Ceci est une version HTML d'une pièce jointe de la demande d'accès à l'information 'Code of Conduct Group on business taxation - meeting background documents'.


Ref. Ares(2016)3142669 - 01/07/2016
Category 5  Other Measures 
 
doc 7
Measure 
         Country 
 
E1 
US Foreign Sales Corporations Ruling 
 
 
 
 
Belgium  
E2 
Informal 
Capital 
Ruling* 
 
      Belgium 
 
E3 
US Foreign Sales Corporations Ruling 
 
 
 
 
NL 
E4 
Informal 
Capital 
Ruling       NL 
 
 
E5 
Foreign 
Business 
Operations 
Relief 
     Denmark 
E6 
Bénéfice Mondial and Bénéfice Consolidé   
 
 
 
France 
E7 
Foreign 
Income        Ireland 
 
E8 
Newly 
Created 
Companies 
      France 
E9 
Tax 
Holidays 
for 
New 
Businesses 
     Luxembourg 
 
E10 
Special 
Depreciation 
for 
SMEs 
     Germany 
E11 
Incentives 
for 
SMEs* 
       Spain 
E12 
Micro 
and 
Small 
Enterprises 
      Portugal 
E13 
Special Scheme for Accelerated Depreciation* 
 
 
 
UK 
 
E14 
Scheme for Early Depreciation of Certain Assets*   
 
 
Denmark 
E15 
Incentives for Investment  (Law 2601/98)*   
 
 
 
Greece 
E16 
Investment 
Tax 
Credits       Spain 
 
E17 
Tax Credits - Environmental Protection* 
 
 
 
 
Luxembourg 
E18 
Investment 
Allowance*       NL 
E19 
Major 
Investment 
Projects 
      Portugal 
E20 
Tax 
Credit 
for 
Investment 
      Portugal 
E21 
Gibraltar 

Development 
Incentives* 
     UK 
 
E22 
Rollover 
of 
Capital 
Gains 
      Germany 
E23 
Reinvested 
Capital 
Gains 
      Portugal 
 
E24 
Small 
Islands 
Income 
Tax 
Reduction 
     Greece 
E25 
St 
Martin 
and 
St 
Barthelemy 
      France 
 
E26 
Mutual Funds / Portfolio Investment Companies* 
 
 
 
Greece 
E27 
Venture Capital Funds and Companies* 
 
 
 
 
Spain 
E28 
Venture 
Capital 
Companies* 
      France 
E29 
Participation 
Fund 
Companies* 
     Austria 
E30 
Investment 
Companies* 
      Sweden 
 
E31 
Limits on Taxes on Commercial Income 
 
 
 
 
Germany 
E32 
Fixed 
Tax 

Transferable 
Securities 
     Greece 
E33 
Representative 
Office 
       Spain 
E34 
Tax Credits for Job-creating Investment* 
 
 
 
 
France  
E35 
Tax Credits for Staff Training Costs*  
 
 
 
 
France 
E36 
Listed 
Companies 

Reduced 
Rates 
     Italy 
E37 
SGII 
Companies 
       Portugal 
E38 
SCR, 
SDR 
and 
SFE 
Companies 
     Portugal 
 
Additional Measure 

E 1 
US Foreign Sales Companies Ruling   
 
 
Belgium 
 
General 
 
US Corporations carrying on sales operations in certain countries other than 
US (e.g. Belgium) may attribute part of the income realised from the sales 
abroad to the relevant Foreign Sales Company (FSC). Under certain 
conditions and limitations, the profits thus attributed to the FSC (as taxable 
abroad) may be exempted in the US. 
 
Conditions Attached 
 
A US based enterprise establishing a FSC in Belgium may lodge an 
application with the Belgian central tax authorities for a ruling under which the 
taxable income is calculated on the basis of a percentage of certain expenses. 
The applicant must disclose detailed information on itself and the anticipated 
FSC (e.g. their legal form, activities, nature of the goods sold through the FSC 
and cost incurred by it).  
 
The FSC may operate in the form of a Belgian company (subsidiary) or a 
branch office (permanent establishment) of the US base company. 
 
The ruling, granted on individual basis, is valid for a period of three years and 
it is tacitly renewed unless either party gives a notice of termination 6 months 
before the end of the three-year period. The US based company must, 
however, in order to keep the ruling valid, annually produce evidence of the 
US authorities’ recognition of the FSC. 
 
Tax Benefits 
 
Should the FSC operate in the form of a branch office (Belgian permanent 
establishment of the US based company), the taxable profit in Belgium is 
determined on a notional cost plus basis with a mark-up percentage of 8%. All 
“direct” costs incurred by the FSC in respect of advertising and sales 
promotion activities, transport of goods and assumption of credit risks, may 
however, be excluded from this notional cost plus tax base. Similarly, the 
income taxes paid by the FSC are not included in the notional tax base.  
 
In the case where the FSC operates in the form of a subsidiary (a Belgian 
company) the taxable profit of the FSC is, in principle, determined on the 
basis of the accounting profit with the necessary tax adjustments. Accordingly, 
the taxable profit consists of the retained profits, non-deductible expenses and 
the paid dividends. It is, however, accepted that the FSC’s transactions with 
affiliated companies are at arm’s length (the FSC has not granted any 
abnormal or benevolent advantages) when the thus determined profits are at 
least 8% of the relevant costs incurred by it (see above). 
 



Informal 
Capital 
Ruling 
     Belgium 
 
General 
 
The concept of informal capital is related to the centralisation (or 
concentration) of a wide range of corporate functions of a (international) group 
of companies. The scope of the centralised functions that a group company 
may assume and carry out on behalf of the group is wide and may include, for 
example, the following types of tasks:  
- commercial strategy development, brand image development, advertising, 
product development, research activities, distribution strategy planning, co-
ordination of vertical management, procurement of raw materials, etc. 
 
Setting up an integrated structure of such separate functions may require “an 
informal capital injection”, i.e. group companies place non-material resources 
(e.g. know-how) which exist at the group level at the disposal of the group 
company that assumes the responsibility for certain centralised functions.  
 
Conditions Attached 
 
The measure is available to companies subject to tax in Belgium, other than 
those taxed under a regime providing for a notional tax base (e.g. co-
ordination centres, distribution centres and service centres).  
 
Tax Benefits 
 
Under Article 24 of the Belgian Income Tax Act (Code des impôts sur les 
revenus) only those profits which result from a company’s own activities are 
taxable in Belgium.  
 
Under the ruling, the part of the profits which relates to informal capital 
(directly contributing to the generation of income) is not considered as 
resulting from the company’s own activities, but merely as a return on the 
informal capital.  
 
The informal capital is determined, on a case by case basis and according to 
the range of activities undertaken, by reference to the net profit margin of the 
company. This profit margin consists of two elements: the part which is 
deemed to refer to the company’s own activities (always at least 10% of the 
turnover) and that referring to the informal capital. The informal capital 
amounts to the sum of the annual profit margin referring to the informal capital 
during a period of max. 10 years. 
 
The informal capital is amortised for tax purposes over a period of at least 10 
years. The injection of the informal capital is not taxable and there is no tax on 
the informal capital as such but capital gains arising from a subsequent 
transfer of the informal capital and liquidation proceeds are taxable in 
Belgium. 

E 3 
US Foreign Sales Companies Ruling   
 
 
 
NL 
 
General 
 
US Corporations carrying on sales operations in certain countries other than 
US (e.g. the Netherlands) may attribute part of the income realised from the 
sales abroad to the relevant Foreign Sales Company (FSC). Under certain 
conditions and limitations, the profits thus attributed to the FSC (as taxable 
abroad) may be exempted in the US. 
 
Conditions Attached 
 
A Dutch FSC carrying on preparatory and auxiliary activities may apply for a 
cost plus ruling provided for in the Administrative Publication of 25 March 
1985 (infobulletin 85/253). The cost plus ruling is granted for a period of 4 
years (renewable) and it ascertains the minimum acceptable prices for intra-
group transactions of the FSC. 
 
Tax Benefits 
 
According to the Administrative Publication, the cost plus mark-up percentage 
applicable to all operating expenses may vary, depending on the relevant 
circumstances, between 5% and 15%.  
 
In order for a FSC to be considered dealing at arm’s length it must show a 
profit of at least the confirmed fixed percentage of the operating expenses. 
Should the commercial profit, computed under the US rules, exceed the result 
from the cost plus calculation, the excess amount is deemed to constitute a 
contribution to the equity of the FSC and is therefore not included in its 
taxable profit.  
 
The tax on the profit calculated on the cost plus basis is levied at the standard 
corporate income tax rate of 35%. 
 
 



Informal 
Capital 
Ruling 
      NL 
 
Conditions Attached 
 
This ruling practice is based on Supreme Court decisions of 3 April 1957 
(BNB 1957/165) and 31 May 1978 (BNB 1978/252) in which the informal 
capital concept was developed in respect of interest free loans between 
related parties. The ruling may be granted to entities liable to Dutch taxation 
and it is valid for a period of 4 years (renewable).  
 
Under Netherlands tax law formal contributions to, or withdrawals from, equity 
capital do not constitute taxable profit. Similarly, informal contributions to, or 
withdrawals from, a Dutch company’s equity capital are not regarded as 
taxable corporate income. The informal capital ruling granted by a Tax 
Inspector ascertains the amount of informal capital contribution.  
 
For example, an informal capital ruling may stipulate that any commercial 
profit in excess of the profit determined under a cost plus method with a fixed 
mark-up percentage is deemed to be informal capital. 
 
Tax Benefits 
 
The taxable profit of the holder of the informal capital ruling is adjusted with 
the amount of the informal capital contribution, i.e. the ruling allows its holder 
to impute an interest deduction on the basis of deemed interest on funds 
advanced to it by related companies free of charge. The adjusted profit is 
taxed at the standard corporate income tax rate of 35%. The informal capital 
contribution is subject to a capital tax at a rate of 1%. 
 
Under Netherlands tax law the profit of the related party that had made the 
informal capital contribution, is adjusted with a corresponding amount. This 
corresponding adjustment is, however, only applicable in respect of related 
companies subject to tax in the Netherlands.  

E 5 
Foreign Business Operations Relief   
 
 
Denmark 
 
Conditions Attached 
 
The foreign business operations relief is available with respect to foreign 
business operations through branches located abroad (permanent 
establishments) as well as conducted through a non-resident subsidiary taxed 
jointly with the Danish parent company under the Danish ‘Joint Taxation’ 
rules. Other activities, such as shipping and transport of goods by vehicles 
between two foreign destinations, salvage and engineering have also been 
regarded as qualifying foreign business operations.  
 
Tax Benefits 
 
The tax relief granted to the income from foreign business operations equals 
50% of the income tax proportionally attributable to the net taxable income 
from the foreign business activity. Net foreign-source income is computed 
according to the Danish tax law. The relief is granted in respect of qualifying 
income, irrespective of the fact whether this income has been subject to tax 
abroad. The relief will be gradually abolished by 1/7 a year, as from 1994 
when the tax relief was reduced to 6/7 of the full 50% of the tax attributable to 
the qualifying income. Accordingly, the relief will be completely abolished by 
year 2000. 

E 6 
Bénéfice Mondial and Bénéfice Consolidé   
 
France 
 
Conditions Attached 
 
Bénéfice Mondial (world-wide income): French resident companies, which 
have obtained an approval from the Ministry of Economy and Finance may opt 
to be taxed on their world-wide income by consolidating profits and losses of 
all foreign direct operations with their own profits and losses. 
  
Bénéfice Consolidé (consolidated income): French resident companies, which 
have obtained an approval from the Ministry of Economy and Finance may 
elect to compute taxable profits by consolidating the profits and losses of their 
French or foreign subsidiaries to their own French source profits and losses. 
The French parent company must hold at least 50% of the voting rights in the 
subsidiaries concerned. 
 
The duration of the application of both measures is at the discretion of the 
parties concerned. It may be revoked or altered if there is a substantial 
change made to the French corporate income tax rate (more than 5%), in the 
case of a changeover from world-wide income taxation to consolidated 
taxation, or in certain cases of abuse. Approvals regarding both these regimes 
are only granted on a very limited basis. 
 
Tax Benefits 
 
Companies with foreign source income or French and foreign subsidiaries can 
benefit from consolidated taxation of foreign source income or the relevant 
part of group companies, respectively. The operating profits and losses are 
set off against each other in order to reach an aggregate group taxable 
income. 
 
For the tax consolidation purposes the taxable profits (or losses) of the foreign 
direct operations or the foreign subsidiaries are calculated under the rules of 
the French Tax Code (CGI). Accordingly, any depreciation, valuation rules, 
etc. allowed by foreign tax law but not by French tax law will be adjusted. 
Long-term and short-term capital gains are also calculated at the level of each 
branch, subsidiary, etc. and subsequently, with certain adjustments, 
aggregated at the group level. 
 
Foreign taxes are credited in France. The foreign tax credit, however, is first 
subject to a per country limitation and then restricted to the French corporate 
income tax which would normally apply to the income from each country in 
each taxable year, as recomputed under French rules. 
 



Foreign 
Income 
      Ireland 
 
Dividends received by and Foreign branch profits of the Irish resident 
companies holding the respective certificates, following submission of an 
investment plan directed towards the creation or maintenance of employment 
in Ireland or involving additional employment in Ireland, are exempt from Irish 
corporate income tax. 
 
1) Repatriated Dividends from a Foreign Subsidiary 
 
Conditions Attached 
 
The measure applies to certain dividend repatriations by a foreign subsidiary 
(51%) located in a treaty country to its Irish resident parent company. A 
certificate must be obtained from the Minister for Finance on the basis of an 
investment plan. The dividends must be applied for the purposes of the 
investment plan which must be directed towards the creation or maintenance 
of employment in trading operations carried on in Ireland. 
 
Tax benefits 
 
Double taxation relief for the repatriated dividends is provided by way of an 
exemption from Irish corporation tax rather than the normal way of giving 
double taxation relief through a credit for foreign tax. 
 
2) Relief for Foreign Branch Trading Profits 
 
Conditions Attached  
 
The measure applies to foreign branch trading profits and related capital gains 
of an Irish resident company which undertakes an investment project leading 
to the creation of substantial new employment in Ireland. Companies must be 
certified by the Minister for Finance on the basis of an investment plan. The 
investment plan must be framed in accordance with published guidelines. 
These guidelines stipulate conditions in relation to employment and 
investment in permanent capital. 
 
Tax Benefits 
 
Double taxation relief for the foreign branch trading profits is provided by way 
of an exemption from corporation tax rather than the normal way of giving 
double taxation relief through a credit for foreign tax. Related capital gains are 
also exempted from capital gains tax. 
 



Newly 
Created 
Companies 
    France 
 
Conditions Attached  
 
The measure is available to new companies (incorporated between 1 January 
1995 and 31 December 1999) with industrial, commercial and artisan 
business activities. The companies must be genuinely new enterprises and 
they may therefore not have been created as a result of a corporate 
reorganisation. No more than 50% of the shares (representing the share 
capital or voting rights) of these companies may be held, directly or indirectly 
by other companies. 
 
In order to qualify for the benefits of the measure, companies must satisfy with 
activity and location tests. Certain activities are expressly excluded from the 
scope of application of the measure. These are banking, financial and 
insurance activities, management of real estate rental activities and 
agricultural activities. The premises and the management of the companies 
must be situated in the defined rural or urban development zones.  
 
Tax benefits 
 
A full corporate income tax exemption for the initial 24 months, which is 
reduced to 75 per cent, 50 per cent and 25 per cent for each of the three 
subsequent 12-month periods, respectively.  
 

E 9 
Tax Holidays for New Businesses 
 
 
Luxembourg 
 
Conditions Attached 
 
The measure is available to new enterprises or enterprises manufacturing 
new products, which stimulate growth and improve the structure of the 
economy, or which will lead to a better geographical distribution of economic 
activity, provided that they do not compete with existing business. 
 
Tax Benefits 
 
The amount of the tax relief depends on the extent of investment in land, 
buildings and equipment and is granted for a fixed period, usually for 8 years 
starting from the commencement of the new facility. The maximum amount of 
the tax relief is 25% of the taxable profits. 
 

E 10  Special Depreciation for SMEs   
 
 
 
Germany 
 
Conditions Attached 
 
Companies, of which the total taxable net asset value is no more than DEM 
240,000 and of which the taxable capital (as determined for the purposes of 
the business tax on capital) does not exceed DEM 500,000, qualify as small 
and medium sized enterprises. For the purposes of the special depreciation, 
these requirements must be met at the beginning of the tax year in which the 
fixed assets are acquired. 
 
Tax benefits 
 
Small and medium sized enterprises may claim an additional depreciation 
allowance of 20% of the acquisition cost of movable fixed assets. The 
allowance may be claimed only in the year of acquisition and it is additional to 
normally allowed depreciation but deducted from cost for the purposes of 
calculating tax depreciation in subsequent years. It is available only if the 
assets are kept in business in Germany by the taxpayer for at least 1 year. 
 
In addition, small and medium sized enterprises may make allocations to a 
depreciation reserve of up to 50% of the expected manufacturing or 
acquisition costs of future depreciable assets, with a ceiling of DEM 300,000. 
The reserve will be taxed as soon as the regular depreciation scheme starts to 
apply to the new assets. The reserve will also be taxed if no assets are 
acquired or manufactured within 2 tax years after the reserve was created. 
 


11 
Incentives 
for 
SMEs 
     Spain 
 
Conditions Attached 
 
A company qualifies as small or medium sized company (SME) if its turnover 
in the preceding tax year was lower than ESP 250 million. If the company is 
newly created, this threshold is applied to its turnover of the current (first) tax 
year. The SMEs in Spain are granted a wide range of different tax benefits. 
Some of the conditions attached to them are dealt with in more detail below. 
 
Tax Benefits 
 
(A) New tangible fixed assets may be freely depreciated for tax purposes, 
provided that there is an increase in the annual average amount of salaried 
personnel. The increase in the amount of personnel must be maintained for a 
total consecutive period of 48 months, starting from the tax year in which the 
incentive was used for the first time. 
 
(B) New tangible fixed assets of any of which the value does not exceed ESP 
100,000 may be freely depreciated for tax purposes, however, only up to a 
total amount of ESP 2 million for each tax year. 
 
(C) New tangible fixed assets may be depreciated for tax purposes, using an 
increased rate determined by multiplying the depreciation rate allowed under 
the official table by a coefficient varying from 1.5 to 2.5. The size of the 
coefficient depends on the useful life of the asset. For assets with useful life of 
less than 5 years the coefficient is 1.5, with a useful life of at least 5 but less 
than 8 years the coefficient is 2.0 and for assets with useful life of at least 8 
years the coefficient is 2.5. 
 
(D) SMEs may establish a tax deductible provision for bad debts. The 
maximum deductible allocation is 1% of the balance of debtors.  
 
(E) SMEs do also qualify for an exemption from corporate income tax on 
capital gains realised on the disposal of fixed assets. This exemption is 
subject to the conditions that the capital gains realised do not exceed ESP 50 
million per year and that it is reinvested in other fixed assets within 3 years. 
 
(F) From 1 January 1997, the first ESP 15 million of profit made by a SME are 
subject to tax at a reduced rate of 30%. 
 

E 12  Micro and Small Enterprises 
 
 
 
 
Portugal 
 
Conditions Attached 
 
In order to qualify as a micro or small enterprise a Portuguese resident 
company or a non-resident company with a Portuguese permanent 
establishment must meet the following requirements: 
 
1) the turnover of such enterprise may not exceed PTE 600 million in the first 
year during which the incentive is applied and  
2) no more than 50% of it may be, directly or indirectly owned by another 
enterprise of which the turnover exceeds this turnover limit in the fiscal 
periods of 1998, 1999 and 2000. 
 
Additionally, the company must carry on industrial, commercial or agricultural 
activity as its main activity. The measure will be available for the micro and 
small enterprises during the tax years 1998, 1999 and 2000. 
 
Tax Benefits 
 
Qualifying additional investments of micro, small and medium sized 
enterprises entitle to a deduction of the taxable corporate income equal to 
10% of the relevant additional investment. The deduction, however, may not 
exceed an amount equal to 30% of the taxable corporate income.  
 
This 30% limit will be increased by 10% where the taxable profit, in the 
accounting period to which the investment relates, is at least 20% higher than 
the taxable profit in the preceding period and the enterprise withholds an 
amount of profit equal to such minimum increase in profits. The withheld profit 
may not be distributed during the three subsequent fiscal years.  
 
The additional investment is determined as being the difference between the 
investment made during the relevant accounting period and the simple 
arithmetic average of the investment made in the previous two accounting 
periods in fixed assets used by the enterprise within the Portuguese territory. 

E 13  Special Scheme for Accelerated 
Depreciation 
  UK 
 
Conditions Attached  
 
This temporary one-year measure (applicable only in respect of the 
accounting year ending between 1 July 1998 and 30 June 1999) was 
introduced in 1998. It is available to small and medium sized enterprises 
which invest in plant and machinery other than those in connection with 
leasing of cars, ships, railway assets or long-life assets.   
 
Tax Benefits 
 
Investment in qualifying plant and machinery entitles the SME to an increased 
first year allowance at a rate of 40% instead of the normal allowable 
depreciation at a rate of 25% (declining balance method). 
 

E 14  Scheme for Early Depreciation of Certain Assets   
Denmark 
 
Conditions Attached 
 
The scheme is applicable if the taxpayer has formally entered into a contract 
on the acquisition of machinery or other capital assets and the acquisition cost 
(excluding financing costs) of such assets is, in any year, at least DKK 
770,000. In determining whether this requirement is met, the acquisition costs 
of all qualifying assets are pooled each year.  
 
Subject to the same annual acquisition cost limit the scheme is equally 
applicable in cases where the taxpayer manufactures the asset to be used 
within his own business.  
 
In order for the taxpayer to apply the scheme, he must have placed a definite 
order for the purchase of an asset or definite plans must have been made to 
process an asset within the business. The delivery or completion of such an 
asset must take place within 4 years. 
 
Tax Benefits 
 
The depreciable basis is the contracted or calculated price of the asset. Once 
the acquisition agreement has been concluded a total of 30% of the 
acquisition cost exceeding DKK 770,000 may be depreciated for tax purposes 
before the delivery or completion of the asset. However, no more than 15% of 
the acquisition cost may be depreciated in any year before the delivery or 
completion has taken place.   
 
In calculating what percentage of allowable depreciation pertains to each 
separate asset, an amount equal to 30% of the pooled acquisition costs in 
excess of DKK 770,000 is divided among the assets acquired or 
manufactured in that year in proportion to individual acquisition costs. The 
resulting figure is then divided by the number of year anticipated for the 
asset’s delivery or completion.  
 
If the acquisition contract is terminated, the delivery does not take place within 
four years or the plans are abandoned before the completion of the 
manufacturing process, any advance depreciation taken under the scheme 
must be brought back to the taxable business income. 

E 15  Incentives for Investment (Law 2601/98 ex1892/90)  
Greece 
 
Conditions Attached 
 
The benefits of the measure are available for investment defined in law 
2601/98 of which the purpose is to encourage private investment in Greece, to 
promote regional development and business competitiveness, and to create 
employment. In general, the qualifying investments involve the construction, 
expansion and modernisation of facilities, and the purchase/installation of 
equipment and technology.   
 
For the purposes of the incentive law, Greece is divided into four major 
regions/development areas (A, B, C and D). Certain additional benefits are 
given for investments located in the northern part of Greece known as Thrace 
(part of region D). With respect to the maximum amounts of the tax 
concessions, a distinction is made between investments made in the tourism 
industry (hotels and other tourist accommodation) and investments made in 
other industry (e.g. in manufacturing and craft industry). Mining enterprises 
are always regarded as falling in the region C unless they actually come within 
region D. 
 
Tax Benefits 
 
Qualifying enterprises making eligible investments may claim accelerated 
depreciation on fixed assets purchased between 1 July 1990 and 31 
December 1994. Regular depreciation rates are increased by a percentage of 
0% to 150%, depending on the region, the number of work shifts and the 
sector of the activities.  
 
Enterprises making qualifying investments, as defined in the incentive law, are 
entitled to income tax exemption for their undistributed profits for a period of 
ten years as from the investment year. 
 
The incentive law provides also for an investment reserve with respect to new 
investments in the regions B, C, D and Thrace. A qualifying investor can claim 
a reduction in taxable profits, provided it is completed by 31 December 2004. 
The maximum amount, which may be deducted from taxable profits, is 
determined as a percentage of the net annual profits (from 60% to 100%) in 
the year of investment and the cost of the investment (from 40% to 100%), 
again depending on the region. 
 


16 
Investment 
Tax 
Credits 
     Spain 
 
General 
 
Investments in new tangible fixed assets (A), export related investments (B), 
research and development activities (C), staff training (D), publication of 
books, films or audio-visual productions (E) and environmental investments 
(F) qualify for different tax credits dealt with in more detail below.  
 
Conditions Attached and Tax Benefits 
 
The investment tax credits, which may be set off against corporate income tax 
liability, vary from 5% to 25% of the invested amount: 
 
(A) An amount equal to 5% investments in new tangible fixed assets (except 
for land) in Spain may be credited against corporate income tax. The assets 
must be kept in use for a period of at least 5 years (or for the asset’s useful 
life if this is shorter than 5 years).  
 
(B) Investments made to set up foreign permanent establishments, or to 
acquire at least 25% of the capital in existing foreign companies or newly 
created foreign subsidiaries. The activities of such branches and subsidiaries 
must be directly related to the export activities of the Spanish investor (finance 
and insurance activities do not qualify) or contracting of its tourism services in 
Spain. In the tax period in which the qualifying (25%) stock ownership is 
acquired, the total investment made in that year and in the two preceding 
years qualify for the 25% tax credit. 
 
Similarly, expenses incurred in respect of promotion, publicity and marketing 
carried out abroad over periods exceeding 1 year entitle the Spanish 
taxpayers for the 25% export related investment credit. 
 
The export related investment credit is, however, limited to 15% of the 
investor’s income or to 4% of his total export related receipts and it must be 
reduced by 65% of any subsidies received.  
 
(C) Research and development expenses incurred in any tax year entitle to a 
tax credit amounting to 20% of these expenses. Should the expenses exceed 
the average amount of expenses in the preceding 2 tax years, the rate of 20% 
will apply to an amount equal to the average amount and a rate of 40% to the 
excess. These credits must be reduced by 65% of any subsidies received. 
 
(D) Staff training related expenses incurred by employers entitle them to a tax 
credit of 5% of such expenses. Should the expenses exceed the average 
amount of expenses in the preceding 2 tax years, a rate of 10% will apply to 
the excess. These credits must be reduced by 65% of any subsidies received. 
 
(E) An investment credit of 5% and 10% (reduced by any subsidies received) 
is granted for the publication of new books and the production of films (and 
audio-visual productions), respectively.  

 
(F) A tax credit of 10% is granted for investments in fixed assets made to 
preserve or improve the environment. The credit must be reduced by the 
amounts of any subsidies received. 
 
The sum of the above investment credits is limited to 35% of the corporate 
income tax liability regarding all other investments apart from investments in 
new tangible fixed assets and environmental investments. In the case of 
investments in new tangible fixed assets the investment credit is limited to 
15% of the corporate income tax liability. Any unused credit may be carried 
forward for 5 years subject to the 35% or 15% limitation in each period, 
respectively. 
 

E 17  Tax Credits - Environmental Protection 
 
Luxembourg 
 
Conditions Attached 
 
In order to qualify for the tax credit the investments must be used in 
Luxembourg and they should be intended for environmental protection, saving 
energy, reducing waste or enabling disabled individuals to work. Certain 
assets are expressly excluded from the scope of this tax credit. These are: 
assets depreciated over less than 4 years, assets acquired on the transfer of 
an enterprise or an autonomous part or subdivision of an enterprise, second-
hand assets, assets of which the acquisition price is less than LUF 35,000 and 
cars for personal use. 
 
Tax benefits 
 
The tax credit is set off against corporate income tax payable and it is granted 
in addition to the normal tax depreciation on the acquisition price of the same 
assets. The tax credit amounts to 8% of the acquisition price of all qualifying 
assets in each tax year up to a maximum value of total investments of LUF 6 
million while a reduced rate of 4% is applied in respect of the excess.  
 


18 
Investment 
Allowance 
      NL 
 
Conditions Attached 
 
Income tax liable persons conducting a business and companies liable to 
corporation tax are entitled to an investment allowance on the basis of their 
investments in fixed assets.  
 
In principle, all investments in fixed assets qualify for the investment 
allowance. Certain fixed assets, for example, houses, stocks, licences, and 
cars not meant for road transport and haulage, however, do not qualify. 
 
The investment allowance is wholly or partially withdrawn if the fixed assets, 
for which the investment allowance was obtained, are sold within a period of 5 
years from their purchase. 
 
Tax Benefits 
 
The allowance amounts to a certain percentage of the total sum invested in 
qualifying fixed assets in any particular year. The allowance can be deducted 
when calculating the taxable profits. The percentage decreases with the 
increase of the invested amount. It varies between 0% and 27%, depending on 
the total sum of investments made as follows (in 1999): 
 
Invested 
amount 
(NLG) 
     Percentage 
     3,800 –   64,000  
 
 
 
 
 
 27 
 
495,000 
– 
556,000 
       
 
 

       above 556,000   
 
 
 
 
 
   0 


19 
Major 
Investment 
Projects     Portugal 
 
Conditions Attached 
 
Individual contractual incentives may be negotiated and agreed with the 
central government with respect to corporate income taxation (IRC), transfer 
tax, local real estate tax and stamp taxes. Such incentives are available for 
industrial investment projects undertaken between 1994 and 1998. The total 
value of such projects must be at least PTE 5 million and they should be of 
particular interest for the domestic economy. 
 
Such tax incentives may also be granted under a conventional scheme to 
investment projects carried out until the end of 1999 even if their total value is 
less than PTE 5 million, provided that the following requirements are met.  
 
1) the projects are aimed at the reorganisation, modernisation, merger or 
concentration of enterprises situated in those regions considered to be under 
economic and social reorganisation, or  
 
2) they are aimed at internationalisation of Portuguese enterprises.  
 
Tax Benefits 
 
With respect to corporate income tax (IRC), the incentive is usually granted in 
a form of a deduction from the taxable income. The deduction amounts to 10% 
of the value of the investment.  
 
Otherwise the incentives are established on case by case basis. 
 
 

E 20  Tax Credit for Investment 
 
 
 
 
Portugal 
 
Conditions Attached 
 
This regime is available for Portugal resident companies and non-resident 
companies with Portuguese permanent establishments, whose main activities 
consist of exercising commercial, industrial or agricultural activity. Finance 
and real estate activities are expressly excluded from the scope of application 
of this measure. The measure will be applied for the last time in 1998.  
 
In order to qualify for the tax credit the investments shall be made in new fixed 
assets, other than: 
 
•  land, except if intended for the purposes of exploration or exploitation of 
mining concessions, natural and source mineral water, quarries, clay pits 
and sand pits in extractive industry projects, 
•  construction, acquisition, repair and improvement of any building other 
than manufacturing premises,  
• light 
vehicles, 
•  furniture and comfort or decoration goods, 
•  social equipment, or 
•  other capital goods not directly and necessarily connected with the 
productive activity carried out by the enterprise. 
 
The assets must be kept in the use of the company for a period of at least 3 
years. 
 
Tax Benefits 
 
Qualifying additional investments entitle the relevant taxpayer to a deduction 
from their taxable corporate income an amount equal to 5% of the relevant 
additional investment. The deduction, however, may not exceed an amount 
equal to 15% of the taxable corporate income. 
 
The additional investment is determined as being the difference between the 
investment made during the relevant accounting period and the simple 
arithmetic average of the investment made in the previous two accounting 
periods in fixed assets used by the enterprise within the Portuguese territory. 
 

E 21  Gibraltar - Development Incentives 
 
 
 
 
UK 
 
Conditions Attached 
 
The Development Aid Ordinance gives tax incentives for both residents and 
non-residents. Licences may be granted for development projects which meet 
the following requirements: 
 
The projects must be new projects which create immovable property in 
Gibraltar. They must either, create 3 houses, benefit tourism, create 
employment, or improve Gibraltar’s economic or financial infrastructure. The 
applicant must prove the economic benefit to Gibraltar and the project must 
require an investment of at least GBP 200,000 over 2 years or at least GBP 
500,000 over 5 years. 
 
Tax Benefits 
 
If a licence is granted, the company is exempt from corporate income tax in 
respect of profits arising from the development until the profits exceed the 
expenditure on the project. In addition, the shareholders are exempt from tax 
on the distributed profits which have been exempt from the corporate income 
tax at the hands of the company carrying out the project. 
 


22 
Rollover 
of 
Capital 
Gains 
     Germany 
 
Conditions Attached 
 
Assets qualifying for the measure are: stocks or shares of corporate entities, 
real estate, buildings, ships, depreciable movable assets with useful lives of at 
least 25 years and certain agricultural and forestry enterprises’ fixed assets. A 
6-year holding period prior to sale is required (except for the agricultural and 
forestry enterprises’ fixed assets). 
 
Tax Benefits 
 
Generally 50% of the capital gains realised on the sale of fixed assets (100% 
in the case of buildings and land) may be deducted from the cost of qualifying 
replacement assets. If replacement is not effected immediately, the allowable 
deduction may be carried forward as a tax-free reserve for the following 4 
business years (6 years for buildings and ships whose construction has begun 
within 2 years). 
 
The deduction will also be available against replacement assets acquired in 
the period prior to that of the sale.  
 
Future depreciation of the replacement assets is based on acquisition cost 
less the amount of untaxed capital gain, as with involuntary conversions. If 
replacement assets have not been acquired, the profit for the business year in 
which the tax-free reserve must be released must be increased by 6% of the 
released amount for each year the tax-free reserve has existed.  
 


23 
Reinvested 
Capital 
Gains     Portugal 
 
Conditions Attached 
 
The measure is available in respect of capital gains arising from the disposal 
of tangible fixed assets. 
 
Tax Benefits 
 
The difference between the realised capital gains and capital losses on 
tangible fixed assets is exempted if the total consideration received is 
reinvested in the acquisition, production or construction of any elements of 
tangible fixed assets until the end of the third financial period following its 
realisation. If only part of the consideration is reinvested, only the 
corresponding part of the capital gain qualifies for the exemption.  
 
Although such a capital gain is not taxed in the year in which it is realised, it 
does not necessarily remain untaxed because it is deducted from the 
acquisition cost of the reinvestment (replacement asset). Accordingly, the 
exempted capital gain effectively reduces the future depreciation allowances 
and increases the capital gains realised on a future disposal. 
 

E 24  Small Islands Income Tax Reduction   
 
 
Greece 
 
Conditions Attached 
 
The measure is available to legal persons, joint ventures and associations 
created under the civil code and which carry on their operations in small 
Greek Islands with less than 3100 inhabitants. 
 
Tax Benefits 
 
The normal income tax rates are reduced by 40%. 
 

E 25  St Martin and St Barthelemy 
 
 
 
 
France 
 
Conditions Attached 
 
Four particular tax incentive schemes designed to promote the economic 
development of the over-seas departments apply in the islands of St Martin 
and St Barthelemy. These are: 
 
A temporary exemption of corporate income tax for enterprises with an 
approval from the Ministry of Economy and Finance (article 208 q CGI). This 
measure is applied to corporate income tax liable companies created before 
31/12/2001, provided that their objectives and activities have been approved. 
 
A long-term fiscal scheme (article 1655 b CGI) is applicable to limited 
companies (i.e. société anonyme, société commandite par actions, société à 
responsabilité limitée) which have as their objective to research and exploit 
ores in the departments of Guadeloupe, Guyane, Réunion and Martinique, or 
to carry out agricultural, forestal or industrial activities in the department of 
Guyane. The application for the prior approval must be lodged with the 
Ministry of Economy and Finance prior to 31/12/2001. 
 
Reduced tax base scheme (article 217 b CGI) applied to corporate income tax 
liable enterprises, of which the activities fall within the following sectors: 
agriculture, tourism, fishing, new energy sources, building and public works, 
transport, etc. 
 
Investment incentive scheme (articles 199, 163, 217 of the CGI) is available 
for corporate income tax liable enterprises, of which the activities fall within 
the following sectors: agriculture, tourism, fishing, new energy sources, 
building and public works, transport, production and distribution of audio-
visual works, etc. 
 
Tax Benefits 
 
The temporary exemption scheme provides for a full exemption from 
corporate income tax for a period of 10 years from the creation of a qualifying 
company.  
 
Companies eligible for the long-term fiscal scheme are exempted from 
corporate income tax liability for a period of 25 years as from their creation. 
 
Only 2/3 of the profits (or losses) are taken into account in calculating the 
corporate income tax due of the companies qualifying for the reduced tax 
base scheme. This reduction of the tax base is applicable until the end of 
2001. 
 
Investments made in regional development companies carrying on their 
activities in the over-seas departments entitle to a deduction from the taxable 
corporate income of the investor up to a maximum of FFR 10,000,000. 
 

NB! Irrespective of any particular regime, the difficulties in enforcing tax laws 
in St Martin and St Barthelemy have lead to a situation where, in practice, 
corporate income taxes are not always imposed or collected. 

E 26  Mutual Funds / Portfolio Investment Companies 
 
Greece 
 
Conditions Attached 
 
The measure (Law 608/70, as amended by Law 1969/91 and Law 2579/98) is 
applied to entities (mutual funds and portfolio investment companies) whose 
exclusive purpose is hold securities (shares, bonds, titles of participation in 
mutual funds, bank deposit certificates, Government treasury bills and other 
stock exchange titles). 
 
The minimum share capital of an investment company must be at least GRD 
500 million, their shares must be listed on the Athens Stock Exchange within 6 
months following their formation and the securities owned by them must be 
deposited for custody with a bank legally operating in Greece. 
 
Tax Benefits 
 
The measure provides for an exemption from all taxes, stamp duties, 
contributions, etc. levied on capital and revenue from all sources. 
 

E 27  Venture Capital Funds and Companies 
 
 
Spain 
 
Conditions Attached 
 
Companies whose purpose is the promotion, through temporary participation 
in the share capital, of non-financial (and non-listed neither participating in with 
more than 25% of the share capital of listed companies) companies, are 
deemed as venture capital companies (VCC). 
 
The share capital of a VCC must be at least ESP 200 million of which at least 
50% must be paid in at the time the VCC is formed and the remaining 50% 
within 3 years. A Venture Capital Fund (VCF) must have an initial capital of 
ESP 275 million. A minimum of five shareholders is required in order for a 
company to qualify as a VCC and correspondingly a minimum of five 
participants is required for a fund to qualify as a VCF. 
 
A VCC may grant participating loans to its subsidiaries if the loans granted 
serve its business purpose. 
 
Both VCCs and VCFs must keep at least 60% of their assets in shares or 
participations in the capital of the ‘target companies’. Additionally, both VCCs 
and VCFs require prior administrative approval and, they must be registered 
as such with the Ministry of Economy and Finance as well as the Mercantile 
Registry. 
 
Tax Benefits 
 
•  100% relief from corporate income tax on dividends, regardless of the 
ownership period and the size of the stock ownership, 
•  Partial corporate income tax exemption for capital gains on disposal of 
shares (the exemption amounts from 99% to 50% of the capital gain, 
depending on the holding period, varying from 3 to 10 years, respectively, 
•  100% relief from withholding tax on the distribution of dividends and other 
profit distributions, regardless of the ownership period and the size of the 
stock ownership. 
 


28 
Venture 
Capital 
Companies 
    France 
 
Conditions Attached  
 
In order to qualify as a venture capital company and thereby for the beneficial 
tax treatment, a French company must meet the following requirements: 
 
The company must be incorporated as a stock corporation, i.e. either as a 
“société anonyme” or a “société commandite par actions”. It must hold shares, 
convertible bonds or similar securities of French companies subject to 
corporate income tax and the share holding in each such company may not 
exceed 40% of the voting rights attached to the shares. 
 
Tax Benefits 
 
Venture capital companies are exempt from corporate income tax on their 
dividend income and capital gains.  
 
Moreover, the dividend distributions of the venture capital companies attract 
favourable tax treatment:  
 
In respect of the dividends received the corporate shareholders of the venture 
capital companies benefit from the long-term capital gains tax treatment (i.e. 
subject to tax at a rate of 18%), and  
 
Individual shareholders are subject to income tax on dividends received at a 
flat rate of 16% instead of the regular progressive rates.  
 


29 
Participation 
Fund 
Companies 
    Austria 
 
Conditions Attached 
 
Only Austrian resident limited companies (AGs) can qualify as Participation Fund 
Companies (PFC). A PFC has to be financed by an issue of certificates providing 
their owners a pro-rata share of the annual profits of the participation fund. The 
certificates may be issued up to a maximum of 15 times the nominal share capital 
of the PFC (of which the nominal amount must be at least 150 million ATS). The 
participation fund must be invested in Austrian enterprises registered in the 
commercial register and all investments must be held for a period of at least 10 
years. 
 
Tax Benefits 
 
PFCs are exempt from corporate income tax with respect to the part of income 
attributable to the participation fund. Dividends and other profit distributions from 
companies in which the PFC participates are exempt from withholding tax. Income 
received by the holders of the certificates (with the exception of the certificates 
owned by the PFC itself) is exempt from withholding tax (and is not subject to 
individual income tax). Special tax privileges apply to participations (and to income 
received from them) held by the PFC as a trustee. 
 


30 
Investment 
Companies 
     Sweden 
 
Conditions Attached 
 
An Investment Company (IC) is a company or economic association, of which the 
exclusive or semi-exclusive activity is to manage securities or other similar 
movable property and whose principal objective is to offer its shareholders an 
investment form that spreads out the risk over a broad portfolio of securities. 
 
In order to qualify as an IC, a large number (several hundred) of individuals must 
be participants or hold the shares of the IC (in case law it has been held that 80 
individual shareholders is not enough to qualify). 
 
This individual shareholders requirement is usually met where an IC is a listed 
company (on the Swedish Stock Exchange).  
 
Tax Benefits 
 
Capital gains and losses realised on the sale of shares and other securities are 
disregarded for taxation purposes. Instead, an amount equal to 2% of the market 
value of the shares and other securities held by the IC at the beginning of each tax 
year (calendar year) is deemed to be taxable income of the IC (at the standard 
corporate income tax rate of 28%). 
 
Dividend income received by an IC is fully taxable. 
 
Distributed dividends are deductible but the IC cannot incur taxable loss due to 
dividend distributions. 
 
Management expenses are deductible. 
 
Unit Trusts (värdepappersfonder) 
 
The same rules apply also to unit trusts, except that an amount equal to 1.5% 
(instead of 2%) of the market value of the shares and other securities held is 
deemed taxable (at the standard corporate income tax rate of 28%). 
 

E 31  Limits on Taxes on Commercial Income 
 
 
Germany 
 
Conditions Attached  
 
The measure applies to commercial enterprises that are liable both to income 
tax and to the tax on income from trade and industry (Gewerbesteuer). Such 
businesses whose taxable income exceeds DEM 100,278 is entitled to a 
relief.  
 
Tax Benefits 
 
The measure provides for a limitation of income tax rates. In calculating the 
taxable income the “Gewerbesteuer” is a deductible item. 
 

E 32  Fixed Tax – Transferable Securities 
 
 
 
Greece 
 
Conditions Attached and Tax Benefits 
 
This measure (law 2238/94 art. 12) was notified as a measure which does not 
follow the general business taxation system. 
 
Greece has subsequently indicated that there is not any special tax regime in 
this sector.  
 


33 
Representative 
Office 
     Spain 
 
Conditions Attached 
 
The measure is available for Spanish permanent establishments (PEs) / 
representative offices (ROs) of foreign investors, when the operations of these 
PEs/ROs do not cover a full production cycle generating income in Spain, the 
said cycle being concluded by the non-resident company or by one or more of 
its PEs. No consideration may arise, apart from covering the costs incurred by 
the PE/RO and no part of the products or services may be intended for third 
parties. (Article 50(4) of Law 43 of 27 December 1995). 
 
Tax Benefits 
 
The PEs/Ros, as defined in Article 50(4) of Law 43 of 27 December 1995, are 
liable to pay corporate income tax at the standard 35% rate, but the taxable 
income is determined on the basis of a fixed cost plus mark-up of total 
expenses incurred by them in the performance of their activities. The mark-up 
rate for the purpose of calculating the taxable income is fixed, by an order of 
23 December 1997, at 15%.  
 
All income of an accessory nature, such as interest or rents, which does not 
stem from the object of the representative offices activities, is added to the 
amount calculated on the cost plus basis. Capital gains or losses accruing 
from the assets allocated to the representative office are equally taken into 
account for the purposes of calculating the taxable income in Spain. 
 

E 34  Tax Credits for Job Creating Investment 
 
 
France 
 
Conditions Attached 
 
The measure applies to all companies subject to normal corporate income tax, 
irrespective of their legal form (sociétés civiles, sociétés commerciales, etc.) 
or of their activities (commercial, artisan, industrial, agricultural, non-
commercial, etc.). 
 
The measure is only applicable in 1998, 1999 and 2000 (when it will expire).  
 
Tax Benefits 
 
The tax credit amounts to FFR 10,000 for each additional employee, 
calculated as an average number of salaried employees during the year in 
question and compared with the corresponding number from previous year. 
The comparison is always made between two subsequent calendar years, 
even if the financial year (accounting period) of the company would not tally 
with the calendar year. 
 
The maximum annual tax credit is FFR 500,000 and it can only be set off 
against the 10% supplementary corporate tax contribution (as provided for in 
article 235 ter ZA of the CGI). 
 
The credit may be carried forward (until 2000) but it can never lead to a tax 
refund. In the case where the average number of salaried employees 
decreases (compared with the corresponding figure of the previous year) the 
negative balance of the credit can be set off against future credits or against 
credit carried forward from previous years. If such a set off is not possible, the 
negative balance must be returned to the treasury. The amount of negative 
balance that has to be returned to the treasury is limited to the amount of the 
credits used against the 10% contribution. 
 

E 35  Tax Credits for Staff training Costs 
 
 
 
France 
 
Conditions Attached 
 
The measure applies to enterprises which have incurred training expenses 
that are greater than the respective expenses during the previous calendar 
year provided that such expenses are not credited against the compulsory 
contribution to training.  
 
Tax Benefits 
 
The tax credit amounts to 25% of the training expenses exceeding the 
respective figure of the previous calendar year and it is set off against the 
company’s corporate income tax liability. Should the credit exceed the 
corporate income tax liability, the excess is refundable. The credit is, however, 
limited to a maximum amount of FFR 1,000,000 per year. 
 

 E 36  Listed Companies – Reduced Rates   
 
 
Italy 
 
Conditions Attached 
 
The measure is available for companies whose shares are quoted on an 
Italian stock exchange. 
 
Tax Benefits 
 
Under the Italian differentiated income tax system the taxable profits of limited 
companies are subject to corporate income tax at the standard corporate 
income tax rate of 37%, except for that part of the profits which is deemed to 
correspond to a ‘ordinary return on capital’. The part of the income which is 
deemed to correspond to the ordinary return on capital is taxed at a reduced 
rate of 19%. The overall tax rate resulting from this differentiated taxation of 
corporate income may not, however, be less than 27%. 
 
In the case of quoted companies the reduced tax rate applicable to the part of 
income corresponding to the ordinary return on capital is further reduced to 
7% and the minimum overall tax rate is 20% (instead of 27%). These reduced 
rates are applied to the corporate income during the first three years following 
the year when the shares of the company were quoted on a stock exchange 
for the first time. 
 


37 
SGII 
Companies 
      Portugal 
 
Conditions Attached 
 
The tax benefits provided for in the measure are available for qualifying real 
estate investment and management companies (SGIIs) that are authorised by 
the Minister of Finance. The authorisation (SGII recognition) is granted by way 
of an administrative ruling.  
 
Tax Benefits 
 
Corporate income tax (IRC) is levied at a reduced rate of 25% (instead of the 
standard IRC rate of 34%) on the taxable profits of SGIIs. Additionally, 
immovable property rental income derived by qualifying SGIIs is exempt from 
withholding of IRC. 
 
The SGIIs are also exempt from the real estate transfer tax (SISA) on the 
acquisition of immovable property and from municipal tax on buildings or parts 
of urban buildings intended to be let for residential occupation. 
 
The above mentioned reduced IRC rate and the exemptions apply to SGIIs 
during their year of incorporation and the following 7 years. 
 

E 38  SCR, SDR and SFE Companies  
 
 
 
Portugal 
 
Conditions Attached 
 
The measure (provided for in Articles 23, 24 and 25 of the Rules on tax 
concessions) was available for 
  
a) venture capital companies (SCRs) incorporated in 1989-1990,  
 
b) regional development companies (SDRs) incorporated in 1989-1992, and  
 
c) business promotion companies (SFEs) incorporated in 1989-1990.  
 
The applicability of the relevant rules has not been extended and therefore, 
the measure has expired as of 1998. 
 
Tax Benefits 
 
Venture capital companies (SCRs) and regional development companies 
(SDRs) were exempt from corporate income tax during the first 5 years of their 
business operations and business promotion companies (SFEs) during the 
first 8 years of their business operations. Interest received on deposits of these 
companies did not qualify for the exemption but was subject to tax at a 
reduced rate of 20%. 
 

Document Outline