A new standard agreement on avoiding double taxation will soon be reviewed by the government. It is planned that this document will become the basis for all subsequent taxation agreements; ministries and government agencies will be authorized to use the standard agreement in negotiations.
In comparison with agreements that were previously in effect, the new project has a number of new developments.
In particular, the concept of "associated enterprise" is being introduced. These kinds of intermediary enterprises are not independent in their dealings with other organizations. Because of this, it is possible to tax profits, which were not in fact received by organization, but which was recorded in their books.
As in previous agreements, the new variation makes provisions for a Dividend Tax of 10-15%. However, new conditions for applying the 10% rate are currently being considered, such as changing the minimum participation in the company to more than 100,000 euros and at least 25% of shares. Previously, the condition for applying the 10% rate was 100% shareholding.
The new standard agreement also addresses regulations on undercapitalization or “thin” capitalization, wherein interest income is treated as dividends. This concerns interest which is addressed in tax legislation concerning income from shares under thin capitalization regulations.