What is the most significant change in Europe's tax legislation in the past 12 months?
The adoption of the Multilateral Instrument (MLI) is the most significant change for Europe's tax legislation.
What has been the most significant impact of that change?
All business organisations will need to review their holding and trading structure to confirm they are compliant with MLI. MLI increases organisations' risk because it gives additional encouragement to tax authorities to challenge what would have been a perfectly normal commercialised structure. Deloitte in Europe helps its clients manage the increased scrutiny and aggressiveness from tax authorities.
How do you anticipate that change impacting your work and the market moving forwards?
Deloitte member firms in Europe provide practical and tailored solutions to marketplace changes. Deloitte in Europe wants clients to be aware of the potential risks and changes they will be required to complete to remain compliant. Professionals of Deloitte member firms in Europe listen to their clients concerns and provide candid assessments of the tax implications of their tax structures. Now, more than ever, MLI will require multinational organisations to think about their structure and confirm it aligns to commercial objectives and corresponding economic substance.
How has this changed the way you offer tax advice?
Deloitte in Europe will be required to document advice more extensively. With the new regulations, it takes a process that was previously much more informal, and increases the need for documentation and a formal approach. Deloitte in Europe will use the Principle/Purpose test to confirm tax advice is being appropriately documented. Deloitte member firms in Europe help multinational businesses navigate this increased expectation of transparency.
What potential other legislative changes are on the horizon that you think will have a big impact on Europe?
Deloitte member firms in Europe help clients balance today's demands with tomorrow's opportunities. The three largest legislative changes that will have the biggest impact on Europe include: Digital Taxation, US Tax Reform, and Regulation requiring organisations to report tax planning (Mandatory Disclosure Rules). Given these changes, Deloitte in Europe provides a holistic approach to help its clients meet regulations and build efficient operating structures for the future within a responsible tax environment.
What are the potential outcomes that might occur if those changes are implemented?
Compliance and reporting requirements and information sharing are increasing exponentially and we need to make sure that increased regulation and the uncertain tax environment does not force clients into unnatural responses to things which have in the past been perfectly permissible. In addition, Deloitte member firms' clients in Europe will be expected to do more with less. Deloitte in Europe can help them automate their processes and tap into the extended workforce to make a challenging requirement an obtainable goal.
Do you think that change will have a positive effect on both your practice and the wider regional/jurisdictional market?
Deloitte in Europe helps clients gain confidence in the spotlight. Its clients are responding to a public perception that companies are evading tax. With the attention on tax, Deloitte in Europe helps its clients navigate uncertainty with the new regulations to comply with tax guidelines. Change brings opportunity. With these changes Deloitte member firms in Europe help clients go beyond tax and build operating models of the future.
How are issues surrounding the taxation of the digital economy affecting your jurisdiction?
New regulations are occurring because of the perception that digitally based multinationals aren't paying their fair share. Deloitte in Europe helps its clients manage the speed of digital change and how it affects digital regulation. A number of countries in Europe are at the forefront of the thinking on how to address this concern with digitally based multinationals. Of particular concern is that some governments seem to have shifted from supporting global, consistent solutions to more unilateral ones.
Where taxation in the digital economy is creating change for regulation, Deloitte in Europe also views digitization as an opportunity. Deloitte member firms in Europe help disruptive technology work for their clients. Deloitte in Europe creates strategies to implement innovative tools and platforms to streamline their tax processes.
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