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Janne Juusela The European Court of Justice (ECJ) has rendered a judgment in a case concerning Finnish taxation of dividends paid to foreign pension funds (Commission v Finland, C-342/10, November 8 2012). According to the judgment, Finland has breached free movement of capital by introducing and maintaining a scheme under which dividends paid to foreign pension funds are taxed in a discriminatory manner in comparison with Finnish pension funds. According to Finnish tax legislation, dividends received by a domestic pension fund are, in principle, taxed at an effective rate of 19.5 %. Dividends received by a non-resident pension fund are subject to a rate of tax of at least 15% in accordance with the double taxation conventions or a tax rate of 19.5% in accordance with national tax legislation.

Michalis Zambartas In view of the imminent memorandum of understanding between the Republic of Cyprus and Troika (International Monetary Fund, Eurogroup and European Central Bank) for financial support, the Cyprus Parliament has been particularly active in the last weeks of 2012 to vote new laws essentially aiming to meet pre-agreed targets with the Troika. There are number of new laws which affect both local and international investors and businesses.

Renaud Jouffroy

Dieter Endres Last year ended on a disappointing note for Germany with the temporary collapse of the legislation needed to bring the tax system up to date for 2013. How much can be salvaged for later implementation remains to be seen. By contrast, the Supreme Tax Court sent its New Year's greeting to the tax world in the form of a judgment holding that intercompany relationships governed by a treaty related-party clause on the lines of the OECD model cannot lead to pricing adjustments for formal reasons alone. The case at issue was brought by a GmbH that had agreed at year end to accept management charges from its Dutch parent for services performed during the year. This agreement was applied in retrospect to the beginning of the year. Management maintained that an oral agreement had been reached before the first service delivery, but was unable to produce any evidence of this. The tax office followed the domestic rules on transfer pricing procedures requiring that services between related parties be documented by a prior written agreement and disallowed the expense without further ado.

Chizuko Tomita Under the recent tax reforms, major changes to the General Law for National Taxes were enacted to protect taxpayers' rights.

Rajendra Nayak

Ayesha Lau

Bob van der Made On December 6 2012, the European Commission issued two formal recommendations, one on aggressive tax planning and one on measures intended to encourage third countries to apply minimum standards of good governance in tax matters. These non-binding recommendations form part of a broader action plan to strengthen the fight against tax fraud and evasion. According to the Commission, EU member states should introduce in their bilateral tax treaties a rule which states that no avoidance of double taxation shall be granted in respect of items of income which have not been subject to tax in the other contracting state. This should apply to unilateral measures for the avoidance of double taxation as well. In addition, the Commission wants member states to renegotiate, suspend or terminate bilateral tax treaties with non-EU countries which do not respect the principles of the EU Code of Conduct for business taxation. Until these non-EU countries respect these principles, they should be placed on national blacklists' the Commission states.

Petter Grüner In a Norwegian Supreme Court case (HR-2012-01759-A) Statoil Holding AS vs. the Norwegian State, the court concluded that a loss on realisation of a stake in the German limited partnership Norsk Hydro Deutschland GmbH & Co KG was non- deductible for the (Norwegian) limited partner. The reason was that (i) the KG was not transparent and (ii) that the KG was "equal to" a Norwegian corporation as defined in the Norwegian Companies Act. According to the Norwegian Tax Act section 2-38, a gain realised on shares in non-Norwegian corporations which are "equal to" a Norwegian company is exempt from taxation for a Norwegian corporate shareholder if certain requirements are met and a corresponding loss is not deductible.

Elena Kostovska On October 31 2012, The FYR Macedonian Parliament ratified the income and capital tax treaty signed with Luxembourg on May 15 2012. The taxes covered by the treaty are the personal income tax, profit tax and property tax in FYR Macedonia while in Luxembourg taxes include individuals' income tax, corporation tax, capital tax and communal trade tax. The treaty is generally in line with the OECD Model Tax Convention on income and on capital with some deviations/specifics discussed below.