CMS Tax Connect | After the crisis, a new tax landscape, Summary report - 2011 Annual tax conference

More than two years after the economic turmoils triggered by the bankruptcy of the Lehman Brothers bank, businesses are still dealing with the legislative and regulatory repercussions of the crisis and the resultant new tax landscape.

One of the main consequences is the need for most governments to find new tax resources in order to deal with the budget crisis. That situation has led to various taxes, particularly in the financial sector. As far as company tax is concerned, tax authorities are focusing their efforts in the transfer pricing area. The issue for States is not only finding new resources but “defending” the national share of tax receipts deriving from international operations. The everexpanding requirement to document intra-group transactions forms part of that increased scrutiny. In that connection, intangible assets are a favoured target.

Intensifying international cooperation is at the same time being brought to bear on preventing tax evasion, with a concomitant “hardening up” by some tax authorities. Even if it is still the exception in most countries, resort to criminal law provisions is now being envisaged for operations which hitherto have rarely if all been under scrutiny. There is a growing tendency to impose greater demands with respect to economic “substance”. In order however to move away from a purely “repressive” approach, some tax authorities are establishing dialogue procedures with some taxpayers with a view to guaranteeing greater legal certainty to the latter in return for greater a priori transparency.

Those developments are occurring in a context in which tax competition between States is still intense, including within the European Union, in order to attract investors. Hence, businesses investments or acquisitions can always lend themselves to favourable tax trade-offs, particularly in the finance area, once the scope of potentially applicable antiabuse rules has been analysed.

The 2011 CMS Annual Tax Conference provided an opportunity to take stock of the above topics. The nature and extent of the changes European multinational companies are now facing were very clearly illustrated by way of introduction by executives from the Dexia group. Subsequently specific workshops enabled CMS network lawyers to delve into the abovementioned topics: tax management and intangible asset transfer pricing policy, criminalisation of taxation law, and acquisition financing. They were topped off with other current technical developments: changes to real estate VAT and legislative developments in Central and Eastern Europe.

The edition of CMS Tax Connect takes account of the above work and allows us to continue with our shared analysis. So please do not hesitate to let us have your comments or suggestions about the issues dealt with here, or indeed any other topics of more immediate concern to you!

François Rontani
Chair of the 2011 CMS Annual Tax Conference

Contents

• Acquisition financing in Europe
• Intangibles, a key source of growth
• Improved relations with tax authorities vs. Criminalisation of tax law
• VAT: immovable property transactions
• Tax news from Central and Eastern European countries