of the formal voluntary disclosure program the implementation of the program has become somewhat more favorable for the taxpayer where the facts of non-willfulness are not as clear There are now more options for dealing with accidental non-filers and those with small accounts including the Streamlined Program Additionally the IRS appears to be applying its discretion more favorably towards the taxpayer in non-willful cases such that outcomes that would not have been possible before are now possible for taxpayers with the right facts

Thus despite the IRS and US Department of Justice claims that coming in quickly was in the taxpayerrsquos best interest practice has shown on balance that extending and delaying was in the best interest for many taxpayers and provided better financial results

It remains to be seen how the IRS will handle 2014 OVDP opt-outs given the fact that all US taxpayers seeking to begin their regularization post-July 2014 are given the option of initiating a formal voluntary disclosure or pursuing the Streamlined Program where one must certify their failures were not willful It is possible that for those taxpayers who initiate voluntary disclosures under the 2014 OVDP the IRS will be stricter in an opt-out because it will presume willfulness since a streamlined filing was not pursued

One final word of caution for taxpayers who may otherwise be eligible for the Streamlined Program waiting may come at a cost As the IRS regularization procedures are expanded and more widely publicized it may become harder to prove non-willfulness in connection with any ongoing failures to comply As each new tax year comes and goes taxpayers who continue to ignore their US filing obligations could find themselves in hot water later on

16 IRS Internal Memorandum ldquoMemorandum for all LBampI SBSE and TEGE Employeesrdquo May 13 2015 Control Number SBSE-04-0515-0025 available at httpwwwirsgovpubfoiaigspderSBSE-04-0515-00255B15Dpdf

September 2015

Forthcoming Events | 73

Forthcoming Events Switzerland Geneva

13 October 2015 US New FBAR and Tax Filing Deadlines and Rules on Inherited Property Moderators Elliott Murray and Danilo Santucci (Baker amp McKenzie Geneva)

10 December 2015 UK Development and Planning Moderator Stephanie Jarrett (Baker amp McKenzie Geneva) These business briefings will be held from 1630 to 1800 at the Baker amp McKenzie Geneva Rue Pedro-Meylan 5 Geneva For further information on these briefings please contact Ganchimeg Daali at ganchimegdaalibakermckenziecom

Zurich

22 September 2015 Insurance and Compliance Update Moderators Joachim Frick and Lyubomir Georgiev (Baker amp McKenzie Zurich)

30 September 2015 Death of the Matriarch ndash Administering Pour-Overs Decantings and Step-Ups Moderators Thomas Salmon and Gregory Walsh (Baker amp McKenzie Zurich)

13 October 2015 Is it Better to Wait or Be a First Mover Moderators Marnin Michaels and Devan Patrick (Baker amp McKenzie Zurich)

29 October 2015 Latest Developments in the Polish Tax Legislation Impacting Wealth Management Moderator Piotr Wysocki (Baker amp McKenzie Warsaw)

10 November 2015 What is Bitcoin and Why Should I Care Moderators Marie-Thegravereacutese Yates and David Gershel (Baker amp McKenzie Zurich)

25 November 2015 Trends amp Developments in Insurance and Insurance Brokerage Laws Moderators Joachim Frick and Anette Waygood-Weiner (Baker amp McKenzie Zurich)

9 December 2015 UK Developments and Planning Moderators Stephanie Jarrett (Baker amp McKenzie Geneva) Lyubomir Georgiev (Baker amp

McKenzie Zurich)


74 | Forthcoming Events

16 December 2015 Turkey Developments Planning and Concerns Moderator Erdal Ekinci (Baker amp McKenzie Istanbul)

17 December 2015 The Taxation of Income from Intangibles Moderator Reneacute Matteotti (Baker amp McKenzie Zurich)

This briefing will be held from 0800 to 0930 at Hotel Glockenhof Sihlstrasse 31 8001 Zurich For inquiries please contact Elizabeth Stocker at businessbriefingszurichbakermckenziecom

United Arab Emirates Abu Dhabi

7 October 2015 US Foreign Account Tax Compliance Act (ldquoFATCArdquo) amp OECD Common Reporting Standard (ldquoCRSrdquo) Training Programs Venue Baker amp McKenzie Habib Al Mulla Level 8 Al Sila Tower Abu Dhabi Global Market

Square Al Maryah Island Abu Dhabi UAE

For inquiries on this event please contact Jenny Medina at uaebdbakermckenziecom or at +971 4 423 0000

Dubai

5-6 October 2015 US Foreign Account Tax Compliance Act (ldquoFATCArdquo) amp OECD Common Reporting Standard (ldquoCRSrdquo) Training Programs Venue JW Marriott Marquis Hotel Business Bay Dubai UAE


United States Miami

15-16 October 2015 16th Annual International Tax and Trust Training Program Venue JW Marriott Miami 1109 Brickell Avenue Miami FL 33131

For inquiries on this event please contact Susie Belanger at susiebelangerbakermckenziecom

September 2015

Wealth Management Contacts | 75

Wealth Management Contacts Abu Dhabi Level 8 Al Sila Tower Sowwah Square Al Maryah Island Abu Dhabi United Arab Emirates Tel +971 2 612 3700 Fax +971 2 658 1811 Borys Dackiw Tom Thraya Amsterdam Claude Debussylaan 54 1082 MD Amsterdam PO Box 2720 1000 CS Amsterdam The Netherlands Tel +31 20 551 7555 Fax +31 20 626 7949 Maarten Hoelen Marnix Veldhuijzen Martje Kiers Barcelona Avda Diagonal 652 Edif D 8th floor 08034 Barcelona Spain Tel +34 93 206 08 20 Fax +34 93 205 49 59 Bruno Dominguez Esteban Raventos Beijing Suite 3401 China World Office 2 China World Trade Center 1 Jianguomenwai Dajie Beijing 100004 Peoplersquos Republic of China Tel +86 10 6535 3800 Fax +86 10 6505 2309 6505 0378 Jinghua Liu Berlin Friedrichstrasse 79-80 10117 Berlin Germany Tel +49 30 22 002 810 Fax +49 30 22 002 811 99 Wilhelm Hebing

Bogotaacute Avenida 82 No 10-62 piso 6 Apartado Aeacutereo No 3746 Bogotaacute DC Colombia Tel +57 1 634 1500 644 9595 Fax +57 1 376 2211 Rodrigo Castillo Jaime Trujillo Brussels Avenue Louise 149 Louizalaan 11th Floor 1050 Brussels Belgium Tel +32 2 639 36 11 Fax +32 2 639 36 99 Alain Huyghe Karen Van de Sande Budapest Dorottya utca 6 1051 Budapest Hungary Tel +36 1 302 3330 Fax +36 1 302 3331 Geza Kajtar Gergely Riszter Timea Bodrogi Buenos Aires Avenida Leandro N Alem 110 Piso 13 C1001AAT Buenos Aires Argentina Tel +54 11 4310 2200 5776 2300 Fax +54 11 4310 2299 5776 2598 Martin Barreiro Alejandro Olivera Gabriel Gomez-Giglio

Caracas Centro Bancaribe Interseccioacuten Av Principal de Las Mercedes con inicio de Calle Pariacutes Urbanizacioacuten Las Mercedes Caracas 1060 Venezuela Postal Address PO Box 1286 Caracas 1010-A Venezuela US Mailing Address Baker amp McKenzie M-287 co Jet International PO Box 2200 Greer SC 29652 USA Tel +58 212 276 5111 Fax +58 212 264 1532 Ronald Evans Humberto DrsquoAscoli Chicago 300 East Randolph Street Suite 5000 Chicago Illinois 60601 Tel +1 312 861 8800 Fax +1 312 861-2899 861 8080 Narendra Acharya Mark Oates Kerry Weinger Doha Al Fardan Office Tower 8th Floor Al Funduq 61 Doha Qatar Tel +974 4410 1817 Fax + 974 4410 1500 Ian Siddell Dubai Address 1 O14 Tower Level 14 Business Bay Al Khail Road Dubai United Arab Emirates Tel +971 4 423 0000 Fax +971 4 423 9777 Borys Dackiw Mazen Boustany Address 2 Level 3 Tower 1 Al Fattan Currency House DIFC Dubai United Arab Emirates Borys Dackiw Mazen Boustany


76 | Wealth Management Contacts

Frankfurt Bethmannstrasse 50-54 60311 FrankfurtMain Germany Tel +49 69 29 90 8 0 Fax +49 69 29 90 8 108 Sonja Klein Geneva Rue Pedro-Meylan 5 1208 Geneva Switzerland Tel +41 22 707 98 00 Fax +41 22 707 98 01 Stephanie Jarrett Denis Berdoz Sylvain Godinet Aicha Ladlami Elliott Murray Jennifer OrsquoBrien Danilo Santucci Hong Kong 14th Floor Hutchison House 10 Harcourt Road Hong Kong SAR and 23rd Floor One Pacific Place 88 Queensway Hong Kong SAR Tel +852 2846 1888 Fax +852 2845 0476 2845 0487 2845 0490 Richard Weisman Steven Sieker Pierre Chan Houston 700 Louisiana Suite 3000 Houston Texas 77002-2755 Tel +1 713 427 5000 Fax +1 713 427 5099 Rodney Read Istanbul Esin Attorney Partnership Ebulula Mardin Cad Guumll Sok No2 Maya Park Tower 2 Akatlar-Beşiktaş Istanbul 34335 Turkey Tel + 90 212 339 8100 Fax + 90 212 339 8181 Erdal Ekinci Duygu Guumlltekin

Jeddah Legal Advisors (Abdulaziz I Al-Ajlan amp Partners in association with Baker amp McKenzie Limited) Bin Sulaiman Center 6th Floor Office No 606 Al Khalidiyah District Prince Sultan St and Rawdah St Intersection Basel Barakat Julie Alexander Kuala Lumpur Level 21 The Gardens South Tower Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur Tel + 60 3 2298 7888 Fax +60 3 2282 2669 Adeline Wong Yvonne Beh Lim Tien Sim Kyiv Renaissance Business Center 24 Vorovskoho St Kyiv 01054 Ukraine Tel +380 44 590 0101 Fax +380 44 590 0110 Ihor Olekhov Hennadiy Voytsitskyi London 100 New Bridge Street London EC4V 6JA England Tel +44 20 7919 1000 Fax +44 20 7919 1999 Ashley Crossley Anthony Poulton Katie Davies James Norman Phyllis Townsend David Whittaker Gemma Willingham Lima Estudio Echecopar Av De La Floresta 497 Piso 5 San Borja Lima 41 Peru Tel +51 1 618 8500 Fax +51 1 372 7171 372 7374 Joseacute Talledo Erik Lind

Luxembourg 10-12 Boulevard Roosevelt L-2450 Luxembourg Tel +352 26 18 44 1 Fax +352 26 18 44 99 Andreacute Pesch Amar Hamouche Manama 18th Floor West Tower Bahrain Financial Harbour PO Box 11981 Manama Kingdom of Bahrain Tel +973 1710 2000 Fax +973 1710 2020 Ian Siddell Julie Alexander Madrid Paseo de la Castellana 92 28046 Madrid Tel +34 91 230 45 00 Fax +34 91 391 5145 391 5149 Luis Briones Antonio Zurera Jaime Martiacutenez Iacutentildeiguez Manila 12th Floor Net One Center 26th Street corner 3rd Avenue Crescent Park West Bonifacio Global City Taguig Metro Manila 1634 Philippines Postal Address MCPO Box 1578 Tel +63 2 819 4700 Fax +63 2 816 0080 728 7777 Dennis Dimagiba Melbourne Level 19 CBW 181 William Street Melbourne Victoria 3000 Melbourne GPO Box 2119T DX 334 Melbourne Tel +61 3 9617 4200 Fax +61 3 9614 2103 John Walker Mexico City Edificio Virreyes Pedregal 24 piso 12 Lomas Virreyes Col Molino del Rey 11040 Meacutexico DF Tel +52 55 5279 2900 Fax +52 55 5279 2999 Jorge Narvaez-Hasfura Javier Ordonez-Namihira

September 2015


Miami Mellon Financial Center 1111 Brickell Avenue Suite 1700 Miami Florida 33131 Tel +1 305 789 8900 Fax +1 305 789 8953 Bob Hudson James H Barrett Simon Beck Stewart Kasner Bobby Moore Abraham Smith Steven Hadjilogiou Jennifer Wioncek Daniel Hudson Pratiksha Patel Cecilia Hassan Sean Tevel Michael Melrose Milan 3 Piazza Meda 20121 Milan Italy Tel +39 02 76231 1 Fax +39 02 76231 620 Francesco Florenzano Barbara Faini Moscow White Gardens 10th Floor 9 Lesnaya Street Moscow 125047 Russia Tel +7 495 787 2700 Fax +7 495 787 2701 Alexander Chmelev Sergei Zhestkov Igor Kuznets New York 1114 Avenue of the Americas New York New York 10036 Tel +1 212 626 4100 Fax +1 212 310 1600 Marc Levey Doug Tween Glenn Fox Brian Arthur Paul DePasquale Palo Alto 660 Hansen Way Palo Alto California 94304 Tel +1 650 856 2400 Fax +1 650 856 9299 Scott Frewing

Paris 1 rue Paul Baudry 75008 Paris France Tel +33 1 44 17 53 00 Fax +33 1 44 17 45 75 Agnes Charpenet Malvina Puzenat Prague Praha City Center Klimentskaacute 46 110 02 Prague 1 Czech Republic Tel +420 236 045 001 Fax +420 236 045 055 Pavel Fekar Riyadh Legal Advisors (Abdulaziz I Al-Ajlan amp Partners in association with Baker amp McKenzie Limited) Olayan Centre ndash Tower II Al-Ahsa Street Malaz PO Box 4288 Riyadh 11491 Tel +966 11 291 5561 Fax +966 11 291 5571 Karim Nassar Rome Viale di Villa Massimo 57 00161 Rome Italy Tel +39 06 44 06 31 Fax +39 06 44 06 33 06 Aurelio Giovannelli Satildeo Paulo Rua Arquiteto Olavo Redig de Campos 105-31 Floor (Ed EZ Towers - Torre A) Sao Paulo SP Brazil CEP 04711-904 Tel +55 11 3048 6800 Fax +55 11 5506 3455 Alessandra S Machado Simone D Musa Adriana Stamato Lavinia Junqueira Elisabeth Libertuci

Santiago Nueva Tajamar 481 Torre Norte Piso 21 Las Condes Santiago Chile Tel +56 2 367 7000 Fax +56 2 362 9876 362 9877 362 9878 Sergio Illanes Leon Larrain Ignacio Garcia Singapore 8 Marina Boulevard 05-01 Marina Bay Financial Centre Tower 1 Singapore 018981 Tel +65 6338 1888 Fax +65 6337 5100 Dawn Quek Esme Wei Stockholm PO Box 180 SE-101 23 Stockholm Sweden Visiting address Vasagatan 7 Floor 8 SE-111 20 Stockholm Sweden Tel +46 8 566 177 00 Fax +46 8 566 177 99 Bo Lindqvist Linnea Back Sydney Level 27 AMP Centre 50 Bridge Street Sydney NSW 2000 Postal Address PO Box R126 Royal Exchange Sydney NSW 2000 Tel +61 2 9225 0200 Fax +61 2 9225 1595 John Walker Taipei 15th Floor Hung Tai Center No 168 Tun Hwa North Road Taipei Taiwan 105 Tel +886 2 2712 6151 Fax +886 2 2716-9250 2712 8292 Michael Wong Dennis Lee



Tokyo The Prudential Tower 13-10 Nagatacho 2-Chome Chiyoda-Ku Tokyo 100-0014 Japan Tel +81 3 5157 2700 Fax +81 3 5157 2900 Edwin Whatley Toronto Brookfield Place 181 Bay Street Suite 2100 PO Box 874 Toronto Ontario M5J 2T3 Tel +1 416 863 1221 Fax +1 416 863 6275 Kristy Balkwill Vienna Schottenring 25 1010 Vienna Austria Tel +43 1 24 250 Fax +43 1 24 250 600 Christoph Urtz Warsaw Rondo ONZ 100-124 Warsaw Poland Tel +48 22 445 31 00 Fax +48 22 445 32 00 Piotr Wysocki Washington DC 815 Connecticut Avenue NW Washington DC 20006-4078 Tel +1 202 452 7000 Fax +1 202 452 7074 George Clarke Christine Sloan Kathleen Agbayani

Zuumlrich Holbeinstrasse 30 PO Box 8034 Zurich Switzerland Tel +41 44 384 14 14 Fax +41 44 384 12 84 Marnin Michaels Richard Gassmann Lyubomir Georgiev Marie-Theacuteregravese Yates Jacopo Crivellaro Robert Desax David Gershel Devan Patrick Thomas Salmon Greg Walsh Editorial Contacts Stephanie Jarrett (Geneva) Managing Editor Tel +41 22 707 98 21 stephaniejarrettbakermckenziecom For further information regarding the newsletter please contact Aubrey Barrameda (Manila) Publication Coordinator Tel +63 2 558 93 23 aubreybarramedabakermckenziecom

Baker amp McKenzie has been global since inception Being global is part of our DNA

Our difference is the way we think work and behave ndash we combine an instinctively global perspective with a genuinely multicultural approach enabled by collaborative relationships and yielding practical innovative advice Serving our clients with more than 4200 lawyers in more than 45 countries we have a deep understanding of the culture of business the world over and are able to bring the talent and experience needed to navigate complexity across practices and borders with ease

wwwbakermckenziecom

copy 2015 Baker amp McKenzie All rights reserved Baker amp McKenzie International is a Swiss Verein with member law firms around the world In accordance with the common terminology used in professional service organizations reference to a ldquopartnerrdquo means a person who is a partner or equivalent in such a law firm Similarly reference to an ldquoofficerdquo means an office of any such law firm

This may qualify as ldquoAttorney Advertisingrdquo requiring notice in some jurisdictions Prior results do not guarantee a similar outcome

Blank Page

ltlt13 ASCII85EncodePages false13 AllowTransparency false13 AutoPositionEPSFiles true13 AutoRotatePages None13 Binding Left13 CalGrayProfile (Dot Gain 20)13 CalRGBProfile (sRGB IEC61966-21)13 CalCMYKProfile (US Web Coated 050SWOP051 v2)13 sRGBProfile (sRGB IEC61966-21)13 CannotEmbedFontPolicy Error13 CompatibilityLevel 1413 CompressObjects Tags13 CompressPages true13 ConvertImagesToIndexed true13 PassThroughJPEGImages true13 CreateJobTicket false13 DefaultRenderingIntent Default13 DetectBlends true13 DetectCurves 0000013 ColorConversionStrategy CMYK13 DoThumbnails false13 EmbedAllFonts true13 EmbedOpenType false13 ParseICCProfilesInComments true13 EmbedJobOptions true13 DSCReportingLevel 013 EmitDSCWarnings false13 EndPage -113 ImageMemory 104857613 LockDistillerParams false13 MaxSubsetPct 10013 Optimize true13 OPM 113 ParseDSCComments true13 ParseDSCCommentsForDocInfo true13 PreserveCopyPage true13 PreserveDICMYKValues true13 PreserveEPSInfo true13 PreserveFlatness true13 PreserveHalftoneInfo false13 PreserveOPIComments true13 PreserveOverprintSettings true13 Start13 SubsetFonts true13 TransferFunctionInfo Apply13 UCRandBGInfo Preserve13 UsePrologue false13 ColorSettingsFile ()13 AlwaysEmbed [ true13 ]13 NeverEmbed [ true13 ]13 AntiAliasColorImages false13 CropColorImages true13 ColorImageMinResolution 30013 ColorImageMinResolutionPolicy OK13 DownsampleColorImages true13 ColorImageDownsampleType Bicubic13 ColorImageResolution 30013 ColorImageDepth -113 ColorImageMinDownsampleDepth 113 ColorImageDownsampleThreshold 15000013 EncodeColorImages true13 ColorImageFilter DCTEncode13 AutoFilterColorImages true13 ColorImageAutoFilterStrategy JPEG13 ColorACSImageDict ltlt13 QFactor 01513 HSamples [1 1 1 1] VSamples [1 1 1 1]13 gtgt13 ColorImageDict ltlt13 QFactor 01513 HSamples [1 1 1 1] VSamples [1 1 1 1]13 gtgt13 JPEG2000ColorACSImageDict ltlt13 TileWidth 25613 TileHeight 25613 Quality 3013 gtgt13 JPEG2000ColorImageDict ltlt13 TileWidth 25613 TileHeight 25613 Quality 3013 gtgt13 AntiAliasGrayImages false13 CropGrayImages true13 GrayImageMinResolution 30013 GrayImageMinResolutionPolicy OK13 DownsampleGrayImages true13 GrayImageDownsampleType Bicubic13 GrayImageResolution 30013 GrayImageDepth -113 GrayImageMinDownsampleDepth 213 GrayImageDownsampleThreshold 15000013 EncodeGrayImages true13 GrayImageFilter DCTEncode13 AutoFilterGrayImages true13 GrayImageAutoFilterStrategy JPEG13 GrayACSImageDict ltlt13 QFactor 01513 HSamples [1 1 1 1] VSamples [1 1 1 1]13 gtgt13 GrayImageDict ltlt13 QFactor 01513 HSamples [1 1 1 1] VSamples [1 1 1 1]13 gtgt13 JPEG2000GrayACSImageDict ltlt13 TileWidth 25613 TileHeight 25613 Quality 3013 gtgt13 JPEG2000GrayImageDict ltlt13 TileWidth 25613 TileHeight 25613 Quality 3013 gtgt13 AntiAliasMonoImages false13 CropMonoImages true13 MonoImageMinResolution 120013 MonoImageMinResolutionPolicy OK13 DownsampleMonoImages true13 MonoImageDownsampleType Bicubic13 MonoImageResolution 120013 MonoImageDepth -113 MonoImageDownsampleThreshold 15000013 EncodeMonoImages true13 MonoImageFilter CCITTFaxEncode13 MonoImageDict ltlt13 K -113 gtgt13 AllowPSXObjects false13 CheckCompliance [13 None13 ]13 PDFX1aCheck false13 PDFX3Check false13 PDFXCompliantPDFOnly false13 PDFXNoTrimBoxError true13 PDFXTrimBoxToMediaBoxOffset [13 00000013 00000013 00000013 00000013 ]13 PDFXSetBleedBoxToMediaBox true13 PDFXBleedBoxToTrimBoxOffset [13 00000013 00000013 00000013 00000013 ]13 PDFXOutputIntentProfile ()13 PDFXOutputConditionIdentifier ()13 PDFXOutputCondition ()13 PDFXRegistryName ()13 PDFXTrapped False1313 CreateJDFFile false13 Description ltlt13 ARA 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 BGR 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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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 HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA ltFEFF005500740069006c0069007a007a006100720065002000710075006500730074006500200069006d0070006f007300740061007a0069006f006e00690020007000650072002000630072006500610072006500200064006f00630075006d0065006e00740069002000410064006f00620065002000500044004600200070006900f900200061006400610074007400690020006100200075006e00610020007000720065007300740061006d0070006100200064006900200061006c007400610020007100750061006c0069007400e0002e0020004900200064006f00630075006d0065006e007400690020005000440046002000630072006500610074006900200070006f00730073006f006e006f0020006500730073006500720065002000610070006500720074006900200063006f006e0020004100630072006f00620061007400200065002000410064006f00620065002000520065006100640065007200200035002e003000200065002000760065007200730069006f006e006900200073007500630063006500730073006900760065002egt13 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH ltFEFF004e006100750064006f006b0069007400650020016100690075006f007300200070006100720061006d006500740072007500730020006e006f0072011700640061006d00690020006b0075007200740069002000410064006f00620065002000500044004600200064006f006b0075006d0065006e007400750073002c0020006b00750072006900650020006c0061006200690061007500730069006100690020007000720069007400610069006b007900740069002000610075006b01610074006f00730020006b006f006b007900620117007300200070006100720065006e006700740069006e00690061006d00200073007000610075007300640069006e0069006d00750069002e0020002000530075006b0075007200740069002000500044004600200064006f006b0075006d0065006e007400610069002000670061006c006900200062016b007400690020006100740069006400610072006f006d00690020004100630072006f006200610074002000690072002000410064006f00620065002000520065006100640065007200200035002e0030002000610072002000760117006c00650073006e0117006d00690073002000760065007200730069006a006f006d00690073002egt13 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO 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 SVE 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 TUR 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 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13

Table of Contents Feature

Automatic Exchange OECD Common Reporting Standard implementation 1

Case Summaries

France

Funds transferred to an undeclared account abroad and presumption of income 14 Business assets exempt from the wealth tax (ISF) Is the managerrsquos company housing a business asset 15 Corporate tax liability of a SCI due to the real estate purchase and resale activity of one of its shareholders 15

Germany

Qualification of a Liechtenstein foundation as a privileged family foundation Tax exemption of dividend income for foreign family foundations and trusts 16

Jersey

In the Matter of the Y Trust - When can a trustee surrender its power to the court 18

United Kingdom

Pugachev Freezing orders and disclosure orders - making trusts susceptible to attack 20

United States

US Tax Court issues important decision on investor control over variable life insurance policy assets 23

Legal Developments

Argentina

Extension of the amnesty program for the disclosure of unreported foreign currency 26

Australia

OTC derivatives draft rules and regulations released Central clearing and single-sided trade reporting 28

Belgium

New ldquoCayman Taxrdquo published 31

China

Withholding tax treatment for China-sourced interest received by Chinese banksrsquo foreign branches clarified 35

Germany

Update on the draft bill on changing the German Inheritance and Gift Tax Act 35 Reform of the taxation of fund investments 36

Mexico

SAT will audit foreign accounts 38 Mexican Anti-Money Laundering Law 38

Taiwan

Legislature announces amendments to the Income Tax Act affecting capital gains tax in the sale of real property 38

Thailand


Ukraine




United Kingdom


United States


Around the Corner


Forthcoming Events


September 2015

Feature | 1














2 | Feature













September 2015

Feature | 3















4 | Feature

















September 2015

Feature | 5













6 | Feature


















September 2015

Feature | 7













8 | Feature











September 2015

Feature | 9








10 | Feature







Issue Comment







September 2015

Feature | 11

Issue Comment





















12 | Feature

Issue Comment














September 2015

Feature | 13















September 2015























September 2015













The decision




September 2015


















High Court orders




September 2015





















September 2015



























September 2015

















I BAADE PAPDE


II CEDIN






September 2015














V Benefits




















September 2015






















September 2015











(i) Trusts



















September 2015





























September 2015



















September 2015


















1 Effective date






September 2015


























September 2015



























September 2015

















September 2015





























September 2015








Unknown








TBD TBD


TBD TBD









25 Id 26 Id

September 2015






























September 2015

























September 2015































September 2015










































September 2015



relief restriction


























September 2015

























September 2015






















September 2015











Around the Corner1










September 2015






















September 2015


















September 2015

















September 2015

















September 2015





Zurich








McKenzie Zurich)










Dubai



United States Miami



September 2015










September 2015











wwwbakermckenziecom



Blank Page

ltlt13 ASCII85EncodePages false13 AllowTransparency false13 AutoPositionEPSFiles true13 AutoRotatePages None13 Binding Left13 CalGrayProfile (Dot Gain 20)13 CalRGBProfile (sRGB IEC61966-21)13 CalCMYKProfile (US Web Coated 050SWOP051 v2)13 sRGBProfile (sRGB IEC61966-21)13 CannotEmbedFontPolicy Error13 CompatibilityLevel 1413 CompressObjects Tags13 CompressPages true13 ConvertImagesToIndexed true13 PassThroughJPEGImages true13 CreateJobTicket false13 DefaultRenderingIntent Default13 DetectBlends true13 DetectCurves 0000013 ColorConversionStrategy CMYK13 DoThumbnails false13 EmbedAllFonts true13 EmbedOpenType false13 ParseICCProfilesInComments true13 EmbedJobOptions true13 DSCReportingLevel 013 EmitDSCWarnings false13 EndPage -113 ImageMemory 104857613 LockDistillerParams false13 MaxSubsetPct 10013 Optimize true13 OPM 113 ParseDSCComments true13 ParseDSCCommentsForDocInfo true13 PreserveCopyPage true13 PreserveDICMYKValues true13 PreserveEPSInfo true13 PreserveFlatness true13 PreserveHalftoneInfo false13 PreserveOPIComments true13 PreserveOverprintSettings true13 StartPage 113 SubsetFonts true13 TransferFunctionInfo Apply13 UCRandBGInfo Preserve13 UsePrologue false13 ColorSettingsFile ()13 AlwaysEmbed [ true13 ]13 NeverEmbed [ true13 ]13 AntiAliasColorImages false13 CropColorImages true13 ColorImageMinResolution 30013 ColorImageMinResolutionPolicy OK13 DownsampleColorImages true13 ColorImageDownsampleType Bicubic13 ColorImageResolution 30013 ColorImageDepth -113 ColorImageMinDownsampleDepth 113 ColorImageDownsampleThreshold 15000013 EncodeColorImages true13 ColorImageFilter DCTEncode13 AutoFilterColorImages true13 ColorImageAutoFilterStrategy JPEG13 ColorACSImageDict ltlt13 QFactor 01513 HSamples [1 1 1 1] VSamples [1 1 1 1]13 gtgt13 ColorImageDict ltlt13 QFactor 01513 HSamples [1 1 1 1] VSamples [1 1 1 1]13 gtgt13 JPEG2000ColorACSImageDict ltlt13 TileWidth 25613 TileHeight 25613 Quality 3013 gtgt13 JPEG2000ColorImageDict ltlt13 TileWidth 25613 TileHeight 25613 Quality 3013 gtgt13 AntiAliasGrayImages false13 CropGrayImages true13 GrayImageMinResolution 30013 GrayImageMinResolutionPolicy OK13 DownsampleGrayImages true13 GrayImageDownsampleType Bicubic13 GrayImageResolution 30013 GrayImageDepth -113 GrayImageMinDownsampleDepth 213 GrayImageDownsampleThreshold 15000013 EncodeGrayImages true13 GrayImageFilter DCTEncode13 AutoFilterGrayImages true13 GrayImageAutoFilterStrategy JPEG13 GrayACSImageDict ltlt13 QFactor 01513 HSamples [1 1 1 1] VSamples [1 1 1 1]13 gtgt13 GrayImageDict ltlt13 QFactor 01513 HSamples [1 1 1 1] VSamples [1 1 1 1]13 gtgt13 JPEG2000GrayACSImageDict ltlt13 TileWidth 25613 TileHeight 25613 Quality 3013 gtgt13 JPEG2000GrayImageDict ltlt13 TileWidth 25613 TileHeight 25613 Quality 3013 gtgt13 AntiAliasMonoImages false13 CropMonoImages true13 MonoImageMinResolution 120013 MonoImageMinResolutionPolicy OK13 DownsampleMonoImages true13 MonoImageDownsampleType Bicubic13 MonoImageResolution 120013 MonoImageDepth -113 MonoImageDownsampleThreshold 15000013 EncodeMonoImages true13 MonoImageFilter CCITTFaxEncode13 MonoImageDict ltlt13 K -113 gtgt13 AllowPSXObjects false13 CheckCompliance [13 None13 ]13 PDFX1aCheck false13 PDFX3Check false13 PDFXCompliantPDFOnly false13 PDFXNoTrimBoxError true13 PDFXTrimBoxToMediaBoxOffset [13 00000013 00000013 00000013 00000013 ]13 PDFXSetBleedBoxToMediaBox true13 PDFXBleedBoxToTrimBoxOffset [13 00000013 00000013 00000013 00000013 ]13 PDFXOutputIntentProfile ()13 PDFXOutputConditionIdentifier ()13 PDFXOutputCondition ()13 PDFXRegistryName ()13 PDFXTrapped False1313 CreateJDFFile false13 Description ltlt13 ARA 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 BGR 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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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 HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV ltFEFF005400650020006e006100730074006100760069007400760065002000750070006f0072006100620069007400650020007a00610020007500730074007600610072006a0061006e006a006500200064006f006b0075006d0065006e0074006f0076002000410064006f006200650020005000440046002c0020006b006900200073006f0020006e0061006a007000720069006d00650072006e0065006a016100690020007a00610020006b0061006b006f0076006f00730074006e006f0020007400690073006b0061006e006a00650020007300200070007200690070007200610076006f0020006e00610020007400690073006b002e00200020005500730074007600610072006a0065006e006500200064006f006b0075006d0065006e0074006500200050004400460020006a00650020006d006f0067006f010d00650020006f0064007000720065007400690020007a0020004100630072006f00620061007400200069006e002000410064006f00620065002000520065006100640065007200200035002e003000200069006e0020006e006f00760065006a01610069006d002egt13 SUO 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 SVE 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 TUR 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 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13

Thailand


Ukraine




United Kingdom


United States


Around the Corner


Forthcoming Events


September 2015

Feature | 1














2 | Feature













September 2015

Feature | 3















4 | Feature

















September 2015

Feature | 5













6 | Feature


















September 2015

Feature | 7













8 | Feature











September 2015

Feature | 9








10 | Feature







Issue Comment







September 2015

Feature | 11

Issue Comment





















12 | Feature

Issue Comment














September 2015

Feature | 13















September 2015























September 2015













The decision




September 2015


















High Court orders




September 2015





















September 2015



























September 2015

















I BAADE PAPDE


II CEDIN






September 2015














V Benefits




















September 2015






















September 2015











(i) Trusts



















September 2015





























September 2015



















September 2015


















1 Effective date






September 2015


























September 2015



























September 2015

















September 2015





























September 2015








Unknown








TBD TBD


TBD TBD









25 Id 26 Id

September 2015






























September 2015

























September 2015































September 2015










































September 2015



relief restriction


























September 2015

























September 2015






















September 2015











Around the Corner1










September 2015






















September 2015


















September 2015

















September 2015

















September 2015





Zurich








McKenzie Zurich)










Dubai



United States Miami



September 2015










September 2015











wwwbakermckenziecom



Blank Page


September 2015

Feature | 1














2 | Feature













September 2015

Feature | 3















4 | Feature

















September 2015

Feature | 5













6 | Feature


















September 2015

Feature | 7













8 | Feature











September 2015

Feature | 9








10 | Feature







Issue Comment







September 2015

Feature | 11

Issue Comment





















12 | Feature

Issue Comment














September 2015

Feature | 13















September 2015























September 2015













The decision




September 2015


















High Court orders




September 2015





















September 2015



























September 2015

















I BAADE PAPDE


II CEDIN






September 2015














V Benefits




















September 2015






















September 2015











(i) Trusts



















September 2015





























September 2015



















September 2015


















1 Effective date






September 2015


























September 2015



























September 2015

















September 2015





























September 2015








Unknown








TBD TBD


TBD TBD









25 Id 26 Id

September 2015






























September 2015

























September 2015































September 2015










































September 2015



relief restriction


























September 2015

























September 2015






















September 2015











Around the Corner1










September 2015






















September 2015


















September 2015

















September 2015

















September 2015





Zurich








McKenzie Zurich)










Dubai



United States Miami



September 2015










September 2015











wwwbakermckenziecom



Blank Page



2 | Feature













September 2015

Feature | 3















4 | Feature

















September 2015

Feature | 5













6 | Feature


















September 2015

Feature | 7













8 | Feature











September 2015

Feature | 9








10 | Feature







Issue Comment







September 2015

Feature | 11

Issue Comment





















12 | Feature

Issue Comment














September 2015

Feature | 13















September 2015























September 2015













The decision




September 2015


















High Court orders




September 2015





















September 2015



























September 2015

















I BAADE PAPDE


II CEDIN






September 2015














V Benefits




















September 2015






















September 2015











(i) Trusts



















September 2015





























September 2015



















September 2015


















1 Effective date






September 2015


























September 2015



























September 2015

















September 2015





























September 2015








Unknown








TBD TBD


TBD TBD









25 Id 26 Id

September 2015






























September 2015

























September 2015































September 2015










































September 2015



relief restriction


























September 2015

























September 2015






















September 2015











Around the Corner1










September 2015






















September 2015


















September 2015

















September 2015

















September 2015





Zurich








McKenzie Zurich)










Dubai



United States Miami



September 2015










September 2015











wwwbakermckenziecom



Blank Page


September 2015

Feature | 3















4 | Feature

















September 2015

Feature | 5













6 | Feature


















September 2015

Feature | 7













8 | Feature











September 2015

Feature | 9








10 | Feature







Issue Comment







September 2015

Feature | 11

Issue Comment





















12 | Feature

Issue Comment














September 2015

Feature | 13















September 2015























September 2015













The decision




September 2015


















High Court orders




September 2015





















September 2015



























September 2015

















I BAADE PAPDE


II CEDIN






September 2015














V Benefits




















September 2015






















September 2015











(i) Trusts



















September 2015





























September 2015



















September 2015


















1 Effective date






September 2015


























September 2015



























September 2015

















September 2015





























September 2015








Unknown








TBD TBD


TBD TBD









25 Id 26 Id

September 2015






























September 2015

























September 2015































September 2015










































September 2015



relief restriction


























September 2015

























September 2015






















September 2015











Around the Corner1










September 2015






















September 2015


















September 2015

















September 2015

















September 2015





Zurich








McKenzie Zurich)










Dubai



United States Miami



September 2015










September 2015











wwwbakermckenziecom



Blank Page



4 | Feature

















September 2015

Feature | 5













6 | Feature


















September 2015

Feature | 7













8 | Feature











September 2015

Feature | 9








10 | Feature







Issue Comment







September 2015

Feature | 11

Issue Comment





















12 | Feature

Issue Comment














September 2015

Feature | 13















September 2015























September 2015













The decision




September 2015


















High Court orders




September 2015





















September 2015



























September 2015

















I BAADE PAPDE


II CEDIN






September 2015














V Benefits




















September 2015






















September 2015











(i) Trusts



















September 2015





























September 2015



















September 2015


















1 Effective date






September 2015


























September 2015



























September 2015

















September 2015





























September 2015








Unknown








TBD TBD


TBD TBD









25 Id 26 Id

September 2015






























September 2015

























September 2015































September 2015










































September 2015



relief restriction


























September 2015

























September 2015






















September 2015











Around the Corner1










September 2015






















September 2015


















September 2015

















September 2015

















September 2015





Zurich








McKenzie Zurich)










Dubai



United States Miami



September 2015










September 2015











wwwbakermckenziecom



Blank Page


Private Banking Newsletter - Baker McKenzie

Documents

Transcript of Private Banking Newsletter - Baker McKenzie