Current Awareness

#SteuerlicheSelbstanzeige, #SteuerdatenDubai, #Steuerhinterziehung, #SteuerhinterziehungDubai, #SteuerstraftatenDubai, #SteuerdatenAusDubai

SCHOLZ KAUFT STEUERDATEN AUS DUBAI

STRAFFREIHEIT DURCH STEUERLICHE SELBSTANZEIGE

In der deutschen und internationalen Presse wurde in den letzten Tagen berichtet, dass die Bundesrepublik Deutschland Steuerdaten aus Dubai gekauft habe und diese Daten jetzt von den Ländern ausgewertet würden. Es geht darum, mögliche Steuerstraftaten aufzudecken.

Personen, die in Deutschland unbeschränkt steuerpflichtig sind, haben in Deutschland ihr Welteinkommen zu versteuern. Hierzu zählen auch Mieteinkünfte und Veräusserungsgewinne (und andere Einkünfte) die im Ausland, also auch in Dubai erzielt werden. Wer dies unterlassen hat, droht ein Steuerstrafverfahren.

Straffreiheit durch eine steuerliche Selbstanzeige nach § 371 Abgabenordnung (AO)

Wer wirksam eine Selbstanzeige erstattet, kann gemäß § 371 Abgabenordnung (AO) nicht bestraft werden, obwohl er eine Steuerhinterziehung (§ 370 AO) vollendet hat. Wichtigster Grund der strafbefreienden Selbstanzeige ist die Erschließung von Steuereinnahmequellen, die dem Staat bis zur Selbstanzeige nicht bekannt waren.

Eine Selbstanzeige ist allerdings nicht mehr möglich, wenn

• Die Tat bereits entdeckt wurde.
• Eine Steuerprüfung bereits angeordnet wurde.
• Ein Straf- oder Bußgeldverfahren bereits bekannt gegeben wurde.
• Ein Finanzbeamter bereits zur Steuerprüfung oder Ermittlung der Steuerstraftat erschienen ist.

Da eine strafbefreiende Selbstanzeige nicht mehr möglich ist, wenn die Tat bereits endeckt wurde, sollten Sie möglichst zeitnah handeln.

Wenn die verkürzte Steuer oder der für sich oder einen anderen erlangte nicht gerechtfertigte Steuervorteil einen Betrag von 25.000 Euro je Tat übersteigt, ist zudem ein Geldbetrag in folgender Höhe zugunsten der Staatskasse zu zahlen:

• 10 Prozent der hinterzogenen Steuer, wenn der Hinterziehungsbetrag 100.000 Euro nicht übersteigt;
• 15 Prozent der hinterzogenen Steuer, wenn der Hinterziehungsbetrag 100.000 Euro übersteigt und 1.000.000 Euro nicht übersteigt;
• 20 Prozent der hinterzogenen Steuer, wenn der Hinterziehungsbetrag 1.000.000 Euro übersteigt.

Unterlaufen bei einer Selbstanzeige Fehler, ist man trotz der Selbstanzeige dem Risiko von hohen Geldstrafen und sogar Freiheitsstrafen ausgesetzt. Daher sollte man sich professionel von Steuerexperten vertreten lassen, die sich auch mit den Gepflogeheiten in Dubai und dem Doppelbesteuerungsabkommen zwischen den VAE und Deutschland auskennen.

Wir koennen Sie bei der Prüfung und Erstattung einer Selbstanzeige unterstützen. Prof. Dr. Jörg Wilhelm hat im Zusammenhang mit dem Kauf von Steuerdaten von schweizerischen Banken zahlreiche Selbstanzeigen erfolgreich betreut. Dr. Ghassan Azhari ist zugelassener Rechtsanwalt in Deutschland und Fachanwalt für Steuerrecht. Er ist seit mehr als 15 Jahren praktizierender Rechtsanwalt in Dubai. Zudem unterrichtet Dr. Azhari internationales Steuerrecht an der Middlesex University in Dubai und hat in den vergangenen Jahren internationales Steuerrecht an der SRH Hochschule in Berlin doziert.

Sie können mit uns einen persönlichen Termin sowohl in Zürich als auch in Dubai vereinbaren.

Kontakt:

Azhari Legal Consultancy
Executive Tower D, Office 901

Business Bay

P.O. Box 213811

Dubai – United Arab Emirates
Tel.: +971-(0)4- 447 35 57
Mail:info@azhari-law.com
Web: www.azhari-law.com

Dr. Ghassan Azhari: +971 50 6884811 (Dubai)
Senator Prof. Dr. Joerg E. Wilhelm: +41 79 2079898 (Zürich)

#LaborLaw, #LabourLaw, #DIFCLabourLaw, #LawyerDubai, #EndofServiceGratuity, #terminationofemploymentcontract, #arbitraldismissal
On 30 March 2021, Dr. Ghassan Azhari held a lecture on UAE Labour Law at Middle Sex University. His lecture covered the mainland jurisdiction and the Labour Laws in the DIFC and other Free Zones.

Parties of a lawsuit can, and frequently do, attempt to settle a claim before having to go to a trial. In fact, the DIFC courts encourage parties to settle their disputes, for example through mediation and conciliation. A party may try to settle in any form or way, within the framework of the law, but Part 32 of the Rules of the DIFC Courts (RDC) sets out a formal mechanism for the parties to settle their claims, with possible cost consequences.

It can be substantially expensive and time consuming to litigate a case before DIFC courts. A “Part 32 Offer” (equivalent to Part 36 offers in the English Courts) permits parties to attempt to settle a claim during a lawsuit.

Either party can make a Part 32 Offer to save costs and time in avoiding full trial. In the event, the offeror (the party making the offer) makes a Part 32 Offer which, for whatever reason, is not accepted, and the offeror is granted a ‘judgment more advantageous’ than the offer, the offeree (the party receiving the offer) may be liable for the legal costs of the lawsuit starting from the date on which the offer was rejected, plus interest.

A Part 32 Offer is a formal offer, and it is treated as “without prejudice except as to costs.”  This means that, if the offer is not accepted, it cannot be used or referred to during legal proceedings in relation to the claim, save as to the issue of costs. It is important to note that, there is no limit to the number of part 32 offers.

Nothing in Part 32 of the RDC prevents a party making an offer to settle in whatever way it chooses, but a Part 32 Offer must be in accordance with Rule 32 of the RDC, to have the consequences specified in the law. To that effect, it is highly advised to consult with a competent lawyer to ensure the form and content of the offer are in compliance with the RDC.

To put things in a practical perspective, consider the following hypothetical:

A ‘service provider’ (Party A) receives a termination letter from its client (Party B) and Party A chooses to file a claim against Party B at DIFC court. The claim of Party A includes its services provided till termination (let’s assume USD 1 Million) and a compensation for the untimely and unjustified termination (let’s assume another USD 1 Million). It is arguably clear in most cases that Party B will have to pay the claim for the services provided by Party A till the termination. The compensation amount for an asserted untimely or unjustified compensation is by far not that clear and it will remain to be seen by the court to determine the amount of compensation the court will grant.

In the middle of this litigation, Party A may, as encouraged by the DIFC courts, try to settle its claim with Party B and to that effect it files a Part 32 Offer to settle its claim for USD 1.5 Million.

In this hypo, if Party B accepts the offer, Party A would get the settlement amount of USD 1.5 million in a timely manner. But if Party B, for whatever reason, chooses to not accept the offer, and if upon trial the court awards Party A a judgement that is ‘more advantageous’ to what Party A had offered in its Part 32 Offer (USD 1.5 Million), then Party B is liable for the legal costs of the lawsuit starting from the date on which the offer was rejected, plus interest.

Azhari Legal Consultancy is registered with the DIFC courts and we are committed to achieve optimal results for every client.

The UAE is governed by the UAE Federal Laws that give – so far – very little indication about the legal classification of bitcoins and other crypto currencies.

There is, however, the Dubai International Financial Centre (DIFC) that has its own probate court. The DIFC is a Federal Free Zone and applies the Laws of England and Wales. The Laws of England and Wales classify crypto currencies as a ‘property’ so that cryptocurrencies can be held on trust (e.g. by a financial institution) for the benefit of accountholders (see: http://www.nzlii.org/nz/cases/NZHC/2020/728.html).

Having said this, you can register a last will at the DIFC probate court under the Laws of England and Wales if (1) you have a residency in the UAE or (2) you have assets in the UAE. In either cases, you need to be at least 21 years old and a non-Muslim.

If you have a residency in the UAE, a DIFC-Will can be drafted in a way that it covers all your assets worldwide. While doing so, one has to consider the (inheritance) laws of the jurisdiction(s) where your assets are located.

A residency in the UAE can be demonstrated by a UAE Visa and a physical address.

If it comes to crypto currencies, it is difficult to prove that the crypto currencies are in the UAE as crypto currencies are in the blockchain and as such not within any particular jurisdiction. If, however, the crypto currencies are held on trust by a financial institution operating in the UAE, the crypto currencies should be considered as an asset located in the UAE. The mere fact that a cold wallet, i.e. a hard ware stick, is located in the UAE might also create an asset in the UAE.

The Laws of England & Wales consider Bitcoin and other crypto assets as a ‘property’ (see: The UK Jurisdiction Taskforce (‘UKJT) Legal Statement on crypto assets and smart contracts’). Consequently Bitcoin and other cryptocurrencies can be bequeathed by a DIFC-Will.

In the DIFC-Will, however, the crypto currencies have to be mentioned in a manner that it is clear which crypto currencies shall be covered by the Will. In this context, it is important to clarify whether you hold your crypto currencies in a cold wallet or a hot wallet. For the purpose of inheritance, it would be beneficial, if the crypto assets will be held in a cold wallet (preferable a hardware rather than a paper wallet) or on trust by a financial institution.

It is worthwhile to mention that according to Part 3 Rule 10 (4) the DIFC Wills and Probate Rules (‘WPR Rules’) that the Director or an Authorized Officer shall have a discretion to register a document including on grounds of confidentiality or sensitivity of information (such as sealed documents or documents containing confidential passwords and personal codes). Having said this, the Testator may register together with his Will a sealed document containing his ‘private key’ that allows to withdraw crypto currencies from public key/address.

Finally, is advisable not only to mention the wallet type, but also the crypto assets the wallet is giving access to, e.g. ‘the Trezor Model T hardware wallet holding/giving access to 50 Bitcoins’. This provision can be important for the beneficiaries for two reasons: (1) the inheritance of crypto currencies might be subject to inheritance tax (depending on the residency of the testator and beneficiaries) and (2) in case the beneficiary wants to convert the crypto currencies to fiat money, e.g. to US-$. In this case, the (converting) bank will ask for a disclosure regarding the ‘source of wealth’. Considering the permanently increasing compliance requirements of financial institutions, clear provisions in the Last Will should make the compliance procedure at least easier.

E-commerce businesses in the EU are often incorporated in a low tax jurisdiction and distribute products in all EU member states. It does not surprise that such a structure is a thorn in the side of high-tax jurisdictions, in particular when these jurisdictions are the core market for the e-commerce business.

This paper will provide a concise overview whether profits of an e-commerce business can be taxed in a state where the e-commerce business is not incorporated. The general rule is that profits of a business are only subject to tax in the state where it is incorporated. A state can only tax the profits of a non-resident business, if the non-resident business has a so called ‘permanent establishment’ in this specific state. In the case of only selling products online to a specific state, the conditions of a ‘permanent establishment’ are normally not fulfilled so that the state to where the products are sold online has no right to tax the profits of such transactions.

1. Permanent Establishment as per Article 5 OECD Model Tax Convention

The tax treatment of cross-border commerce is the subject of bilateral tax treaties, (Agreements for the Avoidance of Double Taxation, ‘DTAs’) which are negotiated versions of the OECD Model Tax Convention.

According to Article 7 of the OECD Model Tax Convention concerning the taxation of business profits, the source country may tax the profits arising from commercial activities carried out within its borders by a foreign entity through a substantial physical presence in the source country.

However, to justify source taxation, such substantial physical presence must reach the level of a permanent establishment as defined in Article 5 of the OECD Model Tax Convention by satisfying the following three prerequisites, namely

• the existence of a distinct place, such as premises, or in certain instances, machinery or equipment (‘place-of-business’ test),
• that this place of business must be ‘fixed’, i.e. it must be established with a certain degree of permanence (‘permanence test’),
• and that the business must be carried on through this fixed place of business. This means usually by personnel of the foreign entity or by personnel who is dependent on the foreign entity (business-activities test).

If the physical presence does not reach the level required by the OECD Model Tax Convention by satisfying these requirements, the source state is not entitled to charge income tax on the profits arising from the international transaction, rather the residence country of the profit making company will have the right to tax the profits of its resident.

An e-commerce business registered in a low tax jurisdiction can normally avoid a ‘permanent establishment’ as defined in Article 5 OECD Model Tax Convention in other countries where it is selling its products.

1.1 The OECD’s approach on the definition of a ‘virtual’ permanent establishment (PE)

The OECD’s Committee on Fiscal Affairs issued a ‘Clarification on the application of the permanent establishment definition in e-commerce: Changes to the Commentary on the model tax convention on Article 5’. In the Clarification it is distinguished between

• computer equipment, which may be set up at a location so as to constitute a PE under certain circumstances,
• and the data and software which is used by, or stored on that equipment.

As per the para 42.2 of the Clarification, a website which is a combination of software and electronic data, does not in itself constitute tangible property. Therefore, it does not have a location that can constitute a place of business as there is no ‘facility such as premises or machinery or equipment’.

On the other hand, the server on which the website is stored and through which it is accessible, is a piece of equipment having a physical location and such location may thus constitute a ‘fixed place of business’ of the company that operates that server.

To sum up, as per the OECD definition, the place where the server is located could constitute a PE of the company. Whereas, the presence or availability of a website in a certain state does not constitute a fixed place of business by itself.

1.2 The Spanish tax authorities’ approach to a ‘virtual’ PE (‘Dell-case’)

In the ‘Dell’ case a Spanish commissionaire subsidiary was categorized by the Spanish tax authorities as PE of its Irish holding company. The Spanish tax authorities concluded and Spanish courts affirmed that sales made by the non-resident entity Dell Ireland through a website which targeted the Spanish market and which was maintained by staff of the Spanish affiliate Dell Spain was sufficient for the conclusion of a PE in Spain. The consequence was that all the sales made by the non-resident Irish company in Spain (minus commissions paid to the Spanish affiliate and other related allocable expenses) were attributed to the Spanish affiliate PE.

2. Introduction of a new digital service tax (‘DST’) in the EU

The EU member states are working on an EU-wide solution to tax profits of e-commerce businesses in each member state. At the same time, some member states are working on a taxation right on a national level, notably France and Spain. In both states, however, only draft laws and proposals are circulating.

On 21 March 2018, the European Commission submitted 2 legislative proposals with the aim that digital business activities are taxed EU-wide.

Proposal 1: Common reform of EU’s existent corporate tax rules for digital activities

This proposal would enable member states to tax profits that are generated in their territory, even if a company does not have a physical presence there. A digital platform shall be deemed to have a taxable ‘digital presence’ or a ‘virtual’ permanent establishment in a member state if it fulfils one of the following criteria:

• it exceeds a threshold of €7 million in annual revenues in a member state;
• it has more than 100,000 users in a member state in a taxable year;
• over 3000 business contracts for digital services are created between the company and business users in a taxable year.

The new rules shall also change how profits are allocated to member states in a way which better reflects how companies can create value online: for example, depending on where the user is based at the time of consumption.

Proposal 2: An interim tax on certain revenue from digital activities

Unlike the common EU reform of the underlying tax rules, the tax would apply to revenues created from certain digital activities which escape the current tax framework entirely.

This system would apply only as an interim measure, until the comprehensive reform has been implemented and has inbuilt mechanisms to alleviate the possibility of double taxation.

A tax of 3% would apply to revenues created from activities where users play a major role in value creation and which are the hardest to capture with current tax rules, such as those revenues:

• created from selling online advertising space;
• created from digital intermediary activities which allow users to interact with other users and which can facilitate the sale of goods and services between them;
• created from the sale of data generated from user-provided information.

Tax revenues would be collected by the member states where the users are located, and would only apply to companies with total annual worldwide revenues of €750 million and EU revenues of €50 million or more.

Prospects

The Ministries of Finance of the EU member states are in the phase of reviewing the proposals and debates are ongoing. Whereas Spain is already in the phase of proposing national legislation for taxation of digital services – modelled on the Proposal 2 of the European Commission – and would most probably welcome EU-wide implementation, Germany for example is generally opposed. Therefore, it remains to be seen whether in Spain and/or EU-wide the DST will be introduced.

Generally speaking, an employee cannot lose his right to end-of-service gratuity. This right is mandatory and cannot be excluded in the employment contract or any Addendum hereto.

The only exception is if the employee breaches his employment contract in a manner that allows the employer to terminate the employment for cause. The reasons for a termination for cause are exhaustively provided in Article 120 of the UAE Labour Law.

According to Article 120 UAE Labour Law an employer can terminate an employment contract without notice only if the employee:

• assumes a false identity or nationality or if he submits forged documents or certificates;
• is engaged on probation and is dismissed at the end or during the probation period;
• commits an error causing substantial material loss to the employer provided that the employer advises the labour department of the incident within 48 hours from having knowledge of the same;
• disobeys instructions on the safety of work provided that such instructions are displayed in writing at conspicuous places or verbally informed to an illiterate employee;
• fails to perform his basic duties under the employment contract and persists in violating them despite formal investigation with him in this respect and warning him of dismissal if the same is repeated;
• divulges any secrets of the establishment where he is employed;
• is finally convicted by a competent court of crime against honour, honesty or public morals;
• is found drunk or under the influence of prohibited drugs during working hours;
• in the course of his work, commits an assault on the employer, the manager or any of his colleagues;
• is absent without lawful excuse for more than 20 intermittent days or for more than 7 successive days during one year.

It has to be emphasized that the employer has to prove the existence of a cause and fulfillment of all requirements provided in Article 120 UAE Labour Law, e.g. notice to the labour department or warning letter. If the employer fails to prove the cause for the termination, the termination will be considered as a ‘normal’ termination with the consequence that the employer has to pay the end-of-service gratuity and the salary for the termination notice period.

Some employers, however, send their employees a termination for cause, just to avoid payment of the end-of-service gratuity and to safe the salary for the termination period. In this case, an employee has the following claims against his employer:

• end-of-service gratuity
• salary for notice period (minimum 1 month)
• compensation for arbitrary dismissal (depending on the circumstances)