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On December 12, 2017 the Irish Tax and Customs released eBrief No. 114/17 in which it announces a revised (more favourable) treatment of interest and royalties under the Irish–Chilean DTA. The reason for this revised treatment is that with reference to paragraph 2 of Article 11 and paragraph 2 of Article 12 in the Protocol to this DTA it is arranged that hat, if subsequent to the entering into force of the DTA, Chile agrees better terms for interest or for royalties in a treaty with an OECD member, those better terms automatically apply to the Ireland-Chilean DTC, if the same conditions are met.
Read more: Chile-Ireland: Revised treatment of interest and royalties under the Irish-Chilean DTA
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On December 15, 2017 two orders of the Seventh Chamber of the General Court of the Court of Justice of the European Union were published. In these orders the CJEU denies respectively the United States and IBEC Company Limited By Guarantee the right to intervene in the Apple state aid case (Case T‑892/16).
Read more: CJEU denies the U.S. the right to intervene in the Apple state aid case
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On December 15, 2017 the OECD issued a press release announcing that on that same date the Bahamas signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. By doing so, the Bahamas became the 116th signatory to the convention.
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On October 20, 2016 the OECD released key documents that form the basis of the Mutual Agreement Procedure (MAP) peer review and monitoring process under Action 14 of the BEPS Action Plan. On October 31, 2016 the OECD announced that the peer reviews will be conducted in 8 batches, with the second batch of Stage 1 peer reviews commencing in April 2017. Stage 1 peer reviews of the MAP programmes of Austria, France, Germany, Italy, Liechtenstein, Luxembourg and Sweden were conducted during this second batch.
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On December 14, 2017 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Bobek in the Case C-382/16, Hornbach-Baumarkt AG versus Finanzamt Landau (ECLI:EU:C:2017:974) was published.
Hornbach-Baumarkt AG (‘Hornbach’) provided comfort letters to banks and creditors guaranteeing that the liabilities of some of its foreign subsidiaries would be met. It did not receive any remuneration from the subsidiaries for the comfort letters. Following a tax assessment, the Finanzamt Landau (Tax Office, Landau, Germany; ‘the Tax Office’) held that the comfort letters had not been granted on arm’s-length terms. The Tax Office therefore increased Hornbach’s business tax. That was to reflect the notional remuneration that it considered would normally have been paid to Hornbach by an unconnected third party in consideration for the comfort letters.
Hornbach brought an action challenging the Tax Office’s assessment before the referring court. It argues that the German legislation providing for the adjustment of taxation of transactions between related companies to reflect arm’s-length terms violates the EU Treaty provisions on freedom of establishment. In particular, the rule only foresees the adjustment of taxation where foreign related companies are involved. Moreover, the rule does not allow taxpayers to invoke justifications for transactions not carried out on arm’s-length terms.
In that context, the Finanzgericht Rheinland-Pfalz (Finance Court of the Land of Rhineland-Palatinate, Germany), asks whether the relevant rule under German law is compatible with the EU Treaty provisions on freedom of establishment.
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