Background
One of the main features of the VAT regime in the European Union (EU) is the VAT invoice, as this is the main tax document that determines when VAT has to be accounted for. It is also the primary document for a business to determine when it is entitled to recover what it has been charged. Historically, the invoices have been in paper form and the rules governing their content and issue have reflected this. However, increasingly businesses have been adopting electronic invoicing and although the VAT Directive provided for electronic invoicing the rules were more restrictive and not consistent across the Member States. In order to address this issue the Council of the EU has adopted a Directive aimed at simplifying the VAT invoicing requirements in particular as regards electronic invoicing.
Summary of the UK Budget delivered by the chancellor on 22nd June 2010
TRUE PARTNERS CONSULTING INTERNATIONAL NETWORK (TPCI) CORDIALLY INVITES YOU to an International Tax seminar to be held in Munich, Germany on June 17th and June 18th, 2010. This seminar will focus on the challenges of managing your tax exposure and risk in an ever changing global marketplace. The topics will be presented both in panel discussions and comprehensive case studies.
Background
The recovery of VAT on deal costs has for many years been a source of dispute between taxpayers and HM Revenue & Customs. This has led to much litigation over the years, with the last few months seeing two high profile cases, both of which resulted in victory for the taxpayer. Although HM Revenue & Customs has already launched an appeal in the first case, and are likely to do so in the second, taxpayers and their advisors should be considering the implications both for deals done in the past and those currently underway.
Viability Studies
The first case that was dealt with in 2009 by the Tribunal, concerned the recovery of VAT on a viability study commissioned to provide information to a prospective lender. The case was taken by My Travel Group (now Airtours Transport Limited), who had been having financial difficulties and needed to restructure their borrowings. Under a tripartite arrangement with a bank and a third party advisor, a viability study was prepared with the advisor invoicing My Travel for the work rather than the bank. My Travel successfully argued that under the principles established by the much earlier Redrow case, it paid for the viability service to be supplied to it and the bank.
As the primary purpose of commissioning the study was to ensure that My Travel could continue to trade and make taxable supplies, it was entitled to recover the VAT in full. HM Revenue & Customs had argued that the supply was made to the bank, with the benefit to My Travel being ancillary. HM Revenue & Customs has appealed against this decision.
Fees incurred by Acquisition vehicle.
The second case concerned the acquisition by Spanish infrastructure group, Ferrovial, of the UK airport operator BAA Plc. As is the case with most large acquisitions Ferrovial set up a new vehicle, NEWCO, to make the acquisition, and NEWCO incurred numerous fees from advisors on which it incurred VAT. Once the acquisition was completed, NEWCO joined the BAA VAT group, though there was a two month gap between the completion of the acquisition and NEWCO becoming a member of the VAT Group.
HM Revenue & Customs argued that the VAT incurred on advisers fees (by NEWCO), was a direct cost of the finance it raised and did not relate to any taxable supplies made by the BAA VAT group.
The Tribunal, however, accepted the argument that NEWCO, as the holding company for BAA, always intended to provide management, strategic advice, corporate governance and financing services to BAA. It was, therefore, carrying on an economic activity from its inception, despite the fact it did not make any charges to its subsidiaries before becoming a member of the VAT group. The Tribunal also concluded that as NEWCO was a member of the BAA VAT group they were a single entity for VAT purposes and the taxable supplies of BAA could be imputed to NEWCO.
Way Forward
The two decisions of the Tribunal provide guidance on a number of technical issues which taxpayers need to be aware of when considering the recovery of VAT on deal costs. Consideration should now be given to the recovery of VAT incurred in the past and the structure of deals in the future, whilst continuing to monitor the further litigation there will be in respect of these cases.
The Irish Finance Bill for 2010 has introduced transfer pricing rules based on OECD Transfer Pricing Guidelines.
The legislation will apply in 2011 to any intercompany trading transactions entered into on or after 1 July 2010. All transactions entered into before 1 July 2010 will be wholly exempt. This grandfather clause provides a one off planning opportunity for multinationals to ensure that their arrangements fall outside the scope of the new rules.
Key features
• Applies only to transactions by a taxpayer engaged in a trade or business attracting the 12.5% tax rate.
• Passive income that is subject to tax at 25% will fall outside the scope.
• The effective date is accounting periods commencing on or after 1 January 2011 in relation to any arrangement entered into on or after 1 July 2010.
• Purely domestic arrangements will also be caught.
• Adjustments will apply only where profits of an Irish taxpayer are understated as a result of non arm’s length transfer pricing practices. Where the transaction is between domestic companies, a corresponding adjustment can be claimed by the counter party.
• Documentation is required although the exact nature and timing is to be classified further.
• Small and medium sized enterprises (“SME”) will be exempt. A group will be considered a SME if it has:
- less than 250 employees, AND
- either turnover of less than Euros 50m or assets of less than Euros 43m.
• There are no specific transfer pricing penalty provisions but it is likely that the general corporation tax penalties will apply.
Planning
Due to the grandfathering provisions, multinationals should review their Irish transactions and ensure they are adequately documented before 1 July 2010.
Background
Where a non EU business purchases goods or services from a UK VAT registered business, in many cases it will not be charged UK VAT. However, there are many instances where UK VAT will be charged and if a non EU business is not registered for VAT in the UK it will not be able to recover this charge through the submission of a VAT return.
There are though, provisions which allow a non EU business to seek to recover VAT incurred in the UK directly from the UK authorities. The UK has though placed restrictions on certain businesses using this procedure which have now been challenged before the European Court. The implications of this challenge are set out below.
Businesses eligible to use the scheme
A non EU business can use the refund scheme so long as:
• It is not registered, liable, or eligible to be registered for VAT in the UK;
• It has no place of business or other place of residence in the EU;
• No supplies of goods or services are made in the UK, with the exception of international transport services or services where the customer accounts for VAT.
• The VAT incurred has not been used for the purpose of insurance and financial transactions.
European Court Hearing
The legislation which blocks non EU businesses recovering VAT which is incurred in relation to insurance and financial transactions was introduced with effect from 3 December 2004. The change in the legislation was designed to block a specific VAT planning scheme which was subsequently defeated on the principle of abuse on rights. However, the block on VAT recovery for insurance and financial transactions has remained within the UK legislation.
The European Commission, however, took the view that this part of the UK legislation was not allowed under the Thirteenth VAT Directive, which sets out the rules that each Member State should introduce into their domestic legislation. In particular it has argued that the UK can not refuse to refund VAT to non EU businesses where a business established in the UK is entitled under UK domestic legislation to recover the VAT in relation to supplies to non EU recipients.
As a consequence, the Commission took infringement proceedings against the UK and the case will be heard by the European Court of Justice on 10 February 2010.
Way Forward
If the European Court finds in favour of the Commission, it means that the UK has been refusing to repay claims from non EU businesses in breach of the EU VAT legislation. This will require the UK to amend its domestic legislation so that such claims will be accepted in the future, and it will also have to address claims which have been rejected in the past.
The position of non EU Businesses which never submitted claims because of the UK legislation must also be addressed.
Those non EU businesses which have had claims rejected, or never submitted claims, should consider establishing the VAT which has been incurred since 2004 in relation to insurance and financial transactions, so that if the Court rules against the UK they can consider making claims for the VAT.
To help companies carefully plan their intercompany transfer pricing strategies and minimize their global tax rates, True Partners Consulting (UK) LLP hosted a free one-hour Web seminar entitled “Transfer Pricing: Compliance, Planning and Process in a Time of Scrutiny,” on 29th January 2009 3 pm UK time.
Les Secular and Abbas Sadak, our UK teams leading transfer pricing specialists went through the following:
- how UK transfer pricing rules work
- essentials of transfer pricing compliance
- benefits of “best methods” reviews and
- the necessary documentation to withstand enquiries from the UK tax authorities and other taxing authorities throughout the world.
To obtain a recording of the web seminar, please email Abbas Sadak on Abbas.Sadak@tpctax.co.uk
A free paper on transfer pricing is also available on request which was circulated as part of this web seminar.
Raymond Montero, Joseph McTague and Andrew Jackson add strength to leadership team
CHICAGO – November 12, 2008 – True Partners Consulting LLC today announced the addition of three new managing directors: Raymond Montero, 47, and Joseph McTague, 47, in the Los Angeles office, and Andrew Jackson, 48, at True Partners Consulting (U.K.) LLP in London, the rapidly growing firm’s first wholly owned office outside the United States.
"As part of our growth strategy, we continue to recruit some of the industry’s most talented and knowledgeable professionals to focus on our clients’ needs,” said Cary McMillan, chief executive officer of True Partners Consulting. "Raymond, Joseph and Andrew bring deep knowledge of complex tax issues in their respective regions and will infuse fresh energy and specialized expertise into our leadership teams in the L.A. and London offices."
Montero brings more than 23 years of experience with corporate and international tax consulting in the United States, United Kingdom and Mexico. In 2004, Montero formed a Professional Corporation to counsel public and private clients about cross-border structuring, transfer pricing related matters, outbound international planning and consultation relating to foreign tax credit.
Previously, Montero was a partner for six years in KPMG’s International Corporate Services (ICS) practice based in Los Angeles. Before joining KPMG, he was a partner with Arthur Andersen in London, where he led the firm’s U.S. Tax Practice based in London. A member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants, Montero has been a featured speaker at a number of industry seminars.
McTague has been a featured speaker at local, regional and national tax and economic development conferences on issues relating to income and other tax credits and business incentives, and he has led numerous focus groups relating to tax and client relations issues and shared his views on tax credit and business incentive issues with lawmakers in a number of states. McTague has been extensively involved in the California Enterprise Zone program and has worked diligently to successfully influence tax and audit policy at the agency and legislative levels. A graduate of the University of Florida, McTague earned a bachelor’s of science degree in telecommunications.
A Value Added Tax (VAT) Partner with True Partners Consulting’s London office, Jackson brings nearly 20 years experience with Big 4 firms and smaller practices. He specializes in providing indirect tax advice across a range of sectors, both private and public, and has been involved in a wide range of cross border transactions advising as part of a multidisciplinary team.
Previously, Jackson worked for HM Revenue & Customs for seven years as a VAT specialist. He has written and lectured on indirect tax issues, with a particular emphasis on property and financial service issues, and graduated from the London School of Economics.
True Partners Consulting (U.K.) LLP advises companies based in the United Kingdom, as well as multinational companies doing business there and other European markets, on a range of tax and business issues including transfer pricing, VAT, cross border transactions, structuring business operations and reorganizations. The office also undertakes all local compliance requirements.
About True Partners Consulting LLC
True Partners Consulting is a world-class tax and business advisory firm that helps large public and private enterprises navigate complex financial regulations without the Sarbanes-Oxley created conflicts inherent in offering both tax consulting and audit services. The firm provides a broad range of services, including analysis and counsel concerning the tax impact of business issues such as organic or acquisition-driven growth, filing practices, business restructuring or bankruptcy. The firm also conducts refund reviews, analyzes clients’ tax exposure and prepares responses to audit inquiries, in addition to helping clients address compliance issues.
The firm has offices in Chicago; New York; Los Angeles; San Jose, Calif.; Tampa Bay, Fla.; Boston; and London. There are also member firms in Paris; Turin, Italy; Barcelona, Spain; and Beijing, China; through the True Partners Consulting International network. Find additional information at www.tpctax.com.
Rapidly growing firm establishes offices in China, Italy and Spain
CHICAGO – Sept. 10, 2008 – True Partners Consulting LLC today announced that True Partners Consulting International Network, an association of tax consulting firms in select markets around the world, has reached agreement with three new affiliates in key international markets.
The three new member firms will join TPCI’s growing affiliates network in Beijing and Shanghai, China; Barcelona, Spain; and Turin, Italy; the company announced. The affiliates, which will be identified as “Member Firms of the True Partners Consulting International Network,” are:
•True Partners Consulting International (China) "挚盟咨询";
•Toda & Nel-lo Abogados, (Spain); and
•Studio Manzoni Pagliero Vanz e Associati (Italy).
“It is thrilling to further strengthen our ability to support our clients in the important global markets where they do business,” said Cary McMillan, chief executive officer of True Partners Consulting. “In less than three years of existence we have made aggressive efforts to support our clients wherever they do business and we’ll continue moving in that direction as we look ahead.”
The three new member firms of True Partners Consulting International will offer a powerful blend of services that True Partners Consulting clients can utilize in key international financial markets, according to McMillan.
True Partners Consulting International – China, is being formed by the owners of Hua-Ander, one of the first partnership accounting firms approved by the Ministry of Finance of the People's Republic of China. Hua-Ander is a full-service accounting, auditing and attestation firm. The new firm will provide tax services. True Partners China, will be led by Wang Guoqi, who has a rich knowledge of tax and international accounting, finance and auditing, and extensive experience in servicing multinational businesses. Guoqi and his partners have served a number of foreign investment enterprises (FIEs) and hi-tech ventures in China in the fields of business services, IFRS audit and review, due diligence, financial advisory, and management consultancy.
Founded in 1991, Toda & Nel-lo Abogados is a mid-sized Spanish firm in Barcelona, also servicing the rest of Spain (especially in Madrid), that specializes in tax & legal services. Serving clients throughout Spain, the firm’s main practice areas are taxation, company & commercial law, litigation, real estate, administrative law and labor law, and for clients in a variety of industries, such as administration (public and semi-public), real estate, pharmaceutical, health, chemical, energy and finance. The founding partners are Ignacio Toda, public prosecutor (abogado del Estado) on voluntary leave, and Ricard Nel-lo. Joan Pons is the partner who leads the tax department and will head the firm’s work with the TPC International Network.
Studio Manzoni Pagliero Vanz e Associati has been providing tax and business legal assistance for nearly four decades to select domestic and foreign clients who are leaders in their fields. The firm has significant experience in M&A transactions, business reorganization and enterprise appraisals, and its lawyers represent clients in disputed tax law matters in all degrees of Italian jurisdiction, including the Supreme Court of Cassation (Corte di Cassazione). Founded by Michele Pagliero, the firm was enlarged to Ignazio Manzoni and Giuseppe Vanz, professors of tax law at the University of Turin, and to other professionals. Natalia Operti, partner of the firm, will lead the work with the TPC International Network.
Through TPC International (a network of independently owned tax advisory firms), True Partners also has an affiliated member firm in Paris, ArtemTax International. Its first wholly owned office outside the United States is located in London and named True Partners Consulting (U.K.) LLP.
About Hua-Ander Certified Public Accountants
Now in its 11th year, Hua-Ander’s international expertise and experience, facilitated by strong English communication abilities, gives Hua-Ander an advantage in servicing foreign entities in China. The knowledge and insight into the practice of local tax and other regulatory requirements enables the firm to provide practical solutions. High quality services, personal attention to each client and issue, and reasonable fees, make Hua-Ander the best cost-effective alternative to the 'Big Four' in China.
About Toda & Nel-lo Abogados
Founded in 1991, Toda & Nel-lo Abogados offers clients 18 professionals with more than 290 years of combined experience in multidisciplinary and diverse tax and legal issues, including work with “Big Four” advisory firms, the Spanish government and major Spanish universities. Toda & Nel-lo Abogados always provide clients with traditional values, professionalism, integrity, confidentiality, honesty, and ethics, to ensure their objectives and needs are met.
About Studio Manzoni Pagliero Vanz e Associati
Established in 1971, Studio Manzoni Pagliero Vanz e Associati provides tax and business legal assistance to select domestic and foreign clients who are leaders in their fields. Made up of seven partners and eleven professionals with law and economics expertise, the firm works to create customized solutions for clients, leveraging a multidisciplinary and global approach. Studio Manzoni Pagliero Vanz e Associati also maintain close working relationships with Turin University and the academic community, and some of its members teach and/or contribute to legal and economic publications.
About TPC (UK) LLP
TPC’s London office provides tax and business advice and specializes in transfer pricing, cross border tax planning, structuring and reconstructions, start up operations and VAT and Customs Duties advice throughout the EU. With its expanding professional team, the London office offers constructive tailored advice and also provides cost effective tax compliance services. For a complementary expert tax consultation, visit www.tpctax.com
About ArtemTax International
ArtemTax International is a tax law firm specializing in inbound and outbound transactions. The team is at the forefront of tax structuring, having implemented one of the first cross-border mergers between two entities in France and in the Netherlands that encompasses tax and accounting matters. ArtemTax International is characterized by its independent and personalized approach, without the restrictions of Sarbanes-Oxley and the French law on financial securities (“Loi sur la Sécurité Financière”), and by granting clients access to a dedicated partner from start to finish, ensuring the highest level of service. The team also differentiates itself through its global approach in taking into consideration financial, accounting, and economic services.
About True Partners Consulting LLC
True Partners Consulting is a world-class tax and business advisory firm that helps large public and private enterprises navigate complex financial regulations without the Sarbanes-Oxley created conflicts inherent in offering both consulting and audit services. The firm provides a broad range of services, including analysis and counsel concerning the tax impact of business issues such as organic or acquisition-driven growth, filing practices, business restructuring or bankruptcy. True Partners provides a wide range of services to its multinational clients, including global structuring, transfer pricing, repatriation planning, international compliance and treaty planning. The firm also conducts refund reviews, analyzes clients’ tax exposure and prepares responses to audit inquiries, in addition to helping clients address compliance issues.
True Partners has offices in Chicago; New York; Los Angeles; San Jose, Calif.; Tampa, Fla.; Boston; and London. Find additional information at www.tpctax.com.
Rapidly growing firm extends global reach to serve multinational clients
CHICAGO – April 18, 2008 – True Partners Consulting LLC announced today that it is launching its first wholly owned office outside the United States, which will be located in London and named True Partners Consulting (U.K.) LLP.
The new office will be led by Kim Brandt and Les Secular, who together have more than 40 years’ experience advising on tax issues throughout Europe, particularly for U.S. companies expanding operations overseas.
“The tremendous growth we’ve experienced in the last two years has greatly increased our need to establish a global presence for our clients with operations around the world,” said Cary McMillan, chief executive officer of True Partners. “We are thrilled to add a London office that will enhance our ability to provide clients in key global markets with ‘world-class’ tax and business advisory services.”
Additional new offices are currently in the discussion phase for Spain, the Netherlands, Italy and China—some of which will be network member firms through TPC International, an affiliated company, formed in October 2007. There is also a Paris office, ArtemTax International, which is the first member firm in the True Partners Consulting International network.
True Partners Consulting (U.K.) LLP will advise companies based in the United Kingdom, as well as multinational companies doing business in the United Kingdom and other European markets, on a range of tax and business issues including transfer pricing, VAT, cross border transactions, structuring business operations and reorganizations. The office will also undertake all local compliance requirements.
“We are extremely pleased to be part of True Partners Consulting,” said Kim Brandt, Partner, True Partners Consulting (U.K.) LLP. “We believe that the firm’s distinctive approach is well-suited to the needs of companies doing business in Europe, and we look forward to providing a differentiated offering to companies in need of fresh thinking on corporate tax and other business issues.”
Les Secular, Partner, True Partners Consulting (U.K.) LLP, added, “The core service strengths we offer in the London office will be further complemented by True Partners’ ability to work fluidly across geographies to access specialized areas of industry expertise and create customized solutions that fit clients’ needs.
About True Partners Consulting LLC
True Partners Consulting is a world-class tax and business advisory firm that helps large public and private enterprises navigate complex financial regulations without the Sarbanes-Oxley-created conflicts inherent in offering both consulting and audit services. The firm provides a broad range of services, including analysis and counsel concerning the tax impact of business issues such as organic or acquisition-driven growth, filing practices, business restructuring or bankruptcy. The firm also conducts refund reviews, analyzes clients’ tax exposure and prepares responses to audit inquiries, in addition to helping clients address compliance issues.
True Partners has offices in Chicago; New York; Los Angeles; San Jose, Calif.; Tampa, Fla.; Boston; and London. Find additional information at www.tpctax.com.
TRUE PARTNERS CONSULTING TO FORM TRUE PARTNERS CONSULTING INTERNATIONAL; FIRST MEMBER FIRM OUTSIDE U.S. OPENS IN PARIS
Rapidly growing firm expanding to support multinational clients
CHICAGO – October 24, 2007 – True Partners Consulting LLC (TPC) announced that it is forming True Partners Consulting International, an affiliated company that will become a network of tax consulting firms in select markets around the world.
The first member firm in the network opens today in Paris, the company announced. To be known as ArtemTax International, “a Member Firm of the True Partners Consulting International Network,” the new firm will be led by Hervé Bidaud, who has nearly 30 years of experience in international tax matters, cross border transactions, group restructuring mergers and acquisitions, and joint ventures.
“We have referred to True Partners as a ‘world-class’ tax and business advisory firm since our founding 18 months ago, and today we are very pleased to have extended our services beyond the U.S. into other parts of the world,” said Cary McMillan, chief executive officer of True Partners. “As the world of business becomes increasingly globalized, we need to be able to support our clients wherever they do business – and we soon will be taking additional steps in that direction.”
Through TPC International, True Partners eventually will have affiliated member firms in strategically selected markets in Europe, Asia and potentially, Latin America.
ArtemTax International will advise companies based in France, as well as multinational companies doing business in France, on a range of tax and business issues including management of tax risks, the optimization of effective tax rates and the implementation of transfer pricing policies. Artemtax International is also handling tax litigation matters.
“The senior professionals of our global network, including ArtemTax International, have the technical skills and problem-solving ability to understand the accounting, financial and economic aspects of international business challenges,” said Hervé Bidaud. “In addition, many of our network members have been part of networks of independent accountants in the past, exerting a great deal of leadership on the accounting and economic aspects of structuring international transactions, including transfer pricing issues.”
About ArtemTax International
ArtemTax International is a tax law firm specializing in inbound and outbound financial transactions. The team is at the forefront of tax structuring, having implemented one of the first cross-border mergers between two entities in France and in the Netherlands that encompasses tax and accounting matters. ArtemTax International is differentiated by its independent and personalized approach, without the restrictions of Sarbanes Oxley and the French law on financial securities (“Loi sur la Sécurité Financière”), and by granting clients access to a dedicated partner from start to finish, ensuring the highest level of service. The team also differentiates itself through its global approach in taking into consideration financial, accounting, and economic services.
About True Partners Consulting LLC
True Partners Consulting is a world-class tax and business advisory firm that helps large public and private enterprises navigate complex financial regulations without the Sarbanes-Oxley-created conflicts inherent in offering both consulting and audit services. The firm provides a broad range of services, including analysis and counsel concerning the tax impact of business issues such as organic or acquisition-driven growth, filing practices, business restructuring or bankruptcy. The firm also conducts refund reviews, analyzes clients’ tax exposure and prepares responses to audit inquiries, in addition to helping clients address compliance issues.
Thefirmhas offices in Chicago; New York; Los Angeles; San Jose, Calif.; Tampa Bay, Fla.; Washington D.C.; and Boston. Find additional information at www.TPCtax.com.