Tax rulings

Some decisions cannot wait for an audit years later to reveal how they are taxed. A reorganisation, a new incentive plan for staff or a large investment may only make sense on one reading of the rules, and if the authority reads them differently the damage is done before anyone can object. For many businesses the uncertainty is itself the cost: a buyer, a bank or an investor wants an answer before signing, not a reasonable view.

A ruling is in effect a document negotiated with the administration, and it protects only what it describes. Its value depends on how the question is framed, which facts are set out, and how closely the business follows them afterwards:

• the rules on which questions an authority will answer in advance, and on the matters it declines to rule on;
• the rules on informal contact and preliminary meetings before a formal request is filed;
• the rules on what a request must disclose, and on the effect of a fact omitted or inaccurately described;
• the rules on how far a ruling binds the authority, for which periods and for which taxpayers;
• the rules on changes in the facts or the law after a ruling is granted, and on when it may be revoked;
• the rules on refusing a request, and on whether a refusal can be challenged;
• the rules on publishing rulings in anonymised form, and on exchanging them with the authorities of other countries;
• the rules on carrying out the transaction as described, and on showing afterwards that this was done.

Our lawyers can support you with this.