ESC-Dijon- Pole Finance – EU Tax – A. Ashta EU Taxation 10. Capital Duties Arvind Ashta Introduction Place of Taxation Capital Company Transactions subject to tax Tax base Tax Rates Exemptions Prohibitions and allowances ESC-Dijon- Pole Finance – EU Tax – A. Ashta

ESC-Dijon- Pole Finance – EU Tax – A. Ashta Introduction Indirect Taxation Harmonization Promotes free movement of capital Abolish stamp duties on securities Abolish other similar indirect taxes Limit duty on capital to once ESC-Dijon- Pole Finance – EU Tax – A. Ashta

ESC-Dijon- Pole Finance – EU Tax – A. Ashta Place of Taxation Effective Centre of Management (real seat) Registered Office (statutory seat) Branch ESC-Dijon- Pole Finance – EU Tax – A. Ashta

ESC-Dijon- Pole Finance – EU Tax – A. Ashta Capital Company For all States Companies listed under article 3 (1) Shares can be dealt in stock exchange Can freely transfer shares and limited liability On option for Member-States: Implcit: Any other form of enterprise, working for a profit Member State has to opt out explicitly ESC-Dijon- Pole Finance – EU Tax – A. Ashta

Basis of Assessment: Compulsory Formation of a capital company; Conversion into a capital company Increase in the capital of a capital company Shares Rights similar to shares Transfer from a third country to a Member Effective centre of management Registered office Transfer from one Member State to another ESC-Dijon- Pole Finance – EU Tax – A. Ashta

Basis of Assessment: Optional Capitalisation of profits or reserves Services rendered in kind by a member A loan taken, if creditor gets share in profits Loan from Member or his family if it increases capital ESC-Dijon- Pole Finance – EU Tax – A. Ashta

Exclusions from tax-base Compulsory Assets or loans which have already been taxed Optional Contribution by members with unlimited liability But in this case, must tax this if Seat transferred to another Member State which does not do this If liability becomes limited ESC-Dijon- Pole Finance – EU Tax – A. Ashta

ESC-Dijon- Pole Finance – EU Tax – A. Ashta Rates See tax rates before 1.7.1984 Transactions taxed less than 0.5% now exempted Other Transactions can be exempted or taxed maximum 1%. ESC-Dijon- Pole Finance – EU Tax – A. Ashta

Exemptions (all optional) Capital raised to absorb losses Public services: State owns at least 50% Cultural, charitable, relief, educational objectives ESC-Dijon- Pole Finance – EU Tax – A. Ashta

ESC-Dijon- Pole Finance – EU Tax – A. Ashta Prohibitions No similar taxes No taxes on registration or pre-incorporation No taxes on introduction of shares on stock exchange No taxes on capital raised through loans, debentures ESC-Dijon- Pole Finance – EU Tax – A. Ashta

ESC-Dijon- Pole Finance – EU Tax – A. Ashta Allowances duties on the transfer of securities, duties on the transfer of businesses or immovable property duties on assets transferred for a consideration other than shares in the company duties on the creation, registration or discharge of mortgages or other charges on land or other property duties paid by way of fees or dues value added tax ESC-Dijon- Pole Finance – EU Tax – A. Ashta