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Business Tax Briefing - 10/03/2017

Budget Wednesday 8 March
A reminder that full comment on the Chancellor’s Budget delivered on Wednesday 8 March is available at  

IFS post-Budget Analysis
The Institute for Fiscal Studies (IFS) held its post-Budget Analysis on 9 March 2017. The following slides from the presentations are now available:
·        Booming Britain?, Thomas Pope
·        Adult social care spending in England, Polly Simpson
·        Business taxes, Helen Miller
·        Earnings and the labour market, Jonathan Cribb
·        Personal tax and benefit changes, Andrew Hood and Tom Waters. See

Hungarian advertisement tax: state aid rules: Commission's letter
Under Hungary's 2014 Advertisement Tax Act, companies were taxed at a rate depending on their advertisement turnover and companies with a higher advertisement turnover were subject to a significantly higher tax rate. In March 2015, the Commission opened an in-depth investigation into whether the tax complied with EU state aid rules. It concluded in November 2016 that it did not. Because of the progressive rates in the 2014 Act, companies with a low advertisement turnover were liable to pay substantially less advertisement tax, even in proportion to their advertisement turnover, than companies with a higher advertisement turnover. This gave companies with a low turnover an unfair economic advantage over competitors. When the Commission opened the investigation, it also asked Hungary to suspend the application of the tax. Hungary suspended the tax but implemented an amended version, without notifying it to or consulting the Commission. The investigation showed that the amended advertisement tax, in force since July 2015, did not fully address the Commission's concerns. The Commission's decision requires Hungary to remove the unjustified discrimination between companies under the 2014 Advertisement Tax Act and the amended version. See  The non-confidential version of the text of the Commission's decision letter has now been published.  See

Prudential (CFC and dividends GLO): HMRC appeal to Supreme Court
HMRC have been given permission to appeal to the Supreme Court on  the issue of the method of giving tax credits in the Prudential Assurance Company Limited case (the CFC and dividends GLO).

Hungary implements 9% general corporate income tax rate
Hungary has implemented a 9% general corporate income tax rate, applicable to all companies and all types of income, from 1 January 2017. This is a general measure, applicable to all business. For an update with further details of changes and of the corporate tax regime in Hungary see here.

Dbriefs webcasts
The next Dbriefs webcast is on Wednesday 15 March at 12.00 noon GMT/13.00 CET. The topic is The Public Sector Impact Of Employment Tax Changes and is from our UK tax focus series. The call will be hosted by Ben Powell and during the call our panel of experts will discuss the three major employment tax changes due to come into effect in April 2017 and how these may impact your organisation. To register for the webcast, click here.

On Thursday 16 March at 13.00 GMT/14.00 CET there is another webcast from the UK tax focus series on Foreign Pension Plans: Distributions - Tax And Governance Changes. Hosted by James Macpherson, our panel of experts will discuss the significant changes to the UK taxation of foreign pensions announced in Finance Bill 2017 that also come into effect from April and what actions your organisation can take now. To register, click here.

Mergers Directive: CJEU holds French rules infringe treaty freedoms
The CJEU has given judgment on a request for a preliminary ruling from the French Conseil d’État on questions which arose in proceedings involving Euro Park Service (‘Euro Park’) and the French Ministry for Finance and Public Accounts. Euro Park, a Luxembourg company, had assumed the rights and obligations of the French company SCI Cairnbulg Nanteuil (‘Cairnbulg’). The French tax authorities had refused to allow deferral of the taxation of capital gains relating to the transfer of assets at the time of its merger through acquisition to a company established in another Member State, on the grounds that the companies involved had not sought the French tax authorities’ prior approval.  Such prior approval would be given only if the taxpayer could show that the transaction is justified for commercial reasons and does not have tax evasion or avoidance as a principal motive, and that the deferred gains will be taxed in the future. No prior approval was required in the case of a national merger. The CJEU held that imposing a condition that the use of the common system of taxation applicable to mergers was to be subject to a process of prior approval only for transfers made to foreign legal persons was incompatible with EU law.  Euro Park Service v Ministre des Finances et des Comptes publics Case C-14/16. See

CJEU holds Belgian withholding tax justified: Parent-Subsidiary Directive
The CJEU has given judgment on a request for a preliminary ruling from the Hof van beroep te Brussel (Court of Appeal, Brussels). The case concerns Belgium's withholding tax on profits distributed to a parent company in the Netherlands, and whether the Parent-Subsidiary Directive applies. The Dutch companies benefited from a regime under which Dutch tax was levied at a zero rate, provided they distributed all their profits to their own shareholders. The CJEU held that, where Dutch tax law makes certain bodies subject to corporation tax, and then immediately provides that they should pay a zero rate, it is granting them an exemption from the tax. This removes them from the scope of the Parent-Subsidiary Directive. Belgische Staat v Wereldhave Belgium Comm. VA and Others Case C-448/15.  See

VAT: Poland: e-books do not qualify for lower rate: CJEU judgment
The Polish Commissioner for Civic Rights could not see why the standard rate of VAT should be applied to e-books, while traditional books qualified for the lower rate of VAT. However, the CJEU has now rejected two arguments for eradicating this difference. It rejected an argument that the legislative process had not been followed correctly in 2009, when the Principal VAT Directive was changed to extend the lower rate to ‘books on all physical means of support’. It went on to note that e-books and paper books both promoted reading, and should therefore be treated equally for VAT purposes unless any difference was ‘duly justified’. In this case, however, the decision to exclude e-books from the lower rate had been considered necessary in order to make electronically supplied services subject to clear, simple and uniform rules. In that context, the difference fell within the broad discretion enjoyed by the legislature, and could not be challenged on the basis that it infringed the principles of fiscal neutrality or equal treatment.  See To discuss the case, or its implications, please contact Barney Horn on 0121 695 5902.

VAT: Belgium: oxygen concentrators do not qualify for lower rate:  CJEU judgment
Oxycure Belgium SA supplies machines which concentrate oxygen drawn from the ambient air, and provide it through a mask or cannula to patients suffering from respiratory insufficiency. Its concentrators therefore perform exactly the same function as machines which dispense liquid or compressed oxygen to patients, albeit by a slightly different method. The CJEU has now ruled that this difference means that, unlike oxygen provided through cylinders, Oxycure’s concentrators do not qualify for the Belgian lower rate of VAT. The lower rate applies to ‘pharmaceutical products’ which, although it can cover more than just medicinal products, cannot extend to Oxycure’s devices. In addition, Oxycure could not demonstrate that the devices were for ‘the exclusive personal use of the disabled’ and they could not qualify for lower rating on that basis. The judgment confirms the potential limitations of the principle of fiscal neutrality: it cannot extend a lower rate in the absence of clear wording to that effect. See To discuss the case, or its implications, please contact Simon Atkins on 020 7007 2348.

This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

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