NEW ADMISSIONS IN THE PLUS MARKET (LONDON)

  Imperial Music and Media Plc
 
was floated on the PLUS quoted market on the 9th June 2010 and intends to make "investments in new musical talent within the UK music industry, predominantly in the areas of rock, jazz and easy listening". The directors "anticipated that investment will be by way of investing capital into and the management and development of new talent, or acquiring and managing the rights and revenues to existing artists catalogues and/or managing existing recorded artists."

Imperial Music and Media Plc has cash of circa £200,000 and has the largest market cap of £3.44m.

 

  Japanese Turnaround Capital Plc was floated on the PLUS quoted market on the 9th April 2010 and intends to "take advantage of opportunities in connection with distressed financial assets in Japan, primarily in relation to portfolios of distressed Japanese consumer loans."
Japanese Turnaround Capital Plc has cash of £448,000 and net assets of £194,000.

 
more information on:

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Cash shells in the Plus Markets Exchange in London

The PLUS Markets is a London based stock exchange aimed at small and mid-cap companies looking to raise capital and gain international exposure with a flexible regulatory environment compared to the traditional capital markets.

PLUS offers the same advantages of AIM such as the ability to raise funds, increase company profile and tax advantages for investors but with the added benefits of lower costs and a more flexible regulatory regime.

 

Cash shells are companies with a stock market quote, board of directors and money in the bank but no active business.

Generally set up as an „investment vehicle‟, the entrepreneurs and shareholders of a cash shell are looking for a business to fund.

Rather than going through the traditional Initial Public Offering (IPO), a company looking for capital is „acquired‟ by a cash shell, known as a „reverse takeover‟. A reverse takeover can be a quicker and more certain route to a public quotation compared to a standard IPO with the added benefit of a known quantity of available capital.

you can find more information about the Plus Markets Exchange on:

http://www.Braxton-co.com

Private Foundation in Guarnsey

Background

Much of Guernsey's economic success over past decades
has been largely due to its adaptability and flexibility to react
to changing market situations and conditions. This
adaptability is no better illustrated than by the Island's
willingness to amend and review legislation to ensure that it
retains its position within the increasingly competitive
market place of international finance and over recent years
there have been many examples of this.

Following the revision of the Guernsey Trust Law - which
was approved by the Guernsey parliament in July this year
and now awaits approval by Privy Counsel - the Island is
now planning to introduce legislation to allow the
establishment of Foundations. This innovation will add a
useful new tool to the Island's current financial product mix
and will help ensure that Guernsey remains able to offer a
highly flexible spectrum of financial services to its global
client base.

The Foundation

Foundations have been created under the laws of other
jurisdictions from as early as 1926 (Liechtenstein). More
recently Panama introduced legislation in 1995, Netherlands
Antilles in 1998 and the Bahamas in 2004. Foundations over
this period have become increasingly popular across the
globe but particularly in civil law jurisdictions where the
concept of the Anglo-Saxon Trust is less well known and not
always wholly understood. In certain situations Foundations
can offer a viable alternative to the trust for commercial
structures, estate planning and for charitable purposes.
Whilst there is no single definition of a Foundation, there are
a number of common features and some interesting
comparisons to be made with trusts and companies alike.

Unlike a trust, a Foundation is a distinct legal entity and has
its own legal personality. It can hold assets, sue (or be sued)
in its own name, may enter into agreements with third
parties but unlike a company it has no shareholders. Since
some Foundations are established for charitable purposes,
they may or may not have beneficiaries.

A Foundation is formed by a Founder (either an individual or
corporate body) who provides the assets to be administered
by the Foundation under contractual rather than fiduciary
principles – giving a degree of comfort to those clients
unfamiliar with equitable principles. Beneficiaries of a
Foundation therefore have contractual rights rather than
proprietary rights in its assets. A key attraction is the ability
for the Foundation to reserve powers to its Founder. A
Founder may retain more control than is usual with a Settlor
of a trust. Commonly reserved powers include those relating
to such issues as investment strategy, the appointment and
removal of beneficiaries or even the power to revoke the
Foundation.

The Potential Guernsey Foundation

It is proposed that a Guernsey Foundation would be
established by Charter and run by a Council responsible for
fulfilling the Foundation's purpose as defined in the Charter
– which would also include the Foundation's name, details
of all Council members its registered office (which would be
in Guernsey) and the Foundation's purpose.
tself may be quite generic - for example "estate planning", or
may be something quite specific. It is envisaged that at least
one member of the Council will be a corporate body. The
Foundation would be entered on the public register however
details of the beneficiaries (if any) would remain confidential
as with a Trust subject only to the pre-existing rules
regarding disclosure in proper cases.

The provision of Council members or administrative services
to Foundations will be, a regulated activity as are trustee
services at present ensuring that the interests of clients and
the reputation of the Bailiwick is upheld.

Over and above the Charter, there will normally be a set of
Rules governing the mode of operation for the Council -
whose members would be subject to duties similar to those
of company directors. Unlike the Charter the Rules would be
a private document and not on the public registry.

It is not proposed that a Guernsey Foundation will be
restricted in terms of the type of assets it can hold. Therefore
whilst it is not envisaged that they will be used for purely
commercial purposes, they will potentially be able to hold
shares in a company carrying on commercial activities.
Filing requirements are likely to be limited to changes in
registered office and Council members and changes to the
Charter all of which would need to be registered immediately
the changes occur. If this is the case it's unlikely that an
annual return be required. The filing of audited financial
statements would be subject to the same exemptions
applicable to Guernsey companies meaning many of them
would fall outside the audit requirement. This will ensure that
pricing can remain competitive.

It is also proposed that the tax treatment of Foundations be
similar to that of Trusts with Guernsey trustees.
A Foundation can also have an Adviser whose role would be
set out in the Foundation Charter and Rules. This is largely
similar to the role of Protector within a Trust structure both
having powers such as to appoint or remove Council
members and beneficiaries, or the Adviser's consent may be
required before the Council carries out certain acts.
It should also be possible for a Guernsey Foundation to
migrate to another jurisdiction if so required and equally for
a Foundation established elsewhere to migrate into the
Island, a long as it fulfils requirements under the Guernsey
legislative framework.

An interesting possibility is to establish structures using both
Foundations and Trusts. Private Trust Companies ("PTCs")
are very much in vogue. These are companies established
for the sole purpose of acting as trustee for one trust or, say,
one family. One issue that often concerns advisers is as to
the identity of those who will own the PTC. Often a purpose
trust is established to hold the shares in the PTC but as
Foundations need not have any beneficiaries it is possible
that they will be used as trustees themselves; a Private Trust
Foundation?

Conclusion
The introduction of Guernsey Foundations will offer the
Island's clients an excellent alternative structure assisting
with wealth management and will provide further choice and
flexibility to the Island's fiduciary sector.
The Foundation combines the flexibility of a trust with the
greater degree of transparency of a company. Given the
ability of a Founder to retain a certain amount of control and
the existing market demand for the Foundation structure
from civil law jurisdictions in particular, the Foundation can
only enhance the Island's competitive position in the market
place.


http://banksit.blogspot.com
http://internationaltax1.blogspot.com
http://assetprotection.wordpress.com
http://proteccionactivos.wordpress.com
http://proteccionbienes.blogspot.com

Hybrid entities and reverse hybrid entities

International tax planners often refer to "hybrid entities" and "reverse hybrid entities." 

From a U.S. tax perspective, a hybrid entity is an entity that is "fiscally transparent" for U.S. tax purposes but not fiscally transparent for foreign tax purposes.  In general, an entity is fiscally transparent if the entity's current year profits are currently taxable to the owners of the entity, regardless of whether the entity made any distributions to its owners during that year. 

 Partnerships are typically fiscally transparent entities.  Corporations are typically not fiscally transparent entities.  Limited liability companies and various types of foreign entities may or may not be fiscally transparent.

 Flexibility in international tax planning may be accomplished by the use of a foreign entity that is a corporation in its country of origin, but has the ability to check the box and elect its classification under Federal tax rules. This article presents a primer on establishing and planning for the use of such "hybrid" entities.

Final entity classification regulations--the "check-the-box" (CTB) rules issued in December 1996(1)--allow taxpayers to elect to treat most business entities (including foreign business entities) for Federal tax purposes as corporations, partnerships or (if the entity has one member) disregarded entities. While specified foreign business entities are excluded from the elective system and are treated per se as corporations, they are generally limited to publicly traded-type entities (e.g., U.K. PLCs, German AGs and French SAs; a list is contained in Regs. Sec. 301.7701-2(b)(8)). Despite the apparent restrictions imposed by the per se list, typically, at least one entity in any given country is viewed as a corporation under local law, but is eligible to check the box (e.g., the U.K. Limited Company, German GmbH and French SARL). Further, Regs. Sec. 301.7701-2(d)(1) grandfathered certain business entities on the per se list in existence on May 8, 1996, allowing them to retain their previous partnership or branch status. The CTB elective regime replaced the former four-factor approach under Regs. Sec. 301.7701-2 for classifying entities, which was cumbersome to apply and sometimes generated uncertainties, particularly for foreign entities.

The final CTB regulations ushered in a new era of flexibility in international tax planning for U.S. persons. However, IRS actions since the issuance of the final CTB regulations have eroded some of the rules' flexibility. This article will discuss establishing a foreign hybrid under the new CTB regime and planning opportunities.

For Federal tax purposes, taxpayers may elect to treat a foreign business entity as either a corporation or as a flowthrough entity, regardless of the foreign country's classification, if the entity type is not on the per se list. (An entity type on the list is automatically treated as a corporation for Federal tax purposes). Thus, a foreign entity taxable as a corporation in its country of incorporation can choose to be treated as a partnership or a branch for Federal tax purposes; such an entity is generally known as a "hybrid" Conversely, an entity classified as a partnership (or other type of flowthrough entity) in its country of formation or residence can choose to be treated as a corporation for Federal tax purposes; such an entity is generally known as a "reverse hybrid."

 A reverse hybrid entity is the "reverse" of a hybrid entity in that the entity is fiscally transparent for foreign tax purposes but not fiscally transparent for U.S. tax purposes.  Entities that are treated the same for U.S. and foreign tax purposes are not "hybrid" entities.

 The use of domestic reverse hybrids in cross-border financing continues despite the issuance by the Internal Revenue Service (IRS) of regulations designed to shut down abuses in the area. These devices, if structured correctly, may enable taxpayers to enjoy double-dip tax benefits with respect to interest expense and reduced withholding under US income tax treaties.

 

More articles about International Tax on

http://international-tax-lawyer.blogspot.com/

PE and expatriates

PE in Venezuela

In general, there is consensus among tax practitioners, SENIAT and the tax courts that the OECD and UN commentaries are a useful instrument to interpret the scope and meaning of the PE definition.3 Several SENIAT advisory letter rulings have consistently referred to the OECD and UN commentaries when interpreting tax treaty provisions.4 Although such cases covered an analysis of other treaty provisions (article 7) with reference to the notion of the term business profits, a term not defined in the treaties or under Venezuelan legislation, the significance of the rulings is that they attach significant value to the OECD and UN commentaries for the elucidation of the meaning of treaties. In the reporters' opinion, these existing rulings ratify that such commentaries will probably be given significant weight when SENIAT analyzes the PE definition.

As will be further discussed in section 9 below, while the definition of PE contained under Venezuelan legislation has been clearly influenced by the definition contained in the OECD and UN models there are some important departures from these models. Although Venezuelan domestic legislation has made some important changes to the PE definition clearly intended to expand its scope, the structure of the definition suggests that the standard treaty PE clause was used as a reference for the drafting of the definition.

Although there are a relatively small number of SENIAT rulings on the matter and almost no court decisions dealing with the concept of PE, the analysis of the basic rule PE found under paragraph 1 of article 5 of both the OECD and UN models represents by far the most common case of examples dealing with the notion of PE.
In general and consistent with the OECD commentaries, SENIAT recognizes that the first step in determining whether a PE is deemed to exist is the analysis of whether the relevant taxpayer has a fixed place of business through which the business of an enterprise is wholly or partly carried on.

It is worth mentioning that in one of the existing advisory letter rulings available on the notion of PE, SENIAT adopted the position that the concept of fixed base should be assimilated to the concept of PE. The ruling referred to a technical services case of a German technical services company (the S A.G. case).6 The matter under discussion was the applicable provision dealing with such service payments under the Venezuela-Germany tax treaty. The ruling concluded that the service payments should be dealt with under the professional services provision (article 14) of the treaty and not by the business profits (article 7) provision. Nevertheless, in order to determine whether the German resident taxpayer was taxable in Venezuela under article 14, it specifically analyzed whether the taxpayer had a PE under article 5 of the treaty. SENIAT therefore assimilated the notion of PE with the notion of fixed base. This position would seem to indicate recognition by SENIAT of the 2000 amendment to the OECD model that suggested that there were no intended differences between the concepts of PE, as used in article 7, and fixed base, as used in article 14.7

Venezuela, Expatriates and FX

As is the case with other jurisdictions, the question of whether there is a PE in Venezuela is the most common question taxpayers, tax practitioners and SENIAT have to face when dealing with cross-border transactions.

The importance of the interpretation of the PE definition and the consequences stemming from it under the extensive network of tax treaties currently in place in Venezuela (26 tax treaties on income) is largely overshadowed by the lack of significant guidance or authority dealing with it from domestic sources and the fact that as a non-member of the OECD neither the model nor the commentaries are binding.
There is no statutory guidance available at the current time for interpreting the tax treaty concept of a PE under article 5 of the OECD and UN models, as it is not customary in Venezuela for Congress ( Asamblea Nacional) to "regulate" or condition the application of treaties beyond the provisions in the tax treaty itself, as approved by Congress.

On the other hand, there is limited or no access at all to preparatory works or agreements, arrangements or instruments exchanged between treaty negotiators in connection with the conclusion of tax treaties, or subsequent exchanges pertaining to the application of the tax treaties.

As such, sources of authority are mostly limited to case law and to guidance issued by SENIAT in advisory letter rulings or particular deficiency claims, neither of which has a stare decisis status and hence may change without the need for proper or in-depth justification.

It should be noted that advisory letter rulings are randomly made public by SENIAT and therefore, although the reporters have made an extensive effort to research all available guidance with respect to the notion of PE, it is possible that other relevant advisory letter rulings exist which have not been covered by this report.
When available, reference is made in this report to evidence in the Venezuelan context. Although there has been some modest evolution in the analysis of the definition by SENIAT, leaning towards the use of the OECD and UN model commentaries, when applicable, there is still a long way to go to obtain a clear understanding of the term under applicable tax treaties.

The report evidences the view of the reporters that to a reasonably large extent significant weight has and should continue to be given - absent domestic authority - to the OECD and UN model commentaries when interpreting the PE definition under Venezuelan tax treaties.

Venezuela Expatriates

This report evidences that there is limited guidance available in Venezuela to aid in the interpretation of the definition of the permanent establishment (PE) concept. There is no statutory guidance available as it is not customary in Venezuela for Congress to "regulate" or condition the application of treaties beyond the provisions in the tax treaty itself, as approved by Congress.
Sources of authority are mostly limited to case law and to guidance issued by the Venezuelan tax authority (SENIAT) in advisory letter rulings or particular deficiency claims, neither of which creates a stare decisis status and hence may change without the need for proper or in-depth justification. On some occasions, as this report will show, limited guidance can also be found in tax treaty protocols.
Court cases dealing with the notion of PE are virtually non-existent. The only exception worth mentioning is the Geoservices case1 which to some extent has language that could be interpreted as a ratification that under a standard PE definition the rendering of services per se should not create a PE for the taxpayer.
Unfortunately for taxpayers, Venezuelan law does not require advisory letter rulings to be made public, or for consistency between them, with respect to administrative case law. SENIAT consistently makes use of such discretionary power with the consequence that it is extremely difficult for tax practitioners and taxpayers to keep up to date with its position, a situation that is even more delicate when dealing with complex international tax cases, let alone when there is a tendency in Venezuelan tax treaty negotiation, evidenced more particularly in the last decade, to rely more heavily on the PE rule under the UN model, with the added complexities of some peculiar changes and adjustments dealing with the services PE, insurance PE and most notably the agency PE.
As the report will also show, because of the non-binding nature of private letter rulings, it is very common to find similar cases with contradictory opinions by SENIAT. Particularly disturbing is a recent ruling that changes the traditional interpretation that a subsidiary would not on its own result in a PE for its parent.2
Although there has been some modest evolution in the analysis of the definition by SENIAT there is still a long way to go before a clear and complete understanding of the term under applicable tax treaties emerges. In general, and consistent with the OECD and UN commentaries, SENIAT recognizes that the first step in determining whether a PE is deemed to exist is the analysis of whether the relevant taxpayer has a "fixed place of business through which the business of an enterprise is wholly or partly carried on" .
Nevertheless, there is still a lot to cover in understanding all the aspects associated with such basic definition and the ramifications resulting from its interplay with the other paragraphs completing the full scope of the definition contained under article 5 of both the OECD and UN models.
With a view to these circumstances, the report underlines the view of the reporters that to a reasonably large extent significant weight has and should continue to be given to the OECD and UN model commentaries when interpreting the PE definition under Venezuelan tax treaties.