Michał Zwyrtek, EMBA

BDO Czech Republic is excited to announce the opening of a new office in Pardubice, East Bohemia. The office will be led by Jindrich Novak, who knows the region and its business environment well. In the new office, the team will provide accounting and payroll outsourcing (BSO) services, as well as tax consulting, with plans to expand into audit and advisory. The new office marks their 9th office, strengthening their ability to support clients within their own region.

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VAT & Transfer Pricing Adjustments: ECJ/CJEU issued the decision in the case C-726/23 (Arcomet Towercranes) – Transfer Pricing Adjustment for intra-group services subject to VAT; documentation required Preliminary Ruling Context: The case involves SC Arcomet Towercranes SRL and Romanian tax authorities regarding the application of VAT on services provided within a corporate group. The primary legal questions concern the interpretation of the VAT Directive regarding intra-group service remuneration and the right to deduct VAT. Interpretation of VAT Directive: The Court ruled that remuneration for services provided by a parent company to its subsidiary, determined by OECD transfer pricing principles and linked to operating margins, constitutes “consideration” for services under Article 2(1)(c) of the VAT Directive, thereby falling within the scope of VAT. Deduction of Input VAT: The Court clarified that tax authorities can require documentation beyond just invoices to prove the existence and usage of services for taxable transactions, in line with Articles 168 and 178 of the VAT Directive. This is permissible as long as the additional documentation requirement is deemed necessary and proportionate. Legal Relationship & Economic Reality: The ruling emphasized the importance of a direct link between the services provided and the remuneration received, affirming that the economic and commercial realities of the transaction must be considered to ascertain if a service was rendered for consideration. Implications for Tax Practice: The decision highlights the need for companies to maintain thorough documentation of intra-group transactions to substantiate VAT deductions and the necessity for tax authorities to assess both formal and substantive conditions when evaluating VAT claims. https://lnkd.in/eDUNuJus

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VAT subsidiary establishments - KPMG in Romania Tax & Legal secures a decisive VAT court success Led by Alin Negrescu, Head of Indirect Tax, our team secured a definitive Supreme Court ruling annulling a tax authority decision that had wrongly claimed a non-resident company had a Romanian fixed establishment via its subsidiary. By leveraging CJEU jurisprudence, we successfully defended the VAT-free treatment of processing services, overturning significant additional VAT assessments. #kpmg #clearchoice CC: Alin Negrescu, Georgiana Enache, Andrei Tudor

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📖Why withholding tax (WHT) on interest payments on bond may be damaging for a State's economic growth? Case study of Switzerland. 💡In an excellent article "Rethinking the Swiss Withholding Tax on Bonds: A Critical Analysis of Its Swiss Tax Impact" [26 Finance and Capital Markets 1/2025] Roland A. Pfister analyses Swiss WHT regime on bond interest payments in order to present argumenty why such tax regime poses a significant challenge to competitiveness of Switzerland on the international capital markets. As a point of departure, Roland observes that: "MNEs seeking to raise capital through the issuance of a bond are likely to evaluate whether a jurisdiction (i) has solid financial and capital markets, (ii) offers an engaging environment for the issuance of bonds and (iii) grants any tax benefits for potential investors in bonds." What has WHT on interest to do with it? "Investors are more likely to avoid a particular bond if (i) it is subject to WHT or (ii) the reimbursement of WHT is bureaucratic and, therefore, represents an administrative and financial burden for the investor. It is widely agreed that to allow companies to successfully place bonds on the international capital markets, bond interest payments must be exempt from WHT to ensure their competitiveness." The payment of interest to bondholders triggers the application of Swiss WHT, which is levied at a rate of 35% to the extent that the bond has been issued by a Swiss tax resident company. The final effective tax rate is 42%. Investors receive 65% of the bond interest payments. Request for a WHT refund = high administrative costs. [See figure 1 below]. The advance of not having WHT on bonds emerges from a comparison of Switzerland and Liechtenstein. "Unlike Switzerland where the WHT ensures compliance through an upfront deduction of 35%, Liechtenstein allows gross interest payments to be transferred directly to investors without any deductions." The final effective tax rate is 12.5%. Investors receive 100% of the bond interest payments. No request for a WHT refund = no administrative costs and simplified liquidity planning. [See figure 2 below]. This prompts "many MNEs headquartered in Switzerland to access the international debt capital markets by issuing bonds through foreign subsidiaries with the Swiss group companies providing guarantees, if needed." [See figure 3 below]. This, in turn, contributes to over complications of Swiss tax system via specific anti-tax avoidance rules (SAARs). Moreover, WHT on bond in Switzerland complicates access to capital markets in that State so much that the "administrative practice of the Swiss tax authorities has been slightly relaxed in two different stages in recent years" in respect to an application of SAARs by introducing the tree methods to allow for tax compliance: (i) "the equity method"; (ii) "the offsetting method"; (iii) a combination of the "equity" and "offsetting" methods. [See figures 4-6]. What is your view?

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Romania introduces important updates to transfer pricing 👇 Romania is taking concrete steps to enhance transparency and efficiency in its transfer pricing framework. Recent legislative changes, effective July 2025, bring new requirements and greater clarity for international companies operating in Romania. 📌 What’s changing? • 𝐀𝐝𝐯𝐚𝐧𝐜𝐞 𝐏𝐫𝐢𝐜𝐢𝐧𝐠 𝐀𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭𝐬 (𝐀𝐏𝐀𝐬): The process for obtaining APAs is now more streamlined. Companies can expect clearer procedures and shorter timelines. A roll-back period of up to five years also improves the business case for wanting to obtain an APA. The APA can also be used to resolve an audit. • 𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭𝐬: The threshold for mandatory transfer pricing documentation is reduced, so more businesses will need to comply. Updated guidance helps remove uncertainty. • 𝐒𝐭𝐫𝐨𝐧𝐠𝐞𝐫 𝐜𝐨𝐨𝐩𝐞𝐫𝐚𝐭𝐢𝐨𝐧: Romanian tax authorities aim to increase dialogue and support early resolution of potential disputes. 👉 Why does this matter? Romania is known to be difficult in accepting HQ-charges, royalties and access to MAP-procedures. These changes may provide new opportunities to resolve such issues. 💡 Want to stay ahead of these changes? Follow me and explore our newsletter, webinars, and podcasts by clicking ‘Visit my website’ below my name.

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#VAT - From 1 July 2025, Slovenia has required all VAT registered businesses (including non-established entities) to submit detailed VAT ledgers alongside their periodic VAT returns. Known locally as Knjiga izdanih računov (Record of Issued Invoices) and Knjiga prejetih računov (Record of Received Invoices), these VAT ledgers are Slovenia’s implementation of a SAF-T-type reporting requirement. Read my latest blog to learn more: https://lnkd.in/eisW9wyu #slovenia #taxtech #compliance

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