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The recent European Court of Justice (ECJ) decision in ICI v Colmer follows principles in earlier ECJ cases, ie that UK direct tax law is subject to the Treaty of Rome, and where it contravenes the principle of freedom of establishment (non-discrimination), taxpayers have recourse to Community law.

Belgium set to alter taxes on share exchanges and stock options

New regulations offer guidance to US corporations and their foreign subsidiaries conducting business in the European currencies that will be replaced by the Euro. Alan Granwell of Ivins, Phillips & Barker Chartered, Washington, DC looks at the options

The future is a different country for international corporate tax planners; they do things differently there. Or at least it will be for those used to dealing with the UK’s present corporation tax system.By Susan Symons, PricewaterhouseCoopers, London

On June 18 1998 the US Internal Revenue Service (IRS) issued final regulations relating to certain transfers of stock or securities by US persons to foreign corporations, pursuant to the corporate organization and reorganization provisions of the Internal Revenue Code. These final regulations are effective for transactions occurring on or after July 20 1998, however, taxpayers may elect to apply the final regulations retroactively to transfers of foreign stock or securities occurring after December 17 1987. For US federal income tax purposes, transfers of property by a US person to a foreign corporation are treated as taxable exchanges unless the transfer qualifies for one of the exceptions to the general rule. One of the more important exceptions to this general rule provides for nonrecognition treatment for the transfer of stock or securities of a foreign corporation that is a party to the exchange or reorganization.

Efforts to pass the final part of the Russian tax code could be hit by a protracted budget debate when the Duma reconvenes after its summer break. Part two of the code deals with specific federal, regional and local taxes. The Russian government hopes that it will be passed and enter into force at the start of next year. But the autumn session of the Duma is likely to be dominated by discussions over the federal budget (see International Updates, for further coverage of recent changes to the Russian tax system). Part one of the code has already been passed and will enter into force in January 1999. It deals with structural issues such as taxpayers' rights, the powers of judges in tax litigation and the burden of proof of guilt for the tax authorities. But the content of the final version differs significantly from the first draft submitted to the Duma in 1996. About half of the original was deleted and proposals relating to tax accounting, consolidated taxpayer groups and procedural items were lost.

US banks Firstar and Star Banc have agreed a merger worth $6.8 billion. The deal will create a bank with assets of $38 billion.

Amvescap, the UK financial services and management group, has made two offerings of notes on the London stock market. The offerings are valued at $250 million and $400 million.

BTP, the UK-based chemicals group, is to buy Italian chemicals company Archimica for £100 million ($160 million). The deal will take BTP into making active ingredients for pharmaceuticals companies. Archimica specializes in anti-AIDS and antibiotic molecules. BTP was advised by Ashurst Morris Crisp in London. Tax partner Richard Palmer worked on the deal. Negri Clementi Montironi & Soci in Milan also worked with BTP.

Right of establishment — Corporation tax — Surrender by one company to another company in the same group of tax relief on trading losses — Residence requirement imposed on group companies — Discrimination according to the place of the corporate seat— Obligations of the national court.