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Watson, Farley & Williams has hired a senior associate from Allen & Overy for its New York tax group. Patricia Iandoli has joined the firm's international tax group as a partner. Iandoli specializes in asset finance tax work.

Guernsey is recommending introducing a withholding tax on EU resident individuals' savings interest instead of exchanging banking information when the EU tax package and Savings Directive is adopted.

PricewaterhouseCoopers has hired Lindy Paull, the former chief of staff of the Congressional Joint Committee on Taxation as co-managing partner of its Washington national tax services practice. Paull joined the firm on May 1 2003 and will work with co-leader Robert Morris. Paull spent 17 years working in Congress, and before working at the Joint Committee on Taxation held positions with the Republican staff of the Senate Finance Committee.

The US Senate ratified the Protocol to the US-Australia double tax agreement (DTA) on March 13 2003. Overall, the Protocol to the treaty is good for business between the two nations and the outcomes are positive. Among other things, it gives Australian companies with US subsidiaries level pegging for dividends with the UK, the most competitive US tax treaty in the world.

Deloitte & Touche has announced that it is converting to a limited liability partnership (LLP) in the UK later this summer. In the post-Enron environment, protecting partners from as much risk as possible is vital for professional services firms, and becoming an LLP is increasingly popular. Deloitte is the last of the big four to convert and law firms are getting in on the act. But the much-desired international networks are proving to be problematic with authorities in some countries, such as France, threatening to tax income from a UK LLP as if it is from a company not a partnership.

Countries joining the EU

Aforeign corporation that is engaged in a US trade or business is subject to regular US income tax on net income that is effectively connected with the trade or business. However, in order to claim deductions and credits otherwise available for calculating its US income tax liability, the foreign corporation must file a "timely and accurate" US income tax return. Failure to do so generally results in permanent disallowance of otherwise available deductions and credits. The IRS has recently issued regulations that significantly relax the standards for accepting late-filed tax returns.

On January 1 2003 Law 51/2002 entered into force (the Law) amending Spanish municipal taxation.

As from 1994, the year in which the Mexico-US tax treaty (the Treaty) was enacted, it was not clear whether the US limited-liability companies were entitled to the benefits of the Treaty when they were treated as pass-through entities when their partners were US tax residents.

While the new corporate reorganization rules have been used in many cases for the past two years, there remain some practical issues for qualified reorganizations.