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Elinore Richardson Czech taxpayers generally base their income reporting on their financial accounts. Accordingly, the tax treatment of realised and unrealised forex gains/ losses has been generally regarded as following accounting treatment. In a judgment, dated April 19 2012 (5 Afs 45/2011 – 94), the Czech Supreme Administrative Court, in a landmark decision, concluded that such unrealised gains and losses, included in profit and loss under accepted accounting principles, nonetheless, do not constitute income for Czech tax purposes. MP Development, the taxpayer, had contracted long term foreign currency denominated loans during its 2004 to 2006 fiscal periods and recognised translation gains. It originally reported these gains for income tax purposes, but subsequently, by appeal against its own filings, asked that the amounts reported be excluded. Though the court, in reversing the lower court decision (which had found for the tax administration) disagreed with the taxpayer's argument that the accounting treatment (defined by decree) was incorrect, it did find that mere translation gains/ losses, recognised in a taxpayer's financial accounts, should be treated as tax neutral, where no physical flow of cash would arise in the event of an actual realisation transaction.

Kevin Downing, one of the key prosecutors in the US government's fight against offshore tax evasion, has become a member of Miller & Chevalier. Since 2004, he has been senior litigation counsel with the Department of Justice's Tax Division, which he joined 15 years ago.

Deloitte has hired Jonathan Traub, former staff director for the Committee on Ways and Means of the US House of Representatives, for its Washington National Tax practice.

John McGowan has been appointed to the new role of chief information officer, global tax, with KPMG International.

Richard Allen, co-founder of Retailers Against VAT Avoidance Schemes (RAVAS) and former head of Delerium Records, looks at how Low Value Consignment Relief (LVCR) has undermined the single market.

Location saving is a hot issue in developing countries. Yin Chao, who speacialises in transfer pricing at Siemens in China, and Yin Shuping, who is an associate professor at Guangdong Polytechnique Normal University, explain China’s perspective on the transfer pricing aspects of location saving on contract R&D.

Irish section 110 finance companies now commonly feature in international finance structures. Over the years their use has expanded from being the issuing vehicle in more traditional securitisation and repackaging type transactions, to a broader range of applications, such as being the issuers of Islamic finance instruments, distressed debt acquiring companies, the underlying vehicle for US life settlement funds, and, more recently as aircraft leasing companies. James Somerville of A&L Goodbody explores this trend in light of recent guidance.

Boris Lazic On May 22 2012, Cyprus and Austria signed a protocol amending the Convention for the Avoidance of Double Taxation (DTT) between the Republic of Austria and the Republic of Cyprus with respect to taxes on income and capital, which was signed in Vienna on March 20 1990. The protocol amends Article 26 of the DTT relating to the exchange of information. In accordance with the Protocol, the contracting states shall exchange such information as is foreseeably relevant for the purpose of carrying out the provisions of the DTT between Austria and Cyprus.

Rossitza Koleva The activity from operation of vessels is levied with an alternative tax pursuant to the Corporate Income Tax Act (CITA). As stipulated in Chapter 34, Art. 254, the taxable persons have the right to choose whether their activity of the operation of vessels be taxed with a tax rate of 10% on the activity from vessel operation. Once this procedure is chosen, the tax is levied for a time period of at least five years. The alternative tax on the activity from ships operations is applicable to the persons performing maritime commercial navigation, provided that they fulfil the following important conditions:

Janne Juusela The merger between A Ltd and B Ltd was registered to the Finnish National Board of Patents and Registration in 2008. B Ltd had verified tax losses from previous accounting periods. A merger consideration was paid in cash to the sole shareholder of B Ltd. The local tax office stated that the merger was not in accordance with the Finnish legislation concerning transfer of losses. They considered that the merger met the requirements of the Income Tax Act but did not comply with conditions of the Business Income Tax Act. Tax officials interpreted that B Ltd was dissolved and thus the losses did not transfer to A Ltd.