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Capital Acquisitions Tax (CAT) is a tax imposed on gifts and inheritances (benefits), which exceed certain tax free thresholds. The recipients of benefits are primarily accountable for the tax. An exemption applies to benefits passing between spouses; all other benefits are taxed at 20%.

The Interest and Royalty Directive of June 3 2003 was amended at the end of April 2004 in the context of the EU accession of 10 new member states. The amendment was necessary because the directive, which provides for abolition of withholding tax on intra Community interest and royalty payments between associated companies, had not yet been adopted when the Accession Treaty was signed in Athens on April 16 2003.

Jürgen Hartmann, one of the most respected tax lawyers in Germany, has left the law firm CMS Hasche Sigle to set up his own practice.

The US Sarbanes Oxley legislation, which prevents firms from providing certain tax services to audit clients and imposes strict rules to ensure auditor independence, is forcing tax advisers in Germany to consider their career development options.

The Finance Bill passing through Parliament now proposes some significant changes to the offshore funds regime (Income Tax Act 1988 part XVII chapter V), which should enable more offshore funds to be certified as having distributor status. The regime was originally enacted in 1984 to counter roll-up of income in a non-UK-based, open-ended offshore fund. By investing in such a fund a UK investor would be taxed on what was effectively an income return on the more favourable capital gains tax basis. The regime as it emerged was, however, quite broad in its application; under it, an investor's gain, insofar as it represents capital gains of an offshore open-ended fund can be taxed as income.

The use of Entidad de Tenencia de Valores Extranjeros (ETVE)s by international investors has increased dramatically in the last few years. Both Spanish and non-Spanish newspapers and other publications have reflected this by emphasizing the fact that most large multinationals already have in place an ETVE structure (see the article in Cinco Días, a Spanish economic newspaper, on April 22 2003). More recently, Cinco Días also reported on May 24 2004, that a substantial part of foreign investment coming into Spain in the last few years was made through ETVEs.

The new accounting standard for the impairment of fixed assets will go into effect for fiscal years starting on or after April 1 2005. However, since early adoption was permitted for fiscal years ending on or after March 31 2004, some companies have already adopted the new standard.

When the largest democracy in the world unexpectedly changes its government, you might expect corporate tax directors to examine their strategies anxiously. But in an interview with Rupak Saha, country tax leader at GE in New Delhi, Simon Briault discovers a period of stability and optimism in India that has been unaffected by political change and looks set to continue

Type of deal Valuer Acquirer Target Adviser to acquirer (tax) Adviser to target (tax) M&A Undisclosed Petrochemical Industries Company of Kuwait Dow Chemical Company KPMG, London, Andrew Gavan, James Madams; Toronto, Steven Hurowitz; Ashurst, London, Richard Palmer, Klaus Herkenroth; Ogilvy Renault, Toronto, Adrienne Oliver In-house; Charles Hahn, Jean-Pierre Lallement M&A Undisclosed Rayovac Corporation Varta agreed to sell its majority stake in Microlite Linklaters, São Paulo, Gustavo Haddad, Bruno Carramaschi Sutherland Asbill & Brennan M&A £270 million ($491 million) Land Securities Group and Delancey announced the creation of the Metro Shopping Fund The joint venture between Land Securities Group and Delancey is a limited partnership structure to set up shopping centres and shops Land Securities Group was advised by Slaughter and May, London, Graham Earles, Gareth Miles Delancey was advised by Olswang, London, Matt Ford M&A ?2 billion ($2.41 billion) Volkswagen Group Lease Plan Corporation Haarmann Hemmelrath, Amsterdam, Roderik Bouwman Allen & Overy, Amsterdam, Olaf van der Donk M&A Undisclosed Texas Pacific Group and Credit Suisse First Boston Private Equity BC Partners agreed to sell Grohe Aktiengesellschaft Weil, Gotshal & Manges, Munich, Tobias Geerling; New York, Marc Silberberg CMS Hasche Sigle M&A $2.03 billion National Grid Transco Crown Castle International agreed to sell its UK subsidiary Linklaters, London, Jonathan Richards Cravath, Swaine & Moore, New York, Lewis Steinberg, Aliza Levine; Norton Rose, London, Dominic Stuttaford, John Challoner, Andrew Roycroft M&A £863 million ($1.57 billion) ING Lease (UK) Abbey National Clifford Chance, London, John Gower, Douglas French, Nina Buchan Slaughter and May, London, Clare Richardson M&A $3.24 billion The May Department Stores Company Target Corporation agreed to sell the Marshall Field business unit and nine Mervyn's store locations to The May Department Stores Company Skadden, Arps, Slate, Meagher & Flom, New York, Sally Thurston Faegre & Benson, Minneapolis, Thomas Mayerle M&A DKK2.33 billion ($380 million) Englefield Capital and Electra Partners Europe agreed to acquire Global Solutions from Group 4 Falck Group 4 Falck agreed to sell Global Solutions Ashurst, London, Patricia Allen advised the management of Global Solutions Group 4 Falck was advised by Norton Rose, London, Louise Higgenbottom, Dominic Stuffaford M&A $1.65 billion The Carlyle Group Verizon Communications agreed to sell its Hawaiian operations to The Carlyle Group Latham & Watkins, New York, David Raab In-house M&A Undisclosed Reliance Group Deutsche Bank agreed to sell Trevira Linklaters, Cologne, Sebastian Benz, Markus Sellmann Deutsche Bank was advised by Hengeler Mueller, Frankfurt, Martin Klein; Trevira was advised by Ernst & Young, Berlin, Peter Jegzentis M&A $550 million Bain Capital Rhodia agreed to sell its North American phosphates business Kirkland & Ellis, Chicago, Jeffrey Sheffield; New York, Steven Clemens Shearman & Sterling, New York, Don Lonczak M&A ?660 million ($798 million) Wendel Investissement Lagardère agreed to sell the Editis publishing business Bredin Prat Slaughter and May, Paris, Pierre-Pascal Bruneau, Yves-Charles Zimmerman, Eric Bérengier Type of deal Value Issuer Lead managers Adviser to Issuer Adviser to lead managers Financing and bond issue ?6.5 billion ($8 billion) Autostrade Goldman Sachs International and Mediobanca Studio Vitali, Piccardi, Romagnoli e Associati Gianni, Origoni, Grippo and Partners, Rome, Massimo Agostini, Claudia Gregori IPO ?515 million ($626 million) Schlumberger reorganized its chip business with the IPO of Axalto ABN AMRO Rothschild, BNP Paribas, Citigroup and HSBC Linklaters, Paris, Annick Laine-Audouard, Laurent Dabernat; New York, Stephen Land, Friedemann Thomma Cleary Gottlieb Steen & Hamilton, London, David Saltzman, Jonathan Hay; Paris, Alexis Marion IPO $2.5 billion Genworth Financial Goldman Sachs Weil, Gotshal & Manges, New York, Kenneth Heitner, Mark Hoenig Davis Polk & Wardwell, New York, Harry Ballan, Po Sit

The European Court of Justice (ECJ) has ruled against Belgium imposing capital gains tax on the sale of a substantial participation in a Belgian company to a foreign entity. In a preliminary ruling the ECJ found the tax to be incompatible with the EC Treaty.