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In the May 2002 issue of International Tax Review (page 58), we reported on a decision by the Cologne Tax Court interpreting language contained in article 23(3) of the former tax treaty between Germany and Canada as a subject-to-tax clause and giving this clause precedence over provisions in the treaty by which items of income "shall be taxable only" in Canada. On appeal, the Federal Tax Court (FTC) has now overruled both the lower court decision and its own 1992 holding on point (judgment of December 17 2003, IR 14/02).

In a decision dated November 3 2003 (Conseil d'Etat, 244437, SARL Meridia France), the French Administrative Supreme Court had to decide whether the interest paid by a French company to a partner domiciled abroad as current account remuneration may benefit from the withholding tax exemption provided by section 131(4) of the French tax code.

On February 27 2004 the minister of finance released Revised Draft Legislation and Explanatory Notes (the new proposals) that contains significant changes to Canada's foreign affiliate regime. The new proposals revise draft legislation that was originally released on December 20 2002 (the 2002 proposals), and introduce a number of new measures (most not dealing with foreign affiliates), including measures to tax payments for non-compete covenants and measures to allow public corporations to return capital without generating a deemed dividend.

Tax reform in Germany has changed thin capitalization rules and the law on exemptions, among other things. More change is on the way, forecast Eckart Nuernberger and Dirk Pelzer of KPMG

On May 1 2004 EU accession will force 10 new countries to fall into line with EU VAT rules. Simon Briault assesses the progress being made and the impact on multinational business and the EU tax landscape

Senator Helen Coonan, Australia's minister for revenue and assistant treasurer, announced on March 1 2004 that the government will introduce legislation to change the interest withholding tax (IWT) exemptions for payments relating to offshore borrowing.

Michael Hardwick: Tax ruling is part of a trend The European Court of Justice (ECJ) continues to exert a powerful influence on the domestic tax policies of EU member states after a landmark ruling on March 11 2004. The ECJ's ruling in favour of an individual French taxpayer could have wider implications for EU member states that impose company exit taxes.