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Keeping up with Tax Banking & Capital Markets - Spring edition

Welcome to the Spring’s edition of Keeping up with Tax for Banking and Capital Markets, picking up on a range of current hot topics relevant to our industry. 

In this release we cover the latest tax developments that require our industry’s attention – Pillar II as well as ATAD III including a tax management function: the reclaim process. 

Specifically, the articles cover the following areas:

  • Tax challenges arising from the Digitalisation of the Economy - Global Anti-Base Erosion Model Rules (Pillar Two in a Nutshell) as released by OECD and the European Commission’s Directive proposal;

  • ATAD 3 in a nutshell; and

  • Why a tax management function such as tax reclaims is essential and deserve more attention today and even more tomorrow? 

Please get in touch with me or your regular PwC contacts if you want to start a conversation with us. Don’t hesitate to let us know if there are any topics that you would like us to cover in upcoming editions.

Kind regards,

Murielle Filipucci & Roxane Haas

Tax challenges arising from the digitalisation of the economy as released by OECD and the EU directive proposal (Pillar II)

The Pillar Two Model Rules (also referred to as the “Anti Global Base Erosion” or “GloBE” Rules), released on 20 December 2021 are part of the Two-Pillar Solution to address the tax challenges of the digitalisation of the economy that was agreed by 137 member jurisdictions of the OECD / G20 Inclusive Framework on BEPS and endorsed by the G20 Finance Ministers and Leaders in October. These Model Rules cover the income inclusion rule (IIR) and undertaxed payment rule (UTPR) and have been designed to ensure large multinational enterprises (MNEs) pay a minimum level of tax on the income arising in each jurisdiction where they operate.  

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ATAD 3 in the nutshell

The EU Commission’s proposal for a council directive (the “Directive”) laying down rules to circumvent the misuse of so-called “shell entities” was released on 22 December 2021 (the “Proposal”). The Proposal is expected to be adopted in the first quarter of 2022. The aim is that Member States transpose the Directive into domestic law by 30 June 2023, with the rules applying as early as from 1 January 2024.

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Why a tax management function such as the tax reclaims is essential and deserves more attention today and even more tomorrow?

In today’s global economic context, the actors of the Financial Institutions are experiencing pressure on their investment performance and margins. To remain competitive, these players are launching initiatives focusing on investment strategies, costs reduction and offering/ pricing strategies. One pragmatic solution with direct impacts on investment performance, investors/client’s satisfaction and cost management is management optimisation of the withholding tax applied on the income derived from investments.

Find out more

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Contact us

Roxane Haas

Partner, Luxembourg Banking & Capital Markets Leader, PwC Luxembourg

Tel: +352 49 48 48 2451

Murielle Filipucci

Partner Global Banking & Capital Market Leader, PwC Luxembourg

Tel: +352 49 48 48 3118

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