Although Germany is now claiming that its corporation tax rate will soon be below the rates of its nearest European neighbours, due to a proposed rate cut from 25 per cent to 19 per cent, the actual effective rate of corporation tax will be still somewhere between 36 and 41 per cent, SUSAN PITTER writes.

Following extensive representations from the financial services industry to abolish capital duty charged when a company raises capital through the issue of shares, in his first Budget, Minister for Finance Brian Cowen acceded to some of the industry’s demands, and reduced the duty from 1 per cent to 0.5 per cent, with effect from December 2nd , 2004.

The European Court of Justice has clarified the VAT treatment of cross border management services provided by EU managers, in the landmark Banque Bruxelles Lambert SA (BBL) v Belgian State.

The European Commission has approved Ireland’s new holding company/headquarter regime, subject to a change regarding the minimum percentage shareholding required to obtain a capital gains tax exemption, writes PETER O’DWYER.

Coming from Latvia, a country with one of the lowest corpoate tax rates in the EU, the new commissioner for taxation and customs union is unlikely to push for tax harmonisation. Ingrida Udre will shortly take up office alongside Ireland’s Charlie McCreevy who has just been voted Ireland’s best ever finance minister (see www.finance-magazine.com) reflecting his policies on corporate tax in Ireland.

The Revenue Commissioners’ hesitancy in giving clear guidelines to the international financial services industry over what constitutes ‘trading’ in a post-IFSC environment is causing problems for the industry.

DAVID SMYTH and MECHTHILD PIETREK compare corporation tax rates in Ireland and the ten accession states - Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia.

In its position paper on the draft European Constitution released on September 17th, the European Commission questions the effectiveness of unanimity and proposes adopting majority voting in some cases.

Proposed changes in Sweden’s tax legislation may see Ireland being ‘blacklisted’ under Sweden’s controlled foreign corporation (CFC) legislation.

After six years of discussion and negotiation, the EU’s Savings Directive has finally come to pass, having been approved by the EU Council of Economic Affairs and Finance Ministers on June 3rd, 2003 as part of the European Union’s Tax Package.

Although there are no tax measures introduced in the UCITS III Directive, the tax implications are many says DEIRDRE POWER.

The man behind the OECD’s clampdown on offshore tax havens, Jeffrey Owens, is to discuss Ireland’s 12.5p.c. corporation tax rate with a panel of leading Irish tax experts at the forthcoming 4th Annual Finance Dublin Conference to be held on March 25th and 26th.

Changes to Section 110, which outlines the tax framework for securitisation, were announced as expected in the Finance Bill 2003, published on February 7th.

The fund administration sector received a boost in the Finance Bill 2003, with the removal of a technical obstacle, which has been impinging upon the sector’s competitiveness.

The European Commission has cleared Ireland’s ‘tonnage tax’, a fiscal package aimed at replacing the normal corporation tax by a tax based on the net tonnage of the fleet for maritime companies engaged in international traffic introduced in the 2002 Budget.

Eight years after the UK introduced its Investment Manager Exemption legislation aimed at countering exposure to domestic tax, Ireland has introduced its own version in the Finance Bill 2003. On examination of the proposed legislation, DONAL O’SULLIVAN and JOHN GROGAN say that the Irish version is more flexible than the UK’s and will maintain Ireland’s position as a leading investment management centre.

Ireland’s double taxation treaties have increased to 48 with the ratification of India and Bulgaria in 2001. Norway also added a capital gains tax agreement which will come into effect this month.