Transferring a business from Ukraine to EU

Transferring a business from one country to another is a serious decision that entrepreneurs make in order to expand opportunities and enhance the competitiveness of their enterprises. In recent years, more and more entrepreneurs from Ukraine have been considering the possibility of relocating their businesses to the European Union (EU), and this phenomenon is not coincidental.

Here are some reasons and motives that drive Ukrainian entrepreneurs to look to the EU as a new place for business development:

Market expansion and access to new customers: The European Union is one of the largest economic blocs in the world with a vast consumer market. Transferring a business to the EU opens up access to new customers and allows for the expansion of product or service distribution geography.
Favorable legal and tax environment: The EU has a stable and predictable legal system, which creates favorable conditions for business. Higher legislative standards ensure the protection of investors’ and entrepreneurs’ rights. Additionally, tax policies in the EU can be more transparent and predictable, contributing to business sustainability and development.
Innovative and technological infrastructure: The European Union actively invests in scientific and technological progress and innovation. Relocating a business to the EU provides entrepreneurs with access to modern infrastructure, research centers, technology parks, and innovation communities, promoting the development and implementation of new technologies.
Enhancement of image and trust: Presence in the European Union can enhance the image and trust in a business. EU countries are renowned for their business reputation, stability, and high quality standards, which can play an important role in attracting customers, partners, and investors.
Opportunities for development and scalability: The European market offers a wide range of opportunities for business development and scalability. Entrepreneurs can gain access to new technologies, investments, partnerships, and international networks, fostering the growth and diversification of their enterprises.

Transferring a business from Ukraine to the European Union can provide significant advantages for entrepreneurs. However, before making such a decision, a thorough analysis and strategy development considering the legal, tax, and economic peculiarities of each specific EU member state are necessary.

Here are some key steps to consider:

Company registration: It is necessary to register the company in accordance with the rules and procedures of the specific EU member state. This may involve establishing a local legal entity or opening a branch/representative office.
Visa and work permits: If you or your employees require entry and work in the member state, obtaining a visa and work permit may be necessary. Specific requirements vary depending on the member state.
Financial planning: Business relocation may require financial planning, including assessing the costs of relocation, forecasting income and expenses, as well as ensuring necessary financing.

Transferring a business from Ukraine to the European Union can provide numerous advantages and opportunities. Here are a few EU member states that are often considered most favorable for business relocation from Ukraine:

Germany: Germany is the largest economy in the EU and offers a multitude of opportunities across various sectors. It is known for its high stability, quality infrastructure, innovation potential, and access to a large market.
United Kingdom: Despite its exit from the EU, the United Kingdom remains an attractive destination for business relocation. London, as a financial center, offers broad opportunities in the financial sector, technology, and innovation.
Netherlands: The Netherlands is known for its favorable tax regime, open economy, and business-friendly environment. It has a convenient geographical location and well-developed infrastructure.
Luxembourg: Luxembourg is a financial center and offers low tax rates for entrepreneurs. It is also known for its stability, high standard of living, and attractive business environment. Ireland: Ireland attracts entrepreneurs with its low tax rates, especially for technology companies. It is also a base for many major international companies and provides access to a highly skilled workforce.
Estonia: Estonia is renowned for its digital innovations and e-government services. It provides simplified procedures for business creation and operation, as well as a favorable tax environment for startups and technology companies.

However, the choice of a specific EU member state for business relocation depends on multiple factors such as your business sector, target market, resource access, tax conditions, and infrastructure. It is recommended to conduct more detailed research and seek advice from specialists to determine the most suitable EU member state for your business.

Our team is always ready to provide high-quality advice and help in solving any tasks you set. Subscribe to our pages on social networks. If you have any questions, want to order services or consultations from us, then follow this link or write to us on WhatsApp/Viber/Telegram +380 98 363 6493 or call us.

Panama Tax Authority Implements Penalties and Temporary Closure Procedure for Non-Compliant Commercial Establishments

Panama City, Panama – In an effort to bolster transparency in tax compliance control, the Panama Tax Authority has introduced a new resolution outlining penalties and procedures for temporary closure of commercial establishments that fail to fulfill their obligations regarding invoices or receipts. The resolution, numbered 201-4983 and issued on June 2, 2023, derives its authority from paragraph 3 of article 11 of Law No. 76 of 1976.

Under this resolution, the Tax Authority is empowered to impose economic penalties and order the temporary closure of non-compliant commercial establishments. Upon identification of infractions, the Tax Authority will issue a resolution specifying the penalties in accordance with the law.

To effect the temporary closure, Tax Authority personnel will personally notify either the taxpayer or the responsible individual of the commercial establishment where services are rendered or products are sold. Following this notice, the establishment will be closed with the placement of seals and/or tape at its entrances to ensure compliance.

It is worth noting that the taxpayer may contest the resolution ordering the closure by filing an appeal. However, even in the presence of an appeal, the temporary closure will only be lifted once the taxpayer rectifies the identified irregularities and settles the imposed fines.

In cases where a commercial establishment is ordered to temporarily close but continues to operate in defiance, the taxpayer’s actions will be considered a repeated offense. Consequently, the Tax Authority will impose fines ranging from USD10,000 to USD25,000 and once again order the temporary closure of the establishment.

By implementing this procedure, the Panama Tax Authority aims to promote greater transparency and adherence to tax regulations. The resolution serves as a stern reminder to commercial entities to uphold their obligations regarding the issuance and maintenance of invoices or receipts, in line with Panamanian tax laws.

The resolution is expected to foster a stronger culture of tax compliance among businesses, ultimately contributing to the growth and stability of the Panamanian economy.

OECD Updates Guidelines for Multinational Enterprises on Responsible Business Conduct

The Organisation for Economic Co-operation and Development (OECD) has released an updated version of its Guidelines for Multinational Enterprises on Responsible Business Conduct. The new guidelines, which were adopted by the OECD’s 50 member countries on June 9, 2023, reflect the latest thinking on responsible business conduct and include a number of new provisions on issues such as climate change, biodiversity, technology, business integrity, and supply chain due diligence.

The OECD Guidelines are a set of voluntary principles and standards for responsible business conduct that are addressed by governments to multinational enterprises operating in or from their territories. The guidelines cover a wide range of issues, including human rights, labour rights, environment, bribery, consumer interests, disclosure, science and technology, competition, and taxation.

The updated guidelines reflect the growing importance of responsible business conduct in the global economy. They also reflect the increasing expectations of governments, businesses, and civil society that companies will take steps to manage their social, environmental, and economic impacts.

The new provisions in the guidelines include:

A new chapter on climate change, which encourages companies to take steps to mitigate and adapt to climate change, and to promote the use of clean energy.
A new chapter on biodiversity, which encourages companies to respect biodiversity and ecosystems, and to avoid causing significant harm to them.
A new chapter on technology, which encourages companies to use technology responsibly, and to respect human rights and fundamental freedoms in their use of technology.
A new chapter on business integrity, which encourages companies to have strong anti-corruption and bribery policies in place, and to conduct due diligence to identify and mitigate corruption risks.
A new chapter on supply chain due diligence, which encourages companies to identify and manage the risks of human rights abuses and environmental damage in their supply chains.

The updated guidelines are a significant step forward in the fight for responsible business conduct. They provide companies with clear guidance on how to operate in a way that is socially, environmentally, and economically responsible. The guidelines also provide a framework for governments, businesses, and civil society to work together to promote responsible business conduct.

The OECD Guidelines are an important tool for promoting responsible business conduct. They are voluntary, but they are backed by the power of government endorsement. The updated guidelines send a strong signal to companies that responsible business conduct is expected and that there will be consequences for those who fail to meet the standards.

Company Registration on Cyprus: Unlocking Business Potential in a Tax-Friendly Environment

Registering a company in Cyprus has become one of the most attractive options for entrepreneurs seeking to expand their business and gain access to international markets. Cyprus, an island nation located in the eastern Mediterranean Sea, is famous for its favorable business environment and low tax rates. In this article, we will look at a detailed plan for registering a company in Cyprus and share tips to help you through the process.

Few advantages:

The first and main advantage of registering a company in Cyprus is tax benefits. Cyprus offers one of the lowest tax rates in Europe, especially in the area of corporate taxation.Profits earned by a company in Cyprus are subject to only 12.5% income tax, making it one of the most competitive regions in which to do business. In addition, Cyprus has a wide network of tax treaties with other countries, which helps to reduce tax liabilities for international businesses.
The second advantage lies in the favorable business environment of Cyprus. The state is actively developing its infrastructure and provides a wide range of services and support for entrepreneurs. Here you will find highly qualified professionals, lawyers, accountants and banking consultants ready to assist you in all aspects of your business, from the incorporation process to bookkeeping and taxation.
The third advantage is access to the European market. Cyprus is a member of the European Union and part of the Eurozone, which provides companies here with easy access to a huge domestic market with more than 500 million potential customers. This creates excellent opportunities for expanding business, establishing partnerships and attracting investment.

Determination of the legal form of the company

When registering a company in Cyprus, you will need to determine the legal form of your company. Here are some basic options to consider:

Limited Liability Company (LLC): The Limited Liability Company is the most common and popular form of company in Cyprus. The LLC provides a limitation of the liability of the owners (members) of the company to the amount of their contributions. This means that in the event of financial difficulties or legal problems, the members of the company are liable only to the extent of their contributions.
Joint stock company (JSC): A joint stock company is a company whose main capital is shares, the owners of which are called shareholders. A JSC in Cyprus can be public (with the possibility of a public offering of shares) or closed (with a limited number of shareholders). Shareholders are liable for the obligations of the company up to the nominal value of the shares they have purchased.
Branch or representative office: You may also consider opening a branch or representative office of your foreign company in Cyprus. The branch is a branch of the main company that retains legal independence, and the representative office is the official representative of the main company in Cyprus.
Other Forms of Companies: Cyprus also offers other forms of companies such as partnership (regular or limited), variable capital investment company (ICIS), fixed capital investment company (ICIS) and others. Each of these forms has its own characteristics and requirements.

When choosing the legal form of a company in Cyprus, it is important to consider your goals, type of activity, legal and tax aspects. It is recommended that you consult with legal and tax professionals to select the most appropriate company form that suits your needs and requirements.

Tax regime on the Cyprus

Cyprus is a popular destination for foreign investors, and one of the reasons for this is its attractive tax regime. However, it is important to note that the tax implications of setting up a company in Cyprus can vary depending on a number of factors, including whether the company has a non-resident management.

In general, companies with a non-resident management are subject to a flat corporate tax rate of 12.5%. However, there are a number of other taxes that may be applicable, such as VAT, property taxes, and withholding taxes.

VAT

Value-added tax (VAT) is a consumption tax that is applied to most goods and services sold in Cyprus. The standard VAT rate is 19%, but there are a number of reduced and zero rates that apply to certain goods and services.

Companies with a non-resident management are generally liable to register for VAT if their turnover exceeds €15,000. However, there are a number of exemptions that may apply.

Property Taxes

Property taxes are levied on the ownership of real estate in Cyprus. The rates of property tax vary depending on the location and value of the property.

Companies with a non-resident management are generally liable to pay property tax on any real estate that they own in Cyprus.

Withholding Taxes

Withholding taxes are taxes that are deducted from payments made to non-residents. The rates of withholding tax vary depending on the type of payment and the residency of the payee.

Companies with a non-resident management may be required to withhold taxes from payments made to non-residents. The amount of withholding tax that is required to be withheld will depend on the type of payment and the residency of the payee.

Tax Planning

It is important to note that the tax implications of setting up a company in Cyprus can be complex. It is therefore advisable to seek professional advice from a tax advisor of White and Partners to ensure that your company is properly structured and that you are compliant with all applicable tax laws.

Here are some of the tax planning strategies that may be available to companies with a non-resident management:

Restructure your company to take advantage of Cyprus’ double tax treaties: Cyprus has a number of double tax treaties with other countries. These treaties can reduce or eliminate the amount of tax that is payable on cross-border income.
Make use of Cyprus’ tax incentives: Cyprus offers a number of tax incentives for businesses that invest in certain sectors of the economy. These incentives can reduce the amount of tax that is payable by your company.
Transfer your profits to a low-tax jurisdiction: If your company is profitable, you may be able to transfer its profits to a low-tax jurisdiction. This can reduce the amount of tax that is payable on your company’s profits.

It is important to note that tax planning strategies can be complex and that they may not be suitable for all businesses. It is therefore advisable to seek professional advice from a tax advisor before implementing any tax planning strategies.

Conclusion:

Company registration on Cyprus offers numerous advantages and opportunities for businesses. With its attractive tax regime, favorable business environment, and access to the European market, Cyprus has become a popular destination for entrepreneurs looking to establish and expand their businesses. The process of company registration on Cyprus involves careful consideration of the legal form of the company, such as a limited liability company (LLC) or a public or private limited company (PLC), among others.

By choosing the appropriate legal form, entrepreneurs can benefit from limited liability protection, favorable tax rates, and access to various business support services. The flexibility and ease of doing business on Cyprus, combined with its extensive network of tax treaties, provide opportunities for international trade and investment.

However, it is crucial to navigate the registration process diligently and ensure compliance with Cyprus’s legal and regulatory requirements. Seeking professional guidance from legal and tax experts is highly recommended to ensure a smooth and successful registration process.

In conclusion, company registration on Cyprus offers a compelling proposition for businesses seeking a favorable tax environment, business-friendly regulations, and access to the European market. With the right legal structure and proper guidance, entrepreneurs can establish a solid foundation for their business endeavors on this vibrant Mediterranean island.

Crypto Asset Licensing in the UK: Navigating the Regulatory Landscape

Cryptocurrencies and the underlying blockchain technology have revolutionized the financial landscape, offering decentralized and borderless transactions. As the adoption of crypto assets continues to grow, governments worldwide are recognizing the need to establish regulatory frameworks to ensure investor protection and maintain financial stability. In the United Kingdom, obtaining a crypto asset license has become essential for businesses operating in the crypto space. This article explores the regulatory environment surrounding crypto assets in the UK and the short process of obtaining a license.

Regulatory Framework for Crypto Assets

The Financial Conduct Authority (FCA), the regulatory body responsible for overseeing financial markets in the UK, has taken significant steps to regulate crypto assets. In January 2020, the FCA implemented the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, bringing crypto assets within the scope of anti-money laundering (AML) and counter-terrorist financing regulations. The regulations require crypto asset businesses to register with the FCA and comply with stringent AML procedures. This regime is known as the FCA AML/CTF Cryptoasset Registration regime.

To be registered with the FCA, companies must meet certain requirements, including:

Having a business plan that sets out how they will comply with anti-money laundering and counter-terrorist financing (AML/CTF) regulations.
Having adequate systems and controls in place to prevent money laundering and terrorist financing.
Having a fit and proper management team.

Companies that are registered with the FCA are subject to ongoing supervision by the FCA. This means that the FCA will regularly review the company’s compliance with AML/CTF regulations and other financial regulations.

The FCA crypto license is a requirement for any company that wants to provide cryptoasset services in the UK. The license is designed to protect consumers and to ensure that the UK financial system is not used for money laundering or terrorist financing.

Which activity should be licensed

The FCA crypto license is required for any company that wants to provide cryptoasset services in the UK. Cryptoasset services include:

Issuing and managing cryptoassets
Providing exchange services for cryptoassets
Providing custodian services for cryptoassets
Providing lending or other financial services that are linked to cryptoassets

Companies that provide cryptoasset services without an FCA crypto license are breaking the law and could face enforcement action from the FCA.

Here are some examples of companies that need an FCA crypto license:

Crypto exchanges
Crypto lending platforms
Crypto wallets
Crypto mining companies
Crypto investment funds

Here are some of the benefits of having an FCA crypto license:

Increased consumer protection: The FCA is a government-backed regulator that is responsible for protecting consumers in the UK financial markets. By having an FCA crypto license, you demonstrate to your customers that you are committed to protecting their interests.
Enhanced reputation: Having an FCA crypto license can help to enhance your company’s reputation and credibility. This can be important for attracting new customers and investors.
Reduced risk of regulatory scrutiny: By having an FCA crypto license, you reduce the risk of your company being subject to regulatory scrutiny. This can save you time and money, and it can also help to avoid reputational damage.
Increased access to financial services: Having an FCA crypto license can help you to access financial services that would not otherwise be available to you. This can include things like banking, insurance, and investment services.

If you are considering providing cryptoasset services in the UK, you should carefully consider whether you need to apply for an FCA crypto license. You should also be aware of the requirements and conditions that apply to FCA-licensed cryptoasset businesses.

How to Get an FCA Crypto License

The process for getting an FCA crypto license is as follows:

Complete an application form.
Provide the FCA with the required information and documentation.
Pay the application fee.
Attend an interview with the FCA.

The FCA will review your application and decide whether to grant you a license. The FCA will consider a number of factors in its decision, including:

The quality of your business plan.
The adequacy of your systems and controls.
The suitability of your management team.

The FCA will also consider the risks associated with your business. For example, if your business is involved in trading high-risk cryptoassets, the FCA may be more likely to require you to take additional steps to mitigate these risks.

If the FCA grants you a license, you will be required to comply with a number of conditions. These conditions may include:

Keeping records of all transactions.
Reporting suspicious activity to the FCA.
Taking steps to prevent money laundering and terrorist financing.

Conclusion

As the crypto asset industry continues to evolve, regulatory frameworks become imperative to ensure investor protection and maintain financial stability. In the UK, obtaining a crypto asset license from the FCA is a crucial step for businesses operating in this sector. By complying with the necessary regulations, businesses can foster trust, access banking services, and position themselves for long-term success in the rapidly growing crypto asset market.

What is the Innovator Founder Visa?

The Innovator Founder Visa is a UK-based visa that replaced the Innovator Visa and the Startup Visa in April 2023. The Innovator Founder Visa allows foreign entrepreneurs to come to the UK to create innovative businesses. It is specifically designed for those who want to set up and run a business that is different from anything else in the UK market.

To be eligible for an Innovator Founder Visa, you must:

Be at least 18 years old
Have a valid passport of a visa-free national country
Have an innovative business idea that has been approved by an approved approval body.
Have enough personal savings to support yourself and your family while you are in the UK.
Meet English language requirements

Here are some of the benefits of the Innovator Founder Visa:

You can live in the UK for up to 3 years.
You can bring your family to the UK.
You can work in the UK with other employers.
You can apply for Indefinite Leave to Remain (ILR) to stay in the UK after 3 years.
You can access government funding and business support.
You can connect with other entrepreneurs and businesses in the UK.

Here are some of the requirements for the Innovator Founder Visa:

You must have an innovative business idea. In other words, there shouldn’t be a similar business in the market, and you can’t join an existing business.
The business idea must have the potential to grow.
Scalability. The business must be scalable and have the potential to grow.
Your business idea must be approved by an approved approval body.
You must have enough personal savings to support yourself and your family while you are in the UK (£1,870 for a family of two parents and one child).
You must meet the English language requirements at level B2.

How to Apply for an Innovator Founder Visa

To apply for an Innovator Founder Visa, you must first submit your documents to an approving authority. The application form can be found on the UK government website. It is important to note that the approval of the endorsement bodies is not yet a guarantee of the issuance of a visa and the Home Office (UK Home Office) reserves the right to refuse to issue a visa if it considers the grounds insufficient.
The supporting documents you will need to provide include:

Business plan
Evidence of your personal savings (amount)

To be eligible for the Innovator Founder Visa, you must have enough personal savings to support yourself and your family while you are in the UK. The amount of savings you need depends on the size of your family. For a single person, you must have at least £1,270 in personal savings. For a couple, you must have +£285 in personal savings. For each child, you must have at least +£315 of personal savings. In total, for a family with one child, you need to show £1,870 in savings.

Personal savings must be kept in a bank account in your name. Money cannot come from investments or money you have earned by working illegally in the UK. The money must be available to you at least 28 days before you apply for a visa.

You can use your personal savings to cover living expenses in the UK such as rent, meals and transport. You can also use personal savings to invest in your business.

If you don’t have enough personal savings, you can get a loan from a bank or other financial institution. However, you will need to prove that you can repay the loan.

Evidence of your knowledge of English at a level of at least B2 (CEFR, SELT, GCSE, etc.)

Cost of the Innovator Founder Visa
The cost of the Innovator Founder Visa is £1,036 per family member. This fee is payable when applying for a visa.
In addition to the visa fee, you also need to pay insurance. The cost depends on many factors, and so, for example, for a citizen of Ukraine on this visa, the cost will be £1872. Depends on the country, age, type of visa and other factors.

Consideration period:

3 weeks if the application is submitted through a consulate
8 weeks if the application is submitted from the territory of the UK

Next steps
After the visa is issued, it will be necessary to meet with the approval authority after 12 months and after 24 months, respectively, to show that the business is working and the business plan is being implemented.
The validity of a visa may be reduced by the approving authority if it is determined that the business does not meet the stated plans.
After a 3-year period, you can extend the visa. The number of renewal times is not limited. Also, you can apply for a permanent residence permit.
Over the course of 3 years there will be at least 2 checkpoints with the UK government, which will check how well you are doing with the implementation of your business plan. The first one will be appointed 12 months after the visa is issued and the next ones, most likely in another 24 months. The Innovator Founder Visa is a new visa and rules are still subject to change.
It is important that your business plan is feasible. Do not build sky-high goals just to get a visa. If there is no progress on the business plan, then the validity of the visa may be reduced.

Criteria that must be met in order to pass checkpoints and subsequently apply for permanent residence in the UK (Indefinite Leave to Remain):

Attract 50,000 investments in your business and spend them on business development.
Double the number of clients in the last 3 years and this number must exceed the average of similar local businesses in the same industry.
Apply for IP protection.
Earn at least £1,000,000 in the last year.
Earn £500,000, of which £100,000 is from exports.
Create 10 jobs with at least the minimum wage or 5 jobs with a salary of at least £25,000 per annum.

To successfully pass the test, it is enough to fulfill only two of any of the criteria listed.
If your goal is not only to pass the checkpoint but also to apply for permanent residence, then you also need to have your presence in the UK for the last 3 years at least 180 days within 12 months.

Conclusion:
At first glance, it may seem that the Innovator Founder Visa is a very complex and confusing process, in which it is extremely difficult to achieve success, but in fact, it is not. The UK is interested in attracting innovative businesses to their country that will work successfully, pay taxes, and create jobs. It is enough to correctly submit your idea, draw up a business plan, and all the necessary documents. It is very difficult to do this on your own, so we recommend that you contact our company. White and partners specialists will help you follow the path of the founder-innovator and get permanent residence in the UK.

Double Taxation and Double Tax Treaties: A Tax Optimization Guide for Small and Medium Companies

Double taxation occurs when a company is taxed on the same income in two different countries. This can happen when a company has operations in multiple countries, or when a company’s income is sourced from multiple countries.

Double tax treaties are agreements between two countries that are designed to avoid double taxation. These treaties typically provide for one country to give a credit for taxes paid to the other country. This credit can reduce or eliminate the amount of tax that the company owes in the first country.

Small and medium-sized companies (SMEs) can benefit from double tax treaties in a number of ways. First, SMEs can use double tax treaties to reduce their tax liability. This can free up cash that can be used to invest in the business, hire new employees, or expand into new markets.

Second, SMEs can use double tax treaties to simplify their tax compliance. By understanding the rules of the double tax treaty, SMEs can avoid making mistakes that could lead to penalties.

Third, SMEs can use double tax treaties to protect their intellectual property. By registering their intellectual property in the countries where they operate, SMEs can ensure that they have the right to use their intellectual property in those countries.

SMEs that are considering expanding into new markets should carefully review the double tax treaties between their home country and the countries where they plan to operate. By doing so, they can ensure that they are taking advantage of all of the benefits that double tax treaties have to offer.

How SMEs Can Use Double Tax Treaties to Reduce Their Tax Liability

There are a number of ways that SMEs can use double tax treaties to reduce their tax liability. Some of the most common methods include:

Tax credits: Double tax treaties typically provide for one country to give a credit for taxes paid to the other country. This credit can reduce or eliminate the amount of tax that the company owes in the first country.
Exemptions: In some cases, double tax treaties may provide for an exemption from taxation in one or both countries. This can be a significant benefit for SMEs that have operations in countries with high tax rates.
Reduced withholding rates: Double tax treaties often provide for reduced withholding rates on payments such as dividends, interest, and royalties. This can save SMEs money on these payments.

Examples of How SMEs Have Used Double Tax Treaties to Their Advantage

There are many examples of SMEs that have used double tax treaties to their advantage. For example, a small software company that has operations in the United States and Canada can use the Canada-United States Tax Treaty to avoid double taxation on its income. The treaty provides for a credit for taxes paid to the other country, which can reduce or eliminate the amount of tax that the company owes in the first country.

Another example is a small manufacturing company that sells products in the European Union. The company can use the EU-Swiss Double Taxation Agreement to avoid double taxation on its income. The agreement provides for a credit for taxes paid to Switzerland, which can reduce or eliminate the amount of tax that the company owes in the European Union.

Challenges that SMEs May Face When Using Double Tax Treaties

While double tax treaties can offer significant benefits to SMEs, there are also some challenges that they may face when using them. Some of the most common challenges include:

The complexity of double tax treaties: Double tax treaties can be complex documents, and it can be difficult for SMEs to understand all of the rules and regulations.
The lack of awareness of double tax treaties: Many SMEs are not aware of the benefits that double tax treaties can offer.
The cost of obtaining a double tax treaty certificate: In some cases, there is a cost associated with obtaining a double tax treaty certificate.

Recommendations for SMEs That Are Considering Using Double Tax Treaties

If you are an SME that is considering using double tax treaties to optimize your tax liability, there are a few things that you should do:

Consult with a tax advisor: A tax advisor can help you understand the benefits of double tax treaties and can help you ensure that you are using them correctly.
Be aware of the challenges: As mentioned above, there are some challenges that SMEs may face when using double tax treaties. Be sure to be aware of these challenges before you decide to use them.
Do your research: Before you sign any double tax treaties, be sure to do your research and understand the terms of the treaty.

By following these recommendations, you can increase your chances of using double tax treaties to your advantage.

For a detailed consultation and further calculation of the cost, terms and necessary documents, please contact White and Partners specialists by clicking on this link.

New Zealand to Implement OECD’s Global Anti-Base Erosion Pillar Two Rules

The New Zealand Government has announced its plans to adopt the OECD’s Global Anti-Base Erosion (GloBE) Pillar Two Rules, referred to as the “Applied GloBE Rules,” by implementing legislation. These rules aim to ensure that large corporate groups are taxed at minimum agreed levels. The rules allow countries to assess the income and taxes reported in offshore entities and levy additional taxes if they fall below the agreed measurement norms. Although New Zealand expects minimal tax collection under the new rules, the government aims to align its regulations with other OECD members. The rules will be activated once a “critical mass” of countries adopts them, with different application dates for each rule, ranging from 2024 to 2025.

The Applied GloBE Rules consist of three components: the Multinational Income Inclusion Rule, the Under Taxed Profits Rule, and the Domestic Income Inclusion Rule for New Zealand-headquartered multinational entities. The rules will apply to multinational groups with consolidated accounting revenue of EUR750 million or more. Exemptions will be granted to investment funds, pension funds, government entities, international organizations, not-for-profit organizations, and income associated with international shipping.

To determine the tax liability under the rules, the Effective Tax Rate (ETR) of each jurisdiction in which the multinational group operates will be calculated. If the ETR falls below the 15% global minimum tax rate, the group will be subject to a top-up tax under the Domestic Income Inclusion Rule, Income Inclusion Rule, or Under Taxed Profits Rule.

In a departure from OECD norms, the Domestic Income Inclusion Rule will only apply to New Zealand-headquartered groups. The country will largely adopt the Applied GloBE Rules by directly referencing them in domestic tax legislation, with additional bespoke legislation to accommodate the rules into the existing tax code.

New Zealand plans to introduce a transitional safe harbor regime consisting of three tests: De Minimis Test, Simplified ETR Test, and Routine Profits Test. This regime will apply for the first three fiscal years beginning on or after January 1, 2024.

Affected multinational entities must register with the New Zealand Revenue Authority and submit a GloBE Information Return within specified timelines. The authority has also introduced penalties for late registration, incomplete/late filing of returns, and late payment of top-up taxes.

Multinational groups operating in New Zealand need to assess the impact of the Applied GloBE Rules, evaluate compliance readiness, and consider the need for system redesign and resource allocation. Financial accounting teams must address new public disclosure rules concerning the disclosure of Pillar Two information in financial accounts.

Greece is making changes to the migration code

The new Migration Code, which was introduced, makes changes to the rules for obtaining the European Blue Card. This card is a special type of residence and employment permit for highly qualified citizens of non-resident countries in the European Union.

The main changes that will come into effect include:

Reduction of the duration of the employment contract with the Greek company for obtaining the European Blue Card from 12 months to 6 months.
Increasing the minimum annual earnings required to obtain a card from 1.5 times the average annual income to 1.6 times.
Ensuring the possibility of obtaining a European Blue Card for citizens of non-resident countries who are already legally in Greece with a C visa, residence permit or valid passport.

Digital Nomads

In addition, the new Migration Code also introduces a separate visa program for “Digital Nomads”. From January 1, 2024, citizens of non-resident countries will have to obtain a “Digital Nomad” visa from the Greek consulate in their country of citizenship or residence before applying for a residence permit directly in Greece.

Work visa of management staff

Also, the new code tightens the criteria for obtaining a work permit for managerial personnel. From now on, only persons who are members of boards of directors, legal representatives or administrators of foreign companies with a turnover of at least 4,000,000 euros will be able to apply for a work permit for the first time.

It is noted that persons who have valid management work permits and meet the new requirements will have the opportunity to renew their permit or apply for a European Blue Card. Those who have a valid management work permit but do not meet the new criteria will only be able to apply for a European Blue Card or a corporate intra-corporate transfer permit if they meet all the criteria.

Provision of technical support

Greek companies that have agreements with foreign companies to provide technical support (such as telecommunications companies) will no longer be able to use the special two-stage route to obtain residence permits for skilled workers. They are obliged to employ these workers according to three stages of dependent employment.

Dependent employment (work of unskilled workers).

The new Code provides for changes in the process of submitting applications for work permits for employers who hire citizens of non-resident countries as “dependent” workers (ie, unskilled workers). In particular, migration authorities issue prior approval based on the relevant quotas and send it electronically to the Greek consulate in the applicant’s country of citizenship or residence. The consulate issues a visa to the applicant. Currently, the authorities issue a preliminary approval and send it to the employer or the relevant consulate by courier. The other stages of the work permit application process for these workers will remain unchanged (ie they will still be subject to the quotas set by the Decree of the Council of Ministers and will have to apply for a residence permit as soon as they arrive in Greece).

Golden visas

As of January 1, 2024, all non-resident nationals planning to apply for Golden Visas based on the purchase of real estate in the following locations are required to invest at least €500,000 (compared to the current amount of €250,000): • Regional units of North, Central and South Athens • Regional units of Mykonos and Santorini (South Aegean region) • Municipalities of Vary-Voula-Vouliagmeni (Attica) and Thessaloniki (Central Macedonia region)

Bahrain to Introduce Corporate Tax Once International Agreement is Reached

Manama, Bahrain – Bahrain is set to implement a corporate tax regime once an international agreement on the taxation framework is reached, announced Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa during a recent parliamentary session. The Organisation for Economic Co-operation and Development (OECD) is currently working on developing a global corporate taxation structure.

The Paris-based organization defines corporate tax as taxes imposed on the net profits of enterprises after allowable tax relief, including taxes on capital gains. In October 2021, the international community, under the auspices of the OECD, reached a significant agreement addressing the tax challenges arising from the digitalization and globalization of the economy. This landmark deal, referred to as the two-pillar solution, includes the establishment of a global minimum effective corporate tax rate of 15 percent for large multinational enterprises.

Minister Shaikh Salman emphasized Bahrain’s commitment to complying with the global direction of corporate taxation. He stated, “When the international legislations are crystal clear, then a comprehensive local legislation would be formulated and presented to the National Assembly.” The minister underscored the importance of companies contributing to the sustainability of the economy and the country’s financial development.

The delay in introducing corporate tax in Bahrain has been attributed to the need for input from international organizations and companies. Minister Shaikh Salman highlighted the significant contribution of the non-oil sector, which now accounts for over 83 percent of Bahrain’s economy. This growth has led to increased employment in the private sector, with the welfare of Bahraini workers being a crucial consideration.

The government is actively working to ensure the sustainability of pension funds, as Shaikh Salman explained. The Social Insurance Organisation (SIO) is conducting a comprehensive actuarial study to ensure the continued stability and operations of these funds. Upon completion of the study, updated lifespan statistics will be presented, and legislators will collaborate on proposals, options, and solutions to enhance the funds’ sustainability levels.

During the parliamentary session, Minister Shaikh Salman and other senior government officials responded to various questions and discussed proposals reviewed by the Cabinet. These topics included corporate tax, the resumption of suspended flights, regulations for video and audio productions, and market-related matters.

As Bahrain aligns with international efforts to establish a fair and effective corporate tax system, the government remains committed to striking a balance that ensures economic growth, employment stability, and a conducive investment environment. The introduction of corporate tax will contribute to the country’s long-term financial sustainability while supporting the ongoing development of the private sector.