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On November 5, former President Donald J. Trump was elected as the 47th President of the United States, with the Republican Party securing control of the Senate.
However, the political control of the House of Representatives remains uncertain and may take a few more days to resolve.
Despite the uncertainty, Republicans are optimistic about achieving a unified government, which could significantly influence tax policy and legislative outcomes.
Should Republicans gain control of both the House and Senate, this unified government would provide a pathway for President Trump’s tax proposals to advance.
Leveraging “budget reconciliation” procedures—similar to those used during the passage of the Tax Cuts and Jobs Act of 2017 (TCJA) and the Inflation Reduction Act of 2022 (IRA)—Republicans could bypass some procedural hurdles to enact tax changes with a simple majority.
However, these procedures are limited in scope and application, influencing the extent of legislative changes.
If Democrats retain control of the House, President Trump’s tax agenda would likely face significant opposition, necessitating bipartisan compromises.
Such a split government may hinder the resolution of crucial tax policy issues, including the looming expiration of TCJA provisions in 2025.
A partisan stalemate could delay decisions, impacting individuals, businesses, and the federal deficit.
While President Trump has not released a formal tax plan for his 2024 campaign, he has proposed several tax policy ideas that may shape his administration’s agenda. Below are key highlights:
President Trump has suggested reducing the corporate tax rate from 21% to 20%, with an additional reduction to 15% for domestic manufacturing through a revived domestic production activities deduction (DPAD).
While these measures aim to incentivize domestic production and boost mergers and acquisitions (M&A), his aggressive tariff policies could introduce supply chain risks, creating both opportunities and challenges for multinational corporations.
Certain Republicans advocate for repealing the corporate alternative minimum tax (CAMT) and the stock repurchase excise tax, as well as eliminating clean energy tax credits introduced under the IRA.
Although this could alleviate tax burdens for businesses, it may increase the federal deficit.
Additionally, the repeal could affect the supplemental funding provided to the Internal Revenue Service (IRS) for compliance, modernization, and customer service improvements.
President Trump has previously called for the elimination of carried interest deductions, although the TCJA only extended holding periods for long-term capital gains.
Whether this proposal will be revived remains uncertain, but it could serve as a funding source for other tax initiatives.
J.D. Vance has supported legislation to limit beneficial tax treatment of large corporate mergers, which could create tension with President Trump’s deregulation priorities.
These proposals may serve as bipartisan funding sources to offset other tax cuts.
President Trump has discussed reinstating 100% bonus depreciation, reversing the TCJA phase-out schedule.
Proposals to eliminate the amortization requirement for R&D expenditures under Section 174 and restore the EBITDA-based business interest deduction are also on the table.
Modifications to global intangible low-taxed income (GILTI), foreign-derived intangible income (FDII), and the base erosion anti-abuse tax (BEAT) are expected.
President Trump has also raised the possibility of withdrawing the U.S. from the OECD’s global tax framework, which could disrupt international tax planning and compliance but may enhance the U.S.’s appeal as an investment destination.
The administration aims to make individual TCJA provisions permanent while eliminating the $10,000 cap on state and local tax deductions.
Additionally, proposals to exempt Social Security payments, tips, and overtime income from federal taxation have been discussed.
The outcome of the 2024 elections and the composition of Congress will significantly influence the direction of U.S. tax policy over the coming years.
Whether through unified Republican control or bipartisan compromises, the potential changes will impact individuals, businesses, and international tax planning.
If you have any queries about this article on Trump Tax, or tax matters in the United States, then please get in touch.
Alternatively, if you are a tax adviser in the United States and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
In the context of a tax appeal, both the taxpayer and the Canada Revenue Agency (CRA) have the right to inspect documents in each other’s possession, control, or power, provided those documents are relevant to the appeal.
However, documents protected by solicitor-client privilege are exempt from disclosure.
This privilege does not generally extend to documents produced by accountants unless specific conditions are met.
Solicitor-client privilege is a fundamental legal principle in Canada that ensures open communication between lawyers and their clients for the purpose of seeking or providing legal advice.
It shields privileged communications from being disclosed, even in litigation, unless the privilege is waived or an exception applies.
This privilege is unique to lawyers and does not automatically apply to other professionals, such as accountants.
However, there are circumstances where an accountant’s communications may be privileged, particularly when they act as an agent to facilitate legal advice.
The recent decision in Coopers Park Real Estate Development Corporation v. The King (2024 TCC 122) highlights the scope and limitations of solicitor-client privilege and offers important lessons on managing privileged documents in tax litigation.
In Coopers Park, the CRA reassessed the taxpayer, alleging that the general anti-avoidance rule applied to certain transactions undertaken in 2004 and 2005 to integrate the taxpayer into another group of companies, the Concord Group.
During discovery, the CRA requested additional information, but the taxpayer’s responses were unsatisfactory or refused.
Consequently, the CRA sought a court order for the production of 19 documents, which the taxpayer opposed, claiming privilege.
The Tax Court of Canada had to evaluate whether these documents were privileged based solely on their content, as the taxpayer did not provide affidavit evidence to substantiate their claims.
The court determined that only two of the 19 documents were protected by solicitor-client privilege:
The court found that portions of the engagement letter describing legal advice on tax matters for the Concord Group were privileged.
This letter outlined the roles of the group’s tax lawyers, accountants, and legal counsel, clarifying that the accountants acted as agents to assist in legal advice.
An email exchange between the Concord Group, accountants, and lawyers preparing a legal agreement was deemed privileged, as it reflected communications in the course of seeking or providing legal advice.
The remaining documents were not privileged. These included:
Engagement letters among lawyers, accountants, and clients must explicitly reference agency relationships to clarify when a non-lawyer is acting as an agent for legal advice.
Where both legal and accounting expertise is required, lawyers should draft key documents to maximize the benefit of solicitor-client privilege.
Documents subject to privilege should be clearly marked and stored separately. Claims of privilege should be substantiated with affidavit evidence to avoid reliance on the court’s interpretation of the document alone.
Even accounting records, if revealing legal strategy, could be privileged. Taxpayers and their advisers must be vigilant in identifying and defending such privilege claims.
The Coopers Park case serves as a critical reminder of the importance of properly identifying and protecting privileged communications in tax litigation.
Solicitor-client privilege is a powerful tool, but its application requires careful documentation, clear agency relationships, and robust supporting evidence.
Taxpayers and advisers should work closely with legal professionals to ensure compliance and mitigate risks during disputes.
If you have any queries about this article on Accountants and Legal Privilege, or tax matters in the Canada, then please get in touch.
Alternatively, if you are a tax adviser in Canada and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
Italy’s proposed tax increase on cryptocurrency trading is facing significant changes, with the government leaning toward a lower tax rate than initially suggested.
Prime Minister Giorgia Meloni’s coalition is reportedly backing an amendment to reduce the tax hike, responding to concerns from crypto executives and industry stakeholders.
This shift highlights the ongoing debate over how to balance public finances with fostering a competitive digital asset market.
The initial proposal in Italy’s recent budget suggested increasing the tax on crypto trading from 26% to 42%.
However, the League, a junior partner in Meloni’s coalition, has put forward an amendment to limit this increase to 28%.
This proposal reflects concerns that a steep hike would make Italy less attractive for crypto businesses compared to other European Union countries.
Forza Italia, another coalition partner founded by the late Silvio Berlusconi, has introduced a separate amendment. This proposal seeks to:
Both proposals are under consideration, with sources indicating the government is likely to favor the League’s amendment.
As part of the League’s proposal, a permanent working group would be established.
This group, comprising digital asset firms and consumer associations, aims to educate investors about cryptocurrency.
Additionally, Finance Minister Giancarlo Giorgetti has hinted at implementing a tax structure based on the duration of crypto investments, offering a more nuanced approach to taxation.
Italy faces a challenging fiscal landscape, with low economic growth and rising public debt.
While the government is keen to bolster public finances, the proposed tax hike sparked backlash for potentially stifling an emerging sector.
India’s experience serves as a cautionary tale.
When India imposed significant crypto taxes in 2022, domestic trading volumes plummeted as investors migrated to offshore platforms.
Italy risks a similar exodus if tax rates are perceived as excessively high.
The European Union is preparing to implement its first bloc-wide crypto regulations under the Markets in Cryptoassets (MiCA) framework.
As these rules come into effect, individual member states must strike a balance between aligning with EU standards and maintaining competitiveness.
Italy’s debate over crypto taxation highlights the complexities of regulating a rapidly evolving industry.
While the government is under pressure to improve its fiscal position, overly aggressive tax policies could undermine the country’s appeal to investors.
The proposed amendments reflect an effort to find middle ground, balancing fiscal responsibility with the need to support the growing crypto sector.
If you have any queries about this article on Italy’s crypto tax proposals, or tax matters in Italy, then please get in touch.
Alternatively, if you are a tax adviser in Italy and would be interested in sharing your knowledge and becoming a tax native, then please get in touch. There is more information on membership here.
In an era of increasing global tax transparency, businesses must navigate evolving disclosure standards to maintain compliance and uphold their reputations.
Recent developments highlight significant changes, including the European Union’s public Country-by-Country (CbC) reporting directive, Romania’s early adoption of this directive, and the United States’ new tax disclosure standards.
The EU’s public CbC reporting directive mandates that multinational enterprises (MNEs) with consolidated revenues exceeding €750 million disclose specific tax-related information on a country-by-country basis.
This initiative aims to enhance transparency and allow public scrutiny of MNEs’ tax practices.
The directive requires the disclosure of data such as revenue, profit before tax, income tax paid and accrued, number of employees, and the nature of activities in each EU member state and certain non-cooperative jurisdictions.
Romania has proactively implemented the EU’s public CbC reporting directive ahead of other member states.
This early adoption reflects Romania’s commitment to tax transparency and positions it as a leader in implementing EU tax directives.
Romanian entities meeting the revenue threshold must comply with these reporting requirements, necessitating adjustments to their financial reporting processes to ensure accurate and timely disclosures.
In the United States, new tax disclosure standards have emerged, influenced by the global shift towards public CbC reporting.
While the US has not adopted public CbC reporting, it has introduced regulations requiring certain tax disclosures to enhance transparency.
These standards focus on providing stakeholders with a clearer understanding of a company’s tax position and strategies, aligning with the global trend of increased tax transparency.
The global movement towards greater tax transparency is driven by efforts to combat tax avoidance and ensure that MNEs pay their fair share of taxes in the jurisdictions where they operate.
This shift is evident in various international initiatives, including the OECD’s Base Erosion and Profit Shifting (BEPS) project, which aims to address tax avoidance strategies that exploit gaps and mismatches in tax rules.
To navigate these evolving tax disclosure requirements, companies should develop cohesive global tax transparency strategies. Key steps include:
By proactively addressing these requirements, companies can mitigate risks and align with the global trend towards transparency in tax matters.
The landscape of tax disclosure is rapidly evolving, with significant implications for multinational enterprises.
Understanding and adapting to new standards, such as the EU’s public CbC reporting directive and the US’s enhanced disclosure requirements, is crucial.
By developing comprehensive compliance strategies, businesses can navigate these changes effectively, ensuring transparency and maintaining stakeholder trust.
If you have any queries about this article on this article, or tax matters more generally, then please get in touch.
Alternatively, if you are a tax adviser and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
The Top-Up Tax is a key part of the OECD’s global tax reform, specifically under Pillar Two.
It is designed to ensure that multinational companies pay a minimum tax rate of 15% on their profits, even if they are operating in countries with lower tax rates.
The Top-Up Tax applies to profits that are taxed below the 15% threshold.
If a company is paying less than 15% tax in a particular country, the Top-Up Tax allows other countries to collect additional taxes to bring the total tax rate up to the minimum level.
Let’s say a company has a subsidiary in a country where the corporate tax rate is only 10%.
Under the Top-Up Tax rules, the company’s home country can impose an extra 5% tax on the profits earned in that country, making sure the company’s total tax rate meets the global minimum of 15%.
This system prevents companies from taking advantage of tax havens or countries with very low taxes, as they will always end up paying at least 15% on their profits, regardless of where those profits are earned.
The Top-Up Tax mainly affects large multinational companies with global revenues of more than €750 million.
Smaller companies that operate within one country are not impacted by this rule.
The tax is part of a broader effort by the OECD to reduce tax avoidance by multinational companies, which often shift their profits to low-tax jurisdictions to reduce their overall tax bills.
The Top-Up Tax is important because it helps create a fairer global tax system.
By ensuring that all large companies pay at least 15% tax on their profits, it reduces the incentive for companies to move their profits to tax havens or low-tax countries.
This tax reform is also expected to generate more revenue for governments, allowing them to fund important public services like healthcare, education, and infrastructure.
The Top-Up Tax is a powerful tool in the fight against tax avoidance.
By ensuring that multinational companies pay a minimum tax rate of 15%, it helps create a fairer tax system and ensures that countries can collect the tax revenue they need to support their economies.
If you have any queries about this article on What is the Top-Up Tax? – or other tax matters – then please do get in touch.
A tax haven is a country or jurisdiction that offers very low or no taxes to individuals and businesses.
Tax havens also often have strict privacy laws, making it difficult for other countries’ tax authorities to find out who is holding money there or how much income they’re earning.
These features make tax havens attractive to people and companies who want to reduce their tax bills by moving profits or wealth offshore.
Many multinational companies use tax havens to reduce their overall tax bills by moving profits to these low-tax jurisdictions.
For example, a company might establish a subsidiary in a tax haven, shift its profits to that subsidiary, and avoid paying higher taxes in the countries where it actually does business.
Individuals also use tax havens to avoid paying taxes on their wealth.
By moving money to a tax haven, they can often keep their income hidden from their home country’s tax authorities.
Tax havens are often criticized for enabling tax avoidance and contributing to global inequality.
When companies and wealthy individuals use tax havens to reduce their tax bills, it deprives governments of the revenue they need to fund public services like healthcare, education, and infrastructure.
Efforts are being made by organisations like the OECD and European Union to crack down on tax havens and make it harder for individuals and companies to use them to avoid paying taxes.
Tax havens play a significant role in international tax avoidance, but they are increasingly under scrutiny.
As global efforts to combat tax avoidance ramp up, the role of tax havens is likely to decline, but they remain a key part of the discussion on how to ensure fair taxation across borders.
If you have any queries about this article on ‘what is a tax haven?’ – or any queries at all – then please do not hesitate to get in touch.
On 9 October 2024, Luxembourg’s government introduced its 2025 draft Budget law (number 8444) to the Luxembourg Parliament, referred to as the Draft Law.
This Budget aims to make Luxembourg’s economy more competitive, strengthen its financial centre, and improve the purchasing power of households.
In this article, we explore the key tax changes proposed in the Budget and what they mean for individuals and businesses.
The Luxembourg government proposes a reduction in the taxable base for registration and transcription duties on real estate transactions. This change is aimed at boosting the housing market. Here’s how it works:
To qualify for this reduction, the property must:
For those buying real estate between 1 October 2024 and when the Draft Law officially comes into force, a written request for a recalculation of duties must be submitted to the relevant authorities.
The reduction applies between 1 October 2024 and 30 June 2025.
In line with Luxembourg’s environmental goals, the Draft Law includes an increase of €24 to the CO₂ tax credit, bringing it to €192 starting from 1 January 2025.
This tax credit is designed to offset the impact of the CO₂ tax on individuals with low or moderate incomes, aligning with Luxembourg’s environmental commitment while supporting household finances.
The Draft Law also references additional measures initially proposed in draft law number 8414, dated 17 July 2024, which include:
These additional measures are designed to complement Luxembourg’s broader fiscal goals, aiming to foster economic growth and maintain Luxembourg’s competitive edge as a financial centre.
Luxembourg’s 2025 Budget brings forward several significant tax changes with the potential to benefit both the real estate market and individuals.
The reduction in real estate duties is expected to encourage housing investment, while the increased CO₂ tax credit aims to make environmentally friendly policies more affordable for lower- to middle-income residents.
Together with the personal and corporate income tax changes, these adjustments reflect Luxembourg’s commitment to economic resilience and sustainability.
If you have any queries about this article on Luxembourg’s 2025 Budget or tax matters in Luxembourg, then please get in touch.
Alternatively, if you are a tax adviser in Luxembourg and would be interested in sharing your knowledge and becoming a tax native, there is more information on membership here.
On 31 July 2024, the Cayman Islands introduced the Beneficial Ownership Transparency Act 2023 (BO Act) along with the Beneficial Ownership Transparency Regulations, 2024 (BO Regulations).
Alongside these regulations, guidance titled Guidance on Complying with Beneficial Ownership Obligations in the Cayman Islands (BO Guidance Notes) was also made available on the General Registry’s website.
This new framework, known as the New BO Regime, revises the rules for entities registered in the Cayman Islands.
For those involved in private client structures, especially with trust arrangements and underlying companies incorporated in the Cayman Islands, these changes may have significant implications.
This article explores what the New BO Regime entails and how it may impact trusts and other wealth management entities.
The New BO Regime broadens the types of Cayman Islands entities required to comply with beneficial ownership reporting obligations.
Under the new rules, some entities that were previously exempt now fall within scope, meaning more wealth structuring vehicles, including foundation companies and private trust companies (PTCs), must adhere to these requirements.
While trusts themselves are exempt from registration, companies or other entities under a trust, known as “Trust Underlying Entities,” must comply with beneficial ownership reporting if they meet certain criteria.
Under the New BO Regime, several types of entities are classified as “Legal Persons” and fall within the scope of the regulations, including:
Entities designated as Legal Persons must maintain a Register that identifies their beneficial owners.
The BO Act sets out who qualifies as a “Registrable Beneficial Owner.” This includes individuals or legal persons who:
In the absence of a Registrable Beneficial Owner, a senior managing official, like a director or CEO, must be listed as the contact person on the Register.
For each Registrable Beneficial Owner, the following information must be provided:
The Register needs to be updated monthly to ensure compliance.
The responsibility for maintaining and filing the Register lies with the Legal Person itself, typically in collaboration with a corporate services provider (CSP). Failure to comply with these reporting requirements may lead to civil or criminal penalties.
The New BO Regime enforcement begins in January 2025, providing a grace period for entities to meet compliance obligations.
Trustees of trusts with a Trust Underlying Entity may need to report beneficial ownership details if there are no other identifiable Beneficial Owners.
Trustees must meet specific criteria, demonstrating ultimate control over the trust’s activities, unless this control is limited to advisory or managerial functions.
Foreign trustees also need to report details of a nominated individual within their organisation.
Foundation companies commonly used in private wealth structuring may also require review.
Depending on the constitutional documents, a Registrable Beneficial Owner could be the Supervisor, founder, or another individual with control.
For PTCs, previously exempt unlicensed PTCs now fall within scope, requiring identification of Registrable Beneficial Owners.
Privacy and Future Changes
However, draft regulations are under consultation, exploring a possible framework for public access in the future.
If public access is introduced, requests will be subject to a “legitimate interest” test to safeguard against risks like extortion or violence.
The New BO Regime places a significant regulatory responsibility on entities and individuals managing trusts and wealth structures in the Cayman Islands.
With the January 2025 deadline approaching, private clients, trustees, and wealth management advisors should carefully assess their current structures to ensure compliance.
If you have any queries about this article on beneficial ownership, or tax matters in the Cayman Islands, then please get in touch.
Alternatively, if you are a tax adviser in the Cayman Islands and would be interested in sharing your knowledge and becoming a tax native, there is more information on membership here.
The UK Budget 2024 brought both relief and new challenges for pension savers, scheme trustees, and administrators.
While some feared changes to National Insurance on pension contributions and tax-free lump sums, these concerns were unfounded.
However, significant changes to inheritance tax (IHT) on pension-related death benefits are set to take effect from April 2027, prompting a closer look at the implications.
In yesterday’s Budget, there were a couple of reassuring announcements for pension savers:
However, while these aspects remain unchanged, new IHT rules will bring added complexity for scheme trustees and administrators in the coming years.
Starting immediately, the Budget extends the tax on transfers to overseas (QROPS) pension schemes, impacting those moving pensions outside the UK.
The Chancellor has introduced new measures to include more pension-related death benefits within IHT.
Previously, only unused defined contribution (DC) funds were anticipated to be affected, but now many other death benefit lump sums, including those from defined benefit (DB) schemes, will also be subject to IHT.
This aligns with the government’s aim to prioritize retirement income for the member and their spouse or civil partner, rather than for descendants.
To implement these changes, HMRC has launched a technical consultation on the practical application of IHT to pension death benefits, with draft legislation expected in 2025.
The government has also confirmed its commitment to incentivize pension saving, maintaining tax relief on contributions and investment growth.
The new IHT rules will come into force on 6 April 2027, applying the standard IHT rate of 40%.
From April 2027, the following death benefits from registered pension schemes will be included in a member’s estate for IHT purposes, unless they are left to a spouse, civil partner, or charity:
Currently, where trustees have discretion over lump sum death benefits, these funds typically fall outside IHT.
However, HMRC intends to end the different treatment of discretionary versus non-discretionary death benefits.
Starting from 6 April 202, pension scheme administrators will be responsible for reporting and paying IHT on unused pension funds and death benefits.
This shift means that:
The collaboration between PRs and pension administrators will involve
When a spouse or civil partner is the beneficiary, the exemption from IHT applies. However, if trustees need time to assess beneficiaries, meeting the two-month reporting deadline may prove difficult.
IHT payments must be reported and paid within six months of the month of the member’s death.
From April 2027, pension administrators will face this same deadline, with interest charges for late payments.
After 12 months, the member’s beneficiaries will share liability with administrators for any outstanding IHT on pension funds.
HMRC expects only about 10% of estates to exceed the IHT threshold, currently set at £325,000 (with a potential extra £175,000 if a home is left to direct descendants).
Pension administrators are required to report IHT information only when payable on unused funds or lump sum death benefits.
HMRC clarified that IHT changes won’t apply to certain life policy products purchased with or alongside pensions as part of an employer package.
Further consultations may address specific exclusions for excepted life assurance and unregistered top-up pensions.
While aspects of the Budget 2024 bring relief for pension contributors, new IHT rules on death benefits from 2027 introduce additional obligations for pension schemes and PRs.
This development could significantly impact estate planning for pension holders.
If you have any queries or comments about this article on tax changes for pensions in UK Budget 2024 then please get in touch.
Denmark is making headlines in the cryptocurrency world with a proposed tax reform targeting unrealized profits from digital assets.
A recent 93-page report from the Danish Tax Law Council outlines sweeping changes to how digital assets are taxed, aiming to align their treatment with traditional investments such as stocks and real estate.
This proposal is part of Denmark’s broader strategy to ensure fair taxation of cryptocurrency investors, but it raises questions about the implications for Danish crypto holders and the global crypto tax landscape.
The Council’s report advocates for significant changes, including a 42% capital gains tax on unrealized profits.
If enacted, this would mean that investors must pay taxes on the value of their cryptocurrency holdings from the date of acquisition, even if they haven’t sold them.
The Danish government hopes these measures will eliminate perceived inequalities in how cryptocurrency investors are taxed compared to holders of traditional assets.
Denmark’s tax minister, Rasmus Stoklund, emphasized the importance of fairness, stating:
“Throughout recent years, there have been examples of Danes who have invested in crypto-assets being heavily taxed. The council’s recommendations can be a way to ensure more reasonable taxation of crypto investors’ gains and losses.”
By taxing unrealized profits, the government seeks to streamline crypto taxation and eliminate loopholes.
Denmark’s proposal mirrors similar moves worldwide:
The global trend reflects growing recognition of cryptocurrency as a significant financial asset class requiring robust regulatory frameworks.
Denmark’s proposed tax on unrealized crypto profits marks a significant shift in digital asset taxation.
While the government aims to create a fair and consistent system, the potential financial burden on investors and the broader implications for Denmark’s crypto market cannot be ignored.
If passed, the legislation could set a precedent for other countries grappling with how to regulate and tax digital assets.
If you have any queries about this article on Denmark’s proposed crypto tax reforms, or tax matters in Denmark, then please get in touch.
Alternatively, if you are a tax adviser in Denmark and would be interested in sharing your knowledge and becoming a tax native, then please get in touch. There is more information on membership here.