Cross-border Scenarios Research Articles

Taxation of Deferred Bonuses in Cross-Border Scenarios: Does the Italian Ruling Introduce a New Frontier?

In this article, the authors discuss a recent ruling of the Italian tax authorities (Ruling No. 126 of 2023), which addresses the taxation of deferred remuneration (in particular, bonuses) paid once an individual has become an Italian resident but relating to employment previously exercised abroad.

Third-Party Liability for the Payment of Taxes and Their Fundamental Rights

This article examines, from a human rights perspective, certain instances establishing the liability of third parties, other than the taxpayer himself, for the payment of taxes, such as the obligation to withhold taxes or the joint and several liability of a third party (i.e. a company’s director) for the payment of taxes due by another person. Such obligations may imply a substantial liability for taxes and often are coupled with sanctions, and also a liability for the infringement of a growing number of formal obligations, including filing returns and reporting data, raising concerns of compatibility with the fundamental rights of taxpayers and private parties. The authors argue that it is doubtful whether the need to secure a more effective protection of the interest to collect taxes can justify exposing third parties to substantive obligations in connection with taxable events for which they are not directly liable or where no specific involvement of that person in a scheme of tax avoidance or evasion is established. Moreover, such compulsory involvement, which is currently imposed without remuneration and without any consideration of the additional burdens that it creates, raises some concerns from the perspective of fairness. The authors propose that a possible solution to some of these problems in the cross-border scenario could be found by amending the Recovery Directive (2010/24), so that states could rely more on mutual assistance within the European Union and less on third-party liability for the collection of taxes.

5G connected vehicle and roadside infrastructure for advanced driving maneuvers in a cross-border scenario

The adoption of 5G cellular communications enables advanced V2X use cases, namely ones involving detailed HD-Maps and real-time holistic sharing of vehicle positions and status between autonomous, connected and even legacy vehicles. The 5G-MOBIX project explores the implications of such use cases. This paper presents the Portuguese 5G Connected Vehicle and Roadside Infrastructure that was developed for supporting the 5G-MOBIX project cross-border trials between Spain and Portugal. The paper details the architecture of the 5G Connected Vehicle and Infrastructure, the technology used, how integrations were achieved and how these CCAM solutions enable the use cases of the 5G-MOBIX project cross-border trials between Spain and Portugal.

LTE/NR V2X Communication Modes and Future Requirements of Intelligent Transportation Systems Based on MR-DC Architectures

This paper deals with the potential of Third Generation Partnership (3GPP) Project mobile cellular standards to enable vehicular communications. Starting from 3GPP Release 15, and Release 16 specifications for Vehicle-to-Everything (V2X) communications, the different communication modes, interfaces and use cases for V2X based on Long Term Evolution (LTE) and New Radio (NR) are analyzed. This research also studies the potential beneficial impact on V2X of a network that is aware of the underlying Multi-RAT Dual Connectivity (MR-DC) architecture. The methodology followed in this work consists of a review of 3GPP standards for vehicular communications based on mobile networks. The performance evaluation of the communication modes was performed through simulations taking into account resource allocation schemes, packet transmission frequencies, packet size, vehicle density and other parameters defined in the standard. In order to perform simulations of the decentralized communication mode (mode 4), a simulator based on OMNeT++ was configured. For the centralized mode (mode 3), an analytical model in MATLAB was used to configure different simulation scenarios. The results obtained indicate that LTE networks can only support basic V2X use cases because they do not demand strict potential requirements. Simulations showed that the centralized mode offers better performance than mode 4; however, it requires cellular network coverage. More advanced use cases are key for a future Intelligent Transport System (ITS), high-performance networks (i.e., Fifth Generation (5G), NR) are expected to coexist gradually with LTE in the V2X landscape. Therefore, in order to meet the strict requirements for latency, transmission speed and reliability, MR-DC architectures combining different radio access technologies, communication modes and connection interfaces should be deployed. In addition, operation in multi-operator and cross-border scenarios must be guaranteed.

Taxation of Self-Employed in Russia: Potential Discrimination

In 2018 the Russian government introduced an option for the self-employed to pay a newly designed professional income tax instead of the ordinary personal income tax. This new tax regime has been widely examined by Russian scholars; however, the potentially discriminatory nature of the tax has not been studied. The tax is based on citizenship, and the authors’ principal hypothesis is that it conflicts with the fundamental principles of Russian tax law because it is not consistent with the principle of non-discrimination in Russian law. The article studies the issues arising from taxing the self-employed (i.e. the professional income tax) in a cross-border scenario and the potential for tax discrimination on grounds of nationality, tax nexus, and citizenship in taxing the self-employed in Russia. Moreover, the article raises the question of “general” tax discrimination among employees caused by the professional income tax. The authors use academic studies and judicial findings to examine the way other countries define the relationship between citizenship and taxation in order to clearly establish the discriminatory character of the professional income tax, and they conclude that the citizenship or nationality of the taxpayer is primarily a political connection rather than an economic one. The tax reflects an economic connection and should be understood as a payment for the “consumption” of public goods. In the contemporary understanding of taxation, the citizenship-based approach should be regarded as discriminatory in principle. The political ambitions of Russia in promoting integration across the EAEU cannot justify the restriction of the self-employed status only to citizens of EAEU member states. The authors recommend redesigning the professional income tax on the basis of residence and revising treaties pertaining to dual taxation in order to extend their provisions to the professional income tax.For citation: Ryabova E.V., Machekhin V.A. (2020) Taxation of the Self-Employed in Russia: Potential Discrimination. Pravo. Zhurnal Vysshey shkoly ekonomiki, vol. 15, no. 2, pp.149– 172 (in English). DOI:10.17323/2072-8166.2022.3.149.172.

Financial Innovation in the Field of RMB Internationalization

Due to the limitations of the traditional financial system, under the background of the general trend of international financial development, the system construction of RMB internationalization has become an important financial innovation and construction project. Therefore, this project studies the financial innovation in the field of RMB internationalization, and puts forward suggestions and assumptions on the construction of the project system. The main research contents of the project include: Research on hardware construction of digital RMB cross-border transaction settlement system based on blockchain infrastructure; Research on the construction and advantages of distributed cross-border payment network based on digital currency; Research on the construction of distributed cross-border payment network and the reform of international monetary system; Research on establishing risk control and supervision system of digital RMB cross-border payment and settlement; Research on guiding third-party payment institutions to expand digital RMB cross-border payment scenarios.

Sharing Studies between 5G IoT Networks and Fixed Service in the 6425-7125 MHz Band with Monte Carlo Simulation Analysis.

This work presents sharing studies between 5G networks and point-to-point fixed service in the 6425–7125 MHz band. In this research, we provide simulations of interference from 5G downlink and uplink to fixed service in the frequency band 6425–7125 MHz. We evaluated several scenarios of interference, which include cross-border scenarios, as well as scenarios of interference within the borders of one administration. The obtained results of this work are presented as protection distance and frequency offsets that are required in order to achieve compatibility between 5G and FS in the 6425–7125 MHz band. The spectrum engineering techniques presented in this research can help different companies and regulatory administrations in their spectrum management and frequency regulation activities and seriously improve the efficiency of implementation for 5G technologies.

Demonstration of 5G Solutions for Smart Energy Grids of the Future: A Perspective of the Smart5Grid Project

As the complexity of electric systems increases, so does the required effort for the monitoring and management of grid operations. To solve grid performance issues, smart grids require the exchange of higher volumes of data, high availability of the telecommunication infrastructure, and very low latency. The fifth generation (5G) mobile network seems to be the most promising technology to support such requirements, allowing utilities to have dedicated virtual slices of network resources to maximize the service availability in case of network congestions. Regarding this evolving scenario, this work presents the Smart5Grid project vision on how 5G can support the energy vertical industry for the fast deployment of innovative digital services. Specifically, this work introduces the concept of network applications (NetApps), a new paradigm of virtualization that are envisioned to facilitate the creation of a new market for information technology (IT), small and medium enterprises (SMEs), and startups. This concept, and the open architecture that facilitates its implementation, is showcased by four real-life 5G-enabled demonstrators: (1) automatic fault detection in a medium voltage (MV) grid in Italy, (2) real-time safety monitoring for operators in high voltage (HV) substations in Spain, (3) remote distributed energy resources (DER) monitoring in Bulgaria, and (4) wide area monitoring in a cross-border scenario between Greece and Bulgaria.

5G connected and automated driving: use cases, technologies and trials in cross-border environments

Cooperative, connected and automated mobility (CCAM) across Europe requires harmonized solutions to support cross-border seamless operation. The possibility of providing CCAM services across European countries has an enormous innovative business potential. However, the seamless provision of connectivity and the uninterrupted delivery of real-time services pose technical challenges which 5G technologies aim to solve. The situation is particularly challenging given the multi-country, multi-operator, multi-telco-vendor, multi-car-manufacturer and cross-network-generation scenario of any cross-border scenario. Motivated by this, the 5GCroCo project, with a total budget of 17 million Euro and partially funded by the European Commission, aims at validating 5G technologies in the Metz-Merzig-Luxembourg cross-border 5G corridor considering the borders between France, Germany and Luxembourg. The activities of 5GCroCo are organized around three use cases: (1) Tele-operated Driving, (2) high-definition map generation and distribution for automated vehicles and (3) Anticipated Cooperative Collision Avoidance (ACCA). The results of the project help contribute to a true European transnational CCAM. This paper describes the overall objectives of the project, motivated by the discussed challenges of cross-border operation, the use cases along with their requirements, the technical 5G features that will be validated and provides a description of the planned trials within 5GCroCo together with some initial results.

Reopening Borders in the Early Stage of COVID-19 Massive Vaccination: A Mathematic Model to Estimate the Optimal Length of Quarantine Period between Different Regions

Background: Quarantine for cross-region traveling has slowed the transmission of SARS-CoV-2/coronavirus. However, it has had a negative impact on mental health and economic recovery. The study aimed to estimate a responsible and pragmatic quarantine period using a mathematic model. Method: We constructed a retrospective mathematical modeling using data from the World Health Organization coronavirus disease database. Four risk levels and 16 different cross-border scenarios were designed and analyzed. We then sought the optimal quarantine duration in different situations using a logarithmic regression analysis. Findings: The mean optimal quarantine days was found to be 1·4, 6·5, 10, and 14 days for the scenarios of traveling from very-high-risk countries to very-high-, high-, moderate- and low-risk countries, respectively. The mean optimal quarantine days regarding from high-risk countries to very-high-, high-, moderate- and low-risk countries were 0, 0·8, 7·2, and 14 days, respectively. The mean optimal quarantine days for from moderate-risk countries to very-high-, high-, moderate-, and low-risk countries were 0, 0·8, 2·6, and 10·4 days, respectively. The mean optimal quarantine days for from low-risk countries to very high-, high-, moderate-, and low-risk countries were 0, 0, 0, and 2 days, respectively. Correlations in logarithmic regression between the optimal quarantine days and the ratio of incidence rate between different countries performed well.Interpretation: The quarantine period for cross-region travelling could be adjusted based on the ratio of incidence rate between the two countries. We recommend a optimal quarantine period for travelers from a low-risk country entering a higher risk country in the early stage of COVID-19 massive vaccination. Funding: No external fundingDeclaration of Interest: None to declare

Back to the Question: Can the VAT Exemption for Cost-Sharing Groups Operate in Cross-Border Scenarios?

In this article, the author analyses the AG Opinion in the ECJ case ofKaplan International Colleges UK (C-77/19) and focuses on the discussion whether cost-sharing groups operating across borders can benefit from the VAT exemption established in article 132(1)(f) of the VAT Directive.

Cloud Computing: Difficulties in Applying Current and Proposed Nexus and Profit Allocation Rules in a Cross-Border Scenario

This article discusses the international tax challenges with respect to business profits arising from the digital economy using the cloud computing service model. In particular, it examines issues that arise from the OECD Model Convention (2017) and other OECD documents, the EU Proposal for a Directive on a Significant Digital Presence and the OECD Secretariat Proposal for a “Unified Approach” under Pillar One.

5G Cross-Border Operation for Connected and Automated Mobility: Challenges and Solutions

The vision of cooperative, connected and automated mobility (CCAM) across Europe can only be realized when harmonized solutions that support cross-border traffic exist. The possibility of providing CCAM services along different countries when vehicles drive across various national borders has a huge innovative business potential. However, the seamless provision of connectivity and the uninterrupted delivery of services along borders also poses interesting technical challenges. The situation is particularly innovative given the multi-country, multi-operator, multi-telco-vendor, and multi-car-manufacturer scenario of any cross-border layout. This paper introduces the challenges associated to a cross-border deployment of communication technologies through the analysis of three use cases: tele-operated driving, high-definition map generation and distribution for autonomous vehicles, and anticipated cooperative collision avoidance. Furthermore, a set of 5G solutions have been identified to ensure that CCAM services can be supported efficiently in cross-border scenarios. Faster handover of a data connection from one operator to another, generalized inter-mobile edge computing (MEC) coordination, and quality of service (QoS) prediction are some of the solutions that have been introduced to reduce the uncertainties of a real 5G cross-border deployment.

Morgan Stanley Judgment: The Emergence of Transnational VAT Pro Rata Calculations

The lack of legal clarity regarding VAT recovery and deductible proportion rules applicable to a branch providing support services to its overseas head-office has led to the application of different deduction methods across the European Union (EU). On 24 January 2019, the Court of Justice of the European Union (CJEU) released a long-awaited judgment in Morgan Stanley & Co International plc (Morgan Stanley) (C-165/17). The Court opined that the French branch of a Morgan Stanley entity with its head-office in the United Kingdom should use two pro rata calculations to recover French VAT incurred. One regarding expenditure exclusively used to support of its head-office’s mixed supplies, and a second, on general costs used to support both establishment’s supplies. The significance of this judgment should not be overlooked for taxable persons active in the insurance, financial and other exempt sectors and established in more than one Member State. In this article, the author considers previous CJEU’s judgments that have contributed to shape the issue of deductible proportion in cross-border scenarios, analyses the Morgan Stanley judgment and addresses theoretical and practical difficulties that arise.

Cross-border regulation and fintech: are transnational cooperation agreements the right way to go?

Abstract In light of inevitable cross-border scenarios in today’s highly interconnected financial markets and since financial stability may be put at risk by the rising phenomenon of financial technology (known as fintech), the importance of developing effective ways to regulate fintech across borders cannot be neglected. The financial sector has changed from a traditional one marked by conventional financial intermediation structures towards an increasingly technology-affected one. Not only this change but anticipated developments too require if not extensively reconsidering the design of financial regulation,1 then at least not turning a blind eye to shaping developments. Whether the numerous recently sprouting bilateral fintech cooperation agreements are adequate transnational regulatory instruments to address fintech effectively across borders is for this paper to elucidate.

Re: Public Consultation Document: Addressing the Tax Challenges of the Digitalisation of the Economy (13 February - 6 March, 2019)

The need for a global response to the challenges presented by the digitalisation of the economy has been magnified due to various unilateral interim measures that countries have begun to adopt. This is because these unilateral measures could fall outside the scope of tax treaties, and result in harmful double taxation. The OECD's public consultation document proposes to design such a global response by amending the existing nexus and profit allocation rules. The terms “nexus rules” and “profit allocation” can be viewed from two perspectives: a. tax claims made by countries under their internal tax laws; and b. restrictions imposed on these claims by tax treaties. It is generally acknowledged that countries, in the exercise of their sovereignty, are free to claim taxing rights in any manner as they may deem fit, although their ability to enforce them may be limited in the case of cross-border scenarios. Given the abundance of ways in which countries may seek to tax their residents and non-residents’ income (whether it emanates from their participation in the digital economy or otherwise), the ends of harmonisation and certainty seem best served through the medium of income tax treaties. This contribution reviews the proposals made in the public consultation document from the perspective of tax treaties.

The Cost Sharing Exemption Under Debate - Part I

It can be concluded from the working papers that the following points are a point of attention: - The requirements (conditions) for applying the cost-sharing exemption; - Application of the exemption in cross-border scenarios, and - Interaction of this particular exemption with the VAT grouping provision of the VAT Directive. This article aims to discuss in two parts all of these issues and provide some thoughts as to the current interpretation and application of the exemption, as well as to point out questions that remain to be answered. This is all done as well in light of the cases DNB Banka and Aviva that are currently pending before the Court of Justice of the European Union (hereinafter: the CJEU) and two infringement procedures against Germany and Luxembourg. In accordance with the above, the first part of the article will list the requirements that need to be satisfied in order for the exemption to apply (section 2). Then a deep dive into interpretation and application of these requirements in practice will be taken (section 3). We will end the article in section 4 with some concluding remarks. In part II of our article we will look at the issues with respect to the application of the exemption in cross-border scenarios that include both EU and non-EU situations and how the exemption interacts with the concept of VAT grouping as set out in Article 11 of the VAT Directive.

The Brisal and KBC Finance Decision: Once Again the CJEU Assesses the Compatibility with EU Law of Gross Withholding Taxation of Non-residents

The levying of withholding taxes on non-residents by the source state is a long-standing topic in EU tax law. The recent case Brisal and KBC Finance, concerning a withholding tax levied on an outbound interest payment, constitutes just the last addition to the line of judgments on this issue rendered over years by the Court of Justice of the European Union. In Brisal the Court first confirmed that Member States are permitted to use different techniques for charging a tax on residents and non-residents for the same item of income, i.e. through a final-year assessment and an immediate retention upon the payment. However, the judiciary of Luxembourg found that residents and non-residents are in a comparable situation with respect to the deductibility of operational costs and thus both categories shall be treated equally in this regard. Although this conclusion could most likely have been anticipated in light of precedent decisions of the Court, the judgment in Brisal is equally remarkable since it disrupts a fundamental tenet of taxation of income earned by non-residents without a permanent establishment, i.e. that the source state can levy a withholding tax on the gross amount of such income and that the expenses of the underlying activity have to be considered by the residence state. Besides and more generally, the decision confirmed that the CJEU is increasingly willing to scrutinize the methods for calculating the tax base adopted by Member States in cross-border scenarios.

The Cost Sharing Exemption under Debate – Part II

The cost sharing exemption of article 132(1)(f) of the VAT Directive is currently under debate, both at the level of the European Commission and within individual Member States. In this second part of their article, the authors continue the discussion of the application of the exemption in cross-border scenarios, that include both EU and non-EU situations, and the interaction of the exemption with the concept of VAT grouping as set out in article 11 of the VAT Directive.

The Cost Sharing Exemption under Debate – Part I

The cost sharing exemption of article 132(1)(f) of the VAT Directive is currently under debate, both at the level of the European Commission and individual Member States. In Part I of this article, the authors analyse each of the conditions for applying this exemption. In the second part of this article, the authors discuss, in particular, the application of the exemption in cross-border scenarios, including both EU and non-EU situations, and the interaction of the exemption with the concept of VAT grouping as set out in article 11 of the VAT Directive.