CHAMBERS Legal Practice Guides

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Corporate Tax Edited by Paul W. Oosterhuis Skadden Arps Slate Meagher & Flom LLP

2014 CHAMBERS Legal Practice Guides

Corporate Tax Edited by Paul W. Oosterhuis Skadden, Arps, Slate, Meagher & Flom LLP

2014 Chambers Legal Practice Guides For more than 20 years, Chambers Legal Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Legal Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. The ‘Guidance and Warnings’ sections, based on the views of clients with in-depth international experience, contain hard-won knowledge about typical local problems and how to overcome them – information usually missing from offi- cial guides.

Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted.

Publisher Michael Chambers Series Editor Claire Oxborrow Business Development Director Brad Sirott Editorial Contributions Monica Fuertes-Britez

Orders to: Chambers & Partners Publishing Published by Chambers & Partners Publishing (a division of Orbach & Chambers Ltd)

39 Parker Street, London WC2B 5PQ Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambersandpartners.com

our editorial and research team ...... p.3

Idntro uction...... p.15

A rgentina...... Guidance and Warnings p.25 Law & Practice p.28

Belgium...... Guidance and Warnings p.43 Law & Practice p.47 bolivia...... Guidance and Warnings p.57 Law & Practice p.60

Brazil...... Guidance and Warnings p.73 Trends & Developments p.76 Law & Practice p.80

Den mark...... Guidance and Warnings p.95 Law & Practice p.98

D ominican Republic.... Guidance and Warnings p.111 Trends & Developments p.114 Law & Practice p.118

France...... Guidance and Warnings p.133 Law & Practice p.136

Gyerman ...... Guidance and Warnings p.155 Trends & Developments p.158 Law & Practice p.162

Gau temala...... Guidance and Warnings p.173 Trends & Developments p.176 Law & Practice p.179

It aly...... Guidance and Warnings p.191 Trends & Developments p.195 Law & Practice p.199

Jan pa ...... Guidance and Warnings p.213 Law & Practice p.216

1 Contents

Lenti chte s ein...... Guidance and Warnings p.239 Law & Practice p.242

luxebo m urg...... Guidance and Warnings p.253 Trends & Developments p.256 Law & Practice p.260

Mexico...... Guidance and Warnings p.273 Trends & Developments p.276 Law & Practice p.281

Panama...... Guidance and Warnings p.297 Trends & Developments p.300 Law & Practice p.304

Peru...... Guidance and Warnings p.315 Trends & Developments p.318 Law & Practice p.322

Spain...... Guidance and Warnings p.337 Law & Practice p.340

Switzerland...... Guidance and Warnings p.369 Trends & Developments p.372 Law & Practice p.376

UK...... Guidance and Warnings p.389 Trends & Developments p.392 Law & Practice p.396

USA...... Guidance and Warnings p.405 Law & Practice p.408

Venezuela...... Guidance and Warnings p.425 Law & Practice p.428

Index...... p.443

2 Our Editorial Team Our Editorial Team

Here you can see our editors, deputy editors and researchers. They are all currently (August 2013) working full-time at our head office in central London. More biographical information can be found on the ‘About Us’ page of our website.

The Editors

The Editors are responsible for the overall content of their guides and for managing the research team.

Claire Oxborrow Andrés Jaramillo Mejía Dee Sekar Editor, Legal Practice Latin America Editor. Editor, Women in Law. Guides. Graduated Graduated in Law from Studied Law (LLB) at with a First in Modern the Pontificia Univer- Queen Mary College, History from the sidad Javeriana in Bo- University of London University of St An- gotá, Colombia, and and completed the drews in 2005. During postgraduate holds a Masters (LLM) Cum Laude in Legal Practice Course at BPP Law studies at the LSE she worked as a European Intellectual Property Law School. Trained at a City firm and visiting lecturer at the University of from Stockholm University. He is a worked as a Project Finance solicitor. Roehampton. After completing the qualified lawyer in Colombia, with Also has a background in events and GDL and the LPC she spent time as significant experience in media, en- international marketing. a volunteer at the Brunel Museum. tertainment and intellectual property law. Edward Shum Rieta Ghosh Editor for Africa, Can- Editor-in-Chief. Grad- Alex Marsh ada, the Middle East, uated in Ancient His- Managing Editor, Caribbean and Global- tory at Durham Uni- Chambers Confiden- wide sections. Studied versity. Former Client tial. Graduated with a Law at Magdalene Col- Information Manager First in English Litera- lege, Cambridge. Previously worked with a European market research ture from Manchester at a South London law firm. agency. Previously worked at a lead- University. He also has an MA with ing business advisory company. Distinction in Contemporary Litera- Georgia Brooks ture and Novel Writing. He has pre- Europe Editor. Gradu- David Lamb viously worked as a researcher with a ated with an MA in Head of Research. Read City headhunting firm and at a busi- Ancient History from English and Philoso- ness knowledge centre. UCL and a BA Hons phy at the University of in Classics from the Leeds before convert- Antony Cooke University of Warwick. Previously ing to law. Has spent a Student Editor. Gradu- worked in marketing and as a free- year teaching English in Japan. ated from Durham lance translator and travel writer. University in Russian Speaks Arabic, French and Italian. & French. Taught Eng- lish at St. Petersburg State University. Previously worked at Michelin, and at Pricewaterhouse- Coopers as an audit associate in In- vestment Management. Fluent in Russian and French.

4 Our Editorial Team

The Editors continued

James Cowdell a top American firm in London and Shi-Ning Koay UK Bar Editor. Bar- Dubai. Studying for an LLM in Law Asia-Pacific Editor. rister. Read Modern and Political Justice at Birkbeck Col- Graduated in Law from History at The Queen’s lege, University of London. the University of Man- College, Oxford. Prac- chester. Completed the tised at the Criminal Laura Mills Bar Vocational Course Bar for five years and was a fee earner USA Editor. Graduated and was subsequently called to the in the family department of a leading with a BA in History Bar in 2005. Trained with a leading London law firm. and Middle Eastern Malaysian law firm and was called to Studies from the Uni- the Malaysian Bar in 2006. Jonathan Rubin versity of Pittsburgh UK Editor. Gradu- and an MA in Middle Eastern Studies Stephen Wallace ated with Honours in from the School of Oriental and Af- Editor, Chambers Law from the Univer- rican Studies, University of London. Confidential. Gradu- sity of Kent in 2006. Has studied French, Arabic, Spanish ated in Law from the Completed the LPC at and Turkish. University of Kent at BPP College in London. Qualified Canterbury in 2006. as a solicitor in 2009, training with

The Deputy Editors The Deputy Editors work with the Researchers and the Editor to ensure the rankings and commentary are a true reflection of the market.

Bryony Hirsch Giles Thomas Jane Pasquali UK Deputy Editor. UK Deputy Editor. USA Deputy Editor. Graduated with an Graduated in Interna- Graduated with a First honours degree in His- tional Relations from in Spanish and Italian tory from the Univer- the University of Sus- from Exeter University sity of York, did a GDL sex in 2005. in 2007. Has lived and at the College of Law in York and is taught in Madrid and Barcelona, and currently completing an LPC at the Gregory Simkins worked for three years in a financial College of Law in Bloomsbury. Graduated with a de- spreadbetting company in London. gree in English from Awarded a PGCE with Distinction Christopher Teevan Cambridge Univer- in Primary Education and Spanish in USA Deputy Editor. sity before obtaining 2011. Graduated from the a distinction for his University of Warwick Masters in Postmodern Literature at Joanna Haber in 2006 with Honours Royal Holloway. Previously worked Global Deputy Editor. in English Literature. as an English tutor in Moscow and Graduated in Public Also holds an MA in Creative Writ- Dubai. Affairs and Manage- ing from Royal Holloway, University ment and International of London. Jamie Horne Development from UK Deputy Editor. Carleton University in Canada and Emma Dougan Graduated in 2008 holds a Postgraduate Diploma in Global Deputy Edi- from Emmanu e l Col- Journalism from the London School tor. Graduated from lege, Cambridge, with of Journalism. Speaks French. Worcester College, an honours degree in Oxford in 2009 with a History. First in English.

5 Our Editorial Team

The Deputy Editors continued

Jon Comlay Luke Kenison Peter Whitfield Graduated in History Europe Deputy Editor. USA Deputy Editor. from the University of Graduated from the Graduated from the York in 2005. University of Warwick University of Newcas- in 2010 with a First tle-upon-Tyne with a in English and Com- BA (Hons) in English parative Literary Studies. Oversees Literature, and is currently studying Kimberley Staines research in Belgium, Iceland, Luxem- towards a Master’s degree in Phi- Graduated with a BA bourg and Malta. losophy at Birkbeck, University of in English Literature, London. Film & Theatre from Madalena Andrade the University of Read- Latin America Head of Phil Roe ing, before completing Brazil Research. Grad- Deputy Editor of the Graduate Diploma in Law and uated in English Liter- Chambers Associate. Legal Practice Course at BPP Law ature with Publishing Joined Chambers & School. from Loughborough Partners in 2007 from a University. Previous experience in- global executive search Leila Afshar cludes teaching English as a foreign firm, where he advised Private Equity Latin America Deputy language and translating. Madalena clients. Has written extensively for Editor. Graduated in is a Portuguese national. both Chambers Associate and the Law from King’s Col- Chambers Student Guide. Graduated lege London; holds an Michael Perkin with an MA in English from Oxford MSc in Development USA Deputy Editor. University, and is a theatre critic for and Anthropology from the London Graduated in English London-based newspapers in his free School of Economics. Language and Linguis- time. tics from the Universi- Liam Whitton ty of Sheffield. Worked Sarah Kogan UK Deputy Editor. as a journalist for Hayters Press Asia-Pacific Deputy Graduated in English Agency and has had copy printed in Editor. Graduated Literature from Bal- a number of national newspapers, in- from Oxford Univer- liol College, Oxford. cluding the Daily Telegraph and the sity in 2004 with a Worked as a freelance Mail on Sunday. degree in English Lan- writer and policy researcher for sev- guage & Literature. Worked in the eral UK national charities. Milena Bellow television industry for several years Europe Deputy Editor. Lidija Liegis as a Researcher and Associate Pro- Graduated in English ducer. Subsequently completed the Europe Deputy Editor. Literature from the Graduated in Philoso- GDL (Graduate Diploma in Law) in University of Glasgow 2011 at the College of Law. phy and Psychology in 2009. Has previously from the University of worked in probate and genealogy Sam Morris Edinburgh (MA hons) research. Oversees research in Aus- Student/Associ- and also holds a Master’s degree in tria, Cyprus, Greece, Switzerland and ate Assistant Editor. Investigative Journalism from City Turkey. Graduated from the University. Previously worked in University of Leiden, journalism, on a project in collabora- Nicolás Obregón Fox The Netherlands with tion with the Financial Times. Speaks Latin America Deputy a First in Political Science in 2008 French, Latvian and Spanish. Over- Editor. Studied litera- and from the London School of Eco- sees research in France, Italy, Finland ture in Madrid before nomics with an MSc in Comparative and the Baltics. gaining substantial Politics in 2009. Has worked for the journalistic experience Dutch Ministry of Foreign Affairs. with a market-leading consumer Speaks Dutch and German. magazine. Worked for three years as a researcher/writer for a travel magazine. Speaks fluent Spanish and inter- mediate French.

6 Our Editorial Team

The Deputy Editors continued

Sara Veale ERASMUS scholar in Paris and Va- Yvonne Berman Student/Associ- lencia. Subsequently completed the Asia-Pacific Deputy ate Assistant Editor. GDL and the LPC. Fluent in Manda- Editor. Having com- Graduated Magna rin and a native Cantonese speaker. pleted a law degree (at Cum Laude from the the University of North University of North Ursula Ben-Hammou London) became a Carolina at Charlotte with degrees Latin America Deputy member of the Bar of England and in English and Dance, and recently Editor. Graduated in Wales (non-practising) and spent completed an MA in English at Uni- Law from the Pon- several years in industry and private versity College London. She is a pub- tificia Universidadpractice in IP, specialising in trade lished poet and currently freelances Católica del Perú and marks and copyright. as a literary critic. holds a Master in Laws (LLM) with specialisation in International Busi- Timothy Shaw ness Transactions from the London Asia-Pacific DeputySchool of Economics and Political Editor. Graduated with Science. She is a qualified lawyer in a BA (Hons) in French Peru, with significant experience in and Spanish from Uni- corporate and finance law. Fluent in versity College London English and Spanish and also speaks in 2010 and spent a year abroad as an French.

The Assistant Editors and Senior Researchers The Assistant Editors and Senior Researchers are responsible for interviewing clients and lawyers and for assisting with the rankings and commentary.

Alexis Hercules Christopher Tooke Eleanor Bramall Confidential Assistant Asia Senior Research- Legal Practice Guides Editor. Has a BA in er. Graduated with a Assistant Editor. Grad- Writing with English First in Russian, Czech uated with a BA in Literature and Cultural and Slovak from UCL, Law from Magdalen History from Liver- where he submitted College, Oxford. Previ- pool John Moores University, an MA his doctorate in Russian literature in ously worked in immigration at the in Periodical Journalism from The 2011. In addition to his experience Home Office. University of Westminster, an MA in within academia, editing journals English Literature from Queen Mary, and teaching at UCL, he has also Emma Beatty University of London. worked in reference publishing, re- Legal Practice Guides cruitment and translation. Assistant Editor. Grad- Angela Castillo-Diaz uated in Law from Dur- Latin America Senior Deborah Lewis ham University in 2009. Researcher. Graduated UK/US Senior Re- Completed a Masters in Journalism from searcher. Graduated in Public International Law (LLM) at Universidad Central from the University of Queen Mary University of London in de Venezuela, holds a Nottingham in 2009 2012. In the intervening years spent Master’s degree from Universidad with a BA in Law with time travelling as well as volunteering Antonio de Nebrija and an MBA de- Australian Law after spending a year and living in Cambodia and Indonesia. gree in Marketing from University abroad at the University of Mel- of Wales, Cardiff Institute. Fluent in bourne. Subsequently completed an Fiona Wong English and a native Spanish speaker. MA in Media Practice from the Uni- Confidential Senior versity of Sydney. Researcher. Holds a BA (First) and an MPhil in English from the Chinese University of

7 Our Editorial Team

The Assistant Editors and Senior Researchers continued

Hong Kong, and a PhD in English Isabel Story Lucy Craig and Comparative Literary Studies Latin America Assis- Europe Assistant from the University of Warwick. Has tant Editor. Holds joint Editor for Germany. been writing for publishing compa- honours in Spanish Graduated from the nies and an online magazine. Speaks and Russian from the University of Oxford Cantonese and Mandarin. University of Notting- in 2011 with a BA in ham and an MPhil in Russian Studies French and German. Previously Francesca Lean from Cambridge. Speaks Spanish and taught English as a foreign language Europe Senior Re- Russian. in Germany. Speaks French and Ger- searcher. Graduated man, and is currently learning Rus- from Newcastle Uni- James Booth sian. Oversees research in Germany. versity in 2008 with UK/US Senior Re- a BA in French and searcher. Graduated Mandeep Sran German, with Spanish. Has previ- from the University of UK/US Senior Re- ously worked in multilingual finan- Manchester with a BA searcher. Graduated in cial recruitment. Speaks French and in History and com- Law from the School of German. pleted the Graduate Diploma in Law Oriental and African at BPP Law School. Has worked as a Studies (SOAS) at the Francois Gill freelance researcher and writer. University of London, and complet- UK Assistant Edi- ed the Legal Practice Course at the tor. Graduated with a Jurgita Meskauskaite Nottingham Law School. Qualified First in History from Europe Assistant Edi- as a solicitor in 2009 specialising in University College tor. Graduated with an Litigation. London in 2006. Went MA in Development on to complete a Master’s in the sub- Management from the Matthew James ject at UCL. Speaks French. University of Westmin- Europe Senior Re- ster in 2007. Previously worked as a searcher. Graduated Georgina Watts business journalist in Lithuania and from Newcastle Uni- UK/US Senior Re- freelanced in London. Fluent in Rus- versity with a First in searcher. Read Classics sian and Lithuanian. History in 2008. Has at The Queen’s College, previously worked in an IP firm in Oxford. Completed the Katherine Hughes Australia and an investment bank. GDL at The City Law Europe Senior Re- School as a Lincoln’s Inn Bar scholar. searcher. Graduated Mayeni Jones Harriet Carter from the University Europe Senior Re- Global Assistant Edi- of Leeds in 2007 with searcher. Graduated tor. Graduated with a a First in Latin and from the School of Ori- First in English from Italian. Previously worked as a tour ental and African Stud- the University of York. guide in Rome. Speaks Italian. ies (SOAS) in Interna- Completed an MA in Keziah Mastin tional Studies and Diplomacy. Also Aberystwyth and a PhD in Creative UK/US Senior Re- has a BA in Modern Languages from and Critical Writing at the University searcher. Graduated the University of Oxford. Has worked of East Anglia. She has taught Eng- from the University of for humanitarian organisations in lish literature and creative writing at Edinburgh in Arabic Brazil and Sierra Leone. Fluent in both school and undergraduate level, and Spanish. Recently French, Portuguese and Spanish. and written two novels. completed the GDL at BPP Law Miriam Urgelles-Coll Indy Tsang School and is currently studying for Europe Senior Re- UK/US Assistant Edi- the LPC. Has previously worked in searcher. Graduated tor. Graduated from not-for-profit organisations and in with an MA in Compu- Regent’s Park College, the legal sector. tational Linguistics be- Oxford with a degree fore completing a PhD in English Literature. in Theoretical Linguistics, both from Was active in student drama and Essex University. writes fiction in her spare time.

8 Our Editorial Team

The Assistant Editors and Senior Researchers continued

Natalia Tejedor Sanz Rachel Low Stella Heng Europe Assistant Asia-Pacific Assistant Global Assistant Edi- Editor. Graduated in Editor (based in Hong tor. Graduated in Law English Studies from Kong). Graduated with from London School of the University of Val- an MA in Sociology Economics. Complet- ladolid, and holds a from Brandeis Univer- ed the Bar Vocational Postgraduate Certificate in Research sity (Boston) and a BA in Commu- Course at the College of Law and was Training from the University of Hull. nication Studies from the Nanyang called to the Bar in 2010. Fluent in Speaks Spanish and French. Natalia Technology University (Singapore). English and French, and also speaks oversees research in Spain and Por- Malay. tugal. Raquel Holzmann Graduated from UCL Stefan Corre Oliver Dimsdale with a degree in Eu- UK/US Assistant Edi- Asia-Pacific Assis- ropean Social and tor. Graduated from tant Editor. Gradu- Political Studies with Leeds University with ated with an MLitt in French. Previously a degree in Philosophy. Creative Writing from worked for the NHS and taught Eng- Subsequently attended the University of St lish as a foreign language in Brazil. the College of Law in London and Andrews in November 2010. Also qualified and worked as a solicitor in holds an MA in English Literature Richard Metcalf the West End of London. from the University of Warwick. Has Europe Assistant Edi- previously worked as a writing tutor, tor. Graduated with a Talia Addleman in Scotland, and as a journalist in Te- First in German and Europe Assistant Edi- gucigalpa, Honduras. Speaks Spanish Italian from the Uni- tor. Graduated from and German. Learning Italian. versity of Bath in 2008 the University of Bir- and holds an MA in Translation mingham in 2008 with Paul Rance Studies from the University of War- a BA in Ancient and Student/Associate As- wick. Speaks French, German and Medieval History. Has completed the sistant Editor. Gradu- Italian. GDL and LPC at the College of Law. ated from Exeter Uni- Oversees research in Ireland and versity with a First in Shuma Hoque Scandinavia. English Literature, and Europe Senior Re- also spent a year abroad at the Uni- searcher. Holds a law Tobias Waters versity of Toronto to read Canadian degree and most re- Asia Senior Research- literature. He completed his MA in cently worked in Spain er. Graduated from the English at UCL in 2010. where she completed University of Kent with her legal studies at Universidad a BA in English and Complutense de Madrid. American Literature, and also holds an MA in English Literary Studies from the University of Durham. Has lived, studied and worked in the United States and Ja- pan.

9 Our Editorial Team

The Researchers The Researchers are responsible for interviewing clients and lawyers, and for assembling the data needed for the rankings and commentary.

Anna Bowen Alice Saville Ben McCarthy Graduated with a BA Graduated from Ox- Graduated from the (Hons) in English Lit- ford University with a University of Reading erature from St. Hilda’s First in English, then with a First in History, College, Oxford in completed an MA in and also presented a 2008. Has lived and Medieval and Renais- paper at the Interna- worked in Australia, and worked sance Studies at UCL. She also writes tional Children of War Conference for various B2B and B2C publishing theatre criticism and features for sev- in 2011. Currently writes for a film houses. eral arts publications. review site in his spare time. Aine Molloy Alistair Faiers Cesare Omissi Graduated with a Law Graduated in 2012 Graduated with a BA LL.B. (Hons) Degree from the University (Hons) in Ancient and from Newcastle Uni- of Warwick with a BA Modern History from versity in 2011 and in English and Latin Corpus Christi Col- an International Law Literature. Writes and lege, Oxford in 2010. LL.M. Degree from the University of directs plays for his theatre company Has previously worked in private Edinburgh in 2012. Competed in the in his spare time. practice in the field of Intellectual 19th Annual Willem C. Vis Interna- Property, specialising in trade mark tional Commercial Arbitration Moot Andrew Dyer matters throughout the world. in Vienna, and has spent time volun- Graduated from the teering in South Africa. School of Oriental and Charles Davies African Studies, Uni- Graduated in 2011 Aleksandra Luczak versity of London, in with a Masters Degree Graduated from King’s 2011 with a BA degree in Modern Languages College London with in Japanese. Spent a year abroad at (French and Spanish) a BSc in Management, Kobe University. Speaks Japanese and from the University of and from London French, and is learning Mandarin. Manchester. School of Economics Anna Winter Chris Nicholson with an MSc in Accounting. Native Completed BA and Polish speaker. Graduated with a BA in English Literature MA degrees in History Alessandra Sulzer from Balliol College, at UCL, where he also Born and raised in Pu- Oxford. Took journal- submitted his PhD in erto Rico. Graduated ism qualifications fol- History. He has co-ed- with an AB (Magna lowing internships at The Observer ited two books on Central and East- Cum Laude) from and The New Statesman magazine. ern Europe, and served on the edito- Harvard, a DPhil from rial boards of two academic journals. Becky Millar Oxford (Corpus Christi College), Christopher Lambert and an LLB from BPP Law School. Graduated with a degree in Philosophy Graduated in Law with Previously a research analyst at a Politics from the Uni- legal strategy consultancy in Lon- from Cambridge Uni- versity before com- versity of Manchester don. A native speaker of English and in 2010. Completed a Spanish. pleting the GDL at the College of Law. Has previously spent Masters in Politics at time travelling, volunteering and the University of Leeds in 2012. Pre- studying Spanish in South America. viously worked as a research analyst.

10 Our Editorial Team

The Researchers continued

Claudia Solaro Dennis Li Georgina Gittens Graduated with a First Graduated with an MA Graduated from Bris- in French and Classics (Merit) in Publishing tol University with a from the University from University Col- BSc in Philosophy and of Reading. Fluent in lege London. Con- Politics in 2013. Volun- French and Italian. siderable editing and teered at a legal charity project management experience in and co-edited a magazine. Cristina González publishing. Native Mandarin speaker Giverny Tattersfield Graduated in Law and also speaks German. from the Universidad Graduated with a BA Complutense in Ma- Elizabeth Sands in English Literature drid, Spain. Trained at Graduated from the from the University of a Brighton-based law University of Warwick Cambridge. Recently firm and worked in a multinational with a First in English worked as an editor financial services corporation. She Literature. Elizabeth and travel writer. is involved in several visual arts or- also writes for theatre. Graham Gilbert ganisations and speaks Spanish and Graduated in Ancient French. Emma Roche Graduated with an LLB History from Univer- Daniel Coyne (Law) from King’s Col- sity of Exeter in 2010. Graduated with a BSc lege London and an Subsequently convert- (Hons) in Internation- MSc in Nationalism/ ed to law by undertak- al Relations from the European and Interna- ing GDL at City, where he also took University of South- tional Politics from the University of the Bar exams. ampton, and has since Edinburgh. Holds a NCTJ qualifica- Hannah Campaigne gained experience across a broad tion in journalism from the Univer- Graduated from the range of media and communications sity of Strathclyde. University of Sheffield roles. Fawkia Hammouda in 2009 with a BA in David Greaves Graduated with an Politics and Philoso- Graduated in English MSc in Political The- phy, then completed and Creative Writing ory from the London the GDL at BPP in Manchester. from the University of School of Economics; Taught English in India, and spent Warwick before ob- attained a previous BA time living in France. taining an MLitt (Dis- in Political Science, International Henriette Mohr tinction) in Creative Writing from Law and International Relations Graduated from the the University of Glasgow. Speaks from the American University in University of Aberdeen Spanish. Cairo. with advanced degrees David Watson Felipe Goralski in International Rela- Has a BA in Modern Graduated with a BA tions and Law, as well History from Keble (Hons) in Politics from as International Studies and Diplo- College, Oxford, an UCL in 2006. Previ- macy from the School of Oriental MA in War Studies ously worked for a and African Studies, University of from King’s College, French medical assis- London. Speaks Norwegian. London, and over 20 years’ experi- tance company in London. Studied Idara Hippolyte ence researching military historical GDL and LPC at College of Law and Read English at Trin- matters for a Ministry of Defence obtained the LL.B. Speaks Spanish ity College, Oxford, Agency. and French. from which she has a Francesca Wright DPhil in English Lit- Read Classics at Uni- erature (2005) and an versity College Lon- MBA (2002). She taught high school don. Recently complet- mathematics and worked for nearly a ed GDL and LPC at the decade in a global energy company. College of Law.

11 Our Editorial Team

The Researchers continued

Jack Chitham Jamie Yule a French car manufacturer. Cur- Graduated from West- Graduated with a de- rently studying the GDL at BPP Law minster University gree in law from Ox- School. Speaks French. with a BA in Develop- ford. Also holds an ment Studies & Inter- LLM with Distinction Lara-Jane Ideo national Relations, lat- from Dundee Univer- Graduated with a er attaining an MSc in Globalisation sity. BA (Hons) in Eng- and Development from the School of lish Literature from Oriental and African Studies. Speaks Joaquín Sarroca Homerton College, Arabic. Graduated in Law Cambridge. Previ- from the Universi- ously interned as a script consultant. Jack Torbet dad de la República Speaks Italian and French and has Graduated with an de Uruguay and holds lived in both countries. LLB (Hons) in Law an LLM from Queen and French Language Mary, University of London. A quali- Louisa Hotson from the University fied lawyer in Uruguay, and fluent in Holds an undergradu- of Glasgow. Holds an English and Spanish. ate degree in Politics LLM from SOAS in Human Rights, from Durham Uni- Conflict and Justice. Spent a year Joe Twomey versity and a Masters studying International Law at the Graduated with a de- degree in US History Université de Strasbourg in France. gree in Modern Lan- and Politics from the University of guages (French) from London. Previously held a research Jack Watkins New College, Oxford. internship with the Institute for Gov- Graduated with a BA Previously taught Eng- ernment, where her research focused Honours degree in lish as a foreign language in Paris, and on new models of governance and History from the Uni- worked for a book supply company on public services. versity of Sheffield in tender bids in Africa. Speaks French 2010. and is currently learning German. Maria Harwood Born in Moscow and Jacob Moffatt Katherine Yu raised in London. Graduated with a BA Graduated with an Graduated with a BSc in Philosophy in 2011 MA in International in Philosophy, Logic and an MA in Social Relations and Modern and the Scientific and Political Philoso- History from the Uni- Method from the London School of phy from the Univer- versity of St Andrews Economics in 2011. Studying part sity of Exeter in 2012. in 2009. Previously worked in local time for a Graduate Diploma in Law government before completing the at BPP, with a training contract at a James Course-Choi GDL at the College of Law. Speaks top City firm starting in 2015. Speaks Graduated with a de- Shanghainese. fluent Russian. gree in Biochemistry from Imperial College Kielan Thompson Marta Krzeminska London in 2010 and Graduated with a BA Graduated from St. then attained an MRes (First) in History and Catherine’s College, in Structural Biology at Birkbeck English in 2007, before Oxford in 2011 with a College in 2011. completing an MRes First in Oriental Stud- in Russian Literature ies and holds an MA James Pulford from the University of Keele in 2009. in Applied Translation from the Uni- Graduated from the versity of East Anglia. Speaks Polish University of Manches- Kim Addison and Hebrew, and is currently learn- ter in 2012 with a BA Graduated in English ing Arabic. in English Literature Studies from the Uni- and an MA in Creative versity of Leicester Matthew Adams Writing. Also writes fiction, drama in 2009 and recently Has a DPhil in English and criticism. completed a commer- from Merton College, cial graduate training scheme with Oxford.

12 Our Editorial Team

The Researchers continued

Matthew Juggins Ramani Rajaratnam Roberta Abdalla Matthew has a BA in Graduated from Not- Graduated in Law History & Ancient tingham University from São Paulo’s Law History from the Uni- with BA (Hons) in His- School (EDESP-GV) versity of Exeter, ob- tory in 2011. Recently in 2010 and was ad- tained in 2012. He has completed her GDL at mitted to the Brazilian lived, studied and worked in Hong BPP Law School, London. Bar Association (OAB) in the same Kong, China and Singapore, and in year. Completed a Master of Arts in his spare time is a writer and an Ar- Raquel Peres Global Ethics and Human Values at tistic Director of an amateur theatre Graduated in Biol- King’s College London in 2012. Has company he co-founded. ogy from the Univer- previously worked in the non-profit sity of Kent in 2010. and legal sectors. Megan Langham Completed an MSc in Clinical Microbiology Rosie Seville Graduated with a BA Graduated with a First (Hons) in Modern His- from the University of Nottingham in 2012. Born and raised in Portugal in Chinese and French tory and German from from the University of Magdalen College, but lived in Germany for six years before moving to the UK for higher Leeds in 2012, and also University of Oxford in studied at National Tai- 2011. Taught English in Germany for education. Fluent in English and Por- wan University. a year, as part of undergraduate stud- tuguese, and also speaks German and French. ies, then completed the GDL at Ox- Rupert Wilson ford Brookes University as a Middle Ray Liu Graduated from Trin- Temple Bar Scholar. Speaks German Graduated with an ity College, Cambridge and French and is learning Italian. LLB from King’s Col- in 2010 with a BA Mersa Auda lege London in 2011. (Hons) in History. Has since studied the GDL Graduated from Uni- Previously worked in and BPTC at City Law School, Lon- versity College London a claims handler role don. with an MA in Com- at a Kent-based law firm. Fluent in Mandarin. parative Literature. Samantha Steele Previously worked as Ria Pal Graduated from the a translator and theatre critic. Speaks University of Oxford Graduated from Uni- Italian, Arabic and Spanish. with a BA in Jurispru- versity College London dence. Has taught Eng- Mitchell Tulloch with a BA in French lish in Australia and Graduated with an MA and Italian. Has pre- New Zealand. in Musicology from viously worked as a Durham University in music journalist and in the fashion Sara Fantoni 2010. Has spent the last industry. Born and raised in two years working as a Italy, called to the Bar corporate paralegal with a magic cir- Robert Li of England and Wales cle law firm and volunteering abroad Graduated in Modern in July 2012. Gradu- in Central America and India. Chinese Studies from ated from King’s Col- Leeds University, later Montague Kobbe lege London with an LLB and from completing the CPE at UNICRI with an LLM in Interna- Graduated from the Westminster Univer- tional Crime and Justice. Has worked University of Bristol sity. Previously worked in a domain for UNICRI as a Junior Fellow. with a degree in Eng- name management company, help- Speaks Italian and French. lish & Philosophy. ing clients to manage their intellectual property on the internet. Speaks Mandarin Chinese.

13 Our Editorial Team

The Researchers continued

Shaun Tey Simon Christian Tom Bushnell Graduated with an LLB Simon studied Law Graduated in 2012 (Law) from Queen at University College from Trinity Hall, Mary, University of London and has been Cambridge with a BA London and subse- called to the Bar at the (Hons) in Law, then quently completed the Middle Temple. completed the Bar Pro- Bar Vocational Course at BPP Law fessional Training Course at Kaplan School. Previously worked at the BBC Sophie Handler Law School. and also briefly worked in Singapore. Graduated from the He enjoys producing reports for com- University of Notting- Vian Chowdhury munity radio in his spare time. ham in 2011 with a BA Graduated in 2011 in History and French with an MSc in De- Shereen Zaki after spending a year velopment Economics. Graduated from King’s abroad in Paris. Subsequently complet- Previously lived in In- College London with ed the GDL at BPP Law School. Speaks donesia. an LLB (Hons) in Law French and Spanish. in 2011. She has expe- William Robertson rience in Competition Steven Preston Graduated from Not- Law and Property Law. Graduated from Uni- tingham University versity College London with BA (Hons) in Ge- Shuo Wang with an LLB. ography in 2012. Pre- Graduated from Peking viously a section editor University in Journal- for Nottingham University magazine ism and Creative In- Impact. Toby Eccleshall dustries Management before completing an Graduated from the MSc in Media and Communications University of Birming- at the London School of Economics. ham with a BA in Ger- Previously worked for a London- man and Russian Stud- based Chinese media company and a ies and subsequently Chinese music channel. completed the GDL at Brunel Uni- versity. Has previously worked as an English teacher in Moscow and enjoys playing the guitar in his spare time.

14 Introduction Introduction Contributed by Skadden, Arps, Slate, Meagher & Flom LLP

Skadden, Arps, Slate, Meagher & Flom LLP is very highly regarded for international work, with a great tax group located across the world. With the ability to serve clients in every major international financial centre, they can provide specific legal advice companies across a spectrum of industries worldwide. A corporate heavyweight, they have received high praise for their tax expertise. Paul W. Oosterhuis is the global head of Skadden’s regulatory practices and represents clients in a wide range of international and domestic tax matters. Mr. Oosterhuis has extensive experience in international mergers and acquisitions, post-acquisition integration transactions, spin-off transactions, internal restructurings and joint venture transactions. He also represents multinational companies in non-transactional international tax planning and IRS controversy matters. Tim Sanders is a chartered tax adviser and head of the European tax practice based in the London office. He works on corporate and banking taxation matters, including mergers and acquisitions, securitisations, debt restructurings, private equity transactions, cross- border and domestic structured finance, corporate reorganisations and restructurings related to international joint ventures. Moshe Spinowitz advises clients on a range of tax matters related to corporate transactions, including public and private company mergers and acquisitions, and cross-border transactions.

International Tax Update In the 60 years following World War II, most developed countries and multinational organisations worked together to reduce source-based taxation and increase residence-based taxation of cross-border income. Bilateral treaties exempting royalties and interest from withholding tax mushroomed in the 1960s, 1970s and 1980s, with 179 treaties concluded between the introduction of the OECD draft model in 1963 through its first publication in final form in 1977 (Holmes, International Tax Policy and Double Tax Treaties 58 (2007)). Most of the treaties have also eliminated taxes on the sale of local country company stock by treaty residents. The implementation of the Maastricht Treaty throughout the EU in 1993 saw the elimination of withholding taxes, including dividend withholding taxes, amongst member states. In the past decade, the United States entered into a number of treaties reducing or eliminating withholding taxes on dividends paid to corporate affiliates. One outgrowth of the move toward residency-based taxation, perhaps not so surprising in retrospect, has been a dramatic expansion of corporate affiliates of multinational groups resident in relatively low-taxed jurisdictions with extensive tax treaty networks. The use of finance companies, intellectual property holding companies and “entrepreneurial” risk-taking companies in places like Luxembourg, Switzerland, Ireland and Hong Kong has grown

16 International Tax Update Introduction

by leaps and bounds. Contract manufacturing and limited risk distribution arrangements that maximise risk and return in low-taxed jurisdictions are now commonplace. With hindsight, the last few years may be seen as the peak of planning designed to take advantage of residency-based rules to allocate income to low-taxed jurisdictions. We may now be seeing the beginning of a new reassertion of the primacy of source-based taxation. This can be seen in recent efforts by certain governments and the OECD to address and combat some of the planning facilitated by residence-based taxation. For example, in December 2012 the UK House of Commons Committee of Public Accounts held a series of highly publicised hearings that criticised the tax practices of several large multinational companies. The companies that were the focus of the hearings have significant operations and sales in the UK, but pay relatively little UK corporate income tax by virtue of the location of their intellectual property and risk-taking activities. Similarly, in February 2013 the OECD released the first report of its Base Erosion and Profit Shifting (“BEPS”) project. The report presented many of the issues raised by residency-based taxation, including the ability to separate the location of income for tax purposes from the location of the underlying activities, and the ability to achieve double non-taxation of income through various planning techniques. The OECD’s report calls for further study and multilateral action to address these issues. But the new assertion of source-based taxation, if it occurs at all, is not likely to occur through withholding taxes. Transfer pricing rules that focus on activities more than financial risks and that treat intangible value as earned in the country where intangibles are used are creeping into the rules and enforcement practices of a number of countries. Limitations on interest deductions, and particularly on related party interest deductions, are expanding. In some countries the substance of special purpose treaty entities holding stock, debt or intellectual property is being challenged, and in some cases “long arm statutes” are taxing indirect gains on the sale of stock. This overview highlights many of the key developments that may mark a coming trend. The country by country reviews provide an in-depth insight into where we are and where we might be going in the future.

Source-based taxation of non-residents on capital gains As a broad assertion of source-based taxation, no international tax case has grabbed more headlines than the Vodafone case in India. In 2007, Vodafone purchased a controlling interest in a Cayman Islands company that in turn owned the Indian business of Hutchison Tel- ecommunications, an international telecommunications company. The transaction involved a non-Indian purchaser, a non-Indian seller, and a non-Indian asset – the stock of the Cayman holding company. Nonetheless, Indian tax authorities claimed that Vodafone was liable for more than USD2 billion in Indian withholding taxes due on the purchase. India imposes capital gains taxation on non-resident sellers of Indian assets, and a corresponding withholding tax obli- gation on purchasers. In this case, the Indian tax authorities claimed that they could disregard the Cayman Islands holding company and treat this as a sale of Indian property. An Indian

17 Introduction International Tax Update

lower court initially agreed with the tax authorities and upheld the assessment. However, on appeal to the Indian Supreme Court, Vodafone prevailed, with the court holding that the tax authorities could not disregard the Cayman holding company. The saga did not end there. Soon thereafter, the Indian Finance Ministry introduced legislation to effectively overturn the Indian Supreme Court’s ruling and grant authority to the tax authorities to treat sales of non-Indian holding companies as sales of Indian property. The legislation has a clear impact on future transactions – sellers and buyers of the stock of non- Indian companies may be subject to Indian tax on those transactions if the sale involves an underlying Indian business. Vodafone is currently in discussions with the Indian tax authorities regarding the application of the new legislation to Vodafone’s 2007 transaction. China has seen similar legislative and enforcement activity. China, like India, subjects non-resident companies to tax on gains from the sale of Chinese property. And like India, China has recently been more aggressive in taxing gains from the sale of non-Chinese companies that hold Chinese assets. Under Directive 698, released in 2009, indirect sales of Chinese property can trigger Chinese capital gains taxation, and corresponding withholding obligations on the part of the purchaser. Common techniques used to minimise Chinese capital gains taxation, including the use of Hong Kong holding companies, can no longer be relied upon. The Chinese and Indian examples evidence a trend among countries that have rejected the residence-based approach to capital gains taxation common among developed countries. For those countries that impose source-based capital gains taxation – and those investors who invest in such countries – common techniques used to avoid those taxes may no longer be reliable, and capital gains taxation will need to be a consideration in those investment deci- sions.

Source-based taxation of other cross-border income In addition to capital gains taxes, much of the attention of the tax authorities and practitioners has shifted to the taxation of other types of income at its source. Here, there are three major trends of note: first, the increasing interest in formulary apportionment as an alter- native to the now-prevalent separate-accounting and transfer pricing regimes; second, the divergence between the OECD countries and large developing economies over the transfer pricing methods to be used to allocate income; and third, the changes at the OECD itself regarding the approach to transfer pricing for intangible property.

Formulary apportionment in the EU On 16 March 2011, the European Commission published a proposal for a Directive that would implement an optional formulary apportionment system within the EU for multinational enterprises operating therein. Entitled the Common Consolidated Corporate Tax Base (“CCCTB”), the proposal would offer companies the option of calculating their taxable income on a consolidated basis using a single set of rules for determining the tax base. All EU affiliates and other affiliates with a taxable presence in the EU would be treated as a single corporation for these purposes; intragroup transactions would be ignored. Once

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calculated, the taxable income of the group would then be allocated within the group using a three-factor formula giving equal weight to assets, labour (determined based on both pay- roll and numbers of employees), and sales. Income as allocated would then be taxed in the member country at local tax rates. The CCCTB does not cover non-EU affiliates of a multinational enterprise without a taxable presence in the EU – ie, non-EU affiliates that do not operate through a permanent establishment in the EU. The income of such affiliates would still be determined on a separate-accounting basis, with transfer pricing rules applying to transactions between EU affiliates and non-EU affiliates within a corporate group. The CCCTB would represent a radical departure, at least within the EU, from the separate- accounting and transfer pricing principles that have prevailed for decades.

Transfer pricing in China, Brazil and India While the EU moves towards a formulary apportionment system, other large economies are bucking the OECD consensus on transfer pricing, and adopting their own approaches that serve to allocate more income to local country activities and sales. In China, while the arm’s-length principle prevails, tax authorities have required alloca- tions of income to take into account Chinese-specific factors that they consider relevant, including reduced labour costs, access to China’s large and growing consumer market, and unpaid pollution charges. These factors serve to increase the amount of profit allocated to Chinese members of a multinational enterprise. India, which also requires arm’s-length pricing, requires the prices for intangibles to reflect the functions and risks associated with the development and exploitation of the intangible property. This approach has the effect of allocating additional income to Indian affiliates involved in developing and marketing intangible property, even where such property is owned and funded by a different affiliate. Finally, Brazil has adopted a series of profit allocation formulae that apply a fixed percent- age profit return unless a taxpayer can prove otherwise. With respect to intangible property, Brazil generally exempts payments associated with such property from arm’s-length pricing altogether, instead imposing special rules limiting the deductibility of payments for intangibles and subjecting such payments to withholding taxes in Brazil.

OECD attribution of profits and transfer pricing The OECD, which has long been the arbiter of transfer pricing principles in the international arena, has also been making significant changes in its approach. In June 2012, the OECD released its draft working paper on intangibles and transfer pricing, adopting an approach whereby returns on intangibles would be determined based on functions performed, assets used, and risks assumed – and not simply legal ownership. Under the OECD approach, relevant factors would include the functions that an entity performs through its employees related to the development of the IP. Despite the OECD’s efforts, what remains lacking is an international consensus on these transfer pricing issues – whether they should be eliminated altogether (such as through for-

19 Introduction International Tax Update

mulary apportionment), substantially revised (as per China, Brazil and India), or simply left alone. Despite the divergence in views, one can detect an emerging trend toward allocating more profit to jurisdictions in which functions are performed and sales made, and less to those where intangible property is owned and funded.

Residency-based taxation of cross-border income Recent years have seen the implementation of significant international reforms by several large developed economies. Most notably, the United Kingdom and Japan abandoned their worldwide, residence-based taxation systems in favour of territorial systems with CFC rules that place a greater focus on preserving the tax base in the UK and Japan respectively than on the taxation of income earned outside of the home country. The changes implemented by Japan and the UK have left the United States as the only large developed economy that imposes worldwide taxation on its multinational enterprises, though proposed reforms may see the United States move in the direction of territoriality as well. The UK’s international tax reforms have involved three major components – lower tax rates, the implementation of territoriality, and a reform to its CFC regime. The UK has reduced its corporate tax rate to 24%, and additional proposals would further lower the rate to 22% by 2014. At the same time, it has adopted a territorial tax system that generally exempts UK corporations from tax on dividends received from non-UK subsidiaries and capital gains realised from the sale of such subsidiaries. Finally, it has substantially liberal- ised its CFC regime so that profits from business and financing activities will generally not be subject to UK tax unless a series of tests are flunked. These changes have made the UK a far more attractive location for corporate domicile. Perhaps not surprisingly, 2012 saw a number of high-profile corporate redomiciliations – including by public companies Aon and Rowan – where formerly US-based companies relocated to the UK in part to realise the tax benefits of a UK domicile under these new rules. Japan has similarly reduced its corporate tax rate while adopting a territorial system that exempts non-Japanese income of multinational enterprises from Japanese tax. In the case of Japan, income of a foreign subsidiary will only be subject to tax in Japan if the subsidiary’s effective tax rate is less than 20% and the subsidiary is not engaged in an active business, does not manage that business in its country of residence, and does not conduct its business primarily in its home country. The reforms in the UK and Japan have left the United States as the only major developed economy that taxes its domestic corporations on their worldwide income. Legislative proposals have been put forth that would change that. Representative Dave Camp, Chairman of the tax-writing House Ways & Means Committee, has authored a draft international tax reform proposal that would reduce the corporate rate to 25%, and adopt a participation exemption whereby dividends from foreign subsidiaries and capital gains realised on the sale of foreign subsidiaries would be 95% exempt from US tax. The discussion draft also includes a series of base erosion proposals that would impose thin capitalisation rules to limit interest deductions, and would reform the current CFC rules to impose taxation on CFC income that is either low-taxed or represents an excess return on intangible property.

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The precise terms of the Camp proposal – most notably its base erosion proposals – are the subject of much discussion among practitioners and policy makers, and the outcome of these discussions remains uncertain. Whether and in what form the Camp proposal might be enacted remains subject to the uncertainties of the legislative process.

Conclusion At this stage the trend towards expanded source-based transactions is focused principally on the major developing countries. Whether these trends are spreading to other countries is an important topic for discussion in this year’s – and future years’ – country analyses.