The EU Beneficial Ownership network has prepared a new version of the Beneficial Ownership factsheet (the “BO factsheet”). This network seeks to enable colleagues in the EU Direct Tax Group and across the PwC European network to deliver high quality advice based on the latest insights on the beneficial ownership concept. By bundling knowledge from the different countries, we can clearly see how the concept of beneficial ownership and abuse are developing internationally.
The latest version of the BO factsheet is available here.
There are many different provisions across Europe (and more widely) that rely on the concept of Beneficial Ownership. The significance of the concept is further heightened by the introduction of the Multilateral Instrument (MLI) and specifically the principal purpose test (PPT). Within the EU, the concept has been the subject of increased attention since the Court of Justice of the European Union (CJEU) issued its decision in the so-called “Danish beneficial ownership cases” in February 2019. In these judgments, the CJEU ruled that Member States must deny a benefit from the Interest and Royalty Directive and the Parent-Subsidiary Directive even if there is no national (or bilateral) provision tackling abuse. Furthermore, the CJEU provided indicators for the assessment of an abusive arrangement. Finally, the CJEU appears to introduce a beneficial ownership requirement for the Parent-Subsidiary Directive to apply. In addition, it ruled that for the interpretation of the beneficial ownership requirement in the Interest and Royalty Directive the OECD commentaries are of importance.
The Danish cases precipitated changes in certain EU Member States’ tax legislation but also heralded a change in approach by national tax authorities who have paid increasing attention to the question of beneficial ownership. As tax authorities look to raise revenue to compensate for the expense of emergency COVID-19 pandemic measures, this may be one area they focus on. Please make sure that you monitor the developments around beneficial ownership and abuse in Europe and worldwide.
In the below infographic we have visualized legislative information regarding beneficial ownership in the EU Member States, the United Kingdom, Gibraltar and Switzerland.
Several national courts of EU Member States have referred to the Danish cases in cases related to possible tax abuse. The previous issue of the BO factsheet (12 March 2020) highlighted the cases of Italy, the Netherlands and Spain.
Since this publication, more countries have referred to the Danish cases. The countries include France and Switzerland, while Spain and Italy have further updated their national legislation as well. We refer to the BO factsheet for more information about these developments.
While at the moment only a few countries have reported a high degree of focus on beneficial ownership, several countries indicate that they expect this will change soon.
Rotterdam, PwC Netherlands
Tel: +31 (0)88 792 43 51
Manager Tax, PwC Netherlands
Tel: +31 (0)61 399 87 29