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    Quantera Global Newsletter – September 2024

    In this edition of the newsletter, you will find the most important national and global developments in tax law that are (closely) related to the world transfer pricing.

    Please feel free to contact us if you have any questions. 

    Quantera Global news, developments, and blogs

    • On 31 July, we hosted a webinar on the transfer pricing aspects of financial transactions, providing you with the latest developments in this field and tips and tricks on how to best deal with this topic. Click here if you missed the session or would like to watch it again. 
    • On 5 August, we published a blog on the new era of U.S. taxation and transfer pricing. The blog reflects insights from our recent webinar featuring experts from Quantera Global and WTP advisors. You can read the blog here. 
    • On 14 August, we published a blog on the concepts of legal form and economic substance. The blog delves into how both interact and the importance of aligning them to maintain a sustainable transfer pricing policy. You can read the blog here.  
    • Quantera Global has launched a podcast! Our first episode features Gian Luca Nieddu from MUSE strategy. Watch the episode by clicking here.   
    • International Tax Review invited Quantera Global to contribute to the article on the Italian Convergys case. Maikel Verhoeven, a managing director of Quantera Global, shared his expert opinion in the article that you may find here. 

    Quantera Global specialties

    In the past month, we completed several challenging and interesting projects worth mentioning, including:  

    • Advising a client on transfer pricing strategy, with recommendations for the most efficient approach to implement various types of cost recharges. 
    • Supporting a client in drafting intercompany agreements to establish and uphold arm’s length terms and conditions for multiple intercompany transactions. 
    • Conducting several financial transaction analyses to substantiate arm’s length interest rates for intercompany loans. These analyses have been used for setting interest rates on newly issued loans, as well as testing the arm’s length nature of previously set interest rates. 

     

    If you would like to know more about these topics, please feel free to contact us. 

    News from around the world:

    Argentina 

    On 13 August, Argentina’s Supreme Court ruled in favour of the Tax Authorities and against Volkswagen Argentina (VWA) regarding a FY 1999 – 2001 tax dispute on transfer pricing. The court decided that VWA improperly included in its profits an extraordinary gain resulting from the waiver of a loan.  

     

    Australia 

    The Australian government has released updated guidance on the Petroleum Resource rent tax, incorporating recommendations from the Treasury’s gas transfer pricing review. This will apply for tax years starting on or after 1 July 2024.  

     

    Belgium 

    On 29 July 2024, the European Court of Justice upheld the validity of Article 8ab of Council Directive 2011/16, as amended by Directive 2018/822. The case originated from the Belgian Constitutional Court, which questioned the law’s compliance with various EU rights, including non-discrimination, legal certainty, and privacy. The Court found no factors undermining the law’s validity and it confirmed that the principles of equal treatment, legal certainty, and respect for private life were not violated. 

     

    Bulgaria 

    On 24 July 2024, the Supreme Administrative Court overturned a decision by the administrative court that had annulled an income assessment by the Tax Authorities for Yazaki Bulgaria for the years 2014, 2015 and 2016. The tax authorities had challenged Yazaki’s net cost-plus margins, which were outside the interquartile range of a benchmark study. Yazaki had adjusted its cost basis to align with the interquartile range, but the tax authorities disagreed, setting the profit to the lower quartile.  

    The Supreme Administrative Court agreed with the tax authorities, ruling that the tax authority’s adjustments were lawful and dismissed the previous court’s decision. 

     

    Czech Republic 

    The Ministry of Finance has released a draft amendment regarding the implementation of the EU directive on global minimum tax. Key changes include new deadlines for filing tax and information returns related to the Czech top-up tax, with the first filings due by mid-2026. The amendment also introduces a new option to simplify the information filing process and expands the scope of entities subject to the tax to include joint ventures, certain international entities, and tax-transparent entities in the Czech Republic. 

     

    European Commission 

    On 1 August, the European Commission launched a public consultation on a common template and electronic format for public Country-by-Country (CbC) reports. The consultation was open for feedback from 1 August to 6 September, and the input received will be considered in finalizing this initiative. 

     

    Italy 

    • On 16 July 2024, the Supreme Court ruled in favour of Convergys Italy Srl, where the company provided call centre services to a related Dutch company for which it received a mark-up of 5% on its costs. The tax authorities challenged this rate, arguing it was below the arm’s length price after removing loss-making companies from the benchmark study. The Provincial and Regional Tax Commissions sided with the tax authorities, but the Supreme Court disagreed. It found that loss-making companies should only be excluded from the benchmark if their losses are due to exceptional circumstances. 

     

    • The deadline for submitting the FY 2023 Corporate Income Tax (IRES) and Regional Tax on Production Activities (IRAP) returns has been extended to 31 October 2024 instead of the previous deadline of 15 October. This also impacts the due date for transfer pricing documentation, allowing companies until the same date to finalize their documentation for FY 2023 to qualify for penalty protection. 

     

    Jersey 

    On 14 August 2024, Jersey’s Minister for Treasury & Resources introduced draft legislation to implement the Pillar Two framework for multinational enterprises with over €750 million global revenue. The new rules, effective from 1 January 2025, will impose a 15% tax on Jersey profits. The legislation is scheduled for debate on 1 October 2024. 

     

    New Zealand 

    On 30 August, the Commissioner of the Inland Revenue Department of New Zealand released a statement outlining the Commissioner’s stance and operational approach regarding withholding obligations associated with transfer pricing arrangements.  

     

    Switzerland 

    On 17 July, the Swiss Federal Supreme Court clarified the application of the annual circular on safe harbour interest rates. The court ruled that if taxpayers deviate from the safe harbour and not explicitly apply the safe harbour rates, the circular is not binding on tax administrations, allowing them to adjust interest rates beyond the circular’s limits. 

     

    Turkey 

    On 2 August, Pillar two legislation was published in Turkey’s Official Gazette. The bill aligns with OECD GloBE Rules, with key provisions including the application of the IIR and DMTT as of 1 January 2024, and the UTPR as of 1 January 2025. It also introduces Transitional Safe Harbours and authorizes the Turkish President and Ministry of Treasury and Finance to set conditions for future Safe Harbours. Additional OECD guidance is incorporated, and new filing requirements are established for Constituent Entities, including a GloBE Information Return and top-up tax return. 

     

    United Arab Emirates 

    Taxpayers can now seek guidance on federal tax laws through a private clarification mechanism, including applying for an advance pricing agreement (APA) for proposed transactions. Applications for APAs will be accepted starting in Q4 2024.  

     

    United Kingdom 

    On 29 July, the UK Government published draft legislation to implement the Country-by-Country reporting safe harbour anti-arbitrage rule. This legislation aligns the UK with the OECD G20 Inclusive Framework Administrative guidance 

     

    Final words 

    Thank you for taking the time to read this edition of our newsletter. I hope you found the insights and updates valuable. If you have any questions or would like further information on any of the topics covered, please don’t hesitate to reach out to us. 

    If you haven’t yet, be sure to subscribe to our Quantera Global newsletter here and join over 2,000 finance and tax leaders to receive our newsletter, webinar agendas, latest trends, and sneak peeks into the world of transfer pricing in your inbox every month.  

    Best regards, 

    Adriaan van der Heijden 

    Director at Quantera Global

    Authors

    icon Theo Elshof
    Managing Director

    We are pleased to share the most important national and global developments in tax law that are (closely) related to the transfer pricing world.

    Please feel free to contact us if you have any questions.

    Send an e-mail to TPnews@quanteraglobal.com or call us at +31 88 221 5800 and we will introduce you to the relevant professional.