World Tax Advisor - Deloitte Tax€¦ · Competitiveness and employment tax credit – Following the Prime Minister’s presentation on 6 November 2012 on the “National pact for

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International Tax

World Tax Advisor 25 January 2013

In this issue: France budget law enacted .................................................................................................................................................. 1 US government issues final FATCA regulations ...................................................................................................................... 5 China: SAFE simplifies rules on administration of foreign exchange for direct investment ...................................................... 7 Italy: Treaty signed with Hong Kong ................................................................................................................................... 10 Malta: Treaty with Saudi Arabia in effect ............................................................................................................................ 10 Mexico: Tax amnesty program introduced .......................................................................................................................... 12 Netherlands: Anti-abuse rule will not apply to Curacao holding companies for another year ............................................... 12 United Kingdom: New treaties with Barbados and Liechtenstein ......................................................................................... 13 In brief ............................................................................................................................................................................... 13 Tax treaty round up ............................................................................................................................................................ 14 Are You Getting Your Global Tax Alerts? ............................................................................................................................ 23 France budget law enacted France’s Constitutional Court issued its decision on measures in Finance Law 2013 on 29 December 2012, concluding that the measures affecting companies were valid, but striking down the controversial provision that would have required wealthy individuals in France to pay a 75% income tax rate on professional income over EUR 1 million. The decision cleared the way for Finance Law 2013 and the third revised Finance Law for 2012 (which had received parliamentary approval on 20 and 19 December, respectively) to come into effect; both laws were published in the official gazette on 30 December 2012. The most significant measures in the two laws are the new global cap on finance charges, more restrictions on the use of loss carryforwards and the alignment of investment income and profits with ordinary income tax brackets. This article looks at the main new provisions. Corporate tax Competitiveness and employment tax credit – Following the Prime Minister’s presentation on 6 November 2012 on the “National pact for growth, competitiveness and employment,” the Third Amended Finance Bill for 2012 introduces a “competitiveness and employment tax credit” (“crédit d’impôt pour la compétitvité et l’emploi” or CICE”) as from 1 January 2013. The tax credit is calculated on the portion of gross payroll not exceeding 2.5 times the national minimum wage (i.e. on gross monthly wages not exceeding EUR 3,564). The rate of the CICE is 4% for wages paid in 2013 (6% for wages paid as from 2014), with no cap on the total amount paid. Payment of the CICE can be offset against the corporate income tax liability for three years, with any excess


reimbursed by the French tax authorities (as in the case of the R&D tax credit). Small and medium-sized enterprises (SMEs) will benefit from an immediate refund of excess CICE on an annual basis. The tax credit must be used for specific purposes stated in the law (mainly, investment, research, innovation, training, recruitment, etc.) and not for increasing dividend distributions or for salary packages of employees carrying out managerial functions. This is an area that the French tax authorities likely will scrutinize in future tax audits. Global cap on finance charges – Interest paid on loans generally is deductible for French corporate income tax purposes, although under the thin capitalization rules, interest paid to shareholders on related party debt may be disallowed. A deduction for interest on a loan obtained to acquire a participation in another company also may be disallowed in the following circumstances:

If the French borrowing company is unable to demonstrate that decisions on share-related transactions are made in France and that the acquired subsidiary is effectively managed in France (“Carrez rule”); or

If the acquisition involves jointly controlled companies and the acquired company enters into a group consolidation with the acquiring company (“Charasse rule”).

As from fiscal year 2012 (i.e. fiscal years closed as from 31 December 2012), the deduction of finance charges incurred by companies liable to corporate income tax is capped at 85% (reducing to 75% as from FY 2014) of their net amount on the portion of finance charges that remain deductible after application of the other more specific restrictive rules (the Finance Law 2013 provides for an order of priority in computing the finance charges that are to be disallowed under the thin capitalization, Carrez and Charasse rules). To the extent a company’s finance charges exceed the 85% cap, they are forfeited, i.e. there is no carryforward of the excess amount. The interest cap does not apply when the total finance charges (including charges disallowed under other limitation mechanisms) are less than EUR 3 million (in the case of a tax-consolidated group, the threshold applies to the group as a whole). Further restrictions of loss carryforwards – Finance Law 2013 further reduces the cap on the utilization of losses carried forward. The amount of loss carryforwards available in a year is capped at EUR 1 million, plus 50% (reduced from 60%) of the portion of the taxable profits of the relevant fiscal year exceeding EUR 1 million. The remaining 50% of income is taxed at the standard corporate income tax rate. This rule applies for fiscal years closed as from 31 December 2012. Tightening of participation exemption for long-term capital gains – The exempt amount under the participation exemption for capital gains, which applies to gains derived from the sale of shares that form part of a substantial investment that has been held for 24 months, is reduced from 90% to 88%. For fiscal years opened as from 1 January 2011, 90% of the income was exempt, with the remaining 10% deemed to represent costs and expenses and taxed at the standard corporate rate of 33 1/3% (plus a 3.3% surcharge), giving rise to an effective tax rate of 3.44%. The taxable portion, which represents a lump-sum charge, is calculated on net long-term capital gains, i.e. after the deduction of long-term capital losses. For fiscal years closed as from 31 December 2012, only 88% of the income is exempt. The remaining 12% taxable portion of long-term capital gains will be calculated on the gross amount (i.e. capital losses can no longer reduce the taxable basis) of the capital gains realized, bringing the effective marginal rate up to 4.33%. Exit tax for companies – Finance Law 2013 makes changes to the French exit taxation rules to bring them in line with jurisprudence of the Court of Justice of the European Union (CJEU). The CJEU ruled in 2011 in the National Grid Indus BV case and Commission v. Portugal that the Dutch and Portuguese exit tax rules on companies were not compatible with the freedom of establishment since they trigger immediate taxation. In France, the migration of a company abroad triggers the immediate taxation of the latent capital gains attached to the transferred assets. This adverse tax consequence does not apply when the head office is transferred to another EU member state but a permanent establishment is maintained in France. For transfers taking place as from 14 November 2012, where a head office of a French company or permanent establishment migrate to an EU/EEA member state (except Lichtenstein), latent capital gains attached to the assets transferred will attract corporate income tax, which must be paid immediately, unless the taxpayer elects to make installment payments over a five-year period. It is unclear whether the five-year installment option is fully in line with European Commission views on exit taxes.


Exceptional surcharge extended – In response to the current economic climate, the 5% exceptional surcharge imposed on the standard corporate tax liability of companies whose annual turnover exceeds EUR 250 million (i.e. effective rate applicable to large profitable companies of 36.10%) will apply until 30 December 2015 (instead of 30 December 2013). Fourth estimated tax installment broadened – Finance Law 2013 extends the scope of the companies subject to the payment of a fourth corporate income tax installment based on estimated profits of the current year (rather than on profits of the previous fiscal year) to companies with annual turnover exceeding EUR 250 million, and increases the amount of the installment. Under the French Tax Code, corporate income tax for each fiscal year is payable in quarterly installments and one final payment. The first three quarterly installments are calculated with reference to the taxable results of the previous fiscal year, but for large companies, the fourth installment is determined on the basis of estimated profits of the current fiscal year, as follows:

For companies with turnover between EUR 500 million and EUR 1 billion that have an increase in estimated profits of more than 50% as compared to the profits of the previous fiscal year, the fourth installment is 66 2/3% of the difference between the tax calculated on the estimated profits for the current fiscal year and the three installments already paid;

For companies with turnover between EUR 1 and EUR 5 billion that have an increase in estimated profits of more than 25% as compared to the profits of the previous fiscal year, the fourth installment is 80% of the difference between the tax calculated on the estimated profits for the current fiscal year and the three installments already paid; and

For companies with turnover exceeding EUR 5 billion that have an increase in estimated profits of more than 11% as compared to the profits of the previous fiscal year, the fourth installment is 90% of the difference between the tax calculated on the estimated profits for the current fiscal year and the three installments already paid.

For fiscal years opened after 1 January 2013, the fourth installment of large companies is determined under the following rules:

For companies with turnover between EUR 250 million and EUR 1 billion with estimated profits that increased by more than 50% as compared to the previous fiscal year, the fourth installment is 75% of the difference between the tax calculated on the estimated profits for the current fiscal year and the three installments already paid;

For companies with turnover between EUR 1 and EUR 5 billion with estimated profits that increased by more than 25% as compared to the previous fiscal year, the fourth installment is 85% of the difference between the tax calculated on the estimated profits for the current fiscal year and the three installments already paid; and

For companies with turnover exceeding EUR 5 billion with estimated profits that increased by more than 11% as compared to the previous fiscal year, the fourth installment is 95% of the difference between the tax calculated on the estimated profits for the current fiscal year and the three installments already paid.

The rules governing the payment of the fourth installment remain unchanged for companies that do not fall within any of the above categories. Standard Audit File-Tax The third Revised Finance Law for 2012 implements the requirement that companies submit a standard audit file (SAF-T) for corporate income tax and VAT purposes. The SAF-T is an electronic file that records key business information in a specified common format for tax audit purposes and aims to simplify tax compliance and tax audit requirements as they relate to information required for tax purposes from business and accounting systems. Mandatory use of the SAF-T will apply as from 1 January 2014. Penalties will apply for noncompliance, and the submission of an incomplete and/or unusable file may result in the application of the arbitrary assessment procedure. Personal income tax Alignment of investment income taxation with ordinary income tax brackets – Many categories of investment income that previously were taxed at special flat rates (21% and 24% on dividends and interest, respectively, and 19% on capital gains in addition to the 15.5% social surcharge) now, in principle, will be taxed according to the standard progressive schedule applicable to ordinary income (i.e. progressive rates ranging from 0% to 45%). The 15.5% social surtax will


continue to be levied, but 5.1% will be deductible from taxable income of the following year. Investment income and capital gains also still will be included in the tax base for purposes of the contribution on high income (a maximum rate of 4%). As from fiscal year 2013, the withholding tax on dividends and interest is 21% and 24%, respectively, and will be deducted from the individual’s final income tax liability. However, individual taxpayers will continue to benefit from a 40% deduction of dividends from their taxable base subject to progressive income tax rates (with the social surtax due on the full base). Long-term capital gains derived in 2012 are taxed at a flat rate of 24%, but as from 2013, they no longer benefit from a fixed proportional rate, instead being taxed at the applicable progressive rate. A deduction of a percentage of the taxable gain will be available, depending on the number of years the shares were held: 20% for shares held between two and four years; 30% for shares held from four to six years; and 40% for shares held during more than six years. A 19% fixed rate continues to apply, under certain conditions, to business creators. The sale of shares representing more than 25% of the profits of a company made by nonresident taxpayers is taxed at a flat rate of 45% as from 1 January 2013. Taxation of share incentive plans – Gains realized on the exercise of stock options and the acquisition of free shares are treated as salaried income for options and shares granted as from 28 September 2012. The taxable event continues to be the date on which the shares were sold, thus allowing beneficiaries to continue to benefit from tax deferral. The specific social tax regime applicable to qualified share incentive plans also remains applicable and these incentives remain exempt from ordinary social charges (up to 50% for companies and about 23% for employees), subject to compliance with specific formalities. However, they still will be subject to a special social contribution due at grant by the company (recently increased to 30%) and by the beneficiary at the time the shares are sold (a 15.5% social surtax and 10% social contribution). A deduction of 5.1% of the social surtax is available for income earned in the year in which the surtax was paid. Start-up stock options continue to benefit from a full exemption from social security charges and the imposition of a flat tax at a rate of 19%, plus the 15.5% social surtax (34.5%) on the date the shares are sold. These categories of income potentially remain subject to the contribution on high income (a 4% maximum). Tax brackets – The progressive tax brackets for personal income tax purposes remain unchanged, but an additional bracket has been added for income exceeding EUR 150,000, which will be taxed at a rate of 45%. The contribution on high income (3% or 4%) remains unchanged. Wealth tax – The wealth tax rates are increased from 0.25% and 0.5%, to progressive rates ranging between 0.5% and 1.5%, on net wealth in excess of EUR 800,000, but there is a cap, so that total of wealth tax, income tax and the surtax, and specific social levies, cannot exceed 75% of annual income. While net wealth under EUR 1.3 million remains exempt, once the tax is triggered, the progressive rates apply to net wealth in excess of EUR 800,000. 75% tax on professional income above EUR 1 million rejected – As noted above, the Constitutional Court declared null and void the provision under which a 75% tax would have applied on professional income over EUR 1 million earned in 2012. The court based its decision on the fact that the contribution would have applied unfairly on different households, i.e. that the 75% tax would hit the income of each individual, while similar levies are imposed “per household.” Specifically, in a case where each member of a household earned income of EUR 900,000, the tax would not apply, but the tax would be due where one member of a household earned EUR 1.1 million and the other nothing. The court invalidated this provision of the budget law without considering other challenges to the proposal, and it did not rule on the “confiscatory” nature of a 75% tax, as argued by some members of parliament. The Prime Minister has announced he intends to introduce a “new draft law in accordance with the principles laid down by the Constitutional Court.” However, the fact that the court did rule that proposed increases in certain levies (supplementary pensions, stock options and real estate gains) to a marginal global rate between 68% and 82% were “excessive” means that great care will need to be taken in redrafting the proposed tax on the wealthy. Whatever route is adopted, it is expected that the government will not introduce a new draft in the short term, but is likely to wait until the Finance Bill 2014 is introduced in September 2013. This material has been prepared by professionals in Taj, French tax and legal firm, member of Deloitte Touche Tohmatsu Limited.


— Ambroise Bricet (Paris) Partner Taj [email protected]

Patrick Fumenier (Paris)Partner Taj [email protected]

Marie-Pierre Hoo (Paris) Director Taj [email protected]

US government issues final FATCA regulations The US Treasury Department and the Internal Revenue Service (IRS) released final regulations on 17 January 2013 implementing the information reporting and withholding tax provisions for foreign financial institutions (FFIs) under the Foreign Account Tax Compliance Act (FATCA). Under FATCA, FFIs are required to report information about offshore accounts and investments held by US taxpayers to the IRS on an annual basis. FFIs include, among others, banks, insurance companies, hedge funds, mutual funds and private equity firms. FFIs must enter into formalized agreements with the IRS to share the identities of US account and asset holders; otherwise, they will face a 30% withholding charge. FATCA also imposes new requirements on certain US entities and Non-Financial Foreign Entities (NFFEs). In the proposed regulations released in February 2012, Treasury provided detailed requirements that US withholding agents, FFIs and NFFEs would need to comply with to avoid the withholding tax under FATCA. The proposed regulations also detailed exceptions and exclusions to the rules and suggested a broader framework of international cooperation seeking to ease challenges of FATCA compliance on foreign entities. In October 2012, the IRS released Announcement 2012-42 that extended the deadlines for certain FATCA-related due diligence, withholding and reporting requirements, and provided additional guidance on grandfathered obligations. Since the proposed regulations were published, the US government has worked with foreign governments to develop model inter-governmental agreements (IGAs) to facilitate the implementation of the FATCA provisions. To date, two model IGAs have been released; four countries (Denmark, Ireland, Mexico and the UK) have signed an IGA with the US and the US is actively negotiating with at least 60 other countries. After taking into consideration comments received on the proposed regulations, Treasury and the IRS believe they are providing a risked-based approach that effectively addresses policy, eliminates burdens and builds on existing practices and procedures. To that end, the final regulations attempt to meet this goal by limiting the application of FATCA to institutions, obligations and accounts that present the concerns FATCA seeks to address. The final regulations also address the coordination of the IGAs by making it clear that FIIs in “Model 1” jurisdictions (i.e. jurisdictions that signed the first model IGA) will be governed by the laws implemented by their own countries, while those in “Model 2” jurisdictions (i.e. jurisdictions that signed the second model IGA) will need to follow the regulations. Modifications to earlier guidance To help minimize the burden of FATCA and target the concerns FATCA seeks to address, the preamble to the final regulations outlines several changes and modifications to the rules originally introduced in the proposed regulations and previous notices, including the following:

Transition relief – Generally adopts the transition relief introduced in Announcement 2012-42. Grandfathered obligations – Extends the date grandfathered obligations must be entered into to 1 January 2014. FFI Agreements – Details substantive requirements that will be included in the FFI Agreement when published (the

Agreement itself will take the form of a revenue procedure). Responsible Officers – Outlines the certification requirements that must be followed by Responsible Officers.


Payee identification and documentation – Eases rules dealing with payee identification and documentation, including allowing the use of forms prepared and completed in foreign languages (subject to certain requirements) and reinstituting the “eyeball test” to determine whether a payee is a US-exempt recipient absent a Form W-9, as long as documentary evidence establishes the entity is a US entity.

Investment Entity FFIs – Adopts the definition of an Investment Entity FFI introduced in the IGA, which generally excludes many smaller entities that are not professionally managed and includes other entities, such as investment advisors and asset managers.

Depository Institution FFIs – Narrows the definition of a Depository Institution FFI to generally exclude entities such as finance companies that do not fund operations with deposits and entities acting as networks for credit card banks that hold cash collateral from such banks.

New FFI category – Explicitly adds a new FFI category for certain holding companies and treasury centers that include an FFI in their expanded affiliated group or are formed in connection with or availed by investment vehicles, such as collective investment vehicles, mutual funds, hedge funds, venture capital funds, etc.

FFI status, deemed compliant FFI categories – Adds additional exceptions to FFI status and additional deemed compliant FFI categories, including the following deemed compliant FFI categories:

o New registered deemed compliant statuses – These include: Qualified credit card issuers – Credit card issuers that agree to prevent customers from having a

deposit in excess of USD 50,000; and Sponsored investment entities and controlled foreign corporations – A sponsoring entity that

agrees to perform all FFI responsibilities for sponsored FFI(s) and certain other requirements. o New certified deemed compliant statuses – These include:

Sponsored, closely held investment vehicles – Similar to registered deemed compliant category for sponsored FFIs; and

Limited life debt investment entities – Status available before 1 January 2017 for certain investment vehicles that are unable to comply with FFI requirements.

Ordinary course of business exception – Replaces the ordinary course of business exception to withholding with a more comprehensive exception for excluded nonfinancial payments, including a list of payments that are withholdable. Collective refund claims – Allows participating FFIs to file a collective refund claim on behalf of its account holders and payees where amounts were over-withheld, subject to certain conditions and requirements. Use of sub-agents – Allows the use of subagents, but the withholding agent remains liable. FATCA Registration Portal The preamble to the final regulations provides additional details on the future FATCA Registration Portal that should be accessible no later than 15 July 2013, including the following:

Model 1 FFIs also will use the system and will be treated as registered deemed compliant FFIs; IGA FFIs can register even if the jurisdiction has not yet ratified the IGA, provided the jurisdiction appears on the list

published by the IRS as having an IGA in effect; The FFI-EIN/FATCA ID will be replaced by a single ID called the Global Intermediary Identification Number (GIIN),

which will be assigned no later than 15 October 2013; The first GIIN List is to be published on 2 December 2013 and intended to be published monthly; and Financial institutions must register by 25 October 2013 to ensure issuance of a GIIN by the 31 December 2013

deadline. New and updated forms The preamble indicates that the IRS intends to release an updated draft Form W-8BEN-E (for entities) and Form W-8BEN (for individuals) in the near future; a draft of the new Form 8966 and revised Forms 1042 and 1042-S also are anticipated. The IRS expects final versions of the Form 8966 and Form 1042-S, including XML-based schemas for electronic filing, to be released later in 2013 or in early 2014.


Given the length and complexity of the final regulations, it will take some time to thoroughly assess their impact and changes, but it is clear that FATCA will be a hot topic for many affected institutions and professionals as the analysis of the final regulations continues and additional guidance is issued. — Denise Hintzke (New York)

Director Deloitte Tax LLP [email protected]

China: SAFE simplifies rules on administration of foreign exchange for direct investment China’s State Administration of Foreign Exchange (SAFE) recently issued guidance that simplifies and relaxes the rules governing the foreign exchange administration of both inbound and outbound investment (Circular 59). Circular 59, which applies as from 17 December 2012, eliminates the advance approval required for many foreign direct investment (FDI) activities, such as setting up a foreign exchange bank account, transferring foreign exchange capital funds to certain accounts, etc., so that banks can directly handle investors’ requests. In addition to simplifying the administrative burdens on the SAFE (for more than 40 types of activities), Circular 59 also is expected to benefit foreign investors. Highlights of Circular 59 The following administrative procedure requirements for FDI are abolished:

SAFE approval for certain foreign exchange accounts (i.e. opening, depositing of funds, buying, selling and remitting foreign exchange);

SAFE approval for domestic transfers of foreign exchange funds for routine business purposes; SAFE approval for reinvestment by foreign investors using legitimate income generated from Mainland China; SAFE verification for a reduction of capital; and Foreign exchange registration and capital verification for reinvestment in China by foreign-invested Chinese holding

companies (CHCs). Controls on the utilization of funds are relaxed as follows:

The restrictions on the number of foreign exchange accounts and the setting up of foreign exchange capital accounts in places other than where a foreign-invested entity (FIE) is incorporated are abolished;

The restriction on the purchase and remittance of foreign exchange by an FIE in places other than where it is incorporated are abolished; and

Domestic entities can use foreign exchange loans obtained domestically to extend loans offshore, and FIEs can grant loans to their overseas parent companies.

The following foreign exchange procedures for FDI are simplified:

The categories of foreign exchange accounts; Foreign exchange administrative procedures for domestic reinvestment by foreign-invested CHCs; SAFE confirmation procedures for verification of the capital of an FIE; Foreign exchange registration procedures for foreign investors in equity acquisitions from Chinese shareholders;

and Conversion of foreign exchange capital to RMB by an FIE.

The following table compares the pre- and post-Circular 59 foreign exchange policies:


Pre-Circular 59 Post-Circular 59 FIE establishment and capital verification

Opening of accounts

To establish an FIE, a foreign investor could set up a special foreign exchange account with a domestic bank to pay expenses relating to incorporation, but this was subject to SAFE’s approval. Approval also was required to set up a foreign exchange capital account after the FIE was established. An FIE generally was not allowed to open a foreign exchange capital account in places other than where it was incorporated. The number of foreign exchange capital accounts held by an FIE was strictly controlled and a ceiling was set for each capital account.

SAFE approval is not required to set up a special foreign exchange or capital account. The bank can directly open an account using the investor’s registration information in the SAFE e-system. An FIE can open one or more foreign exchange capital accounts and there are no restrictions on the location of the accounts. Instead of setting a ceiling for each capital account, SAFE will set a limit on the total capital inflow for the FIE.

Verification of capital

Accounting firms were required to submit documents in hard copy to the local SAFE to obtain written confirmation of a capital injection or reduction.

SAFE approval is not required to set up a special foreign exchange or capital account. The bank can open an account using the investor’s registration information in the SAFE e-system.

Domestic reinvestmentDomestic reinvestment by foreign investors

SAFE approval was required where a foreign investor made a reinvestment (i.e. newly established an FIE or increased the capital of an existing FIE) with legitimate income generated in China, or where an FIE converted its registered foreign debt to capital.

SAFE approval is not required.

Domestic reinvestments made by foreign-invested CHCs

All FIEs had to register for foreign exchange purposes, regardless of whether they were invested by a foreign investor or a foreign-invested CHC. A foreign-invested CHC had to obtain SAFE approval to remit its foreign exchange capital to its domestic-invested entity for capital injection purposes.

FIEs established by a foreign-invested CHC are not required to register for foreign exchange purposes, unless they are jointly established by the CHC and a foreign investor(s). If registration is required, a foreign-invested CHC will be considered a Chinese shareholder. SAFE approval is not required. The bank can process the remittance after reviewing the relevant materials. However, the bank must register the information in the SAFE e-system after the remittance is processed.

Equity acquisition from a Chinese partySpecial foreign exchange account and sales proceeds receipt by Chinese seller

The Chinese seller had to set up a special foreign exchange account and obtain SAFE approval to receive and retain the sales proceeds from the foreign investor in foreign exchange. SAFE approval was required when the proceeds were deposited in the account.

SAFE approval is not required to set up a special account or to receive the proceeds from the acquisition. The bank can directly process the funds using the registration information in the SAFE e-system.


Pre-Circular 59 Post-Circular 59 Foreign exchange registration by foreign acquirer

After the consideration was paid, the foreign acquirer had to complete certain registration formalities with the local SAFE office where the Chinese seller was located.

Where the consideration is paid through an inbound remittance in foreign exchange, registration will be completed automatically through the SAFE e-system. Where the consideration is paid in other forms, registration formalities will have to be completed by the target company with its local SAFE office.

Equity or real estate disposal to a Chinese partyRemittance of purchase consideration by Chinese buyer

Where a domestic entity or individual purchased shares from a foreign party, SAFE approval was required for the Chinese buyer to purchase and then remit the foreign exchange to the foreign seller.

SAFE approval is not required. The bank can directly process the purchase and remittance of foreign exchange using the registration information in the SAFE e-system.

Remittance of proceeds from sale of real estate by domestic branch of foreign company

Where a domestic branch of a foreign company (generally a representative office) disposed of its real estate in China, SAFE approval was required for the branch to convert the RMB proceeds to foreign exchange and then remit the proceeds to the head office.

SAFE approval is not required. The bank can directly process the proceeds after reviewing the relevant materials submitted by the branch.

Offshore loansOffshore borrowers Offshore borrowers generally were limited to

the lender’s wholly owned subsidiaries or shareholding enterprises legally established abroad. For a foreign-invested multinational with a Chinese member entity fulfilling regional investment/management functions, the group’s domestic member entities were allowed to make loans in foreign exchange to offshore members of the group, provided the loan balance did not exceed the total of dividends distributed in the preceding year and the foreign investor’s share of retained earnings of the lender.

No particular restriction is imposed on the qualification of borrowers. Domestic entities are specifically allowed to make loans to their overseas parent companies, with the loan balance not exceeding the overseas parent’s share of dividends receivable and retained earnings.

Conversion of foreign exchange capital to RMBOther cases For exceptional cases not specifically covered

by the foreign exchange administration rules, but where the entity had valid business needs to convert foreign currency into RMB, the bank could handle the conversion as requested after reviewing the relevant documents, but documentation had to be submitted to the local SAFE.

The bank can handle the conversion in exceptional cases after verifying the validity of the business needs. It is no longer necessary to submit documentation to SAFE.

Summary Circular 59 removes a number of SAFE approval requirements, thus allowing banks to directly facilitate and process the relevant foreign exchange transactions. The new rules also replace certain paper submission requirements by providing public access to SAFE’s e-system. These measures will reduce public costs, facilitate direct investment and benefit China’s economic development. It is worth noting, however, that Circular 59 specifically asks banks to enhance compliance awareness, which reflects the SAFE’s concern about violations of the foreign exchange rules and could be interpreted to mean that SAFE supervision will continue, albeit with a change of administrative emphasis.


— Nora Fu (Shanghai) Partner Qin Li China Lawyers1 [email protected]

Italy: Treaty signed with Hong Kong Italy and Hong Kong signed a first-time tax agreement on 14 January 2013 that aims to reduce tax impediments, promote investment and provide greater certainty about how income will be taxed and how tax information between the two jurisdictions should be exchanged. The agreement will enter into force once the ratification procedures are completed in both Italy and Hong Kong and will apply as from the tax year following the year the instruments of ratification are exchanged. The agreement is based on the OECD model treaty and its most significant articles are those on the withholding rates to be applied to income paid to residents of the other jurisdiction and the exchange of information clause. Since Hong Kong does not levy withholding tax on dividends and interest, the treaty rates on such income are relevant only to Hong Kong residents that derive income from Italy. The treaty provides for a 10% withholding tax on dividends and a 12.5% rate on interest (reduced from Italy’s 20% domestic rate in the absence of a treaty). The treaty rate on royalties will be 15% (Italy’s domestic rate can be 22.5% or 30% and Hong Kong levies a rate of 4.95% or 16.5% under its domestic law). The exchange of information clause is modeled on article 26 of the OECD model treaty, which allows for the exchange of information that is “foreseeably relevant” for carrying out the provisions of the agreement and for enforcement of the domestic law of the contracting states. Inclusion of this provision is likely to mean that, once the agreement is ratified, Hong Kong will be removed from Italy’s list of countries and territories that have a preferential tax regime; it is unclear when this will take place, but an optimistic outcome could be removal from the list within a year. — Olderigo Fantacci (Hong Kong)

Partner Deloitte Hong Kong [email protected]

Malta: Treaty with Saudi Arabia in effect The first-time tax treaty and accompanying protocol signed by Malta and Saudi Arabia on 4 January 2012, entered into force on 1 December 2012 and applies as from 1 January 2013. The treaty is based on both the OECD and the UN model treaties, with some variations. As compared with Saudi Arabia’s other tax treaties, the dividend and royalty withholding tax rates under the treaty with Malta are comparable, if not better. The treaty is one of the few Saudi Arabian treaties that allocate taxing rights with respect to income from debt claims to the residence state of the recipient. Residence – The residence definition is extended, by way of the protocol, to include a pension scheme established in either state and an organization that is established and operated exclusively for religious, charitable, scientific, cultural or educational purposes (or for more than one of those purposes), provided it qualifies as a resident of the state in which it is established and notwithstanding that all or part of its income or gains may not be subject to tax or is exempt in that state. Permanent establishment (PE) – The treaty includes a typical PE article, with some deviations. In particular, an enterprise will be deemed to have a PE in a state if it provides services through employees situated in that state for a period of time

1 Qin Li China Lawyers is a strategic partner of Deloitte China


aggregating more than six months in a 12-month period. The sale of goods or merchandise belonging to the enterprise at an occasional temporary fair or exhibition after its closing is excluded from the definition of a PE. Business profits and independent personal services – The business profits article is based primarily on the UN model, with some deviations one of which is that, no profits will be attributed to a PE by reason of the mere purchase by that PE of goods or merchandise for the enterprise. The protocol provides a definition as to what business profits will be held to include for the purposes of the treaty and provides that, the term “business profits” includes income derived from manufacturing, mercantile, banking and insurance, the operation of inland transportation, the furnishing of services and the rental of tangible personal movable property. The term does not include the performance of personal services by an individual either as an employee or in an independent capacity. The treaty adopts the UN model article on independent personal services, meaning that income derived by a resident of a state in respect of independent professional services is taxable only in that state, except that the other state also may tax such income if the individual has a fixed base regularly available in the other state for the purpose of performing his/her activities or if his/her stay in the other state is for at least 183 days in any 12-month period. Dividends, interest and royalties – The treaty provides for the following withholding tax rates:

Dividends paid by a resident of Saudi Arabia to a resident of Malta will be subject to a 5% withholding tax, and dividends paid by a Malta resident company to a resident of Saudi Arabia may not exceed the tax chargeable on the profits out of which the dividends are paid.

Interest income from debt claims will be taxable only in the state of residence of the recipient of the income. The withholding tax on royalties in the source state may not exceed 5% (with respect to royalties paid for

industrial, commercial or scientific equipment) and 7% (for all other royalties). The protocol provides for a branch profits tax that may not exceed 5%.

Capital gains – The capital gains article is largely based on the corresponding article in the UN model treaty, with influence from the OECD model. In particular, the treaty stipulates that gains derived by a resident of a state from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other state may be taxed in that other state. Gains derived from the alienation of shares in a company that is not an immovable property company, representing a participation of 20% or more in the company, may be taxed in the state in which the company is resident. Shipping and air transport – Profits of an enterprise of a state from the operation of ships or aircraft in international traffic, including profits derived from the rental on a full (time or voyage) basis of a ship or aircraft used in international transport, the rental on a bareboat basis of a ship or aircraft used in international transport and the use or rental of containers and related equipment used in international transport that is incidental to income from the international operation of a ship or aircraft, are taxable only in the state in which the place of effective management of the enterprise is situated. Other – The credit method has been adopted for purposes of relief from double taxation. The treaty lacks a nondiscrimination clause and a provision relating to assistance in the collection of taxes. No limitation on benefits clause is included, although the miscellaneous provisions include a general clause stating that the treaty will not affect the application of domestic provisions preventing tax evasion and avoidance. — Conrad Cassar Torregiani (Malta)

Partner Deloitte Malta [email protected]

Astrid Vroom (Malta)Senior Manager Deloitte Malta [email protected]


Mexico: Tax amnesty program introduced Mexico’s Federal Revenue Law for Fiscal Year 2013, published in the official gazette on 17 December 2012, includes a tax amnesty that will enable taxpayers to settle tax liabilities incurred before 31 December 2012, as well as interest and certain penalties. The tax amnesty mainly covers income tax, the business flat tax, VAT and customs duties and fines imposed due to noncompliance with formalities. The tax amnesty will be available during fiscal year 2013, since the Federal Revenue Law is issued on an annual basis (traditionally these programs are available only at the beginning of a new administration). Salient points of the tax amnesty are as follows.

For tax liabilities that arose before 1 January 2007, 80% of the unpaid tax (including adjustments for inflation) will be forgiven, as will 100% of interest, fines and penalties relating to the tax liability, provided the 20% balance is paid in a single installment.

Interest, fines and penalties resulting from assessments issued between 1 January 2007 and 31 December 2012 generally will be fully forgiven, provided the outstanding balance of tax owed is paid in a single installment (there is no tax abatement for this five-year period).

Certain fines imposed during fiscal years 2012 and 2013 will be reduced by 60% if paid within 30 days following their notification to the taxpayer.

To benefit from the amnesty, the taxpayer must submit a request to the Mexican tax authorities and will have to refrain from initiating any litigation relating to the tax liability. The amnesty will not be available for tax liability that is the subject of criminal proceedings. The Mexican tax authorities will issue detailed rules on the tax amnesty by 31 March 2013, after which taxpayers will be able to file their amnesty petitions. — Reginaldo Montaño (Mexico City)

Partner Deloitte Mexico [email protected]

Eduardo Barrón (Mexico City) Partner Deloitte Mexico [email protected]

Netherlands: Anti-abuse rule will not apply to Curacao holding companies for another year In a decree issued 21 December 2012, the Netherlands government announced that the new tax arrangement between the Netherlands and Curacao likely to be agreed on during 2013 will not enter into force before 1 January 2014. It had been expected that the arrangement would be agreed on in 2012 and enter into force on 1 January 2013. This delay will affect Curacao holding companies with shares in Dutch companies. According to an anti-abuse rule in Dutch corporate income tax, foreign companies holding shares in Dutch companies can be subject to tax on capital gains on the disposal of the disposal of the shares. The risk of taxation will arise primarily in cases where the foreign company is not an intermediate holding company between entities with active businesses, but is, for example, held by a group of investors that are not actively managing investments. A further requirement to trigger the anti-abuse rule is that the foreign company is interposed mainly to avoid or minimize Dutch dividend withholding tax or the income tax of ultimate shareholders. The current arrangement with Curacao allows the Netherlands to apply the anti-abuse rule and effectively tax capital gains on the disposal of shares in a Dutch company. Based on a unilateral decree issued on 12 December 2011, however, the Netherlands announced that it will not apply the domestic anti-abuse rule to Curacao holding companies until a new tax arrangement enters into force. Because the 2012 decree states that the Netherlands-Curacao arrangement likely will not enter into force before 1 January 2014, the anti-abuse rule will not apply for calendar year 2013, meaning it will be possible to restructure current shareholdings during this period without the risk of Dutch taxation.


— Pie Geelen (New York) Director Deloitte Tax LLP [email protected]

Heiko Lohuis (New York)Senior Manager Deloitte Tax LLP [email protected]

United Kingdom: New treaties with Barbados and Liechtenstein Tax treaties between the UK and Barbados and the UK and Liechtenstein entered into force on 19 December 2012. The provisions of the UK- Barbados agreement are effective in Barbados as from 1 January 2013 and in the UK as from 1 April 2013 for corporation tax and 6 April 2013 for income tax and capital gains tax. The new treaty replaces the treaty dating from 1970, which had some unusually high withholding taxes. All withholding tax rates on passive income, except for real estate investment trust dividends, are now zero. For the UK, the withholding tax provisions in the Liechtenstein treaty apply as from 1 February 2013, and the provisions for income and capital gains tax apply as from 6 April 2013. For Liechtenstein, the treaty provisions on income and capital gains taxes apply as from 1 January 2013 and the withholding tax provisions as from 1 February 2013. Under the treaty, dividends will be exempt from withholding tax. However, where dividends are paid out of income derived directly or indirectly from immovable property by an investment vehicle that distributes most of this income annually and whose income from such immovable property is exempt from tax, in which case the rate will be15%. Interest and royalties will be exempt. Liechtenstein was hitherto the only country in the European Economic Area with which the UK did not have a comprehensive tax treaty. The treaty broadly follows the OECD model agreement, including the latest OECD exchange of information article, which will apply to matters not covered by the tax information exchange agreement signed in 2009. That was left in place as it provides necessary rules for the exchange of information during the period of the Liechtenstein disclosure arrangement. — Bill Dodwell (London)

Partner Deloitte United Kingdom [email protected]

In brief Canada – The Canada Revenue Agency (CRA) has issued administrative relief from withholding taxes for nonresident employees attending conferences in Canada as part of their duties of employment (e.g. to make presentations and/or lead a workshop, or attend for learning purposes). Since the employees are paid their regular salaries while at the conferences and such attendance is considered employment services performed in Canada, employers normally are required to withhold Canadian tax from their employees’ remuneration unless an employee has applied for and received a waiver of the withholding tax. The relief generally provides that if there is an income tax treaty between Canada and an employee’s country of residence, and the employee is only in Canada for the purpose of attending a conference, the employee would be exempt from tax in Canada under the treaty. Employers would not be subject to the stringent withholding and reporting obligations. European Union – ECOFIN has approved the plan to permit 11 EU member states to proceed with their financial transactions tax. The next step will be to adapt the existing draft directive to that smaller area. The 11 countries are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. India – The Finance Minister issued a statement on 14 January 2013 announcing that the government has accepted the major recommendations on implementation of the general anti-avoidance agreement (GAAR), which are set out in the final report of the Expert Committee.


United States – On 14 December 2012, President Obama signed H.R. 6156 to comply with the World Trade Organization (WTO) rules to establish permanent normal trade relations with Russia and Moldova. Russia joined the WTO on 22 August 2012 after a 19-year accession process. The passing of this bill allows for the bilateral trade benefits with Russia to be realized by US companies that export to Russia. The benefits are lower tariff rates and trade dispute resolution through the WTO. About 60% of US exports to Russia consist of aircraft, machinery (mostly parts for oil and gas production equipment), and meat. Tax treaty round up At the end of each month, World Tax Advisor provides an update on recent tax treaty developments, with a focus on items that directly affect the withholding tax rates of the key jurisdictions covered by the Deloitte International Tax Source (DITS). Additional coverage may include stated negotiating priorities and other important tax treaty trends. URL: http://www.dits.deloitte.com Unless otherwise noted, the developments discussed below are not yet in force. Austria-Chile – When in effect, the treaty signed on 6 December 2012 provides for a 15% withholding tax on dividends. A 5% withholding tax will apply on interest derived from bank and insurance company loans, bonds or securities that are regularly and substantially traded on a recognized securities market; or a sale on credit paid by the purchaser of machinery and equipment to a beneficial owner that is the seller of the machinery and equipment; otherwise, the rate will be 15%. A 5% withholding tax will apply to royalties paid for the use of, or the right to use, industrial, commercial or scientific equipment; otherwise, the rate will be 10%. The 2011 treaty enters into force on 6 February 2013 and will apply as from 1 January 2014. When in effect, a 5% withholding tax will apply to dividends paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company; otherwise, the rate will be 15%. A 10% rate will apply on interest and for royalties paid for the use of, or the right to use, a copyright of literary, artistic or scientific work including cinematograph films, and films or tapes for television or radio broadcasting, a patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. The rate on royalties will be 5% if paid for the use of, or the right to use, industrial, commercial or scientific equipment or for the use of, or the right to use software. Finland-Uruguay – The 2011 treaty enters into force on 6 February 2013 and will apply as from 1 January 2014. When in effect, a 5% withholding tax will apply to dividends paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company; otherwise, the rate will be 15%. A 10% rate will apply on interest and for royalties paid for the use of, or the right to use, a copyright of literary, artistic or scientific work including cinematograph films, and films or tapes for television or radio broadcasting, a patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. The rate on royalties will be 5% if paid for the use of, or the right to use, industrial, commercial or scientific equipment or for the use of, or the right to use software. Hong Kong-Italy – See article in this issue. URL: http://newsletters.usdbriefs.com/2013/Tax/WTA/130125_4.html Japan-United States – The two countries signed a protocol to the 2003 treaty on 24 January 2013. The protocol provides for exclusive residence-country taxation of interest and an expanded category of direct dividends, a mandatory binding arbitration provision, provisions that will enable the competent authorities to assist each other in the collection of taxes and for the full exchange of information between the competent authorities. Netherlands-Curacao – See article in this issue. URL: http://newsletters.usdbriefs.com/2013/Tax/WTA/130125_7.html Peru-Portugal – When in effect, the treaty signed on 19 November 2012 will provide for a 10% withholding tax on dividends paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company where that company is a resident of Portugal and 10% of the voting power of the payer company when that company is a resident of Peru; otherwise, the rate will be 15%. Interest paid on a bank loan will be taxable at a maximum rate of 10%;


otherwise, the rate will be 15%. A 10% rate will apply to royalties paid for technical assistance in connection with the use of, or the right to use, a copyright of literary, artistic or scientific work (including computer software, cinematographic films and other means of audio or video reproduction) or a patent, trademark or secret formula, or for industrial, commercial or scientific information; otherwise, the rate will be 15%. Singapore-Vietnam – The 2012 protocol to the 1994 treaty entered into force on 11 January 2013 and will apply as from 1 January 2014 for withholding and other taxes (1 January 2013 for the exchange of information provisions. When in effect, the protocol provides that dividends derived by the Singapore government from the carrying on of commercial activities will not be subject to tax and the withholding tax on royalties will be reduced from 15% to 10%. The interest article contains a most favored nation clause, under which, if Vietnam has a tax treaty with any other state that provides for a withholding tax rate on interest that is lower than 10%, the lower rate will apply to the treaty with Singapore. Spain-United States – See article in this issue. URL: http://newsletters.usdbriefs.com/2013/Tax/WTA/130125_2.html United Kingdom-Barbados – See article in this issue. URL: http://newsletters.usdbriefs.com/2013/Tax/WTA/130125_8.html United Kingdom-Liechtenstein – See article in this issue. URL: http://newsletters.usdbriefs.com/2013/Tax/WTA/130125_8.html Bilateral treaties and protocols for DITS countries that are in effect as from 2013 The following table reflects tax treaties and protocols that became effective (or were terminated) on 1 January 2013 with respect to their provisions on withholding taxes. Rates shown are as provided in the treaty; domestic withholding tax rates or EU directives may result in a lower rate. The table does not include standard exemptions or special rates, such as those typically provided for interest paid to government entities, government-related loans, etc.

Treaty Dividends (%) Interest (%) Royalties (%)Argentina-Chile - - -The 1976 income tax treaty and 2003 protocol are terminated.Argentina-Russia 10/15 15 15The 10% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. Argentina-Spain - - -The treaty is terminated. Austria-Czech Republic - - 5The protocol only affects the tax treatment of royalties. The protocol contains a clause under which if the Czech Republic agrees with all other EU member states that royalties may be taxed at a rate of 10% in the source state, that rate also will apply instead of the 5% treaty rate. Austria-Qatar 0 0 5Austria-Tajikistan 5/10 8 8The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 15% of the capital of the payer company; otherwise, the rate is 10%. Belgium-United Kingdom 0/10/15 0/10 0The 0% rate applies to dividends paid to a company that holds directly at least 10% of the capital of the payer company for an uninterrupted period of at least 12 months or where the dividends are derived by a pension fund, provided the dividends are not derived from the carrying on of a business by the pension fund or through an associated enterprise; the 15% rate applies where the dividends are derived directly or indirectly from immovable property by an investment vehicle resident of a contracting state whose income from such property is exempt from tax and distributes most of that income annually; otherwise, the rate is 10%. A 0% rate applies to interest paid on a loan granted or credit extended by an enterprise to another enterprise; interest paid to a pension scheme, provided the interest is not derived from the carrying on of a business by the pension scheme or through an associated enterprise; otherwise, the rate is 10%. Royalties are taxable only in the state of residence of the recipient. Canada-Colombia 5/15 10 10The 5% rate applies where dividends are paid to a company that holds directly at least 10% of the voting power of the payer company; otherwise, the rate is 15%.


Treaty Dividends (%) Interest (%) Royalties (%)Chile-Argentina - - -The 1976 income tax treaty and 2003 protocol are terminated.Chile-Russia 5/10 15 5/10The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 10%. (As a result of special wording in the treaty, however, the reduced rates do not apply on dividends paid from Chile, which are instead subject to the 35% domestic rate, with the 20% corporate tax rate creditable against the withholding tax on dividends.) The rate on royalties is 5% if paid for the use of, or the right to use, industrial, commercial or scientific equipment; otherwise, the rate is 10%. China-Ethiopia 5 7 5China-Latvia - - 7The protocol only addresses the tax treatment of royalties.Colombia-Canada 5/15 10 10The 5% rate applies where dividends are paid to a company that holds directly at least 10% of the voting power of the payer company; otherwise, the rate is 15%. Cyprus-Poland 0/5 5 5The protocol provides for a 0% withholding tax on dividends are paid to a company that holds directly at least 10% of the share capital of the payer company for 24 months; otherwise, the rate is 5%. Cyprus-Russia - - -The protocol changes the requirements for eligibility for the 5% rate on dividends: instead of a minimum USD 100,000 investment in the capital of the company in whose shares are held, the minimum investment is EUR 100,000. The 10% rate is unchanged as are the nil rates of withholding tax on interest and royalties. Czech Republic-Austria - - 5The protocol only affects the tax treatment of royalties. The protocol contains a clause under which if the Czech Republic agrees with all other EU member states that royalties may be taxed at a rate of 10% in the source state, that rate also will apply instead of the 5% treaty rate. Czech Republic-Bahrain 5 0 0Czech Republic-Barbados 5/15 0/5 5/10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. An exemption applies for certain government-related interest and interest paid in connection with the sale on credit of merchandise or equipment or on a loan or credit granted by a bank; otherwise, the rate is 5%. The 5% rate applies to royalties paid for a literary, artistic or scientific work, including cinematograph films, and films or tapes for radio or television broadcasting; the rate is 10% if paid in connection with a patent, trademark, design or model, plan, secret formula or process, computer software, or any industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience. Czech Republic-Denmark 0/15 0 10The 0% rate applies to dividends paid to a qualifying pension fund or similar institution or paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Czech Republic-Hong Kong 5 5 5The treaty applies in Hong Kong as from 1 April 2013.Czech Republic-Poland 5 0/5 10A zero rate applies for loans and credit granted by a bank; otherwise, the rate is 5%.Denmark-Czech Republic 0/15 0 10The 0% rate applies to dividends paid to a qualifying pension fund or similar institution or paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Denmark-Hungary 0/15 0 0Dividends are exempt from withholding tax if paid to a company (other than a partnership that is not liable to tax) that holds directly at least 10% of the capital of the payer company for an uninterrupted period of no less than one year. Dividends also are exempt if paid to a qualifying pension fund or similar institution providing pension schemes; otherwise, the rate is 15%. Ecuador-Uruguay 10/15 15 10/15The 10% rate applies where dividends are paid to a company that holds at least 25% of the capital of the payer company; otherwise, the rate is 15%. The 10% rate applies to royalties paid for the use of a copyright of literary, scientific or artistic works; otherwise, the rate is 15%.


Treaty Dividends (%) Interest (%) Royalties (%)Estonia-India 10 10 10The treaty applies in India as from 1 April 2013.Estonia-Jersey D D DFinland-Morocco 7/10 10 10The 7% withholding tax rate applies where dividends are paid to a company that holds at least 25% of the capital of the payer company; otherwise, the rate is 10%. Finland-Turkey 5/15 5/10 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. Interest derived by a bank for certain public export-related loans or credit is subject to a 5% rate; otherwise, the rate is 10%. France-Panama 5/15 5 5The 5% rate applies where dividends are paid to a company that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Germany-Ireland 5/15 0 0The 5% rate applies where dividends are paid to a company (other than a partnership or German real estate investment trust company) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. The rate on royalties may be adjusted if Ireland amends its rules to allow greater amount of royalties to be disregarded for the purpose of the Income Tax Act and if Germany renegotiates the royalties article of the treaty. Germany-Liechtenstein 0/5/15 0 0The 0% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the voting rights of the payer company for at least 12 months; the 5% rate applies where dividends are paid to a company (other than a partnership) that holds at least 10% of the voting rights of the payer; otherwise, the rate is 15%. Interest and royalties are taxed only in the state of residence of the recipient. Germany-Mauritius 5/15 0 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Interest is taxable only in the residence state. Germany-Spain 5/15 0 0The 5% rate applies where dividends are paid to a company that holds directly at least 10% of the capital of the distributing company; otherwise, the rate is 15%. The 5% rate will not be granted where the dividend recipient is a REIT (or a partnership mentioned in the 1966 treaty). Germany-Taiwan 10/15 10/15 10The rate on dividends is 10%, except in the case of certain real estate investment companies, which is subject to a 15% rate. The rate on interest is 10%, except in the case of certain real estate investment companies, which is subject to a 15% rate. Hungary-Denmark 0/15 0 0The treaty provides that dividends are exempt from withholding tax if paid to a company (other than a partnership that is not liable to tax) that holds directly at least 10% of the capital of the payer company for an uninterrupted period of no less than one year. Dividends also are exempt if paid to a qualifying pension fund or similar institution providing pension schemes; otherwise, the rate is 15%. Hungary-Georgia 0/5 0 0The 0% rate applies where dividends are paid to a company (other than a partnership) that has held directly at least 25% of the capital of the company paying the dividends for an uninterrupted period of at least 12 months before the decision to distribute the dividends; otherwise, the rate is 5%. Hungary-Qatar 0/5 0 5The treaty provides that dividends paid to a company that is the beneficial owner will be exempt from withholding tax; a 5% rate will apply in all other cases. Iceland-Barbados 5/15 10 5The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Iceland-Slovenia 5/15 5 5The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the payer company; otherwise, the rate is 15%. Indonesia-Croatia

10 10 10


Treaty Dividends (%) Interest (%) Royalties (%)Indonesia-Hong Kong 5/10 10 5The treaty applies in Hong Kong as from 1 April 2013. The 5% withholding tax applies where dividends are paid to a company (other than a partnership) that holds at least 25% of the capital of the payer company; otherwise, the rate is 10%. Indonesia-Morocco 10 10 10Ireland-Germany 5/15 0 0The treaty provides for a 5% rate where dividends are paid to a company (other than a partnership or German real estate investment trust company) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. The rate on royalties may be adjusted if Ireland amends its rules to allow greater amount of royalties to be disregarded for the purpose of the Income Tax Act and if Germany renegotiates the royalties article of the treaty. Israel-Georgia 0/5 5 0Dividends are exempt from withholding tax if paid to (1) a qualifying pension fund, (2) the other contracting state or its central bank or (3) a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 5%. Korea-Panama 5/15 5 3/10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. The 3% rate applies to royalties paid for the use of, or the right to use, industrial, commercial or scientific equipment; otherwise, the rate is 10%. Korea-Switzerland 5/15 5/10 5The protocol to the treaty provides for a 5% withholding tax rate on paid to a company that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Interest paid to a bank is subject to a 5% rate; otherwise, the rate is 10%. Latvia-China - - 7The protocol only addresses the tax treatment of royalties.Latvia-Georgia 0/5/10 0/5 5The 0% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 50% of the capital of the payer company. The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 10%. Interest on bank loans or credit is exempt; otherwise, the rate is 5%. Latvia-Russia 5/10 5/10 5The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company, provided the amount invested exceeds USD 75,000 or its equivalent in Russia or Latvia’s national currency; otherwise, the rate is 10%. The 5% rate applies to interest paid on loans between banks or other financial institutions; otherwise, the rate is 10%. Latvia-Turkmenistan 5/10 10 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 10%. Lithuania-India 5/15 10 10The treaty applies in India as from 1 April 2013. The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Lithuania-Mexico 0/15 10 10The 0% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Malta-Bahrain 0 0 0Malta-Hong Kong 0 0 3The treaty applies in Hong Kong as from 1 April 2013.Malta-Saudi Arabia 0/5 0 5/7Dividends paid by a resident of Saudi Arabia to a resident of Malta are subject to a 5% withholding tax; dividends paid by a Malta resident company to a resident of Saudi Arabia may not exceed the tax chargeable on the profits out of which the dividends are paid. The 5% rate applies to royalties paid for industrial, commercial or scientific equipment); otherwise, the rate is 7%.


Treaty Dividends (%) Interest (%) Royalties (%)Malta-Switzerland 0/10 0/10 0The treaty provides that where dividends are paid by a company that is a resident of Malta, Malta tax on the gross amount of the dividends may not exceed the tax chargeable on the profits out of which the dividends are paid. An exemption applies under the treaty where dividends are paid by a company that is resident of Switzerland to a company that holds at least 10% of the capital of the payer company for at least one year; otherwise, the rate is 10%. An exemption is provided for interest paid in connection with the sale on credit of industrial, commercial or scientific equipment, for the credit sale of merchandise by one enterprise to another and on bank loans; otherwise, the rate is 10%. Mauritius-Germany 5/15 0 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Interest is taxable only in the residence state. Mexico-Bahrain 0 4.5/10 10The 4.5% withholding tax rate applies to interest paid to a bank; otherwise, the rate is 10%. Mexico-Lithuania 0/15 10 10The 0% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Mexico-Ukraine 5/15 10 10The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the shares of the payer company; the rate in all other cases will be 15%. New Zealand-Samoa D D DThe treaty only covers the taxation of individuals and does not address dividends, interest or royalties, so the domestic rates continue to apply. Norway-Portugal 5/15 10 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company for an uninterrupted period of at least 12 months before the payment of the dividends (or for the life of the company if the company paying the dividends has existed for less than 12 months); otherwise, the rate is 15%. Poland-Cyprus 0/5 5 5The protocol provides for a 0% withholding tax on dividends are paid to a company that holds directly at least 10% of the share capital of the payer company for 24 months; otherwise, the rate is 5%. Poland-Czech Republic 5 0/5 10A zero rate applies for loans and credit granted by a bank; otherwise, the rate is 5%.Poland-Saudi Arabia 5 5 10Poland-Switzerland 0/15 0/5 0/5Under the protocol to the treaty, dividends are exempt from withholding tax if paid to qualifying pension funds (or similar) or where the beneficial owner is a company (other than a partnership) that directly holds at least 10% of the payer’s capital on the date the dividends are paid and has done so or will have done so for an uninterrupted 24-month period in which that date falls; otherwise, the rate is 15%. The rate on interest is 5%, with an exemption for payments between associated companies (provided the beneficial owner of the interest is not a partnership). The rate on royalties is 5%, with an exemption for payments between associated companies (provided the beneficial owner of the royalties is not a partnership). Portugal-Hong Kong 5/15 10 5The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company for an uninterrupted period of at least 12 months before the payment of the dividends (or for the life of the company if the company paying the dividends has existed for less than 12 months); otherwise, the rate is 15%. Portugal-Norway 5/15 10 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company for an uninterrupted period of at least 12 months before the payment of the dividends (or for the life of the company if the company paying the dividends has existed for less than 12 months); otherwise, the rate is 15%. Portugal-Panama 10/15 10 10The 10% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%.


Treaty Dividends (%) Interest (%) Royalties (%)Portugal-Uruguay 5/10 10 10The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer; otherwise, the rate is 10%. Romania-Saudi Arabia 0/5 5 10The 0% rate applies where dividends are paid to the government of the treaty partner, a local authority or agency wholly owned by the treaty partner; otherwise, the rate is 5%. Romania-Switzerland 0/15 5 10Under the protocol, a 0% withholding tax applies where dividends are paid to the other contracting state, pension funds and federal reserve banks, and where paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. Russia-Argentina 10/15 15 15The 10% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. Russia-Chile 5/10 15 5/10The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate will be 10%. The rate on royalties is 5% if paid for the use of, or the right to use, industrial, commercial or scientific equipment; otherwise, the rate is 10%. Russia-Cyprus - - -The protocol changes the requirements for eligibility for the 5% rate on dividends: instead of a minimum USD 100,000 investment in the capital of the company in whose shares are held, the minimum investment is EUR 100,000. The 10% rate is unchanged as are the nil rates of withholding tax on interest and royalties. Russia-Latvia 5/10 5/10 5The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company, provided the amount invested exceeds USD 75,000 or its equivalent in Russia or Latvia’s national currency; otherwise, the rate is 10%. The 5% rate applies to interest paid on loans between banks or other financial institutions; otherwise, the rate is 10%. Russia-Switzerland 0/5/15 0 -The protocol to the treaty provides for a 0% rate on dividends paid to the other contracting state, pension funds and federal reserve banks. The 5% rate applies if the beneficial owner is a company (other than a partnership) that holds directly at least 20% of the capital of the company paying the dividends and the foreign capital invested exceeds CHF 200,000 (or its equivalent in any other currency at the time the dividends become due). Otherwise, the rate is 15%. The treatment of royalties is not affected by the protocol. Saudi Arabia-Malta 0/5 0 5/7Dividends paid by a resident of Saudi Arabia to a resident of Malta are subject to a 5% withholding tax; dividends paid by a Malta resident company to a resident of Saudi Arabia may not exceed the tax chargeable on the profits out of which the dividends are paid. The 5% rate applies to royalties paid for industrial, commercial or scientific equipment); otherwise, the rate is 7%. Saudi Arabia-Poland 5 5 10Saudi-Arabia-Romania 0/5 5 10The 0% rate applies where dividends are paid to the government of the treaty partner, a local authority or agency wholly owned by the treaty partner; otherwise, the rate is 5%. Saudi Arabia-Ukraine 5/15 10 10The 5% rate applies to dividends paid to a company that holds directly at least 20% of the shares of the payer company; otherwise, the rate is 15%. Singapore-Spain 0/5 5 5Dividends are exempt from withholding tax if paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 5%. Singapore-Switzerland 5/15 5 5The 5% rate applies where dividends are paid to a company that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Singapore-United Kingdom 0/15 0/5 8The amending protocol applies in the UK as from 1 April 2013 for corporate taxes and as from 6 April 2013 for income and capital gains taxes. The protocol provides for REIT withholding tax at 15% and reduces the withholding tax on interest to 5% and on royalties to 8%.


Treaty Dividends (%) Interest (%) Royalties (%)Slovakia-Georgia D 5 5The treaty does not provide for a withholding tax on dividends, so the domestic rate applies. Slovakia-Switzerland 0/15 5 10The protocol to the treaty provides for a 0% rate on dividends paid to the other contracting state, pension funds and federal reserve banks, or where the beneficial owner is a company that holds directly at least 10% of the capital of the company paying the dividends; the nonportfolio rate remains 15% under the treaty. The protocol does not affect the treatment of royalties. Slovenia-Azerbaijan 8 8 5/10The 5% rate applies to royalties paid for the use of or the right use computer software, a patent, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; otherwise, the rate is 10%. Slovenia-Iceland 5/15 5 5The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the payer company; otherwise, the rate is 15%. Slovenia-Isle of Man D D DThe treaty only addresses the taxation of individuals. There are no provisions on the taxation of dividends, interest and royalties so the domestic rates continue to apply. South Africa-Democratic Republic of Congo

5/15 10 10

The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. Spain-Argentina - - -The treaty is terminated. Spain-Germany 5/15 0 0The 5% rate applies where dividends are paid to a company that holds directly at least 10% of the capital of the distributing company; otherwise, the rate is 15%. The 5% rate will not be granted where the dividend recipient is a REIT (or a partnership mentioned in the 1966 treaty). Spain-Singapore 0/5 5 5Dividends are exempt from withholding tax if paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 5%. Sweden-Switzerland 0/15 0 -The protocol to the treaty provides that dividends are exempt if paid to a company (other than a partnership) that holds directly or indirectly at least 10% of the capital or voting power of the payer company and where paid to a “qualifying pension.” The general 15% rate under the treaty is unchanged. Interest is exempt from withholding tax under the protocol. The treaty exemption for royalties is unchanged under the protocol. Switzerland-Hong Kong 0/10 0 3The treaty applies in Hong Kong as from 1 April 2013. An exemption applies for dividends paid to a company (other than a partnership) that holds directly at least 10% of the capital of the payer company, or if paid to a pension fund or scheme or the Hong Kong Monetary Authority; otherwise, the rate is 10%. Switzerland-Korea 5/15 5/10 5The protocol to the treaty provides for a 5% withholding tax rate on paid to a company that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Interest paid to a bank is subject to a 5% rate; otherwise, the rate is 10%. Switzerland-Malta 0/10 0/10 0An exemption applies under the treaty where dividends are paid by a company that is resident of Switzerland to a company that holds at least 10% of the capital of the payer company for at least one year; otherwise, the rate is 10%. Where dividends are paid by a company that is a resident of Malta, Malta tax on the gross amount of the dividends may not exceed the tax chargeable on the profits out of which the dividends are paid. An exemption is provided for interest paid in connection with the sale on credit of industrial, commercial or scientific equipment, for the credit sale of merchandise by one enterprise to another and on bank loans; otherwise, the rate is 10%.


Treaty Dividends (%) Interest (%) Royalties (%)Switzerland-Poland 0/15 0/5 0/5Under the protocol to the treaty, dividends are exempt from withholding tax if paid to qualifying pension funds (or similar) or where the beneficial owner is a company (other than a partnership) that directly holds at least 10% of the payer’s capital on the date the dividends are paid and has done so or will have done so for an uninterrupted 24-month period in which that date falls; otherwise, the rate is 15%. The rate on interest is 5%, with an exemption for payments between associated companies (provided the beneficial owner of the interest is not a partnership). The rate on royalties is 5%, with an exemption for payments between associated companies (provided the beneficial owner of the royalties is not a partnership). Switzerland-Romania 0/15 5 10Under the protocol, a 0% withholding tax applies where dividends are paid to the other contracting state, pension funds and federal reserve banks, and where paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. Switzerland-Russia 0/5/15 0 -The protocol to the treaty provides for a 0% rate on dividends paid to the other contracting state, pension funds and federal reserve banks. The 5% rate applies if the beneficial owner is a company (other than a partnership) that holds directly at least 20% of the capital of the company paying the dividends and the foreign capital invested exceeds CHF 200,000 (or its equivalent in any other currency at the time the dividends become due). Otherwise, the rate is 15%. The exemption for royalties under the treaty is not affected by the protocol. Switzerland-Singapore 5/15 5 5The 5% rate applies where dividends are paid to a company that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 15%. Switzerland-Slovakia 0/15 5 10The protocol to the treaty provides for a 0% rate on dividends paid to the other contracting state, pension funds and federal reserve banks, or where the beneficial owner is a company that holds directly at least 10% of the capital of the company paying the dividends; the nonportfolio rate remains 15% under the treaty. The protocol does not affect the treatment of royalties. Switzerland-Sweden 0/15 0 0The protocol to the treaty provides that dividends are exempt if paid to a company (other than a partnership) that holds directly or indirectly at least 10% of the capital or voting power of the payer company and where paid to a “qualifying pension.” The general 15% rate under the treaty is unchanged. Interest is exempt from withholding tax under the protocol. The treaty exemption for royalties is unchanged under the protocol. Switzerland-Turkey 5/15 10 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 20% of the capital of the payer company; otherwise, the rate is 15%. Taiwan-Germany 10/15 10/15 10The rate on dividends is 10%, except in the case of certain real estate investment companies, which will be subject to a 15% rate. The rate on interest is 10%, except in the case of certain real estate investment companies, which will be subject to a 15% rate. Taiwan-Thailand 5/10 10/15 10The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 10%. The 10% rate applies to interest received by a financial institution (including an insurance company); otherwise, the rate is 15%. Thailand-Taiwan 5/10 10/15 10The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 10%. The 10% rate applies to interest received by a financial institution (including an insurance company); otherwise, the rate is 15%. Turkey-Finland 5/15 5/10 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 25% of the capital of the payer company; otherwise, the rate is 15%. Interest derived by a bank for certain public export-related loans or credit is subject to a 5% rate; otherwise, the rate is 10%. Turkey-Switzerland 5/15 10 10The 5% rate applies where dividends are paid to a company (other than a partnership) that holds directly at least 20% of the capital of the payer company; otherwise, the rate is 15%.


Treaty Dividends (%) Interest (%) Royalties (%)Ukraine-Mexico 5/15 10 10The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the shares of the payer company; otherwise, the rate is 15%. Ukraine-Saudi Arabia 5/15 10 10The 5% rate applies to dividends paid to a company that holds directly at least 20% of the shares of the payer company; otherwise, the rate is 15%. United Kingdom-Armenia 5/10/15 5 5The treaty applies in the UK for as from 1 April 2012 for corporation tax purposes and as from 6 April 2012 for capital gains tax purposes. The 5% rate applies where dividends are paid to a company that holds at least 25% of the capital of the payer company and has invested at least GBP 1 million in its capital on the date the dividends are paid. The 15% rate applies where dividends are paid out of income derived from immovable property by an investment vehicle that distributes such income on an annual basis and whose income from such property is exempt. The rate in all other cases is 10%. United Kingdom-Belgium 0/10 0/10 0The 0% rate applies to dividends paid to a company that holds directly at least 10% of the capital of the payer company for an uninterrupted period of at least 12 months or where the dividends are derived by a pension fund, provided the dividends are not derived from the carrying on of a business by the pension fund or through an associated enterprise; the 15% rate applies where the dividends are derived directly or indirectly from immovable property by an investment vehicle resident of a contracting state whose income from such property is exempt from tax and distributes most of that income annually; otherwise, the rate is 10%. A 0% rate applies to interest paid on a loan granted or credit extended by an enterprise to another enterprise; interest paid to a pension scheme, provided the interest is not derived from the carrying on of a business by the pension scheme or through an associated enterprise; otherwise, the rate is 10%. Royalties are taxable only in the state of residence of the recipient. Uruguay-Ecuador 10/15 15 10/15The 10% rate applies where dividends are paid to a company that holds at least 25% of the capital of the payer company; otherwise, the rate is 15%. The 10% rate applies to royalties paid for the use of a copyright of literary, scientific or artistic works; otherwise, the rate is 15%. Uruguay-Liechtenstein 5/10 10 10The 5% withholding tax applies where dividends are paid to a company that holds directly at least 10% of the capital of the payer company; otherwise, the rate is 10%. Uruguay-Portugal 5/10 10 10The 5% rate applies where dividends are paid to a company that holds directly at least 25% of the capital of the payer; otherwise, the rate is 10%. Vietnam-Morocco 0 5 10

Are You Getting Your Global Tax Alerts? Throughout the week, Deloitte provides commentary and analysis on developments affecting cross-border transactions on a free subscription basis delivered straight to your email. Read the recent alerts below or visit the archive. Subscribe: http://www.deloitte.com/view/en_GX/global/insights/email-alerts/index.htm Archives: http://www.deloitte.com/view/en_GX/global/services/tax/cross-border-tax/international-tax/69d28aca44ed2210VgnVCM200000bb42f00aRCRD.htm Brazil Brazil issues new transfer pricing regulations Following the enactment of Brazil’s new transfer pricing rules in September 2012, the Brazilian revenue services, on 31 December 2012, published Normative Ruling 1,312. The purpose of NR 1,312 is to provide instructions to tax inspectors and taxpayers on how to apply the country’s new transfer pricing rules set forth by Law 12,715. [Issued: 23 January 2013] URL: http://www.deloitte.com/view/en_GX/global/services/tax/cross-border-tax/transfer-pricing/transfer-pricing-alerts/e1c3927b9066c310VgnVCM1000 003256f70aRCRD.htm URL: http://www.deloitte.com/assets/Dcom-Global/Local%20Assets/Documents/Tax/Alerts/transfer-pricing/dttl_tax_tpalert_2013-002_180113.pdf


Italy One-time IRES refund opportunity available for companies Italian companies and branches of foreign companies have a limited window of opportunity to obtain a refund of prior corporate income tax overpaid because they were not allowed to deduct a certain portion of their liability for the regional tax on productive activities (IRAP) for corporate income tax purposes. The portion concerned is that attributable to such corporations’ personnel costs. The Italian tax authorities have issued the relevant form that must be filed for the refund, as well as the deadlines for filing the claim, which will depend on the specific region/city where the company is located. The filing window will expire between 19 March 2013 and 15 May 2013. [Issued: 24 January 2013] URL: http://www.deloitte.com/view/en_GX/global/services/tax/cross-border-tax/international-tax/a1a2361deed6c310VgnVCM1000003256f70aRCRD.htm URL: http://www.deloitte.com/assets/Dcom-Global/Local%20Assets/Documents/Tax/Alerts/dttl_tax_alert_Italy_240113.pdf United States Protocol signed with Spain to amend existing income tax treaty On 14 January 2013, the US and Spain signed a protocol amending the 1990 income tax treaty between the two countries. The protocol reduces or eliminates withholding tax on some cross-border dividend, interest and royalty payments, modernizes the limitation on benefits article and includes a mandatory arbitration provision. [Issued: 15 January 2013] URL: http://www.deloitte.com/view/en_GX/global/services/tax/cross-border-tax/international-tax/85dd9ecfd224c310VgnVCM3000003456f70aRCRD.htm URL: http://www.deloitte.com/assets/Dcom-Global/Local%20Assets/Documents/Tax/Alerts/dttl_tax_alert_United%20States_150113.pdf Have a question? If you have needs specifically related to this newsletter’s content, send us an email at [email protected] to have a Deloitte Tax professional contact you. About Deloitte Deloitte refers to one or more of Deloitte Global Services Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Global Services Limited and its member firms. “Deloitte” is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu Limited (DTTL), a UK private company limited by guarantee. Each member firm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTTL does not itself provide services to clients. DTTL and each DTTL member firm are separate and distinct legal entities, which cannot obligate each other. DTTL and each DTTL member firm are liable only for their own acts or omissions and not those of each other. Each DTTL member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in its territory through subsidiaries, affiliates, and/or other entities. Disclaimer This publication contains general information only, and none of Deloitte Global Services Limited, its member firms, or its and their affiliates are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. None of Deloitte Global Services Limited, its member firms, or its and their respective affiliates shall be responsible for any loss whatsoever sustained by any person who relies on this publication.