Technical Tax Masterclass: Historical Tax Settlements Christophe Bourdaire Client Manager – European Tax Practice, FiscalReps Nazaret Gonzalez Client Manager – European Tax Practice, FiscalReps

Agenda What is an historical tax settlement? What are the risks? FiscalReps assistance Spotlight on countries o France o Spain o United Kingdom o Italy o Germany Voluntary disclosure and tax authorities assessments examples

What is an historical tax settlement? Late registration Regularisation of past periods Monthly deadlines missed Prescription?

What are the risks? Financial risks o Penalty (late return/late payment) o Interests for late submission Legal risks o Legality of policies o Authorisation to write business revoked Reputation risks

FiscalReps Assistance Scoping the work Reviewing the historical data o Confirming the amount of taxes to regularise o Calculating the penalties and interests Submitting the historical taxes Mitigating the penalties/interests

Spotlight on France Penalty regime o Late return: 10% of the tax amount o Late payment: 5% of the tax amount o Both: 10% of the tax amount o Interest rate: 4.8% per annum Mitigation process o 30 days on reception of the penalty notice o From 2 months ro 12 months depending on the amount of the liability o Reduced amount of penalties/interests achievable Tax office assessment o 3 to 6 years (but can be extended on a case-by-case basis) o Penalty up to 80%

Spotlight on Spain Late declaration & payment of taxes (voluntary late return) Late declaration & payment of taxes (non - voluntary late return) A penalty amount of % of tax due is normally applied Interest for the delay Mitigation is not possible Tax authorities assessment Up to 10 years Non cooperation penalised IPT Delay in submissionPenalty amount 1-3 months5% of the unpaid tax 3-6 months10% of the unpaid tax 6-12 months15% of the unpaid tax ˃ 12 months 20% of the unpaid tax + interest for the delay

Spotlight on Spain Late declarations & payments Presentation outside the period will entail: o Forms 10 and 11 respectively, the loss of collection commission (5% commission for timely submission) and the repercussion of late payment interest at the legal monetary rate in each year o Form 20 & Form 50, the repercussion of late payment interest at the legal monetary rate in each year Mitigation possible if the delay or reason is justifiable. Consorcio

Spotlight on Spain It is not possible to submit late declarations with the Gestora (UNESPA), for this reason, no penalties for a historical declaration can be applied. However, we can talk about the “Toaster story”… Fire Brigade Charge

Spotlight on United Kingdom

Spotlight on Italy Declared month by month Penalty regime o 0 to 15 days: 0.20% o 16 to 30 days: 3% o 30 to % Interest rate: 1% (2.50% in 2013) Historicals under 12 months

Spotlight on Italy PENALTIES MISSED SUBMISSIONS WRONG SUBMISSIONS UNDERPAYMENTS 100% of IPT due 200% of IPT due 30% of IPT due APPLICABLE REDUCTIONS APPLICABLE REDUCTIONS 16.67% of IPT due 33.33% of IPT due 10% of IPT due OUR DEAL 8.33% of IPT due 16.67% of IPT due NOT applied 1/61/12 Voluntary disclosures over 12 months

Country spotlight – Italy PENALTIES MISSED SUBMISSIONS WRONG SUBMISSIONS UNDERPAYMENTS 100% of IPT due 200% of IPT due 30% of IPT due APPLICABLE REDUCTIONS APPLICABLE REDUCTIONS 16.67% of IPT due 33.33% of IPT due 10% of IPT due If the tax payer agrees to pay the assessed amount Law 1216/1961 Tax office assessment

Spotlight on Germany Process o Historicals usually filed on a return basis (correction return) Penalty regime o Penalty for late filing: 10% of the tax amount with a limit of EUR 25,000 per return o Interest rate for late payment: 1% per month o Length of time the deadline has been missed, eventual benefits from the delay, degree of the fault and status of the tax payer shall also be taken into account by the tax authorities (also applicable for tax authorities assessment) Mitigation possible if the delay or reason is deemed “excusable” Tax authorities assessment o Up to 10 years o Non cooperation penalised

An example of voluntary disclosure Following an internal audit, historical liabilities are identified in several European countries. A voluntary disclosure is carried out and following amount of IPT liabilities are regularised: o France:EUR 100,000 related to EOY 2013 o Spain:EUR 200,000 related to EOY 2013 o Italy:EUR 100,000 related to EOY 2013 o UK:GBP 500,000 related to EOY 2013 o Germany:EUR 100,000 related to EOY What will be the total estimated penalty? EUR GBP 2.What will be the total estimated interests? EUR GBP

Tax authorities assessment - Example Following a joint assessment from several tax authorities in Europe, the following IPT historical liabilities need to be regularised: o France:EUR 100,000 related to EOY 2013 o Spain:EUR 200,000 related to EOY 2013 o Italy:EUR 100,000 related to EOY 2013 o UK:GBP 500,000 related to EOY 2013 o Germany:EUR 100,000 related to EOY What will be the total estimated penalty? EUR GBP 2.What will be the total estimated interests? EUR GBP

Questions