1 Tax Archives - Dorr Consulting

Tax on offshore gifts?

A very interesting development is under way at the Supreme Court. As our clients and partners know we have always advocated about the opportunity of setting up an international estate planning with the benefit of not having to pay ITCMD tax on offshore gifts. That is possible because of a loophole in the regulation and with a lot of cases lost by the estates revenue services makint it pretty secure until now.

Sao Paulo estate revenue service lodged an appeal against the judgment of the 6th Public Law Chamber of the São Paulo Court of Justice (TJ-SP) which recognized the right of the taxpayer not be compelled to collect the amount for the gift tax/inheritance tax (ITCMD) on the bequest of a property located in Treviso, Italy, and on the transfer of a sum of money foreign (Euro), both operations carried out in 2005.
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Inheretance tax at 20%?

Inheritance tax rate (ITCMD) at 20% seems to be a reality ever closer. Not only by the government’s present proposal a few months, but now officially a proposal from the states is on the table since the 20th of this month.

The strong increase in revenue on gifting (53.8% higher than the same period 2014 in São Paulo) shows that many families are front running this scenario. On one side will be much more expensive to do estate planning or probate proceedings in Brazil, on the other Brazilian culture to always left the matter for later, often beyond the time required for an orderly planning, might change making families seek more sophisticated solutions to reduce or avoid the higher taxation.
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The long-awaited amnesty

Amnesty for whom? That’s an interesting question. We waited a while to finally make our comment on the matter and thus we could see how some legal consultants are seeing the project to implement the RERCT (A special regime to come into tax and currency exchange compliance) to be regulated by the PLS 298/15 or to simplify, a project for capital repatriation. Our vision always has been accompanied by a certain skepticism about the government’s ability to pass such a project with so little political capital as now, but let’s leave that aside for a moment.

The project itself is bound to create a fund for loss compensation with ICMS due to the attempt to finally promote a reform of such a tax to end the fiscal war between the states. Unfortunately as is common in Brazil is an inconsistency to expect a fund that require recurring funding to be powered via a measure that will promote a non-recurring revenue, famous cover the sun with a sieve. But this is not a project design error itself, but the fiscal measures plan.
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Estate Tax

Again returned the agenda of fiscal adjustment an increase in the estate tax, and as we anticipate here in mid-April, this would be the most logical and simple way forward:

Interestingly, the Governor chose to push the less efficient hand, since introducing a tax on large fortunes or a federal tax on inheritances coming up in various difficulties, the path that seems to be more logical would be to legislate to increase ITCMD rates thus increasing its revenues by states, including Maranhão, with some compensation in transfers received in order to also benefit the federal government.

Check our full review on that subject in April 14th: Veja nosso post completo de 14 de Abril: A little push… to the wrong direction?/a>

Although the Finance Minister Joaquim Levy is against the proposal, the options seem to be running out, since successive defeats have become virtually certain to reduce the fiscal target for this year, and that this tax would hit the richest people of society, in line with the PT will. Both Mercadante, Chief of Staff and Nelson Barbosa are supporters of the idea.
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The Finance Minister is missing!

The Finance Minister is missing (Joaquim Levy), for now only from a press conference, but for many the risk of him disappearing from this economic team are real, whether by discontent, self-will, the will of the president, congress or even former presidents, Lula in case.

Shortly after the event, the Minister came to justify the absence that was caused by a health problem, citing the noise that the media made about it. And why all this is relevant? It’s precisely the credibility of Joaquim Levy that’s holding this government today, if it turns out, for any of the possible reasons who will bring the necessary adjust measures to put the economy back on track.
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Minimum EB-5 Investment Amount Expected to Increase to US$750,000

Photograph of a U.S. Department of Homeland Security logo.

We just received the following communication from the immigration Law Firm Schonberg & Timerman, P.L.:

“This year, U.S. Senate will vote on an authorization bill to renew the EB-5 program for another 3 years. The last statutory renewal of the EB-5 bill was enacted on September 28, 2012. The new bill is expected to raise the minimum EB-5 investment amount of US$500,000 since that amount has not changed since 1990 when the EB-5 visa was implemented.

The US Secretary of Homeland Security Jen Johnson has recently recommended to the U.S. Senate an increase of 50% to the minimum investment amount required for the EB-5 visa. That is to increase from $500 to $750 thousand USD. As a result, by latest of September 30th, 2015, it is estimated that the minimum required investment for the EB-5 visa will be US$750,000.”

So if you were thinking about using this method to move to the US think faster. Don’t forget to have your pre-immigration planning done before receiving the temporary green card. Contact us if you seek forward looking solutions.

Swiss Banks freezing accounts and blocking withdrawals

For the past months we have being receiving information that Italian clients were having some problems transferring or withdrawing assets from Swiss banks. Since this information was getting almost zero repercussion outside Italy we decided to explain what is happening.

As you may already know about the global shift to tax compliance, usually you hear more US related news. This time Italians are under scrutiny from their government and Swiss deposits are the top priority. Anyone thinking that this won’t happen to many other countries think again. Belgium and France are on the same path.

To their defense, Swiss banks are adopting measures to safeguard their interests and operations (just to make sure that you all understood, THEIR interests not their client’s). Some of them are only allowing transfers to accounts in white listed countries that are already under OECD tax information standards, only under the clients personal name and after the client went to the bank in person, with his lawyer to sign documents saying that he is tax compliant in his home country reliving that bank of any misconduct. Of course the client has to convince the receiving bank that his funds are tax compliant as well. Cash withdrawals are also being blocked and recent court cases are backing the right of the banks to do so (don’t you read the bank account contract’s small letters??). Credit Suisse and BSI (recently acquired by BTG Pactual) are among those taking this measures.
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Brazil Receita Federal issued new rules for the differentiated monitoring of large taxpayers

Brazil Receita Federal issued new rules for the differentiated monitoring of large taxpayers, which is the surveillance of economic-tax behavior of individuals, sectors and economic groups, especially large enterprises.
 
Monitoring has the objective of “producing analysis on the most significant negative variations that result or may result in loss of actual or potential revenue” and “promote tax compliance initiatives among major contributors, prioritizing actions to self regulation”.
 
According to the decree published in the Official Gazette, this monitoring will be carried out systemically, regionally-oriented work processes defined by the Special Coordination Major Contributors (Comac), subject to the guidelines established by the Supervisory Secretariat (Sufis).
 
The criteria for classifying companies subject to differentiated monitoring will be declared gross income declared debts, wages and participation in the collection of taxes administered by Revenue.
 
Individuals will be subject to this monitoring from the analysis criteria as a total declared income, assets and rights in equities operations, one-person investment funds and participation in legal persons subject to differentiated monitoring.

See the ordinance publication of the full (portuguese) here .

Panama Bearer Shares no longer available

Back in August 2013 Panama’s National Assembly approved legislation (Law No. 47 of 6 August 2013) immobilizing bearer shares in Panama companies, with the new law becoming effective on 7 August 2015.

The original proposal was approved allowing for a three-year transition period for existing companies. However, on 23 April 2015 the Panama National Assembly amended the bearer share legislation through Law No. 18 2015, reducing the transition period from three years to less than five months.

Requirements summary:

All bearer shares in Panamanian Companies must be placed in the custody of an authorized custodian.

Companies that have bearer shares in circulation prior to the effective date of 7 August 2015 must place their certificates with an authorized custodian by 31 December 2015.

Companies that issue bearer shares after the effective date of 7 August 2015 will have to place their certificates with an authorized custodian within 20 days of the shares being issued.

Companies depositing bearer shares into custody require the authorization of a resolution of the Board of Directors or Shareholders, which must be registered in the Public Registry of Panama.

Companies that have bearer shares in circulation prior to 7 August 2015 must register this resolution before 31 December 2015, or they will be deemed automatically to prohibit the issuance of bearer shares.

As one of the few places in the world that still had this type of structure, Panama takes an important step towards a more compliant classification.

Brazil SwissLeaks CPI – HSBC

Brazil SwissLeaks CPI (Parliamentary Investigation Committee) may receive additional information from HSBC Brazil regarding clients that applied to open up accounts with HSBC in Switzerland.

After receiving information of all Brazilian account holders with the Swiss HSBC, Brazil HSBC CEO said that they have information on clients that were applying to open accounts with their Swiss branch since the Brazilian branch was the referral office for them. The executive affirmed that they don’t know which of those clients actually opened accounts in Switzerland but if CPI requests they would provide the information they have.

The executive also said that client accounts that are considered high risk or from clients that don’t provide enough information on the resources origin are being closed and that they are taking other steps to increase the bank’s security.

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