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Baltic Tax Regimes for Investment Support by Jānis Taukačs

Explore developments in Baltic tax regimes to boost investments, including BEPS guidelines and benefits, with a focus on Latvian holdings and top companies. Learn about tax-efficient structures for share deals, dividends, royalties, and cross-border mergers.

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Baltic Tax Regimes for Investment Support by Jānis Taukačs

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  1. Developments in the Baltic tax regimes to support investments Jānis Taukačs partner

  2. The globalbackground to tax planning

  3. Base erosion and profit shifting (BEPS)

  4. OECD ActionPlanon BEPS

  5. Someof the mainBaltictaxbenefits

  6. MainBaltictaxbenefits

  7. SometypicaluseofLatvian holdings

  8. Top 60 co’swithforeigncapital2012 by Dienas Bizness + JT

  9. Share deal vs. asset deal • The sale of anassetbyLatCo1 - 15% CIT on gains. • LatCo1 initiallycontributes the assetto share capitalofHoldCo. • Afterseveralyears the assetgainsvalue; LatCo1 sells shares in HoldCo. The sale is tax exempt in Latvia. • Asof 2013 – «substance overform» (generalanti-avoidancerule)! • Alsostampduty (2% ->1% up to LVL 1k) and VAT thuscanbereduced. 0% LatCo1 LatCo2 Sale of shares in HoldCo Contribution 100% HoldCo

  10. Dividends throughLatvia • 10% WHT inPoland, if dividends paiddirectlyfromPlCo to RusCo • IfLatCoholdinginbetween – 0% WHT, ifLatComeets 3 formalcriteria • However • RusCowillreceive dividends with a delay (interim dividends – plannedin LAT) • GAAR + beneficialownership RusCo 0% WHT 100% 10% WHT LatCo 100% 0% WHT PlCo

  11. Royalties • RoyaltiesfromRusCoto EstCo: • 15% WHT in RUS (no taxtreaty) • EstCocancredit, if it distributes dividends • InterposingLatCoholdingallows: • 5% WHT inRUS (underLat-Rustaxtreaty) • this 5% RUS WHT – deductiblein LAT from CIT payablebyLatCo • 0% WHT byLatCo to EstCo • However • Beneficialownershipunder DTT • TP Est Co (IP) 0% License 100% 15% LatCo Sub-license 100% 5% Rus Co

  12. Cross-bordermerger

  13. Tax-freedistributionof EST AS profits HoldCo 1 EST AS LAT AS LIT AB LAT AS LIT AB 2 13

  14. The HQ in EST better LAT AS EST Branch LIT Branch • EST Branch profit taxable in AS • No credit in LAT AS for EST Branch profit until CIT on it is paid in EST • 3 years statuteoflimitations

  15. Contacts BalticTaxLawFirmoftheYear2010,’11,’12 BalticTransferPricingFirmof the Year2013 www.sorainen.com janis.taukacs@sorainen.com

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