Business Guide and Taxes in Peru

This Business- and tax Guide in Peru, in Spanish and English, contains the legal and tax provisions for any Peruvian or foreign company that decides to do business in Peru .

Esta Guía de Negocios e Impuestos en el Perú, en español e inglés, contiene las disposiciones legales y tributarias para cualquier empresa peruana o extranjera que decida hacer negocios en Peru.


 

PDF en Castellano:
GUIA DE NEGOCIOS E IMPUESTOS EN EL PERU

PDF in English:
BUSINESS GUIDE AND TAXES IN PERU

Hundreds of investors In Britain involved in tax avoidance schemes face paying huge sums

New twenty pound note

The aggressive tax avoidance scheme the supreme court is refusing a final appeal was based on Disney film rights. Film partnerships became popular as a means of avoiding tax after Gordon Brown set up tax breaks for the industry in 2005. In 2012 officials launched a push to close such schemes in the belief that some had stepped over the line into aggressive tax avoidance.

Eclipse Film Partners 35 is one of the film partnerships accused by HM Revenue & Customs of using industry exemptions to help its members avoid paying their fair share of tax. Sir Alex Ferguson, the former Manchester United manager, and Sven-Göran Eriksson, the former England manager, were among a host of City figures and celebrities in Eclipse 35, a £1 billion film investment scheme with Disney that created tax relief worth £117 million.

The Eclipse 35 scheme, who has another 289 members besides Sir Alex Ferguson and Sven Goran Eriksson, denies using distribution rights to Disney films Enchanted and Underdog to generate tax relief. However, The Telegraph reports otherwise. According to this source, investors in Eclipse 35 put in $50m towards buying distribution rights to Enchanted and Underdog in 2007. The purchase fund was then topped up by a Barclays loan facility that contributed another £790m. On the same day, the partnership sub-leased the rights on to another arm of Disney, thereby generating tax relief.

Investors in Eclipse Film Partners 35 were told that same year that they were not entitled to £117m in tax relief that the scheme had been intended to provide.

Eclipse 35 had already lost its case at the court of appeal, which ruled in February last year that the scheme amounted to tax avoidance on the grounds that there was no trade being carried out.

The supreme court’s refusal last month of a final appeal could have huge ramifications for similar schemes. The Financial Times reported last year that the scheme was one of over 30 film financing partnerships promoted by the Future Capital Partners firm in the mid-2000s. Hundreds of wealthy investors are now facing having to pay out huge sums after the Supreme Court finally closed the door on a seven-year battle with Revenue & Customs.

 

Brussels investigates the Spanish law regarding the Statement of Assets abroad

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The Directorate General for Taxation and Customs sent a letter to the Spanish government last month informing  that the European Commission had opened an infringement procedure against Spain regarding the famous Form 720, a form designed to register the Statement of Assets abroad to avoid fraud. This form, created by the Spanish Inland Revenue service, requires taxpayers to report the assets they have in other countries. In the same letter the Commission grants Spain two months for claims.

The obligation to declare assets abroad came in 2012 after the government approved a rule which forced taxpayers to inform the tax authorities about the properties, accounts and investments abroad worth more than 50,000 euros. This obligation was issued at the same time as a tax amnesty, in a “carrot and stick” style: the government opened the window of the tax amnesty but hardened the situation for those who did not comply with it.

Taxpayers had to file Form 720 with this information before the 30th of April 2013. And ever since, if their assets abroad vary this must be communicated before 30 March each year.

However, the Tax Office contemplates sanctions of up to 150% on the undeclared amount and fines of up to 10,000 euros per item omitted. Also, in Form 720, obligations don`t prescribe ever; ie for assets abroad the normal expiration time of four years for tax matters does not apply.

For both these issues, immediately in 2013 a consulting office placed a complaint to the European Commission,  claiming the penalties contemplated in Form 720 are disproportionate, and that the unprescriptability is not allowed in European Community law.

Brussels is now following up on this complaint and has issued an infringement procedure against Spain.

 

 

 

 

….

Bruselas investiga la declaración de bienes en el extranjero

Considera que las sanciones son desproporcionadas. Concede dos meses para alegaciones

La Comisión Europea ha abierto un procedimiento de infracción contra España por la declaración de bienes en el extranjero, el conocido Formo 720, por el que la Agencia Tributaria obliga a los contribuyentes a informar sobre el patrimonio que tengan en otros países. La Dirección General de Fiscalidad y Unión Aduanera de la Comisión Europea envió una carta al Ejecutivo español con fecha del pasado 19 de noviembre para informar de que “incoaba expediente”. La Comisión, señala la misiva, concede dos meses a España para alegaciones.

El inicio del proceso se produce tras la denuncia que presentó en 2013 el despacho DMS Consulting, de Palma de Mallorca, contra el Formo 720 por la desproporción del régimen sancionador. La norma que regula la declaración de bienes en el extranjero establecía una sanción de 10.000 euros por cada dato omitido y multas de hasta el 150% de las cantidades no declaradas.

Desde el Ministerio de Hacienda explican que estudiarán con detalle la carta de Bruselas y analizarán con detalle el asunto. Además, destaca que los objetivos de prevención del fraude de este Formo 720 son conforme a derecho comunitario. Y recalcan que este Formo es una de las medidas más ambiciosas de la lucha contra el fraude.

Alejandro del Campo, abogado del despacho DSM y el primero en denunciar la norma ante Bruselas, explica que otro de los puntos que investiga Bruselas es si es legal “la imputación como ganancias de patrimonio no justificadas los activos no declarados en plazo, sin posibilidad de alegar prescripción”. Hacienda considera que los bienes no declarados a tiempo son imprescriptibles, es decir que no se les aplicará la caducidad habitual de cuatro años para los asuntos tributarios. Precisamente la imprescriptibilidad y lo elevado de las sanciones son las cuestiones que investiga Bruselas.

La obligación de declarar el patrimonio en el exterior surgió en 2012 tras aprobar el Gobierno una norma por la que obligaba a los contribuyentes a informar al fisco sobre las propiedades, cuentas corrientes, inversiones y valores en el extranjero de más de 50.000 euros. Lo hizo en medio de la polvareda provocada por la amnistía fiscal en una decisión política que algunos expertos calificaron como el palo y la zanahoria: Abría la ventana de la amnistia pero endurecía la situación para los que no se acogieran a la misma.

 

Los contribuyentes tenían que presentar el Formo 720 con esta información antes del día 30 de abril de 2013. Y desde entonces si su patrimonio en el exterior sufre variaciones tienen que comunicarlo antes del 30 de marzo de cada año. En caso contrario Hacienda contempla unas sanciones de hasta el 150% de la cantidad no declarada. Multas de 10.000 euros por cada dato omitido. Y consideraba que los bienes correspondían al último año no prescrito por lo que también tendrían que pagar el impuesto correspondiente (IRPF o Sociedades). Ahora Bruselas investiga si algunos puntos de la norma que lo regula son legales.

 

 

@beanavarro: Bruselas expediente a España x su norma estrella contra fraude fiscal,el #Formo720 xa declarar bienes en extranjerohttps://t.co/TMfnMmU75u

Five Spanish Non-Resident Taxes

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If you own a property in Spain you should know that there are some taxes that apply, even if you are a non-resident.

Income Tax
All non-resident owners of a Spanish property have to pay an annual tax to account for their “share” of the property. Even though it is called an “income tax”, it is not actually based on your level of income, but on a “deemed” or “notional” income, which is a percentage of the rateable value of the property multiplied by the non-resident tax rate of 24.75%.
This tax is based on the calendar year and it is always due within 12 months of the end of the tax year. So, for the 2014 tax year, tax needs to be paid before 31st December 2015.

Property or IBI Tax
Property Tax in Spain is referred to as IBI and, like the United Kingdom, this tax will be levied by your local council in Spain. The council will assign a rateable value to your property and then, your rates or property tax will be a percentage of this amount. The percentage will depend on your council, but in most cases it will be somewhere between 0.5% and 1%. So, if you had a rateable value of €50,000 and your local percentage was 0.75%, then, your annual rates bill would be €375.
This tax is also based on a calendar year,and will normally be payable between June and September each year; again, this will depend on your local council.

Rental Income Tax
Up until the end of 2009, Rental Income Tax was 24% of the gross income you received on any rentals. So, if you generated €1000 by renting out your property, then, you would have to pay €240 in tax. You could not offset any expenses – i.e. cleaning, utilities, insurance, mortgage interest, marketing, management fees etc.
However, since January 2010, the rules have changed, which means that you can now offset expenditure when calculating what income, or effectively profit, will be subject to tax of 24.75%.
In theory, rental income tax returns need to be submitted each quarter, to account for income received in the preceding 3 months.

Capital Gains Tax
When non-resident owners sell aproperty, they make a capital gain or a loss upon the sale, which is the difference between what they paid for the property and the proceeds of the sale. The buyer of the property should always withhold 3% of the sales value and pay this to the Spanish tax office, as an “advance” of the buyer’s potential capital gains tax. It is then up to the buyer to calculate their gain or loss, and, if a gain has been made,it will be subject to 21% tax. The buyer should pay the 3% within 1 month of the sale date, and the seller then has an additional month to submit their calculation of a gain or loss and the corresponding tax returns.
Inheritance Tax
Inheritance Tax for non-residents is a tax on the beneficiaries and not on the deceased, as it is in the United Kingdom. The tax rates themselves can vary depending on the relationship of the beneficiaries to the deceased, the amount that is being gifted, their age, and even their wealth in Spain. In the very worst situationtax rates can reach levels of 81%!
The other major issue for Britishcitizens is that transfers between husband and wife in Spain are not tax exempt as they are in the United Kingdom. So, if a spouse were to die, then the surviving spouse, in most cases, will need to pay inheritance tax (as well as probate), in order to take on the additional 50% share of the property.
It will normally take about6 months to deal with the probate issues in Spain and pay any outstanding inheritance tax, before the property deeds can be altered.
No Inheritance Tax is payable if the property is owned by a British company, since even if a shareholder dies, the company can continue in existence and the shares passed on to a beneficiary under British rules. Please be advised that this requires SPECIALIST advice.

Duties of a Company Director of a Spanish Limited Company (Sociedad Limitada – SL)

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The Sociedad Limitada (SL), the Spanish name for Limited Liability Company  (LLC), is the most common form of company in Spain and is similar to a limited company in other countries.  Like any form of company, a Sociedad Limitada (SL) is aimed at performing all sorts of commercial activities subject to commercial law. It is composed of a limited number of partners, it requires a minimum of capital, and the liability of the owners is also limited.

To incorporate a Sociedad Limitada in Spain the appointment of a company director is required.  It can either be a Sole Director, Joint Directors, Joint and Several Directors, or a Board of Directors composed by a minimum of three members.

This article provides an overview of the implications and duties of a company Director of a Sociedad Limitada.
Duties of a company director

 

A company director manages and runs the day-to-day decisions of the company and has full authority to represent the company in all activities related to the company’s corporate purpose.  This authority cannot be limited as regards to third parties.

 

In the case of the joint directors, each director can act independently and represent the company. However, in the case of joint and several directors, all members must agree on all acts or contracts entered into by the company.
The first director’s duty is to comply with tax and social security issues. Below are the instances in which a Director must register as an “autónomo” (freelancer), a legal figure in Spain, as regulated in the Additional Provision 27th of the General Law of the Spanish Social Security RDL 1/1994 of June 20th(Disposición Adicional 27ª de la Ley General de la Seguridad Social (RDL 1/1994 de 20 de junio):

  • Directors with effective control of the company must register as an autónomo (freelancer) in Spain;
  • If the director has been assigned a wage;
  • Whenever the director has actual control of the company (at least half the capital);or when the director happens to be the ultimate beneficiary.
  • When he has a stake equal to or greater than a third of the capital;
  • When the director exercises functions of management and has a percentage of at least 25% of shares in the Company.

The role and responsibilities of the directors are usually regulated in the statutes of the company, or through a Shareholders’ Agreement, which will delimit their role and how to perform their obligations. However, the Spanish Corporations Act regulates a number of basic obligations that the directors must comply with as representatives of a company:

  • Perform their duties diligently and loyally to defend the interests of the company.
  • Must not use the name of the company to conduct business of their own, or take advantage of their position to make business operations for personal gain.
  • Have the obligation to inform the other partners of any conflict of interests with the company, especially those involving competition.
  • Must keep secret any confidential company information, even after their removal or resignation, and should never share any information that may entail negative consequences for the interests of the company.

If they fail to fulfil these obligationsthey may have to respond with their own assets for the damaged caused.
Directors are also responsible for the following duties:

  • Lodge the incorporation deed at the Mercantile Register;
  • Update the shareholders’ book;
  • Call general meetings;
  • Represent the company;
  • Prepare and disclose the annual accounts and the directors’ report;
  • Call a general meeting to dissolve the company, if it is to be dissolved;
  • Challenge resolutions of the general meeting when they are contrary to the objects of the company; and
  • Keep the minutes book

 
Third party liability

The Spanish Corporations Act states that a corporation may have a cause for dissolution when “it causes losses that reduce the company`s worth to less than half its initial capital.” To avoid this situation the company must raise its capital or reduce it to a sufficient extent, as long as it is not appropriate to request the filing for bankruptcy.
If the company is clearly in the event of dissolution the director is required to call a general meeting within 2 months to adopt the agreements to, either approve the dissolution of the company, increase capital, or agree on a capital reduction. If the director fails to comply with this obligation he or she may be liable for all amounts owed to any creditor acquiring the company after its dissolution.

Conclusion

Being a company director is a serious commitment. Directors represent the company and manage its daily activities, and in principle, are not liable for the acts or debts of the company, provided they act diligently and in accordance with the law. It is, therefore, imperative that directors know the limits of their duties in accordance with the law, statutes or, where appropriate, derivatives of a Partnership Agreement.

 

 

 

Are you eligible for a Spanish Golden Visa?

In order to obtain a Spanish Residency permit by means of the Spanish Golden Visa scheme, you must make an investment in Spain. However, not just any investment will do. It must comply with the criteria exposed in the Spanish Entrepreneurial Act of 2013 in order to make you eligible for the Residency.

The first but not the only way to obtain the permit is by making a capital investment. And perhaps the easiest, most profitable and secure investment is in real state. The conditions are that you must be using at least €500,000 of your own funds to start with. However, above that threshold there is no limit to debt financing, for instance with a mortgage in Spain.

When making an investment of this type, there are specific taxes and fees one must consider.

  1. a) VAT or transfer Tax: up to 10%
  2. b) Stamp Tax, if applicable: 1%
  3. c) Land Registry, Notary and legal fees: up to 2%

 

So, it is important to keep in mind that, in order to apply for the Spanish Golden Visa, the total amount needed will rise approximately another 13% in order to actually be able to make the investment.

An alternative to acquiring real state is buying Stock shares of a Spanish Company; in this case the amount rises to 1.000.000€ or more. Other options are depositing 1.000.000€ or more in a Spanish financial company or acquiring Spanish Treasury  Bonds worth 2.000.000€ or more.

 

Lastly, you can also invest in business projects classified as “of general interest” if you can prove that the business will have a positive effect in job creation, or make a social or economic impact in the geographical area of the investment, or if it represents a significant contribution to scientific and/or technological innovation. The residency permit obtained by this type of investment requires the approval of the relevant Spanish authorities.

 

As you know, a Spanish Residency permit gives you access to all “Schengen” countries, including Austria, Belgium, Denmark, Finland, France, Germany, or Switzerland, amongst many others.

 

Los expertos piden una reforma fiscal equitativa y antifraude

Excelente artículo analítico escrito por Ana Balseriro de “La Voz de Galicia” sobre la petición de expertos y agentes sociales de una reforma fiscal de alcance,  que solucione la falta crónica de capacidad recaudatoria, recupere la equidad, simplifique el sistema y reduzca la sangría del fraude.

El informe de la comisión de sabios que preside Manuel Lagares y que servirá de base a la reforma tributaria del Gobierno está listo. El ministro de Hacienda recibirá las conclusiones el jueves 13 y las elevará al Consejo de Ministros del 14, con una semana de retraso sobre lo anunciado inicialmente por Montoro.

Pero a la espera de las recomendaciones de la comisión Lagares, expertos y agentes sociales insisten -al hilo de los últimos anuncios de Rajoy- en pedir una reforma fiscal de alcance, que solucione la crónica falta de capacidad recaudatoria, recupere la equidad, simplifique el sistema y reduzca la sangría del fraude. «El margen de maniobra del Gobierno va a depender de si la economía despega con fuerza. Pero sería bueno que se revirtieran las medidas introducidas que están haciendo daño a contribuyentes y empresas. La crisis nos ha llevado a un estado de excepción tributario y hay que ponerle fin», resume Ricardo Gómez-Acebo, socio de Deloitte Abogados. Algunas propuestas de los expertos para los grandes impuestos se detallan a continuación:

IRPF

Deshojando la margarita de la rebaja impositiva. El vehículo recaudatorio por excelencia, el impuesto sobre la renta de las personas físicas (IRPF), divide a los especialistas, aunque hay consenso en reducir los tipos, al menos para las rentas más bajas. El centenar de expertos que integran el Consenso Fiscal que elabora semestralmente PwC y que acaba de publicarse bajo el título de Un punto de partida para la reforma fiscal, recoge la opinión de que hay que reducir la presión fiscal. «Lo primero que hay que hacer es crear un sistema que tenga una capacidad recaudatoria significativa y que esté bien gestionado», señala Ignacio Zubiri, catedrático de Hacienda de la Universidad del País Vasco, que resume los objetivos de la reforma en «depurar bonificaciones, cerrar vías de elusión y reducir el fraude», añadiendo que «inicialmente no deben aumentarse los tipos de los impuestos más importantes».

¿Mantener o no el sistema dual? En la misma línea de Zubiri está la batería de propuestas enviada por el sindicato de técnicos de Hacienda (Gestha) al ministerio, abogando, entre otras cosas, por «reducir los efectos contrarios a la progresividad derivados de la dualidad fiscal de las rentas del trabajo y del capital, excluyendo las ganancias especulativas del concepto de renta del ahorro», e incluyendo las rentas generadas en sicavs (vehículos de inversión de las grandes fortunas), fondos de inversión o sociedades instrumentales. Desde la CEOE, sin embargo, plantean mantener el sistema dual del IRPF con un tipo de gravamen único sobre el ahorro, mientras que piden eliminar el recargo adicional temporal que se aprobó para los años 2012 y 2013 y que se ha prorrogado este 2014. A favor de esta supresión también se posiciona Ricardo Gómez-Acebo, de Deloitte, por considerar que «aunque el IRPF ha sido de los impuestos que mejor han aguantado la crisis, en parte por la introducción del gravamen especial que elevó los tipos entre los más altos de Europa, a medio y largo plazo el efecto es perjudicial y no se mantiene la recaudación». También el recientemente fallecido David Taguas, en su última entrevista a La Voz, defendía un IRPF de tipo único (flat tax) con un mínimo exento «lo suficientemente elevado».

IVA

¿Subirlo o mantenerlo? Montoro aseguró que no se tocaría de nuevo. Sus palabras apagaron el incendio que provocó la filtración de que el comité Lagares propondría subir el IVA, algo sobre lo que este lunes volvió a insistir la presidenta del FMI, Christine Lagarde, en el Global Forum Spain de Bilbao. Desde el Registro de Asesores Fiscales (REAF) del Consejo General de Economistas defienden que se estudie la eliminación de algunas exenciones y de operaciones a tipo reducido, revisando los regímenes especiales. La patronal, por su parte, se opone a cualquier subida del impuesto y también «a desplazar bienes y servicios desde tipos reducidos al general», por entender que repercutiría en la ya debilitada demanda interna y comprometería la recuperación. Los sindicatos lo comparten. Zubiri defiende «depurar» los tipos reducidos porque tienen un coste elevado (más del 40 % de la recaudación) y sus ganancias de equidad son dudosas, ya que, en realidad, los ricos se ahorran más que los pobres. «Habría que tender, como en Dinamarca, a un sistema de tipo único con algunos bienes esenciales a tipo cero». Eliminar las declaraciones simplificadas y establecer mecanismos efectivos de lucha contra el fraude son propuestas de consenso.

Sociedades

Corregir la brecha entre el tipo nominal y el efectivo. Hay diversas opiniones. Gestha, por ejemplo, plantea establecer «uno o varios tipos impositivos superiores» para las bases imponibles positivas superiores al millón de euros. Así se nivelaría el tipo medio efectivo con las pymes y microempresas, a la vez que se eliminan los beneficios fiscales y la mayoría de las deducciones. Desde Deloitte Abogados, el socio en Galicia Fernando Vázquez defiende una «simplificación». «Se trataría de eliminar las deducciones que quedan» y reducir el tipo impositivo nominal para acercarlo al efectivo.

Otros impuestos

Nuevas fórmulas y lucha contra el fraude. Zubiri subraya que la forma de luchar contra el fraude es «haciendo que no sea rentable». Los expertos también plantean nuevas figuras impositivas, como clarificar la fiscalidad medioambiental o crear impuestos sobre la contaminación o las transacciones financieras.

Artículo original en:

http://www.lavozdegalicia.es/noticia/economia/2014/03/06/expertos-piden-reforma-fiscal-equitativa-antifraude/0003_201403G6P34992.htm

Fair Tax Mark to reward tax justice

¨In this interesting article published by The Guardian and written by Craig Scott, the author discusses the relevance, pros & cos of the Tax Mark launching as a reward for transparency and fairness in corporate taxation practices and policies.¨

“In this world nothing can be said to be certain, except death and taxes.” For many, Benjamin Franklin’s famous quote encapsulates everything we need to know about the inevitability of taxes. Yet over the past few years, it has become apparent that, for an increasing number of multinational companies, when it comes to tax, nothing is certain.

Google, Facebook and Amazon have all been criticised recently for the level of corporation tax they pay in the UK, but perhaps it was the US coffee giant Starbucks that attracted the most opprobrium when it was revealed in 2012 that the firm, at the time worth $40bn (£24bn), reportedly paid just £8.6m in corporation tax in the UK over 14 years.

These companies aren’t breaking any laws – they are simply taking advantage of the complexity of the corporate tax system.

Politicians are starting to act: plans were announced at last year’s G20 to close loopholes in the tax system. Public anger is also growing – in a recent survey commissioned by Christian Aid, 34% of Britons said they are currently boycotting a company because it does not pay its fair share of tax.

So how can the problem of corporate tax avoidance be tackled and the public’s understanding of the issue improved? At a recent roundtable discussion, hosted by the Guardian in association with Midcounties Co-operative, participants discussed the pros and cons of the Fair Tax Mark, which will launch today.

The Fair Tax Mark will use a set of metrics to assess companies on their tax and transparency. Companies that score a minimum of 13 out of 20 will be awarded a Fair Tax Mark. According to one of the directors of the Fair Tax Mark, Richard Murphy, the aim of the scheme is to allow companies who are paying the right amount of tax to stand out. “There are good companies in this world,” he said. “There are exemplars of good practice who are trying to pay the right amount of tax.”

How much is enough?

Yet for some participants, defining what the “right amount of tax” is could be problematic. “How do you pin down what a fair tax rate is?” asked Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants. “There are all sorts of dynamics that come into it; even tax experts wouldn’t necessarily agree with each other.”

For Murphy, “right” means that the “economic substance” of what a company is doing in a certain country has to be reflected in the tax it pays. If the company only has a “filing cabinet” in that area, rather than having staff, sales and assets there, yet is supposedly generating a vast amount of profit, “that looks like a tax arrangement”.

He went on to tell the roundtable how a system of awarding “bonus points” would ensure the Fair Tax Mark didn’t unfairly penalise companies that had paid a low rate of tax for legitimate reasons. If, for example, a firm was entitled to tax relief to offset investment in R&D, the rating would accommodate this – as long as these reasons were disclosed.

This bonus marking system went some way to allaying the concerns of a few participants who felt that an earlier iteration of the Fair Tax Mark was too simplistic in its approach to tackling tax avoidance.

There are many other legitimate reasons why a company would not have to pay the headline rate of tax, said Mike Truman, editor of Taxation Magazine. “If you are operating within the law you shouldn’t be penalised,” he stressed.

Ken Olisa, corporate director of Thomas Reuters, said the tax system was dealing with very complicated issues; if it was reduced to something simple, it could inflame the public with headline views and “damage business and democracy”.

Olisa believed encouraging companies to be transparent about their tax affairs was a better approach. “Let the public and media form their [own] views,” he said.

But some participants felt the public would embrace having an easy way to tell if a company was paying a fair amount of tax or not, without becoming swamped with information. “All consumers want to know,” said Robert Hodgkins of the ICAEW, “is has it passed, or failed?”

“We are only going to be giving the mark to people who want it … we are not going to stand in judgement,” said Murphy, who was keen to emphasise companies would have to apply to receive Fair Tax Mark accreditation. The standard wouldn’t be imposed on companies or its findings released without their consent.

This operating model is standard in ethical certification, said Paul Monaghan, director of Up the Ethics. “A business says, ‘I’m thinking of certifying my supply chain, can I have a proxy audit?’ You then get an initial report back and the conversation begins,” he said. Sometimes this leads directly to certification, he added, and sometimes improvements and tweaks need to be made before certification is granted.

“If companies are concerned they are going to be highlighted unfairly, then part of the response to that has to be better reporting,” said Jenny Ricks, head of campaigns, Action Aid. “The onus is on them.”

But if signing up to the Fair Tax Mark is voluntary, why would businesses choose to do so? Parallels were drawn with the Fair Trade movement and other consumer-awareness campaigns. “These things started off very small and now they dominate global markets – they have become really influential,” said Rob Harrison, another Fair Tax Mark director.

When the Co-op began championing Fair Trade products, said Ben Reid, chief executive of Midcounties Co-operative, rival supermarkets soon followed suit “as it was seen as a unique selling point for Co-op and was taking market share”. Reid added that Fair Tax was now attracting the same type of passion. He said the Co-op’s energy business picked up hundreds of new customers last year after a large energy supplier was accused of avoiding paying corporation tax for a number of years and it became the subject of a boycott campaign. If the Fair Tax Mark becomes relevant to like-minded consumers, businesses will adopt it and “that is why this is important”, he added.

Companies are “responding to public demand for change on this issue”, said Ricks. “This will be another tool to democratise the debate around tax.”

Public anger

Alasdair Roxburgh, campaigns manager, Christian Aid, took up this point. There is public anger over tax, he said, “but at the moment it is not particularly directed or fully formed”. Roxburgh thought the Fair Tax Mark offered an opportunity to help people understand tax as an issue: “We need to get better at communicating why tax is important,” he said.

This could also be mutually beneficial for businesses, said Richard Wilcox, managing director of Unity Trust Bank. He used the Living Wage as an example, pointing out that businesses who signed up to that initiative began collaborating to ensure mutual success. Businesses that sign up to the Fair Tax Mark were likely to do the same: “It has the ability to snowball,” he said. “There is a clear business benefit there.”

Murphy agreed: “When all businesses understand each other and there is mutual trust, we will create prosperity and that can be shared.”

Roundtable participants were clearly coming round to the merits of the Fair Tax Mark, but a number of contributors wanted to know more about its business model. Would it become another organisation that both draws up industry standards and gets paid to help companies meet them, asked Olisa, such as the Institutional Shareholder Services (ISS), which advises its clients on corporate governance. The danger in that is that shareholders have “handed over thinking” to the ISS, said Olisa, which can sometimes result in the organisation exerting an undue influence.

“It’s a paid-for standard,” admitted Harrison, but it will operate on a sliding scale “that will start on £200 for a tiny shop”. Half the fee will be charged for an assessment and then, if the assessment is passed, the company will pay the second half for a licence to display the mark which, he said, would be subject to annual assessment. Fair Tax Mark was a not-for-profit organisation, he added.

Other participants worried that the Fair Tax Mark would lose its relevance once the economy picked up. However, Oxfam’s economics justice policy adviser, Krisnah Poinasamy, said the effects of austerity “are going to last far longer than the implementation of it” and therefore the argument around “who is paying their fair share” would continue.

Olisa, who had voiced some reservations regarding the Fair Tax Mark, largely came around to the idea in the end, suggesting that if the scheme focused on “justice more than tax”, it could and should succeed. “The idea of tax justice, as a citizen, I find hugely attractive,” he said. “As a businessman, I find it hugely attractive. The only way we create wealth in society is through businesses and we have to operate in society, so it’s an easy argument.”

How does it work?

• The Fair Tax Mark aims to help organisations that apply for accreditation achieve maximum transparency and fairness in their taxation policies.

• A company’s publicly available information (website, annual accounts etc) will be examined to assess its transparency, tax rate, tax avoidance and tax disclosure.

• The criteria have been devised in consultation with NGOs, business representatives, industry practitioners and a seven-member technical team of academics and professionals. Development of the criteria is an ongoing process.

For up to date information on the Fair Tax Mark, visit fairtaxmark.net

At the table

Larry Elliott (Chair) economics editor, the Guardian

Ben Reid chief executive, Midcounties Co-operative

Paul Monaghan director, Up the Ethics

Rob Harrison director, Fair Tax Mark; editor, Ethical Consumer Magazine

Robert Hodgkinson executive director of technical strategy, Institute of Chartered Accountants

Richard Murphy director, Fair Tax Mark; founder, Tax Research LLP

Ken Olisa OBE corporate director, ThomsonReuters; chair, Restoration Partners

Krisnah Poinasamy economics justice policy adviser, Oxfam

Jenny Ricks head of campaigns, Action Aid

Alasdair Roxburgh campaigns manager, Christian Aid

Mike Truman editor, Taxation magazine

Chas Roy-Chowdhury head of taxation, Association of Chartered Certified Accountants

Richard Wilcox managing director, Unity Trust Bank

 

Source:

http://www.theguardian.com/sustainable-business/fair-tax-mark-to-reward-tax-justice

Forecast Suggests Increased Confidence In Spanish Property Market

In this interesting article published by Tax News-Global Tax News and written by Ulrika Lomas, the author discusses how real seems to be the positive forecast of increasing possibilities for the Spanish property market for 2014.

A new report from the Urban Land Institute and PwC has found increasing investor confidence in the Spanish property market.

Sixty-seven percent of respondents who contributed to Emerging Trends in Real Estate Europe 2014 said that they believed there are now good opportunities in Spain, with the EUR162m acquisition of the Parque Principado mall in Oviedo by Intu and the Canadian Pension Plan Investment Board indicating mainstream interest in the market.

Joe Montgomery, CEO of ULI Europe, said that mainstream institutions were following opportunistic investors who entered the market when Sareb (a company which manages assets transferred by the four nationalized Spanish financial institutions) opened for business in 2013. However, he cautioned: “with limited signs of tenant demand and rental growth, questions remain as to how far the market recovery can go.” Skeptics warn that debt remains very hard to obtain, and that Spain is still a risky market.

The report also found 51 percent of investors seeing opportunities in Ireland, with Dublin transformed from a “no-go” location to “one of the hottest markets in Europe” in just two years.

Simon Hardwick, real estate partner at PwC Legal, said that there was “a battle for assets” underway, and that with intense competition over a limited supply in core locations in Europe, investors are having “to look at other opportunities and to accept more risk.” He added that the fast improving outlook for “non-prime” locations was evidence of this, but that PwC was “skeptical” that there would be a rush into the riskiest markets: “Investors’ interest remains focused primarily on sustainable returns from quality assets in good locations.”

Further, 71 percent of respondents believe that this will mean more equity for refinancing or new investment during 2014, in particular with increasing flow from sovereign wealth funds based in Asia. Fifty-one percent expect that debt for refinancing or new investment will increase, while only 15 percent expect it to become scarcer. However, there was no expectation of a return to pre-recessional levels, and southern Europe and the Benelux countries remain especially cautious.

The top five European real estate investment markets in 2014 are predicted to be Munich, Dublin, Hamburg, Berlin, and London.

Source:
http://www.tax-news.com/news/Forecast_Suggests_Increased_Confidence_In_Spanish_Property_Market____63526.html

Foreign Notary Deed in Spain

A recent press release from the Consejo General del Poder Judicial (General Council for the Judiciary) reports an interesting ruling of the Spanish Supreme Court. The decision, of 19 June 2012, ratifies the one of the previous instance according the registration in a Spanish Land Registry of a deed of sale of an immovable located in Spain, notarized by a German Notary. Taking into account the rules of private international law the Supreme Court confirms the validity of the foreign deed in Spain as a basis for a Registry record.

In the instant case litigation arose from the sale of an apartment in Tenerife, which was acquired undivided by two German citizens. One of them sold his share to a third party with the consent of the other; the transfer was formalized by a German notary and the acquirer sought to have it recorded in the Land Registry of Puerto de la Cruz. The registrar refused, considering that the German document lacked full legal force in Spain; his decision was upheld by the General Directorate for Registries and Notaries, but rejected on appeal both by the Court of First Instance and the Audiencia Provincial, as well as by the Supreme Court.

According to the Supreme Court, a decision such as the one taken by the registrar and supported by the General Directorate cannot be approved under the current understanding of the freedom to provide services at the European Union level; also, to require the involvement of a Spanish Notary would mean an unjustified limitation to the freedom of transfer of goods. Article 1462 of the Spanish Civil Code, which applies in the case, equates issuing of a public deed with delivery of the sold thing; the provision does not require that the deed be granted by a Spanish Notary public, therefore a formally valid deed granted by a foreign Notary will have the same effect (in terms of equation with delivery) as one notarized in Spain. The Supreme Court believes that this interpretation matches the EU tendency to avoid duplication of formal requirements, once they have been fulfilled in a member State for a purpose identical or similar to that required in the State where the act thus documented aims to produce effects. To back this opinion the Court leans on the Commission’s Green Paper of December 14, 2010 entitled “Less bureaucracy for citizens: promoting free movement of public documents and recognition of the effects of civil status records”; on the consistency of the understanding with the Spanish regulation on foreign investments, which does not require that contracts be notarized by a Spanish Notary; and on Article 323 of the Spanish Civil Procedure Act, which accords full evidential effect to public documents formalized abroad when comparable to the Spanish “escritura pública” in as far as the role of the Notary is concerned, regardless of the formal differences.

Two members of the Court do nevertheless dissent with the idea that Article 1462 Civil Code allows for the same treatment to be granted to Spanish and foreign deeds, as, according to the provision, equation between the public deed and the delivery of the sold asset is excluded when the deed states (or it can easily be inferred) otherwise. In this regard, the differences between the German and the Spanish systems for the conveyance of ownership justifies the need for the intervention of Spanish Notaries: only they can safeguard the essential rules of the legal transfer of property that governs our country, which is that of título y modo (grounds of acquisition followed by the traditio or delivery)