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Katerina Charalambous A double tax treaty (DTT) was signed between Cyprus and Lithuania in June 2013. The treaty, which follows the OECD Model Convention for the avoidance of Double Taxation on Income and on Capital, has been ratified by the two contracting states and has entered into force as of January 1 2015. According to the DTT there is no withholding tax on dividend payments on the basis that the receiving company is the beneficial owner of said income and owns at least 10% of the capital in the dividend paying company. In a different case a 5% withholding shall be applicable. Further, no withholding tax shall be suffered on interest payments from one contracting state to the other, and a 5% withholding tax on royalty payments.

Giuliano Foglia

Philippe Jeffrey

Miruna Enache In an attempt to summarise the efforts deployed by the Romanian authorities for encouraging investments, this overview covers state aid schemes and other incentives available to investors at the beginning of 2015. Two state aid schemes were implemented in 2014 and are now operational (with potential for additional grants being awarded in 2015):

Rossitza Koleva An agreement between the government of the Republic of Bulgaria and the United States of America was signed earlier in December. From the Bulgarian side it was signed by Vladislav Goranov, Bulgarian Minister of Finance and, for the US side, by H.E. Marcie Ries, the US Ambassador. With this agreement, Bulgaria shall become a part of the worldwide exchange of information in compliance with the the Foreign Account Tax Compliance Act ( FATCA). FATCA was voted and passed by the US Congress in 2010 and it is a tool for the Internal Revenue Service (IRS) to control and prevent cross-border tax evasion from citizens of the US through off-shore accounts and with financial assets abroad.

Dieter Endres After a series of political disputes, the Bundesrat gave its approval to a watered down Bill to change various tax rules on the lines of a traditional tax amendment act. While the amendments are not drastic, the Bill covers the following. An attempt to transpose the ECJ Beker and Beker judgment of December 18, 2013 (case C-168/11) into national law. The ECJ held the present method of calculating the maximum foreign tax credit to be unacceptable because it effectively reduces personal allowances in proportion to the tax-free foreign source income. The amendment does not completely achieve its object because of a drafting error. Further legislative action is to be expected.

Samantha Merle The LuxLeaks affair has brought Luxembourg tax rulings or Advance Tax Clearances (ATC) to the centre stage. However, the procedures, rules and guidelines surrounding the filing of these documents have already been under review by the government for some time. In mid-October, a draft law announced a new set of measures for the future (Zukunftspak), which evoked, among many other issues, the subject of tax rulings in Luxembourg. The draft law has now become law and a Grand-Ducal Regulation provides some further insight into these changes. From January 1 2015, the process of filing advance tax clearances will undergo some modifications. The formal requirements are more or less a formalisation of the existing practice. The request must include the following information:

Bob van der Made It is understood a number of meetings were held in the first half of January between French Finance Minister Sapin and French issuers, the French banking industry and non-governmental organisations (NGOs). Apparently, in a dramatic shift of position, France now supports a broader-based EU financial transaction tax (FTT) with a large range of financial instruments included in the scope, combined with lower tax rates. This move would align the French position more to that of Germany and the smaller ECP-11 member states (the countries participating in the enhanced cooperation procedure). At least one other big member state, Italy, is actively supporting the French on this initiative. Spain apparently is sitting on the fence. Although by mid-January no new documents or concrete compromise proposal had been circulated to the ECP-11, French President Hollande is intent on reaching an agreement on EU FTT with the ECP-11 as soon as possible in 2015.

Shane Hogan

David Cuellar