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Royal & SunAlliance has transferred a portfolio of non-life insurance contracts. Its portfolio of Italian direct insurance policies has been transferred to Direct Line Insurance in Italy.

Allen & Overy has hired a team of Ernst & Young tax lawyers for its Amsterdam office. Partner Olaf van der Donk, who was previously the head of Ernst & Young's M&A tax group in the Netherlands, started on September 9 and will lead the team, which includes three associates from Ernst & Young and a fourth new associate. Two associates started in early September and the others will start in November. The associates joining Van der Donk are Roelof Goudswaard, who has 12 years' experience as a tax lawyer, Olaf Kroon, Jochem Kin and Maarten Blomme.

A recent decision by the Federal Tax Court illustrates the limited reach of the general anti-avoidance clause in the German tax code (Judgment of March 20 2002 – I R 63/99 – released in July 2002).

The French Administrative Supreme Court has rendered an interesting decision (Conseil d'Etat, May 27 2002, No 125959, Société Superseal Corporation), involving the application of the tax treaty between France and Canada with respect to capital gains derived from the alienation of real estate and the payment of royalties.

It was decided in Commissioner of Inland Revenue v Kwong Mile Services Limited (In Members' Voluntary Winding Up) in July 2002, that income arising from an underwriting agreement was derived at the place where the activities were carried out under the agreement. The taxpayer, a Hong Kong incorporated company, entered into an underwriting agreement with a developer who constructed a commercial and residential building in Guangzhou. The taxpayer undertook the sale of the property. The taxpayer marketed and promoted the sale of the individual units through its agent in Hong Kong. The judge held that, in this case, the place where the underwriting agreement was signed or where the underwriter assumed the risk under the agreement (both in Guangzhou) was not important. The activities that gave rise to the profit were the promotion, marketing and actual sales of the commodities concerned, and the source of the income was derived at the place where such activities took place.

The US Internal Reveunue Service (IRS) is strengthening its anti-tax shelter stance and has set new audit priorities. The strategy is designed to focus on key areas of non-compliance and will hit promoters of the schemes first before aiming to identify participants in the tax evasion efforts.

Countrywide Assured Financial Services Limited has arranged a new 15-year distribution agreement with Friends Provident Life and Pensions. Under the terms of the agreement, Friends Provident Life and Pensions has been appointed as exclusive provider of the life assurance products through the Countrywide estate agency network. The distribution agreement is expected to create payments to the Countrywide Group of around £275 million ($426 million) on a discounted basis over the next 15 years.

Ernst & Young can officially begin the difficult task of integrating some of its largest offices, after the European Commission cleared the proposed merger between Ernst & Young and Andersen in France and in Germany.

Royal Philips Electronics unit Philips Medical Systems and the Rabobank Group unit De Lage Landen are setting up a joint venture in the US. The new venture will be called Philips Medical Capital and will provide financing for the purchase of the full diagnostic imaging equipment that Philips Medical Systems produces throughout the US. The new venture will be based in Pennsylvania and will be 60% owned by De Lage Landen. De Lage Landen will treat it as a consolidated subsidiary. Schulte Roth & Zabel represented DeLage Landen, with Daniel Blickman leading the tax side. Sullivan & Cromwell advised Philips, with Andrew Solomon in New York leading the tax group.

Following the publication of the revised Catalogue of Foreign Investment in Industries, effective April 1 2002, the State Administration of Customs issued a circular clarifying the import value-added tax and customs tax exemption for equipment imported by a foreign invested enterprise for its own use within the enterprise's total investment amount. The circular states that "encouraged" projects approved after April 1 2002, and "encouraged" projects that were once categorized as "restricted B" projects in the old guidance catalogue, which involve technology transfers, are now both entitled to the tax exemptions.