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Leading advisers update you on the latest M&A tax developments.

The Delhi High Court has delivered a major ruling regarding the taxation of advertising, sales, and marketing promotions (AMP) expenses.

David Cuellar

Khoonming Ho

Katerina A Charalambous Cyprus companies have a long history of presence in Russian structures. Russia's deoffshorisation law and, more specifically, the introduction of controlled foreign company (CFC) rules which was set to prevent the shifting of profits to preferential tax jurisdictions and re-route funds back to Russia could also affect the domination of Cyprus companies in such structures. Nonetheless, as it is construed from the aforementioned legislation, nothing is black and white and each case must be viewed on its own merits. In the same vein, the Russian Ministry of Finance has recently clarified the criteria upon which profits of a Cyprus company shall be exempted from Russian taxation. The Ministry has clarified that companies whose large majority of income (more than 80%) is active shall be exempted. However, the active companies' test is not expected to be straightforward, with the list of passive income to include dividends, interest and royalties as well as rental and lease income and income from the provisions of consulting, marketing, legal and other services.

Arne Schnitger

Georgia Grigoriou Greek law 89/1967 (L.89), as now in force, includes provisions aiming to attract foreign investments to Greece by granting the qualifying entities a special cost–plus tax regime (pre-agreed with the tax authorities), following a special advance pricing procedure. Such regime has been in force since 2006. Specifically, this special tax regime applies to local entities and branches of foreign enterprises, exclusively engaged in providing certain qualifying services (for example, consulting, accounting, advertising, marketing, data processing and/or R&D services) to other associated entities established outside Greece and to their head offices abroad. A L.89 office is established after obtaining a special license granted by the Ministry of Finance (MoF) and must employ at least four persons while its operating expenses must be at least €100,000 per year and covered by direct funding from the company established outside Greece.

Rajendra Nayak

Giuliano Foglia

Samantha Schmitz-Merle Luxembourg Undertakings for Collective Investment (UCIs) may perform different types of investments in many different countries and may as such realise different types of income from different countries. The return on these various investments may be subject to withholding tax in the source country. The double tax treaties (DTTs) concluded by Luxembourg provide, among other provisions, reduced withholding tax rates. The question arises as to whether and if yes, under which conditions, Luxembourg UCIs may benefit from these reduced rates. Obtaining a tax residence certificate (TRC) from the jurisdiction of establishment of the fund is very often one of the requirements. The Luxembourg tax authorities have released a circular, the aim of which is to confirm under which conditions Luxembourg UCIs (SICAVs, SICAFs and FCP) may obtain a TRC. The circular also clarifies the position of the Luxembourg tax authorities and the foreign authorities towards DTT benefits for Luxembourg UCIs. The circular covers SICAVs, SICAFs & FCP, both within the meaning of the Luxembourg 2010 law on Undertakings for Collective Investments and within the meaning of the 2007 Law on Specialised Investment Funds (SIFs). A TRC can be obtained under certain conditions for SICAVs/SICAFs (type 1 tax residence certificate) as well as for FCPs (type 2 tax residence certificate).