Gunter Spielmann - Fiduciary Future

Report
International Developments and Trends
in International Taxation
Günter Spielmann
Executive director, EMEA Tax services
Grant Thornton International
© Grant Thornton LLP. All rights reserved.
Some initial comments……………..
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There have been recent changes to trusts in Cyprus
A Cyprus trust is a form of SPV
There are many different forms of SPV's in use globally
There are many jurisdictions offering different types of
SPV's
• There haven been recent significant trends in international
tax policy concerning SPV's
• We will look at SPV's from a global view in terms of recent
international developments and trends in international
taxation
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Should a Multinational use a SPV?
Home country
local co.
Host country
local co.
Intermediary
country local co.
As the result of either a direct or indirect investment into host country:
– Are there tax incentives available in the host country that defer
home country tax and reduce global tax
– Are there tax incentives available in the intermediary country that
defer home country tax and reduce global tax
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What is an SPV?
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Corporation in a tax favored location
Corporation performing a tax favored function
Often located in tax friendly countries
Other times located in commercial centers
Could serve as a conduit of corporate fund transfers
Could also be used as a repository for corporate funds
Often used to manage the deferral of income in the home country
Often used to manage to global tax rate of a multinational
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Uses of a SPV
SPV as a holding company
• The ownership of foreign activities can be
centralized in an SPV company which either
has offshore operating branches or owns
the shares of overseas subsidiaries
conducting active trade and business in
other countries.
• The SPV company would serve as the
clearing house for profits from foreign
operations, accumulating profits, reinvesting
and expanding in new countries, with only
concessional rates of tax applying.
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Shareholder
SPV Hold Co
Subsidiaries
Uses of a SPV
SPV as a holding company
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Deferral of tax on dividends
Deferral of tax on capital gains
Ability to retain funds offshore @ nil or low tax
Favorable withholding tax on remittance
Shareholder
SPV Hold Co
Subsidiaries
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Uses of a SPV
SPV as lending company
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Debt principal loaned from SPC to operating co
Interest deducted @ operating co
Interest subject to w/h tax @ operating co
Debt principal not deductible @ operating co
Debt principal not subject to w/h tax @ operating co
Interest subject to nil/low tax @ SPV
Shareholder
Interest deferred from tax @ shareholder level
SPV Hold Co
Subsidiaries
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loan
SPV Fin Co
Uses of a SPV
SPV as licensing company
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Royalties are deductible by licensee operating co
Royalties subject to w/h tax @ licensee operating co
Royalties subject to nil/low tax @ SPV
Royalties deferred from SPV shareholder tax
Shareholder
SPV Hold Co
Subsidiaries
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license
IP Co
Uses of a SPV
SPV as administrative company
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Performs management functions e.g. HR, Legal, IT etc.
Fees deducted at user entities
Fees subject to nil/low w/h tax
Fees subject to nil/low tax @ SPV
Fees deferred from tax @ shareholder level
Beware of jurisdictions with foreign base services regime
Shareholder
SPV Hold Co
Subsidiaries
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SPV Admin Co
Uses of a SPV
SPV as trading company
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Purchase of goods from related or 3rd party @ arms length
Goods are sold @ arms length to related or 3rd party
Resale margin parked in SPV
Resale margin deferred from tax @ shareholder level
Beware of CFC jurisdictions with foreign base sales anti-deferral
Shareholder
SPV Hold Co
Subsidiaries
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Sales SPV Trade Co
Uses of a SPV
SPV as shipping company
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Generally requires foreign flag of convenience
Ship’s profits kept offshore from shareholder through SPV
Some income streams from shipping may violate deferral
Beware of shareholder jurisdictions with foreign base shipping
Shareholder
SPV Hoco
Subsidiaries
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Lease
Ship Co
Uses of a SPV
Other uses of SPV’s
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Offshore banking
Asset protection trusts
Offshore trusts******
Captive insurance
Offshore mutual funds
Real estate holdings
Free trade zones
E Commerce zones
Technical support call centers
*****A popular Cyprus SPV the subject of recent local amendments
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Where are the most popular SPV locations?
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Bahamas
Barbados
Bermuda
BVI
Cayman Islands
Channel Islands
Cook Islands
Cyprus
Gibraltar
Hong Kong
Ireland
Isle of Man
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Labuan
Luxembourg
Madeira
Malta
Mauritius
Monaco
Panama
Samoa
Switzerland
Turks & Caicos
Vanuatu
What are some trends in international tax policy
concerning SPV's?
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Controlled Foreign Corporations regimes
Transfer Pricing
Thin Capitalization
Treaty shopping and/or limitation on benefits
Tax transparency reporting
Increased penalties
General Anti Abuse rules
Increased tax authority cooperation
Tax Information Exchange Agreements (TIEA's)
US Model Agreement for FATCA compliance
More countries adopting US FATCA type compliance
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Thank You
Thank You For Your Attention
© Grant Thornton LLP. All rights reserved.
International Developments and Trends
in International Taxation
Günter Spielmann
Executive director, EMEA Tax services
Grant Thornton
[email protected]
© Grant Thornton LLP. All rights reserved.

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