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Dr Thomas Schänzle

Giuliano Foglia

Gerry Thornton

"Given the positive vibes generated by the 'Make in India' campaign, we must seize the moment and use tax policies to encourage investments into the manufacturing sector."

Pawel Mazurkiewicz With effect from January 1 2015, the Polish corporate income tax law has been amended substantially. These amendments were mainly aimed at governing three issues: Elimination of certain opportunities for aggressive tax planning (in particular, structures allowing for the tax free exchange of assets); Introduction of the new system of thin capitalisation restrictions; and Introduction of a regime for the taxation of controlled foreign corporations (CFCs). From the foreign investors' standpoint, the new thin capitalisation regime is certainly the most important item. Until the end of 2014, Polish thin capitalisation restrictions were, in practical terms, irrelevant (the permissible limit of debt-to-equity was 3:1, and even more importantly, in principle only loans provided by direct shareholders were qualified as falling within the scope of thin capitalisation). Therefore, almost all interest paid in respect to loans provided by related parties were fully tax deductible. New shape of this legislation introduces the following features of thin capitalisation:

Maik Thomas Heggmair of WTS discusses recent transfer pricing changes in Germany, including the adoption of the authorised OECD approach (AOA) into German legislation and incoming reporting changes and provides practical views on recent audit experiences.

Larissa Neumann, partner at Fenwick & West, assesses the transfer pricing landscape in the US, looking at authority attitudes and areas of focus based on recent dispute cases, and points to the need for consensus on the transfer pricing aspects of the OECD’s project to tackle base erosion and profit shifting.

Matthew Cridland Australia was focussed on state and federal politics in early February, including an upset election result in Queensland. Notwithstanding these distractions, tax developments still continued apace. The Federal Court provided a detailed judgment regarding the tax promoter penalty provisions in FCT v Arnold (No 2). The court imposed penalties of $1.5 million in respect of a pharmaceuticals donations scheme.

Loreto Pelegrí

van der Made The Italian EU Presidency's Code of Conduct Group (Business Taxation) six-monthly progress report to the ECOFIN Council was finalised on December 11 2014. On patent boxes, following all discussions in the OECD Forum on Harmful Tax Practices (FHTP) around BEPS Action 5, a compromise regarding the modified nexus approach and how to assess whether there is substantial activity in an IP regime, was endorsed by the Code Group on November 20 2014. The Code Group agreed that all the EU patent box regimes that had been subject to examination by the Group are not compatible with the modified nexus approach as adapted by the compromise. As a consequence, these EU patent boxes should therefore be changed in line with the compromise. As part of the agreement, countries with existing IP regimes must agree to close these to new entrants by June 30 2016 and will abolish them by June 30 2021, after which all countries will be required to operate only nexus-compliant regimes. New entrants can therefore still enter the existing patent boxes until June 2016 and benefit from the five year grandfathering. The Code Group agreed that the legislative process necessary to give effect to that change and the related monitoring by the Code Group should commence in 2015. The Netherlands has made a reservation regarding the scope of IP assets qualifying for tax benefits under an IP regime in respect of the compromise regarding the modified nexus approach.