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In March 2004 the European Court of Justice (ECJ) invalidated a French statute that taxed the unrealized appreciation inherent in corporate stock held by long-term French resident individuals upon transfer of their tax residence from France to another country (Hughes de Lasteyrie du Saillant - Case C-9/02).

Advocate General Kokott issued her non-binding opinion in the Manninen case (C-319/02) on March 18 2004 regarding the compatibility of the Finnish tax credit system with the EC Treaty. In Finland, economic double taxation of corporate profits is avoided by crediting corporate income tax paid by the company against the income tax payable by the individual on the dividend received. The credit is denied, however, if the company distributing the dividend is not a resident of Finland.

A 0% dividend withholding tax rate in some cases is one of the features of the new protocol between the US and the Netherlands, according to Wouter van Holthuijsen and Saskia Rienks of PricewaterhouseCoopers

Regulatory changes have made the creation of a holding company in China more attractive. However, investors still need to be aware of the tax and foreign exchange rules, cautions Wendy Guo of KPMG

The first three multilateral advance pricing agreements have been concluded in Europe. Similar agreements are likely to grow in popularity, according to Dave Rutges, Eduard Sporken, Dirk Van Stappen and Pascal Luquet of KPMG

The pressure to repeal tax-break legislation is now on the House of Representatives after the Senate approved the Jumpstart Our Business Strength (JOBS) Act by 92 votes to 5 on May 11 2004.

PricewaterhouseCoopers' northern UK practice appointed Ronnie Pannu as head of its tax investigations group on May 21 2004. Pannu succeeds Geoffrey Baldwin, who is retiring after 26 years at the big-four firm. Before joining the firm in 1995, Pannu served as an inspector of taxes at the Inland Revenue.

Mark Penney, a tax partner at rival big-four firm Ernst & Young, joined KPMG in London on May 7 2004 to head-up the firm's international tax group. Penney specializes in cross-border mergers and acquisitions and advised on Walmart's acquisition of Asda and Scottish Power's purchase of PacifiCorp.

Although Irish tax law imposes an obligation on companies generally, and on others who pay interest to persons whose usual place of abode is outside Ireland, to withhold tax from certain payments of interest, there are extensive carve-outs from this withholding obligation in the case of outbound interest payments. Among these carve-outs, sections 246(3)(ccc) and (h) of the Taxes Consolidation Act 1997 (TCA) provide that withholding tax is not to be deducted from certain interest payments where the recipient of the interest is, by virtue of the law of a relevant territory, resident for the purposes of tax in the relevant territory. A relevant territory means a member state of the European Community (other than Ireland) or a territory with which Ireland has a double taxation treaty, for example, the US.

by Richard Collier-Keywood, UK head of tax, PricewaterhouseCoopers