International Tax News - July 2013

by DLA Piper


By Mike Patton and Paul Flignor

The OECD’s Committee on Fiscal Affairs has published its Action Plan to address Base Erosion and Profit Shifting. This sweeping international effort aims to combat a comprehensive range of international tax reduction techniques on a scale that is without precedent.

The Action Plan follows from the directive given the CFA by the G20 group of countries to better address global corporate taxation and builds upon the general concepts set forth in the OCED report on BEPS issued in January 2013. The Action Plan asserts: “The BEPS project marks a turning point in the history of international co-operation on taxation.”

The Action Plan will require coordinating OECD member (and non-member) countries to act individually, bilaterally and multilaterally as they find ways to address base erosion and profit shifting. Moreover, the scale of the Action Plan is vast. It has the support of the finance ministers of the G-20 – the world’s largest economies – and it includes the involvement of many emerging economies.

Find out more about the Action Plan and its import for your business »


By Michael Greenberg

The IRS has released Private Letter Ruling 201322009, which responds to a request for clarification on the proper application of certain “look-through” rules for purposes of determining whether a foreign corporation is a “passive foreign investment company” (PFIC) for US federal income tax purposes.

The PFIC rules aim to place US persons that own foreign investment companies and US persons that own US investment companies, such as regulated investment companies, on an equal footing by limiting the ability of US persons to defer US income tax on foreign investment income through the use of foreign companies, and by disposing of the equity of such companies, converting ordinary income to capital gain.

Generally, if a foreign corporation is a PFIC because it meets prescribed income or asset tests, then US equity holders are subject to a harsh tax regime, including the denial of any capital gain treatment.

In the Ruling, the IRS ruled that a foreign corporation did not look-through both its first-tier and its second-tier US subsidiaries for purposes of determining whether it was a PFIC; rather, it only looked-through its first-tier US subsidiary and counted the domestic stock owned by that subsidiary as an active asset for purposes of the PFIC tests.

The Ruling is important because it illustrates both how the IRS applies the special PFIC look-through rule for domestic stock of 25 percent-owned US subsidiaries and how the rule takes priority over the general PFIC look-through rules irrespective of the quantum of ownership of the domestic stock owned by a US subsidiary.

Find out more about these look-through rules, along with the specific facts and issues pertaining to the Ruling »


By Bahareh Samsami, Maureen Doran and Aaron Borenstein

The New York State Bar Association’s Tax Section has recently published a report highlighting that, in a variety of commonplace circumstances where a controlled foreign corporation (CFC) engages in certain routine treasury center and hedging activities, the application of existing subpart F rules can frequently lead to tax results that are inconsistent with the CFC’s economic position.

These inconsistencies stem from the treatment of currency gains as subpart F income. The report explores whether the relevant existing rules can be interpreted under current law to minimize unpredictable or adverse consequences or, alternatively, how the rules might be modified to reduce the likelihood of unpredictable or unreasonable tax consequences.

After analyzing tax and economic inconsistencies, the Report concludes by requesting that the Internal Revenue Service clarify the application of existing subpart F exceptions to currency gains.

Find out more >>


By Ortwin Carron and Nicolas Couder

Since the start of 2013, Belgium’s transfer pricing audit cell has been increasingly busy.

A large number of multinational groups with operations in Belgium have received lengthy transfer pricing questionnaires, the first step in what typically becomes a detailed transfer pricing audit.

Find out more »


By Antonio Tomassini and Carlotta Benigni

Italy’s tax authorities are taking a harder look at the deductibility of interest expenses by foreign banks operating as permanent establishments inside Italy.

The amount of free capital of an Italian PE should be tin line with the amount ordinarily.

Italian tax authorities are taking a harder look at Italian permanent establishments of foreign banks. They are particularly interested in the amount of free capital at the level of the Italian PE.

Find out more »

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© DLA Piper | Attorney Advertising

Written by:

DLA Piper

DLA Piper on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.