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In a recently published decision dated December 19 2001, the Cologne Tax Court interpreted language contained in article 23 (3) of the tax treaty between Germany and Canada as a subject-to-tax clause, and gave this clause precedence over provisions in the treaty by which items of income "shall be taxable only" in Canada. While the interpretation of treaty article 23 (3) as a subject-to-tax clause is not new, the relation of this clause to language in the treaty by which items of income are taxable "only" in a specified treaty state is highly controversial and of considerable practical significance.

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Covering foreign employees in US retirement plans is a complex area and mistakes can be costly. Robert H Masnik and Karen Field of KPMG’s Washington National Tax Compensation and Benefits practice discuss the issues

Influenced significantly by methods based on the OECD transfer pricing guidelines, many countries are adopting and supplementing transfer pricing rules to compete and protect their tax base. This column highlights major transfer pricing developments around the world during the past few months. By Bill Dodge and Giovanni DiCenso, Deloitte & Touche, Washington, DC

The US has failed to recognize the European Union as a single economic entity for tax purposes. This raises a number of potential problems for US and EU companies. By Stephen E Fiamma and Dave Lewis of Allen & Overy's US Tax Group, London

The Singapore government's proposed tax reform package has met with approval from tax advisers who believe that it will go some way towards boosting the country's ailing economy and increasing foreign investment. The Economic Review Committee (ERC), which was set up by the government in December 2001, announced a series of proposed changes on April 11 this year. The government will announce whether it intends to adopt these proposals, which are part of the report called Restructuring the Tax system for Growth and Job Creation, on May 3 when the budget is delivered.

Tax authorities in a number of countries are increasingly focusing on transfer pricing issues related to stock options. Ernst & Young transfer pricing and stock-based compensation professionals have collaborated to review the pitfalls and opportunities with particular reference to the UK, the US and Germany. By Gareth Green and Jeremy Glover in London and Stanley Veliotis in New York

Allen & Overy has poached a Haarmann Hemmelrath partner to set up a tax practice in Germany and increased its tax partnership in Paris. Eugen Bogenschütz is joining the Frankfurt office as head of German tax. Bogenschütz, who was a partner at Haarmann Hemmelrath for eight years, and previously worked at Price Waterhouse, concentrates on cross-border M&A transactions and restructurings. Allen & Overy approached Bogenschütz over six months ago with the offer, at a time when he was not actively seeking to leave Haarmann Hemmelrath, and he was tempted by the opportunity of building a tax practice from scratch as well as the firm's international reach. He explained:

Last month he gave businesses a sweetener by announcing tax measures to aid both big and small business. But now, UK chancellor of the Exchequer, Gordon Brown's budget has received a backlash of criticism from corporates angry at once again being forced to fund public spending.

The Andersen network has continued to disintegrate this month with offices across the world joining rival firms. Deloitte and Touche and Ernst & Young appear to be the big winners so far, with KPMG, who originally set out to acquire the entire Andersen network outside the US, lagging far behind. On April 4 Deloitte & Touche signed a memorandum of understanding with Andersen in the US to acquire a ?significant' number of its US tax staff.