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TAX RESIDENCE: UKRAINE VS SPAIN. WHERE TO PAY TAXES TO IT SPECIALISTS?

Published: 03.03.2023 |

Since the beginning of the full-scale invasion of the Russian Federation on the territory of Ukraine, many millions of people were forced to leave the territory of Ukraine, businesses were forced to move and adapt to new conditions of doing business in new territories. Such a large number of IT specialists are abroad for more than 183 days, so the country of stay considers them their tax residents. Depending on the specifics of the tax legislation of each country, the place of tax payment depends on many factors. In connection with the great complexity of this issue, you and I will consider the conditions of tax residence in Ukraine and Spain, and as a result, we will determine where IT specialists still have the right to pay taxes. Tax resident of Ukraine As a general rule, the Tax Code of Ukraine recognizes a person as a tax resident as a natural person who has a place of residence in Ukraine. However, this is not the only criterion, additional criteria are (the list is not exhaustive): staying in Ukraine for at least 183 days (including the day of arrival and departure) during the period or periods of the tax year; presence of closer personal or economic ties...

Once again about the safety of using Internet banking and payment cards

Published: 22.02.2023 | blog

Currently, many types of fraud with bank accounts (both in classic and digital banks) have been identified and explained, numerous recommendations and warnings have been issued to prevent losses from fraudsters. The vast majority of bank clients have accepted the fact that million winnings or an unrealistic amount of inheritance is a complete deception. However, the continuous progress of modern technologies, unfortunately, encourages criminals to intensify their efforts in fraudulent schemes, the goal of which is their own enrichment through the theft of money. Therefore, we would like to remind you of the key safety rules in such tools for managing your non-cash finances as Internet banking (a service for remote access to all your accounts in a financial institution) and payment cards. When you log in to Internet banking, you get to your personal account. Usually, in Internet banking, fund transfer operations are available, and for this you do not even need a computer, but a mobile phone with an installed banking program is enough. For the safe use of Internet banking, it is important to follow the following rules: 1) Minimize the use of Internet banking from a mobile phone...

Conflict of tax residency and double taxation

Published: 08.02.2023 |

The focus of today's blog is the peculiarities of tax residency conflicts, in which several countries consider a person to be their tax resident, and, accordingly, double taxation and the role of bilateral agreements in the settlement of these issues. For clarity, let's take as an example the provisions of the Cypriot legislation regarding tax residency. This is especially relevant for Ukrainians who were forced to go abroad due to the war and chose Cyprus as their country of residence. When will I become a Cyprus resident? Perhaps, for many, the concepts of "resident", "domicile" and "non-domiciled residents" are already familiar. In this block, we offer to recall them and understand how these concepts affect taxation in practice. To determine a natural person as a resident of Cyprus, two tests of length of stay are used - the 183-day test and the 60-day test. First, a person is recognized as a resident of Cyprus if he is on the territory of Cyprus for more than 183 days during a calendar year. At the same time, other criteria, for example, the center of vital interests, are not taken into account. Secondly, a person can become a resident of Cyprus if he stays in the...

SERBIA HAS AMENDED THE LEGISLATION THAT SIMPLIFIES COMPANY REGISTRATION

Published: 08.02.2023 |

Serbia amends the Law on the procedure for registering companies with the Commercial Registers Agency (AKR). The changes require the filing of applications for company registration with the AKP in electronic form. These changes in the Serbian legislation are adopted to implement the direction of the government of the digitalization of the economy and electronic services. The provision of paragraph 2 of Article 9 of the Law will enter into force in full on May 16, 2023, therefore, filing an application for registration in paper form with a certified constituent act will be prohibited. In addition to the possibility to submit documents for company registration in electronic form, there are other changes in the corporate legislation of Serbia. The right to certify a digitized document by a lawyer. New changes give the right to digitize documents and confirm the identity of the applicant when registering a company by lawyers registered in the list of lawyers of the Serbian Bar Association. The lawyer signs the application with his electronic signature (qualified electronic signature). The lawyer is obliged to keep the original document, which he digitized and submitted to the...

BUSINESS IMMIGRATION TO LITHUANIA

Published: 08.02.2023 |

One of the most common grounds for issuing a residence permit in Lithuania is doing business in Lithuania. If a foreigner plans to develop his business in Lithuania and reside here, he can establish or buy an enterprise in Lithuania and develop the planned business. In case of foundation or purchase of an enterprise, a foreigner who is a participant, shareholder or member of the management body of the enterprise being created or acquired, may apply for a temporary residence permit in Lithuania, under the following conditions: A Lithuanian company has been operating for at least 6 months before applying for a residence permit in Lithuania; The authorized capital of the enterprise is not less than 28,000 euros, including 14,000 euros invested by the foreigner; The value of shares owned by a foreigner is at least 1/3 of the value of the company's shares; Citizens of Lithuania, other member states of the European Union or member states of the European Free Trade Association or foreigners permanently residing in Lithuania work in a Lithuanian company on a permanent basis, the monthly salary (of all employees) is at least 2 average monthly salaries in...

GDPR: working with Personal data

Published: 29.05.2019 |

Tags:

#EU #Ukraine

With the rapid development of business on the Internet, including in Ukraine, a real legal settlement of the issues of personal data protection by preventive means and compensation damage for their violation is necessary. This issue is particularly relevant for those companies that have access to personal data of EU citizens and where the number of employees is more than 250 people (small and medium-sized enterprises are not required to keep records of data in most cases stipulated by Art. 30.5 GDPR). The main conditions for the collection, storage and distribution of personal data and the liability for violation of personal data are provided for by the Law of Ukraine “On the protection of personal data” of 01.06.2010, No. 2297-VI (Law No. 2297-VI). Also, the responsibility for violation of personal data is provided in Art. 182 of the Criminal Code of Ukraine, in Art. 188-39 of the Code of Administrative Offenses of Ukraine. On April 26, 2017, the European Court of Human Rights ruled in plaintiff’s favor for the protection of his personal data, with a reimbursement of EUR 6,000 for non-pecuniary damage, referring, inter alia, to the Convention for the Protection of...

Nature, purpose and effect of controlled foreign corporation rules. Their compatibility with the principles of international tax law

Published: 02.10.2018 |

Tags:

#Taxation #Taxes

Increase in globalization and foreign trade in the last century led to aggressive tax planning. Though these planning measures are legitimate, they are designed for shifting profits to low tax jurisdictions. There is a number of measured to deal with this tax abuse. In particular, some jurisdictions apply controlled foreign corporation (CFC) rules. Historically, the CFC concepts were created to help prevent tax evasion achieved by setting up offshore companies in tax havens, such as Bermuda and the Cayman Islands. Increasingly countries have developed CFC legislation to counter perceived overseas abuses enveloped in a low tax overseas entity. The aim of CFC rules is to prevent or obstruct the creation of structures used by companies, especially domestic multinationals, for pure avoidance of domestic tax liability. CFC rules are designed to prevent profit shifting without penalizing foreign subsidiaries engaged in legitimate business practices. A controlled foreign corporation is a corporate entity that is registered and conducts business in a different jurisdiction or country than the residency of the controlling owners. A company that qualifies as a CFC generally has its...

OECD’s and other cross-border initiatives in information exchange between states

Published: 02.10.2018 |

Tags:

#OECD

For many years, countries have recognized in international forums that co-operation is the key to obtain tax information from abroad. The OECD’s work is at the forefront of international efforts to promote exchange of information for tax purposes. The organization developed different mechanisms for the exchange of tax information, many of which have been implemented worldwide. The OECD started its work on harmful tax practices with regard to tax havens, initially in May 1998 with its Report Harmful Tax Competition – An Emerging Global Issue. This Report called for a concerted international effort to eliminate harmful tax practices and to adopt a series of recommendations. Following the Report, OECD Global Forum Working Group on Effective Exchange of Information developed Model Agreement on Exchange of Information in Tax Matters (known as the Model TIEA) to push for greater transparency. It was issued in April 2002. The aim is to establish a standard for what constitutes the effective exchange of information. The Model TIEA is not a binding instrument but contains two models for bilateral agreements. A large number of bilateral agreements have been based on this...

The concept of Non-Discrimination as expounded in Article 24 of the OECD Model Tax Convention on Income and on Capital

Published: 02.10.2018 |

Tags:

#OECD #Taxation

Non-discrimination articles have been used in tax treaties over a number of years, they are designed to place non-discrimination requirements on the source country rather than on the residence state. There may arise cases where a country provides favourable treatment to its nationals and discriminates against foreigners. To circumvent such cases tax treaties provide a clause which restricts contracting states from offering discriminatory treatment to foreign nationals as compared to its nationals. The article on non-discrimination is the tool employed by tax treaties to express and achieve this very fundamental principle of taxation and to prevent unfair taxation as distinct from preventing double taxation. As mentioned in General remarks to the Commentary to Article 24 of the OECD Model Tax Convention on Income and on Capital (2017) (the OECD MTC): This Article deals with the elimination of tax discrimination in certain precise circumstances. Discrimination means unequal treatment in situations which are identical or similar. Article 24 of the OECD MTC deals with non-discrimination provisions; nationality non-discrimination, permanent establishment non-discrimination,...

Transfer Pricing Methods that can be used to arrive at an arm’s length price as set down in the current OECD Transfer Pricing Guidelines in terms of achieving comparability and objectivity

Published: 02.10.2018 |

Tags:

Transfer pricing

OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017 (OECD Transfer Pricing Guidelines), there are 3 traditional methods and 2 transactional methods to determine an arm length price. Traditional transaction methods are: Compared Uncontrolled Price method (CUP) Resale Price method (RSP) Cost Plus method (CP) Transactional profit methods are: Transactional Net Margin method (TNM) Profit Split method (PS) Compared Uncontrolled Price (CUP) method compares price changed for products and services in controlled transaction between related parties, and price that would have been charged if it were a transaction undertaken between independent non-related parties. CUP method can be internal and external. The first one compares prices between distributor an its related customer, and price between the same distributor and its non-related customer. External method determines price between distributor and its related customer, and between another distributor and its independent customer. Resale Price (RSP) method is based on difference between price at which products were bought and then sold to third party. The resale...

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