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TAXATION > Final exam > Flashcards

Final exam Flashcards

1
Q

Conditions to be a resident

A
  • more than 6 months
  • personal interest
  • economical interest
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2
Q

2 criterias define taxation

A
  • territory

- residence

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3
Q

Article 7p

A

This article includes the tax exemption for personal income tax (IRPF) for workers with payroll in a company resident in Spain that travel abroad to perform a job that is addressed to a company that does not reside in the Spanish State.

  • live in one country but travel and work all the time
  • 60,100 euros exempt every year from their labor income (abroad)
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4
Q

Non-resident income tax (Beckham law)

A
  • 5 years + 1 year of arrival
  • 24% flat percentage
  • can not have lived in Spain for the last 10 years

The Beckham law in Spain is a special tax regime that enables foreigners who move to the Spanish territory to pay a flat fee of 24% only on the incomes they obtain in Spain instead of a progressive tax on their worldwide incomes (19-45%).

It allows all the workers who reside abroad that want to come to work in Spain to pay income and wealth tax as if they were non-residents during the first 6 years.

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5
Q

Direct tax- personal income taxes

A
  1. Wages- labor income
  2. Real estate income
  3. Interests, dividends- bank income
  4. Freelance income
  5. Increase in the value of my wealth
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6
Q

Obtaining foreign income laws

A
  • Article 7p

- The Beckham Law

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7
Q

The BEPS

A

Base erosion and profit shifting project

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8
Q

3 ways to reduce taxation

A
  1. Loan- interests
  2. Royalties- moving expenses from one branch to another
  3. Loss- move loss from one country to another
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9
Q

Transfer prices

A

Cost centers–> profit centers

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10
Q

Corporate tax

A
  • Not about revenue, about profit
  • An expense

Corporation tax is defined as a direct and personal tax levied on the income of companies and other legal entities

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11
Q

What are the solutions to BEPS?

A
  • improve international standards
  • more transparent tax environment
  • updating the framework
  • national legislative measures
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12
Q

VAT

A
  • indirect tax
  • double taxation- income tax + VAT
  • foundation- exempt- can also not deduct VAT
  • only going to affect economical activity
  • neutral for the company- not an expense like corporate tax
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13
Q

How BEPS problems arise

A

Corporate tax is collected at the national
level. In cases of transnational economic
activities, the interaction between different
national tax systems may result in taxation by
more than one jurisdiction, or double taxation.

• The current international tax rules were
drafted to avoid such a situation. However,
these same rules have facilitated, in some
cases, the opposite case, for example, double
non-taxation.

• Also, the interaction between national tax
systems can lack of rules that prevent the
taxation of profits in a specific location
(stateless income)..

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14
Q

The presence of BEPS

A

4-10%

Affects both developed and developing countries

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15
Q

What are the risks of BEPS attributed to technology companies?

A

The BEPS package recommends, in turn, that the indirect tax applied to digital transactions can be taxed in the country in which the customer is located and provides consensual mechanisms for this purpose and efficiently

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16
Q

What is BEPS relationship with developing countries?

A
  • important to developing countries due to the heavy reliance dependence on corporate tax revenues
  • especially from multinational corporations
  • There is also a branch of work devoted to the development of practical guidelines for the most priority BEPS issues identified by developing countries, including support tools for their implementation.
  • UN + OECD–> tax inspectors without borders
17
Q

15 actions of the BEPS plan

A

Action 1: Address the challenges of the digital economy for taxation.
Action 2: Neutralize the effects of hybrid mechanisms.
Action 3: Reinforcement of the “controlled foreing company” (CFC)
standard.
Action 4: Limit base erosion through interest deductions and other financial payments.
Action 5: Combat harmful tax practices taking intoaccount
transparency and substance.
Action 6: Prevent the abusive use of agreements.
Action 7: Prevent artificial circumvention of the concept of
permanent establishment (PE)
Action 8-10: Ensure transfer pricing results are in
line with value creation.
Action 11: Evaluation and monitoring of BEPS.
Action 12: Require taxpayers to disclose their mechanisms of tax planning
Action 13: Reexamine transfer pricing documentation (report country by country).
Action 14: Make dispute resolution mechanisms more effective.
Action 15: Develop a multilateral instrument

18
Q

Corporation tax

A

Corporation tax is defined as a direct and personal tax levied on the income of companies and other legal entities

19
Q

Entities with one of the following requirements are resident in Spanish territory:

A
  • That they would have been constituted in accordance with Spanish law.
  • Have their registered office in Spanish territory.
  • Have their headquarters of effective management in Spanish territory.
20
Q

Article 7p IRPF: Exemption requirements for work abroad

A

– Work performed abroad cannot exceed € 60,000 of remuneration.
– There must be an effective real displacement of the worker to the foreign country.
– In the country of displacement there must be a tax of the same nature or similar to that of this tax.
– The country of displacement cannot be a country or territory considered as a tax haven.
– In addition to working for a Spanish company, the person must be resident in Spain.

21
Q

Non deductablc expenses- corporate tax

A
  • illegal
  • fines
  • loss from games
  • other taxes

dividends- exempt

22
Q

Transfer pricing- intangible assets

A

In fact, it is well known that one of the main
instruments at the service of base erosion and
profit shifting has been the self-interested
distribution of profits by intangibles that are difficult
to value.

23
Q

Intangible assets

A
  • goodwill
  • know how
  • trademarks
  • copyrights
  • patent
  • licenses
  • trade names
  • trade secrets +++
24
Q

Action 8 of the Action Plan (Guidance on

Transfer Pricing Aspects of Intangibles)

A

sought to clarify the definition of intangibles contained in
these Guidelines, improve the identification of
operations in which they are involved
intangible and, above all, offer additional help for
the difficult determination of value
market or arm’s length principle in the
operations with intangibles.

25
Q

Transfer pricing- key areas for action

A
  • common consolidated tax base
  • ensure effective taxation where profits are generated
  • increase transparency
26
Q

Shadow reporters

A
  • only give recommendations, not directly determine

- final decisions made in the country

27
Q

Rapporteur

A
  • representation for the different positions from Europe

TAXATION (4 decks)

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