is your tax structure state aid proof?/media/files/other/2017/...global m&a deal volume for the...

IS YOUR TAX STRUCTURE STATE AID PROOF?

www.dlapier.com | 03

CONTENTS

1

2

3

4

5

6

What is EU State Aid?

Do EU State Aid rules apply?

Potential impact of EU State Aid rules

What do you need to do?

Meeting your needs

DLA Piper network

04 | Is your tax structure state aid proof?

CONTACTS

Bob Martens Global Co-Leader International Trade, Regulatory and Government Affairs Brussels T +32 (0)2 500 15 03 F +32 (0)2 500 16 00 [email protected]

Orestis Omran Counsel Litigation & Regulatory T +32 (0)2 500 15 39 F +32 (0)2 500 16 00 [email protected]

Randall Fox Co-Head International Transfer Pricing London T +44 (0)207 796 6928 F +44 (0)207 796 6666 [email protected]

Pie Geelen Dutch Tax Advisor Head, European Tax Desk New York T +1 212 335 4905 F +1 212 884 8505 [email protected]

Joel Cooper Co-Head International Transfer Pricing London T +44 (0)207 796 6929 F +44 (0)207 796 6666 [email protected]

Roderik Bouwman Partner Co-Chair Global Tax Amsterdam T +31 (0)20 5419 894 F +31 (0)20 5419 941 [email protected]

Trade, Regulatory and Government Affairs

Transfer Pricing and Economic Services

International Tax

WHAT IS EU STATE AID?1



WHAT IS EU STATE AID?

■ European concept which may impact MNEs with operations in the EU

■ To establish an EU internal market, State aid law has been created to avoid EU Member States engaging in a subsidy race favoring their national industries or attracting businesses to the detriment of other EU Member States

■ EU State aid rules prohibit public authorities from granting selective advantages capable of distorting competition and affecting trade between EU Member States

■ Some State aid measures may nevertheless be declared compatible with the internal market

■ State aid measures can only be implemented after approval by the European Commission (EC), unless exempted by a specific regulation

Intervention by the State and through State resources

Economic advantage on a selective basis

Competition has been or may be distorted

Likely to affect trade between Member States

EU STATE

AID


WHAT IS EU STATE AID?

■ Competition Commissioner Vestager’s 2014 – 2019 priorities concerning State aid are tax investigations and the banking sector:

– tax breaks granted by certain EU Member States to multinationals (Aggressive tax planning)

– strict application of State aid rules by continuing the investigations started by the previous Commission

– stop any tax arrangements found to constitute unlawful State aid

■ State Aid rules can cover tax arrangements entered into by MNEs with EU Member States

– The Commission has, to date, adopted 5 high profile decisions relating to tax rulings granted to MNEs and is requesting the EU Member States involved to pressure the recovery of several billion euros of unpaid taxes

More than 1,000 tax rulings reviewed by the EC

DO EU STATE AID RULES APPLY?2



DO EU STATE AID RULES APPLY?

Tax Arrangements with EU Member States

Unilateral Advance Pricing Agreements

Tax rulings, including, excess profits rulings

Audit settlement agreements

Other agreements with local tax

authorities

Even if a tax arrangement complies with national law, it may still constitute unlawful State aid

3 POTENTIAL IMPACT OF EU STATE AID RULES



COMMISSION INVESTIGATION

POTENTIAL IMPACT OF EU STATE AID RULES

■ Materiality (including damages)

■ Position Papers for uncertain tax positions in financial statements (e.g. FIN 48)

■ Consideration of EU State aid risk during due diligence

■ Review of existing business models

■ Restructuring of transactions (planned)

■ Economic substance (people, functions, and risks)

■ Public perception if investigations are on-going or finalised

■ Mainstream media coverage

■ Reimbursement requested by national Courts

■ Negative decision requiring payment of back-taxes and compound taxes, for up to 10 years

■ No suspensive effect of an appeal

ACCOUNTING AND

DISCLOSURE

M&A INVESTMENTS

DUE DILIGENCE

BUSINESS OPERATIONS

REPUTATION AND BRAND

WHAT DO YOU NEED TO DO?4


■ Undertake a structured assessment of the impact of State aid on your business operations

■ Analyse and disclose income tax risks for financial reporting purposes (e.g. FIN48 or similar)

■ Consider solutions that will help you manage and mitigate State aid risk

■ Plan for uncertainty and increased levels of controversy

■ If the EC has already started to investigate, seek specialized State aid assistance

WHAT DO YOU NEED TO DO?


MEETING YOUR NEEDS5



DLA PIPER STATE AID SERVICE OFFERING

STATE AID ASSESSMENT

OTHER SERVICES

■ (Privileged) opinion as to whether or not the existing or contemplated tax arrangements constitute unlawful EU State aid, including legal, economic, and financial analysis

■ Quantification of exposure (where applicable)

■ Propose and implement restructurings to mitigate EU State aid risk

■ EC investigation assistance, including legal comments to the EC supported by economic and financial analysis

■ Representation before European courts supported by economic and financial analysis

DLA PIPER NETWORK6



DLA PIPER OVERVIEW

“…The firm is focused far less on the amount of physical property it owns than it is on integrating its global business to deliver high-quality work to multinational clients or clients with multinational issues.” Law360, September 2017

“The expansion is geared toward building a greater global platform for clients that are increasingly looking at investing throughout’ Latin America, rather than within a single country.” American Lawyer, December 2016

“The growth that the firm has seen in the last 12 months has only strengthened its cross-border and international capabilities, which it has demonstrated across a wide range of practice areas.” Law360, June 2016

“Over five years, the biggest upward movement in brand has come from DLA Piper…” Acritas, February 2016

DLA Piper has “led in listening to clients and positioning itself as a business-led law firm.” Financial Times, October 2, 2015

DLA Piper has “become really aggressive in the thought leadership arena, and that is really resonating with corporate counsel.” Bloomberg BNA, April 24, 2015

Global M&A deal volume for the eighth consecutive year (Mergermarket 2017)

Worldwide mid-market and small-cap M&A deal volume (Thomson Reuters 2017)

Most active M&A law firm globally by deal volume (PitchBook 2017)

Best in the world for Real Estate, Franchise and Entertainment (International Who’s Who 2017)

Most powerful law firm brand in the world (Acritas 2017)

Most active Private Equity law firm globally by deal volume (PitchBook 2017)

Most active M&A law firm in the US by deal volume (PitchBook 2017)

Most active in private equity exits globally (PitchBook 2017)

2 3Best-branded Law Firm (BTI Brand Elite 2017)

Most active Venture Capital law firm globally by deal volume (Pitchbook 2016)

Law firm by revenue (The Am Law 100 2017)

Most powerful law firm brand in the United States (Acritas 2017)

Most innovative law firm in North America (The Financial Times 2017)

4 5Law firm for client service (BTI Client Service A-Team 2018)

Law firm for global reach and breadth of international work (Law360 2017)

6 7 Firm with superior client relationships (BTI Industry Power Rankings 2017)


SUPPORTING YOU GLOBALLY

AlbanyAtlantaAtlantic City AustinBaltimoreBogotaBostonCalgaryChicagoDallasEdmontonHoustonLima

Los AngelesMexico CityMiamiMinneapolisMontrealNew YorkNorthern VirginiaPhiladelphiaPhoenixRaleighRio de Janeiro*Sacramento

AarhusAmsterdamAntwerpBirminghamBratislavaBrusselsBucharestBudapestCologneCopenhagenEdinburghFrankfurtHamburg

HelsinkiKyivLeedsLisbonLiverpoolLondonLuxembourgMadridManchesterMilanMoscowMunichOslo

ParisPragueRomeShef�eldSt. PetersburgStockholmViennaWarsaw

Abu DhabiAl KhobarDohaDubaiJeddah Kuwait CityManamaMuscatRiyadh

AMERICAS EUROPE MIDDLE EAST ASIA PACIFICAucklandBangkokBeijingBrisbaneHong KongMelbournePerthSeoulShanghaiSingaporeSydneyTokyoWellington

AFRICA AlgiersAddis AbabaAccraBujumburaCasablancaDakarDar es SalaamJohannesburgGaboroneKampalaKigaliLagosLuanda

LusakaMaputoMwanzaNairobiPort LouisTunisWindhoek

DLA Piper presence

Cooperation �rm*

San DiegoSan FranciscoSan JuanSantiagoSão Paulo*SeattleShort HillsSilicon ValleyTorontoVancouverWashington, DCWilmingtonYellowknife

www.dlapiper.com

DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at www.dlapiper.com.

This publication is intended as a general overview and discussion of the subjects dealt with, and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. This may qualify as “Lawyer Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.

Copyright © 2018 DLA Piper. All rights reserved. | MAR18 | 3263538

is your tax structure state aid proof?/media/files/other/2017/...global m&a deal volume for the...

Documents