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Andra Casu From January 1 2011, interest payments may be exempt from withholding tax under the EU Interest & Royalty Directive, as implemented in the Romanian tax legislation (after a transition period that lasted up to the end of last year). Such exemption may be availed of if the effective beneficiary of interest payment holds at least 25% of the share capital of the Romanian taxpayer for a period of at least two years, ending on the date of payment of the interest. As a note, interest payment beneficiaries are defined as EU/EFTA legal entities, or permanent establishments of an EU/EFTA company, situated in another EU/EFTA state. Thus, apparently no reference is made to the extent to which the associated company concept shall apply in this context from an ownership perspective. As one may note, a strict interpretation of the law indicates in this respect the direct shareholding relationship. A key aspect in determining the particular area of application of such concept would be however the notional degree of coverage offered in this respect by the EU legislation as transposed in the Romanian tax legislation. In this respect, Directive 2003/49/CE brings forward the definition of the associated company concept: companies qualifying as parent, subsidiary and also sister companies are deemed to be associated for the purposes of the Directive. Importantly, the provisions of Directive 2003/49/CE are applicable starting January 1 2011 (until this date, the application of the Interest & Royalty Directive was only based on the local legislation on this matter). The analysis in this respect leads therefore to the conclusion (critical from a practical perspective, even if not tested yet from a practical point of view) that the application of the Interest & Royalty Directive would also extend to payments of such nature made to sister companies (of course, as long as ownership criteria are fulfilled).

Myranda Chatzimatthaiou On April 14 2011, just nearly two weeks after Standard and Poor's, a rating agency, downgraded the debt grade of Cyprus from A to A-, parliament unanimously passed a new legislation relating to banking institutions. The Tax and Rescue Fund Law approves the imposing of taxes on deposits of banking institutions and aims at creating a financial stability fund that will help support the credibility of the local financial system and safeguard the deposits of investors.

Janne Juusela The Finnish controlled foreign company (CFC) legislation implies that a Finnish company may be subject to income tax for its share of the profit of a CFC regardless of whether these profits are distributed by the CFC to its shareholders or not. A CFC is defined as a foreign corporation owned and controlled by a Finnish tax resident that pays income tax in its domicile at a rate less than 60% of the Finnish corporate income tax rate.

In recent years there has been a great deal of interest in corporate migrations out of the UK. But a non-UK group becoming UK headquartered is an area that has received somewhat less attention. Simon Letherman, Ansgar Simon, Don Lonczak and Iain Scoon of Shearman & Sterling in London and New York explore why US groups are attracted by inverting into Europe, and particularly the UK.

Monika Dziedzic On January 1 2011, new corporate income tax (CIT) exemptions applicable to collective investment schemes were introduced. As of that date, non-Polish collective investment vehicles, such as investment funds, investment companies and pension funds (entity) are exempt from CIT in Poland, provided that the following conditions are met:

Hans Martin Jorgensen Nick Pearson-Woodd A Norwegian Court of Appeal ruled on March 2 that Dell AS, a Norwegian commissionaire company, constituted a dependent sales agency permanent establishment (PE) in Norway for its undisclosed Irish principal. Dell has sought leave to appeal the decision to Norway's Supreme Court.

Janette Pantry Soraya Jamal Over the past year, Canada has actively increased the network of jurisdictions with which it has entered into a tax information exchange agreement (TIEA). Canada has recently signed TIEAs with a number of countries, including the Bahamas, Bermuda, Cayman Islands and Jersey, and is negotiating TIEAs with other jurisdictions that do not have a double income tax treaty with Canada.

Suryohadi An Indonesian internet provider (Indo Co) entered into a contract with a UK-resident global satellite operator (Sat Co) for the use of bandwidth, and paid bandwidth leasing fees. Indo Co did not use all the available bandwidth and sold remaining bandwidth to customers who paid leasing fees proportional to the size of bandwidth used.

Over the past decade or so, Canada has been struggling with the problem of how to effectively deploy their audit verification personnel in the face of increasing complexity in both the applicable domestic tax laws and the transactions and structures used by taxpayers. John Yuan and Chia-yi Chua of McCarthy Tétrault in Toronto explain how the Canada Revenue Agency have begun to employ some form of risk analysis to assist with their internal decision making on what type of taxpayers or issues to pursue.

International Tax Review broke new ground last month with the presentation of awards for the leading in-house tax teams in Europe for direct and indirect tax.