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At present, in Ireland, there is a difference in the tax treatment of unit-linked investment products in the form of life assurance policies or mutual funds, dependant on whether they are available to Irish residents (Domestic Funds) or are exclusively available to non-residents (IFSC Funds). In the International Financial Services Centre (IFSC) where such products are sold exclusively to non-Irish residents, both the fund itself and the policy holders are exempt from Irish tax. In the case of such products outside the IFSC, however, Irish residents may be unitholders and the fund is subject to tax on an ongoing basis at the standard income tax rate of 24% (22% from April 6 2000).

Corporate tax

The UK Inland Revenue issued a press release on January 14 announcing that legislation would be introduced in the next Finance Bill to widen the circumstances in which companies can calculate their taxable profits in a currency other than sterling. The new rules will apply to accounting periods beginning on or after January 1 2000.

Bruno Gouthiere, of Bureau Francis Lefebvre, Paris analyzes the reasons for repatriating a Luxembourg captive reinsurance business back to France

Australia’s thin capitalization rules are covered in the wholesale tax reforms put forward in the Ralph Report. Peter van den Broek of Clayton Utz, Melbourne outlines the likely changes and their impact for international operations

The Dutch Supreme Court has ruled that a German engineering company had a permanent establishment in the Netherlands, and therefore the Netherlands was entitled to levy wages tax on the wages of German employees who worked occasionally in the Netherlands.

Spanish value-added tax (VAT) law makes the exercise of the right to deduct VAT borne before starting up activities conditional on the fulfillment of certain requirements (a formal pre-commencement of activities declaration must be filed: in practice, those activities charging VAT must be commenced within one year, or an application must be filed to extend such term). Failure to meet those requirements means a deferral of the VAT deduction until activities are actually started, and a consequent financial cost.

Eugen Bogenschütz and Kelly Wright of Haarmann, Hemmelrath & Partner, Frankfurt-am-Main analyze the structure and outcome of the 1998 Daimler-Chrysler merger

Under two recent advance rulings, foreign investors in India may be subject to amendments to the Finance Act, designed to prevent Indian companies taking undue advantage of certain concessions. Keyur Shah, Arthur Andersen, Mumbai reports

The IRS has issued new regulations that further limit the use of check-the-box tax planning techniques used by US companies for their foreign subsidiaries. Keith Martin of Chadbourne & Parke assesses the extent of the new restrictions