eu-switcherland-tax-pact

EU and Switzerland’s New Savings Tax Pact

The European Union and Switzerland have initialed an agreement on the automatic exchange of tax information (AEOI).  The first exchange is scheduled for 2018 after all account data is collected from the onset of 2017.

On 19 March 2015, the agreement was initialed by Jacques de Watteville, the Swiss State Secretary, Dominique Paravinci, the Deputy Director of the Switzerland’s Directorate for European Affairs and Heinz Zourek, the Head of EU Directorate General on Tax and Customs Union.

The agreement which is expected to be signed in the coming weeks, will replace the savings tax agreement that has been in force since 2005 and extends to all 28 member states of the EU.

As provided in the AEOI agreement, EU member states and Switzerland will be required to exchange account information automatically on a reciprocal basis annually.  Such information exchanged will include the name, address, date of birth, tax identification number, and an extensive amount of financial and account balance information about EU taxpayers from both parties.

Tax Commissioner Pierre Moscovici commented that “We are taking a decisive step towards total tax transparency between Switzerland and the EU. I am confident that our other neighbours will soon follow suit.  This transparency is vital to ensure that each country can collect the tax revenue due”.

It is intended for the deal between the EU and Switzerland to come into force on 1st January 2017.

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arbitration-what-bear-in-mind

Arbitration: What to bear in mind

Without a doubt, International Commercial Arbitration is the most preferable and modern method of the so called ADR (Alternative Dispute Resolutions). The most significant reason why parties choose Arbitration in order to resolve their disputes is mainly for the avoidance of delays in resolving the disputes arising between them.

One may argue that there is no effective justice in Cyprus. Judges deliver judgments two or three years after the lawsuit is filed to the Court Registrar due to the procedural rules which have to be followed and the compliance time with the above-mentioned rules, received from the Lawyers. Thus, parties nowadays prefer Arbitration as a Dispute Resolution incorporating to their main agreement an arbitration clause or drafting a separate arbitration agreement.

The delay in justice is not the only reason why parties in a dispute may decide to refer to Arbitration. Arbitration is recognized as an effective ‘tool’ and is enforced on an international level. There are many conventions which refer to the procedure followed in Arbitration, such as the New York Convention for the recognition and enforcement of arbitral awards.

Party autonomy also plays an important role why parties resolve their disputes with Arbitration. Party autonomy is considered to be the fundamental cornerstone of the arbitral proceedings since parties must clearly express their consent to arbitrate. Furthermore, parties are free to choose the arbitrator, the applicable law, the seat of arbitration etc.

What is more important, arbitration procedure is of a confidential nature and third parties are not entitled to attend and/or obtain any information regarding the case. Thus, arbitration offers privacy, a benefit court proceedings are not offering. This is of great significance where the parties in a dispute are internationally known, (e.g. ‘big’ companies) who definitely do not want to have their dispute published.

One must note that Cyprus has two Legislations related to Arbitration. We have the Arbitration Law, Cap.4 (1944) and the International Commercial Arbitration Law (L.101/1987). The First – which unfortunately has not been modified yet – refers to disputes between two or more Cypriot individuals or companies, it is of a domestic enforcement. The Second does not refer to local individuals but it mainly covers the disputes arising out of international nature relationships. So, if a Cyprus Company is entered into agreement with an Italian one, and there is a clause regarding arbitration, the Second one will be enforced, of course if the parties agree to resolve their disputes in Cyprus and/or under the Cyprus Law. This also applies in cases where a Cyprus Company is entered into agreement with non-European Companies.

Amongst the most known Arbitration Institutions are the following: the London Court of International Arbitration, the International Chamber of Commerce, Vienna International Arbitral Centre, the  Arbitration Institute of the Stockholm Chamber of Commerce, American Arbitration Association, China International Economic and Trade Arbitration Commission, Singapore International Arbitration Centre, World Intellectual Property Organization, Arbitration and Mediation Centre etc. One must bear in mind that every Institution has its own Arbitration Procedural Rules and the parties have to be willing to apply these rules to their dispute.

Arbitration became known in Cyprus the last two-three years, after the ascertainment of the necessity to relieve the Court from its workload. In my opinion, the main problem why Arbitration in Cyprus is not so preferable than any of the above International Institutions – not even preferable locally- is because of the Legislation we already have which has to be modified in order to comply with the International Standards of Arbitration and Arbitration Institutions. It is unacceptable for the Domestic Legislation – Cap.4 to remain the same as the first document enacted in 1944. Also, the provision of the Application of the Civil Procedure Rules – Article 30 creates another problem why an individual thinks twice before he/she refers the matter to Arbitration. If the Arbitrator applies the Civil Procedure Rules, then one party may argue what is the difference than going to a Court and resolve the dispute arisen. Our Civil Procedure Rules – which have not been modified yet, except from two Rules only (Rules 25 &30) – are considered to be a most significant ground in the delay of justice.

To conclude, Arbitration is still considered to be the most effective method of Dispute Resolution and its various advantages are worldly recognized, with the most important one to be the prompt resolution of the dispute between two parties. As William E. Gladstone states, ‘Justice delayed is justice denied’.

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alternative-investment-fund-cyprus

Alternative Investment Funds workshop and refresher course

Last week Socratis Parparinos Chief Operating Officer and Andreas Ioannou Head of the Corporate attended a workshop aimed at updating their knowledge relating to the establishment and onwards management of Alternative Investment Funds (herein after AIF’s).
At Parparinos & Milonas, we continually strive to ensure our staff are given the opportunity to refresh their knowledge and keep up to date with current affairs by following a continued program of seminars via external and internal training.
With our new AIF closing in on approval from the Cyprus Securities and Exchange Commission and 2nd and 3rd AIF being in the pipeline, it seemed appropriate to take time out of the busy day to day schedule and further out knowledge on what is proving to be in many quarters an unknown quantity.

AIF’S IN CYPRUS

Currently very few AIF operate in Cyprus. However demand as well as desire for their incorporation and set up and onwards management is growing day by day. An asset for both foreign investors looking to establish a Fund in Cyprus as well as High Net Worth Individuals in Cyprus the AIF, shall become a prominent tool for Corporate Tax Planning in the near future.

HISTORY AND BENEFITS

Derived from the passing of the Alternative Investment Fund Managers Law of 2013 in July, Cyprus harmonized with the EU Directive of 2011 No. 61. (EU Directive 2001/61/EC). Allow me to take the opportunity to detail some of the main benefits in using an AIF:

  • Cyprus residents holding units of AIF under certain conditions are subject to a reduced taxation, which totals to just 2,1% of AIF’s profits compared to up to 17% dividend income tax applicable in other cases.
  • An AIF can be used for real estate, private equity, leveraged forex to hedge fund trading in exotic financial instruments and investments of any kind, listed or non-listed.
  • The price at which an investor may subscribe to the shares of an AIF or have its shares redeemed is based on the prevailing Net Asset Value (NAV), plus or minus a subscription or redemption fee respectively.
  • AIFs can be set up as an umbrella fund, with its sub-funds being segregated portfolios of assets and, accordingly, the assets of a sub-fund belong exclusively to that sub-fund shareholders and shall not be used to discharge directly or indirectly the liabilities or claims against the umbrella or any other sub-fund.
  • The sub-funds can be denominated in another currency than the currency of the main AIF.
  • Every sub-fund can have its own currency, shareholders, assets/liabilities and operate totally independently from the other investors.
  • Should the client wish they can appoint an approved and regulated fund manager such as SCSS Fund Management Ltd., which is a licensed AIFM regulated by CySEC which will allow for many synergies and cost efficiencies.
  • An approved and licensed AIFM like SCSS Fund Management Ltd will provide the core service of Portfolio Management and Risk Management as well as the ancillary services of Fund Administration, Marketing and Distribution and other activities related to the assets of the AIFs. Thus giving both credibility to the investors as well as safety to the stakeholders.
  • Investors in units of the AIF will enjoy confidentiality with the list of unit holders only being kept by the Fund manager.

MAIN CHARACTERISTICS OF AN AIF

  •  Legal Form: Variable Capital LLC, or Limited Partnership
  • Legislation Cyprus AIF Law and Cyprus AIFM Law
  • Regulated by the Cyprus Securities and Exchange Commission EU Passporting is available providing that markets’ approval is received
  • Taxed in Cyprus
  • Deposits are placed with a custodian bank
  • Multiple classes of shares without limitation
  • The legislation looks to invite investors through a vehicle that can house endless numbers of investors
  • All assets welcomed

Should you require further details please do not hesitate to send in a message to articles@pmcorporatelaw.com and we shall be happy to discuss how an AIF maybe a suitable vehicle for you.

EB-5 Legislation Pending

Shortly after Detroit filed for bankruptcy in July 2013, Judge Rhodes made it clear that its lawyers shouldn’t be charging the struggling city for first-class flights, alcoholic beverages or movies in hotel rooms. His instructions are the most detailed legal-fee instructions given to a city or county in a modern municipal bankruptcy case.

In Detroit’s case, some firms said they refrained from making unnecessary or overly aggressive moves that would have run up the bill for the 680,000-resident city. Lawyers at Dentons U.S. LLP who spoke for the city’s 23,500 retirees said that they also cut their bill by $3.4 million. The firm charged $14.6 million for helping explain the claims and voting process to retirees who were unfamiliar and “largely hostile” to the bankruptcy, firm officials said in court papers.

The 204 ABA-approved law schools reported total J.D. enrollment (full-time and part-time students) of 119,775. This is a decrease of 8,935 students (6.9 percent) from 2013 and a 17.5 percent decrease from the historic high total J.D. enrollment in 2010. The 2014 total enrollment is the lowest since 1982, when there were 169 ABA-approved law schools.

Personal Injury Case Settled

Shortly after Detroit filed for bankruptcy in July 2013, Judge Rhodes made it clear that its lawyers shouldn’t be charging the struggling city for first-class flights, alcoholic beverages or movies in hotel rooms. His instructions are the most detailed legal-fee instructions given to a city or county in a modern municipal bankruptcy case.

In Detroit’s case, some firms said they refrained from making unnecessary or overly aggressive moves that would have run up the bill for the 680,000-resident city. Lawyers at Dentons U.S. LLP who spoke for the city’s 23,500 retirees said that they also cut their bill by $3.4 million. The firm charged $14.6 million for helping explain the claims and voting process to retirees who were unfamiliar and “largely hostile” to the bankruptcy, firm officials said in court papers.

The 204 ABA-approved law schools reported total J.D. enrollment (full-time and part-time students) of 119,775. This is a decrease of 8,935 students (6.9 percent) from 2013 and a 17.5 percent decrease from the historic high total J.D. enrollment in 2010. The 2014 total enrollment is the lowest since 1982, when there were 169 ABA-approved law schools.