Archive for July, 2013

The following blog post includes leading Danish business daily Jørgen Børsen’s article on current tax evolutions as analyzed by HLB’s Chairman Mogens Andersen, CEO Rob Tautges and International Tax expert Kimberlee Phelan on the occasion of HLB’s annual Audit & Tax Conference.

Empty treasuries in most countries around the globe have spawned a whole new focus on the need for tax revenue – and not least by those companies and individuals who are trying to eliminate their fair share of the bill.

Therefore, it is no longer enough to relate to what jurisprudence says – the moral aspect must also be considered carefully. This is the message from global audit network HLB International, which today launches a three-day conference on international tax in Copenhagen – a very hot topic where the global trend is directed towards more transparency and increased attention from authorities.


“We need to tell our customers that it is no longer enough to be legally correct – it’s also about acting in a morally correct way. Many will say: As long as I abide by the rules, I am free from trouble – but in the future this won’t be enough “says Danish Mogens Andersen, partner at Beierholm and chairman of the HLB network.

“All you are doing is certainly correct. However, it is ultimately the market and external stakeholders which determine whether you behave properly,” he continues. That was what for instance the American coffee chain Starbucks’ English company experienced the hard way when persistent criticism of unpaid tax cost customers, so that recently the chain voluntarily offered to pay 5 million GBP (approx.43 million DKK) in taxes.


At the same time the authorities intensify their hunt for new tax sources, like an iron fist –in Denmark as well – used against those who do not have their documentation in place, for example in connection to intercompany transactions (transfer pricing) where prices must be correct.

“I have worked with tax for 25 years, without a fine ever being issued if a document or a statement was missing or delayed. During the last three years, the hammer fell immediately with a fine of US$10,000 whenever anything was missing,” says Kimberlee Phelan from HLB International Tax Committee and Tax Partner at the accounting firm WithumSmith+ Brown in the United States.


In Denmark, the tax authorities introduced fines that can run into millions if there is not sufficient evidence and documentation for intercompany transactions across countries.

Also on a third front the tax authorities are changing and shaping their practice: Using tax havens is more difficult given the growing quantities of data that are exchanged across countries: “It’s getting harder given the increasing transparency between countries. Addressing the challenge of avoiding tax becomes really stepped up, as there is access to much more information across borders,” said HLB CEO Rob Tautges.


Whether aggressive tax planning will come in the same bad light as banking secrecy, is according to Kimberlee Phelan, too early to say. “From the American side it does not exist any longer. The US has traced Switzerland and the Cayman Islands and is also looking at India, so our advice to our customers is: We do not want to touch you if you do not report all of your bank accounts,” she says.

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Matthew Walsh


Princeton, NJ



Current U.S. tax law allows thousands of Canadians age 55 and older to move into the United States without a visa or a tax filing requirement for a period of up to 182 days. Dubbed Canadian “Snowbirds,” these migrants could soon have the possibility of enjoying an extra two-month stay in the U.S., with new legislation that has proposed a limit of 240 days for visa-less entry.

The proposal to push this limit from six to eight months has been met with “wide support” from both Democratic and Republican representatives, according to Canadian Snowbird Association researcher, Evan Rachkovsky. Due to the limit increase, the U.S. stands to gain an additional bump to the economy due to tourism. However, the implications of such a move are not lost on the tax code.

Although Congress has showed support for the bill, there are still roadblocks that could prove troublesome. Healthcare migration is much less flexible than visa migration, and current Canadian provincial law differs on the amount of time citizens can be out of the country whilst remaining on their provincial healthcare plan. Many of these laws have restrictions less than eight months, creating external and uncontrollable limitations on any legislation passed by the U.S. Congress.

The biggest roadblocks to the potential benefits of the legislation, however, are major tax implications which need to be considered. Under current tax law, taking advantage of two extra months in the sun may subject Canadian citizens to IRS compliance laws. Under these laws, snowbirds would be subjected to worldwide taxation of income, and may impose additional taxes for those who own stakes in certain Canadian companies (passive foreign investment companies). Finally, these Canadians could be subjected to heightened disclosure compliance in regards to foreign retirement funds and other off-shore investment accounts. These implications have the potential to nullify any increase in trade and tourism between the two countries due to the unwillingness of snowbirds to subject themselves to such stringent requirements and increased costs.

The sun may be warm, but the U.S. tax code is icy.

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nicole dNicole DeRosa, CPA, MAcc

Tax Supervisor

New Brunswick, NJ

Check out the below table to learn what holidays people are celebrating around the world in July!


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