The popular website Airbnb gives travelers to Paris the possibility to stay a few nights in 40,000 different homes and apartments without a single Haussmanian building or bourgeois townhouse in the French capital entered on its balance sheet. Valued at over 25.5 billion dollars, some investors question how this brick and mortar-less company can reach valuation levels only previously reserved for hotel industry elites like the Hilton and Marriott groups. More head scratching occurred when Microsoft recently acquired LinkedIn for about the same amount, 26 billion, after the social network announced disappointing losses at the beginning of the year.
Shockwaves from this morning’s announcement are still rippling through the media, the markets and foreign and UK government. The “leave” scenario that many business owners and public figures dismissed at first as fantasy has now been voted by a majority of the British public. As the dust settles, the impact of Brexit will become clearer, but for the moment we can begin to piece through what this decision may mean for business in Luxembourg and abroad. We’d like to offer some of our initial thoughts and suggestions, as tax advisers with strong knowledge of both markets and just how intertwined they have become.
As the OECD pushes for more transparency across borders, the Common Reporting Standard, or CRS, with its automatic exchange of information will soon become the norm for many countries around the world. We’ve put together this infographic to bring you quickly up to speed with what you should know about CRS.
Conventional wisdom warns us against putting all our eggs in one basket: portfolios must be diversified, risk spread as thin as possible… However, in our line of work, putting all your eggs in one basket has proven advantages whether it be when structuring investment funds, large group of companies, or dealing with complex transactions. Over the years, we have built an integrated approach of tax advice and corporate implementation services that is designed to bring value in many different ways, where and when it counts most to you.
Transfer pricing has become the hot topic in Luxembourg taxation over the last few years in an environment that relies increasingly less on tax rulings. In the past, businesses viewed tax rulings as a way to provide certainty and avoid risks when structuring investments or intra-group transactions. However, for a number of reasons this is no longer the case. This means that multinationals and international investors need to develop a solid strategy for transfer pricing and related documentation. In this blog, I would like to suggest some best practice recommendations which should help businesses define a reasonable approach towards transfer pricing.
In September I suggested that one way to diversify the economy could be through a lower total corporate income tax (CIT) rate in my blog “Using fiscal policy to diversify Luxembourg’s economy.” In November, our ATOZ TaxTrends surveyshowed that among decision makers in Luxembourg, 73% felt that lowering the CIT to 15% would be an important incentive for businesses. It appears that the majority of the decision makers also agree that the Luxembourg total CIT (currently 29.22%) should be lower, and after some research and analysis, I think that the facts agree as well.
Last week, the OECD Global Forum on VAT met in Paris to discuss International VAT/GST Guidelines, focusing heavily on VAT treatment of international trade in services and intangibles, with an aim to level the playing field among countries. When the VAT reforms for 2015 were announced, many media outlets expressed concern that Luxembourg would lose its coveted status as a hub for e-commerce firms. As the year winds to an end, we can now draw our own conclusions about what has changed and what has stayed the same. It’s clear that Luxembourg is ahead of the curve; the 2015 changes to VAT brought the country closer to meeting proposed global standards and complying with BEPS recommendations. But what were the real consequences of these changes? And how can we be best prepared for a ‘new normal’ in VAT?
Finance is a sector that has the ability to generate large amounts of money without requiring large amounts of manpower. It’s a boon, but it’s also a bane. In the past few decades, Luxembourg has been able to top the list of per capital GDP in Europe through the development of this rather abstract industry, all while becoming an increasingly easy target for the critical European media.
Summer is almost here and a great number of us will be hopping on a plane and flying off to a holiday destination. In anticipation of the travel season, we’re looking at some of the more confusing rules, or rather lack of harmonization governing Value Added Tax (VAT) in passenger transport in the European aviation industry.
In Greek and Roman mythology, Janus is the god of gates and doors. He has two faces: one which looks to the future and another one which looks to the past. It is the image I’ve chosen to represent the current European commission whose paradoxical nature, like that of two-faced Janus, has left me and my peers somewhat perplexed. This morning, I read the big announcement by Apple in Ireland in the Financial Times. If you haven’t heard the news yet, Apple has announced to its investors with its Q-10 filing to the SEC (p.21) (link) that if the European Commission were to decide that Ireland provided them with favorable tax treatment and state aid, the company could be liable to pay back taxes for the past decade. For Apple, this penalty would set records. Big names like Apple, Fiat, Starbucks, and Amazon have been in the sightlines of the EU Commission for some time. Only today, however, did one of these companies hint at how much damage a Commission decision could inflict upon the finances of the company.