Nordik Legal Service has joined WTS Tax Legal Consulting

Nordik Legal Service has joined WTS Tax Legal Consulting, as a participating partner. WTS is a global network of selected consulting firms represented in more than 100 countries worldwide. 

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Responsible investigation procedures

During the last few weeks, the investigation procedures of the Special Prosecutor seen substantial attention. The discussion follows news on how the Prosecutor had unlawfully maintained record of discussions between attorney and his defendant, which where produced during the tapping of the phone of the defendant. Obviously a clear violations of attorney-client privilege.

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Ne bis in idem - Changes necessary?

New finding of the European Court of Human Rights raises questions whether criminal proceedings, followed by administrative sanctions imposed by Icelandic Tax Authorities, may be in breach of the classical principle know in Roman Civil Law as Ne bis in idem.

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Access to the rulings of the tax dispute committee

We have not seen as many amendments in the Icelandic Income Tax act as the during last years. During that time the number of cases brought before the Tax Dispute Committee the number of publisher rulings reduces dramatically. Shouldn't it be the other way around?

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Innovation and taxes

The wheels of Icelandic innovation and entrepreneurial sector have started to roll and commercial banks have increasingly participated in that framework. The government could also do more to improve the overall regulatory framework to facilitate such activities, especially in the areas of tax and corporate law. Numerous examples show that the current regulatory framework reduces the scope and peoples possibility to initiate and fund own business, including rules on taxation of stock options.

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This Christmas, Nordik legal recommends......

What is better than enjoying the holiday with an eggnog and the following entertainments?

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Stefán Ólafsson and the tax discussion

Are Icelandic companies being tax tormented in comparison to other countries? It is misleading to focus solely on tax rates when discussing how high or low taxation here is. A comprehensive picture of the taxation of Icelandic companies compared to other countries can only be built by considering many factors and therefore not only by comparing tax burden here to large countries, as in such countries were analogous.

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Alarming evolvement of the currency restrictions

It appears that the government's access to investigation mechanisms, which fall under the principle of privacy, such as phone tapping and house search warrants, have no limitations and indeed not compatible with what is happening in other countries that Iceland compares itself with.

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Effective tax-system = foreign investment

Foreign investment in Iceland today is historically low. In this small and remote island, authorities seem to believe that foreign investors are interested in pursuing business here without any tax incentives. On the contrary, tax authorities need to deviate from narrow and conservative interpretation of tax law and go further in placing preferential policies without violating Iceland's obligations according to the EEA Agreement

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Hostility towards investments - Taxation levied on dividends

The Icelandic tax system has taken significant changes, which have been characterised by more boldness than foresight, but such rapid and ill-considered tax changes have directly driven companies with substantial tax revenues from the country. Enactment of the so-called 20/50 rule, affected investments in own business enterprise in a particularly unfavourable way and has had significant impact on almost all small and medium enterprises in Iceland so now residents are punished for investment and job creation with increased tax burden.

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New tax levied on financial institutes

The rationale for the enactment of Act on Activities Tax levied on financial institutions in Iceland was that the country's financial institutions are exempted from VAT and that they have received great financial aid from the government following the bank crises. It is argued that the financial institutions were in an enviable position, but on the contrary, financial institutions end up bearing a heavier tax burden than VAT obligated industries, which has a significant negative impact

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Tax alert - New VAT provisions

The purpose of this alert is to notify service providers that newly amended provisions of the Icelandic VAT act in certain cases shifts the liability on the return of VAT from the customer domiciled in Iceland, to the non-domiciled service provider.

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The legislator's costly mistake

Withholding taxes levied on interest income are effectively pays by the debtor, not the creditor, who is generating the income. This tax will reduce the options for financing for Icelandic companies in the future.

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Is an abolishment of obligation taxable event?

In judgment no. 626/2010, the Supreme Court addressed the matter whether an employee could be considered to have received taxable benefits from the employer because of a purchase agreement concerning purchase and sale of shares in the company. The Supreme Court rejected the Chief's of Internal Revenues interpretation of the reality principle and ruled that the wording of the contract must be examined in order to see whether it provided the employee taxable occupational benefits

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