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By Maurice Emmer and Leslie McDermott, San Jose, and Alan Shapiro, Washington DC

Grady Bolding has joined Orrick, Herrington & Sutcliffe as a tax partner in the San Francisco office. Bolding joined the firm from the defunct Brobeck, Phleger & Harrison that folded in February this year.

The associated tax and legal firm for Pricewaterhouse-Coopers in Italy, Studio Pirola Pennuto Zei has lost a team of ten people from its tax group.

A European Court of Justice (ECJ) Advocate General opinion on a personal tax case could lead to similar cases being brought by businesses. The case related to the French residential exit tax due by Hughes de Lasteyrie du Saillant, transferring his tax residence from France to Belgium. The ECJ Advocate General ruled that the French exit tax is against the EC freedom-of-establishment principle in the EC Treaty.

The European Union Council has issued new regulations related to financial aid, technical assistance and economic cooperation with developing countries in Latin America and Asia. In this regard, a decree was published in the February 28 2003 Mexican official gazette enacting the Model Convention between Mexico and the European Union that is in effect retroactively as from January 17 2003.

At present, various factors influence the taxation of employee stock options in Switzerland. The main issues to consider are the following:

The budgetary measures for 2003 include new rules on the place of supply of services for value-added tax (VAT) purposes.

A new notice issued by the Ministry of Finance and the State Administration of Taxation exempts enterprises from business tax on the disposal of equity or shares which were initially invested in the form of buildings, land use rights, technology or other intangible assets. Prior to the issue of these rules, intangible assets or real property transferred to a company as capital contribution were exempt from business tax until the investor disposed of the equity or shares, which then subjected the disposition to a 5% business tax. However, there was a lack of guidance on how the 5% would be calculated and this new notice clarifies this issue. The notice takes effect from January 1 2003.

Elimination of capital tax

Energy companies initially embraced President Bush's proposal to eliminate taxes on dividends, but some pulled back after reading the fine print. Keith Martin of Chadbourne & Parke explains why