The Negative Impact of the New Finnish Limited Liability Companies Act

Przez Tuomo  Kauttu

An unnecessary and harmful clause was added to the Finnish Limited Liability Companies Act


A new clause was added to the Companies Act, according to which the purpose of a limited liability company is to generate profits for shareholders. The topical question is, is such a clause necessary in law at all? Or is the phrase purely harmful?

Historically, a limited liability company is one of the types of companies that can conduct business. A special feature of a limited company is that ownership is based on capital investments that can also be traded. The Annual General Meeting decides annually, within the limits set by law, how much of the company's profits are distributed to shareholders as dividends.

The company's management must drive the company's interests and ensure that the business is successful. This has always been the case. Such an activity does not require that the law defines the purpose of the company.

The wording of the Act confuses the decision-making of the General Meeting. Without this clause, decision-making on dividends could be made on a sound basis. Decisions on the distribution of dividends can now be influenced by decision-making even when it is not in the company's interest and is against the will of the majority of shareholders.

The wording of the Act makes it difficult for the management of the company to operate and increases the risk of claims by the management. This can paralyze the development of healthy businesses.

Under the pressure of an aggressive group of owners - even minority owners - management may be at risk of minimizing focus on activities that bring quick profits to an aggressive group but is destructive to the company's business.

The above-mentioned problems are not new in the history of international limited liability companies. The exception is that in Finland the root cause of the problem is recorded in the law. In addition, the wording of the law is economic and not legal. The law has an economic opinion that is just one opinion among others.

In legal science, the question has been considered from two different theories. One theory is known as 'property model' or 'owner concept'. In this theory, a joint-stock company is an instrument whose sole purpose is to maximize the wealth of its owners. Another theory is known as "entity model" or "equity concept". According to the company model, a limited company is an instrument that can simultaneously serve the interests of several of its participants.

Whatever the opinion, the question is, in any case, legal theory or economic theory. It is not wise to record the current theory of choice at any given time.

The most well-known example of legal history is the Court's ruling in 1919, Dodge v. Ford Motor Co .. Instead of paying dividends, Henry Ford intended to invest in new technology and more sophisticated production and pay higher wages to employees. As a result of the claim by the minority shareholders (Dodge brothers), the court ruled that dividends would prevail. The statement of reasons for the decision includes a statement that the purpose of a limited liability company is to generate profits for shareholders. The phrase has survived. The sentence has not been applied in the United States as such in the case-law, nor was it enshrined in law.

Over the last hundred years, the issue has been repeatedly discussed, and the issue has also been taken into account in law-making in the United States. Once and for all, it has come to the conclusion that the purpose of a limited liability company is to “conduct legal business” and that the management of the company has a duty to act in the interests of the company.

Would it also be advisable in Finland to review the definition of the purpose of a limited company?

“The purpose of a limited company is to conduct legal business” is a historically well-established, harmless and in many ways tested definition. It is difficult to understand why the definition is not used in Finland.

Should You File a Lawsuit?

Przez Suzanne Natbony

When is it appropriate to sue? Attorneys and others working in the legal industry are used to being asked this question, not just from clients, but from friends and even family members.

Individuals may want to sue for a variety of reasons. Maybe a company collected money from them and did not render the promised service, perhaps they ate contaminated food or sustained an injury on someone’s property, maybe they were lied to, or feel that they are the victim of medical malpractice. There are any number of reasons that people start asking this question ranging from very serious problems to outright laughable ones.

Most of the people asking these questions usually want to hear a resounding ‘YES’ from their attorney friends. They are looking for confirmation that they can go ahead and enforce their legal rights. Unfortunately, it is usually far more complicated than people assume. Attorneys with extensive years of practice and a good grasp of legal proceedings can help potential plaintiffs make the best decisions in these matters.

One might hear their lawyer call this type of legal analysis, “the 4 Cs of case evaluation.” In other words, a person needs to have the following four components before he or she can sue over a wrongdoing. These are:

  1. Claim(s)
  2. Compensability
  3. Corroboration
  4. Collectability


1. Claims

Are the case’s claim legally valid? Is it possible to win the claims if the case goes to court?

Claims can fall into many areas of law. Common claims include claims for breach of contract, defamation, nuisance, negligence leading to personal injury or professional malpractice, wrongful termination or employment discrimination.

Before an individual can sue for any of these claims, the specific components of each claim must be met. For example, in a negligence case, there are four criteria that must be fulfilled for the claim to be valid. These are duty, breach, causation, and damages. However, the presence of these elements does not guarantee the aggrieved party will win a lawsuit.

Before filing a lawsuit, the person pursuing a claim must also understand whether there would be any possible counterclaims and defenses available to the defendant. If the defendant’s claims or defenses are stronger than the plaintiffs, or if the defendant is able to counter the claims of the plaintiff, then it may not be worthwhile for the aggrieved party to pursue litigation.

Any potential plaintiff needs to ask themselves what the potential defendant’s counterclaims or defenses might be and whether these are strong enough to drop the idea of pursuing a lawsuit.


2. Compensability

Can the court award damages for the plaintiff’s claims? Be it monetary reparation or other non-monetary remedies - will the suing party receive any compensation if the case ended in their favor?

For example, imagine a dry cleaner failed to return an expensive suit when delivering clothes back to an individual. Let’s imagine in this scenario that the issue was flagged with the dry cleaner, and it turned out that the offending suit was not lost forever, in fact it was still in the delivery vehicle and was eventually returned to the aggrieved party. While this might have caused the customer some temporary frustration, is it prudent to sue over this little discomfort, even though it is true the company failed to meet the due date of the agreement? The customer did not lose any money, and the company returned the suit as soon as they found it in the van. It is true there was damage, the customer experienced frustration.

Before suing, a person must consider how much they have lost and whether the courts can award them damages at all. Litigating is a costly procedure and must be taken into consideration by any potential plaintiff. It can cost thousands of dollars to file a lawsuit and countless precious hours and energy to prepare paperwork whether you are filing in the civil courts or just small claims court.

Even if a claim is found to be valid, the court may find it difficult to measure damages that will adequately compensate the suing party’s claims. In the case of non-monetary reparations such as an injunction, the courts may not be able to deliver a restraining order for a variety of reasons. The potential plaintiff must therefore take many factors into account when deciding whether his or her damage is compensable.


3. Corroboration

Is there evidence to prove the claims? Is there compelling written or video evidence, experts or witnesses that can testify on behalf of the plaintiff in court? Evidence will vary based on the claim.

For example, in a breach of contract case, it is easier to prove the breach if there is a written contract, along with emails to support that the terms were not met.  An aggrieved party will find it more difficult to prove an oral contract and will need to find other avenues to prove that an oral contract existed and that a breach occurred. This could include bringing witnesses to testify in court.

In a products liability case, it is the responsibility of the individual to prove to the court that the damage was due to the product itself or defects in the product and not their failure to follow instructions or their mishandling of the item. In a medical malpractice case the potential plaintiff may need an expert to testify that the standard of care was not reached by the medical professional.

In any such case, the evidence of the potential plaintiff must be stronger than that of the potential defendant. The aggrieved party must take into consideration what sort of evidence, witnesses and testimony the potential defendant might introduce to the court to back up their side of the story.


4. Collectability

If the aggrieved person wins the case, is it possible to collect damages? Will the defendant agree to pay damages or appeal the case? Does the person have the financial wherewithal to compensate the suing party? If compensation might lead to the entity filing for bankruptcy, then the person who filed the lawsuit may have serious issues with collecting damages. The potential plaintiff must take into consideration all aspects of the defendant’s ability to pay upon receiving a judgement in court.

So what is the answer to the age old question of whether or not a potential plaintiff should sue?

It is important to pay critical attention to “the 4 Cs.” If an aggrieved person cannot provide satisfactory answers to these four critical elements, the lawsuit may end up being a waste of money, time, and resources.

Even if the four Cs are present, it is exceptionally rare to come across a cut and dry case in which it is all but guaranteed that the plaintiff will win. There are still a variety of factors that might mean the plaintiff could lose, such as alienating the jury so that the individual jury members dislike the plaintiff and don’t want to find in his or her favor.

It is therefore always best to seek the advice of a seasoned legal professional before embarking on a lawsuit.


Suzanne Natbony’s background is in business law.  She has worked in-house for several startups and for several law firms. Her focus is on helping potential clients get deals done and grow their business through preventive legal services designed to prevent lawsuits in the first place. As a fellow entrepreneur (as founder and CEO of the online legal services platform, LawTake), Ms. Natbony can relate to what you’re going through and offer unique legal advice and experience with business issues. Learn more about Suzanne Natbony here. 

Drop in Chinese Foreign Direct Investment in Europe and North America Causes Concern

Przez Jacob Stein


North America and Europe are two of the most popular regions for Foreign Direct Investment because of their economic and political stability. Since 2006, investment from China was on the rise, going from $25 Billion in 2006 to $94 Billion in 2016.

However, in the last two years, North America and Europe have seen a sharp decline in Chinese FDI due to the new Chinese outbound investment regulations. In addition, these new restrictive policies have altered the type of investment and investor.

Before changes to the policy were made, a handful of private Chinese investors were responsible for a significant portion of FDI mainly in real estate, hospitality, sports, and entertainment. Investment in these sectors accounted for almost 25% of all foreign investment from China.

These sectors are now restricted, and areas focused on Chinese development and infrastructure such as technology, R&D, energy, and agriculture programs have taken precedence. In addition, the private investor has been replaced by sovereign-wealth funds and other political players focused on projects such as the Belt and Road initiative.

The implications of this trend, if it continues, is concerning. From 2015 to 2016, the value of Chinese FDI in both regions increased by $53 billion. From 2016 to 2017, the value dropped by $26 billion (discounting the completion of the $43 billion Syngenta deal).

Even more troubling is the forecast for Chinese FDI. The total value of newly announced acquisitions and transactions in North America dropped by 89% and 75% respectively, and in Europe, 60% and 46% respectively.

At Aliant®, our attorneys are well-versed in policy changes and its impact on our clients. We work closely with our colleagues in China to help our Chinese and non-Chinese clients to move funds out of China to North America and Europe.


For more information on how we can assist you, please contact us today at

Proposed Amendment to U.S.- P.R.C. Income Tax Treaty May Impact Chinese Investment in the U.S.

Przez Leticia Balcazar

U.S.- P.R.C. Income Tax Treaty Alert.

Proposed Amendment to U.S.- P.R.C. Income Tax Treaty May Impact Chinese Investment in the U.S.

On August 21, 2018, Sen. Tammy Baldwin, D-Wis and Sen. Marco Rubio, R-Fla., introduced legislation that would disallow application of treaty reduced withholding rates for Chinese individuals and entities.

Internal Revenue Code (IRC) Sections 871(a)(1)(A) and 881(a)(1) impose a flat tax of 30% on the gross FDAP income of foreign individuals and entities, respectively. Sections 1441 and 1442 impose an obligation to withhold the 30% tax upon the payee of FDAP income. FDAP income is passive investment income, such as, royalties, interest, dividends, rents, salaries, wages, premiums, annuities, compensations, and remunerations.

The Agreement Between the Government of the United States of America and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income, Apr. 30, 1984, T.I.A.S. No. 12,065, provides for reduced rates of withholding as follows:

Dividends      10%    Article 9, para. 2

Interest           10%    Article 10, para. 2

Royalties       10%    Article 11, para. 2


The proposed changes to IRC section 894 are in bold. 

(a)       Treaty provisions.

            (1) Except as otherwise provided in this section, the provisions of this title shall be applied to any taxpayer with due regard to any treaty obligation of the United States which applies to such taxpayer.

            . . . .

(d)       Exception for People’s Republic of China.

(1) IN GENERAL.- The rates of tax imposed under sections 871 and 881, and the rates of withholding tax imposed under chapter 3, with respect to any resident of the People's Republic of China shall be determined without regard to any provision of the Agreement between the Government of the United States of America and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income, signed at Beijing on 18 April 30, 1984.

(2) REGULATIONS.-The Secretary shall promulgate regulations to prevent the avoidance of the purposes of this subsection through the use of foreign entities.''


If the legislation becomes law, all U.S. source FDAP income earned by Chinese individuals and entities will be taxed at 30% on the gross amount and withheld at the source. Fortunately, the exemption for portfolio interest under IRC sections 871(h) or 881(c) is still available for Chinese individuals and entities on qualifying debt investments. Under the portfolio interest exemption, U.S. source interest is exempt from the 30% flat tax on properly documented loan transactions.

Leticia Balcazar is a partner with Aliant, LLP in Los Angeles California. She assists foreign investors with their business transactions in the United States. She is an expert not only in structuring new debt investments for foreign lenders but also in restructuring existing debt investments to comply with the portfolio interest exemption rules.

The New Business Form - Simplified Corporations (SAS) in Argentina:  Articles, Bylaws and Shares

Przez Javier Canosa

Law 27,349 known as the “Venture Capital Support Law” (the “Law”) promises to revolutionize the daily practice of corporate law and business affairs.


First filing of the Articles and Bylaws and subsequent filings.

In the City of Buenos Aires, the Business Entities’ Controlling Body (“IGJ”) is the entity in charge of the incorporation of the SAS. The filing will be made through a Management System of Digital Documentation (“GDE”) and the system of Remote Proceedings (“TAD”).

The number of the filing proceeding will be the CUIT (Single Taxpayer Code) of the SAS.

Corporate capital: shares.

The capital will be divided into shares. At the incorporation, capital must not be less than two (2) adjustable minimum living wages (currently, AR$17,720).

The subscription and paying up of the shares must be made in accordance with the conditions, proportions and terms set forth in the Articles of Incorporation. At least 25% of the contributions in cash must be paid at the time of the subscription. The outstanding amount must be paid up in no more than two (2) years. Contributions in kind must be fully paid at the time of the subscription.

Contributions may be in cash or in kind. Contributions in kind may be made at the value unanimously agreed on by the shareholders in each case. They must indicate on the Articles of Incorporation the chosen method of assessment, or otherwise, the market value. In case of corporate insolvency or liquidations proceedings, the creditors may challenge the assessment within five (5) years as from the day of the contribution. The challenge will not succeed if the assessment was made by the court. The financial statements must include a statement indicating the assessment mechanism for the contributions in kind.

Ancillary services may be rendered, either by shareholders, directors or third party providers. These services may consist in services already rendered or to be rendered in the future, and their contribution amount may be determined by the shareholders in the Articles of Incorporation or by the unanimous decision of the shareholders, otherwise the contribution value will be determined by one or more experts unanimously appointed by the shareholders. The Articles of Incorporation must include the assessment mechanism used.

The service contribution must be described in the Articles of Incorporation and/or subsequent amendments, and must indicate its content, term, method, compensation, penalties for violations and the alternative mechanism for paying up when the contribution renders impossible for any event. These contributions may only be amended as agreed, or otherwise, with the consent of the obligor and the shareholders.

If the service contribution is pending either in whole or in part, the transfer of shares held by the shareholder who promised the service contribution will require the unanimous consent of the shareholders, in which case an alternative mechanism for paying up must be established.

Shareholders guarantee third parties the paying up of the contributions jointly and unlimitedly.

Capital increase.

When the capital is increased, shareholders may decide at the shareholders’ meeting the characteristics of the shares to be issued, indicating their class and rights.

The shares may be issued at face value or at a premium, in which case different premium values may be set for shares issued upon the same capital increase. For this purpose, shares of different classes must be issued, which may hold equal dividend and voting rights with different premiums.

When the capital increase does not exceed 50% of the registered corporate capital, the articles of incorporation may provide for a capital increase without serving any notice or registration of the shareholders’ meeting resolution.

Irrevocable capital contributions.

Contributions may be irrevocable subject to a subsequent issuance of shares for 24 months as from the date on which the contributions are accepted by the SAS management body, which must decide whether to accept them or reject them within 15 days as from the payment in whole or in part of the contribution amount. The conditions and requirements for payment of these contributions must be set forth in the relevant rules.

Classes of shares.

The SAS may issue non-endorsable registered shares of common or preferred stock, and their face value must be indicated as well as the dividend and voting rights held within each class.

Book-entry shares may also be issued.

The different classes of shares may have the same voting and dividend rights, regardless of any differences in their purchase price. The Articles of Incorporation must indicate the voting rights held by each class of share, as well as if they carry one or more votes, if applicable.

In the event the share certificates are not issued, the share ownership will be proved by means of the SAS record certificates included in the book of shares. In addition, the SAS must issue account balance statements.

Transfer of shares.

The trading mechanism or transfer of shares must be set forth in the Articles of Incorporation, which may establish that any transfer of shares or of any class of them will be subject to prior authorization of the shareholders at the shareholders’ meeting. In the event the Articles of Incorporation do not include this provision, notice of the transfer of shares must be served to the SAS and recorded in the book of shares to be effective against third parties.

The Articles of Incorporation may prohibit the transfer of shares or a class of shares, provided that the term of the prohibition does not exceed ten (10) years as from the date the shares were issued. This term may be extended for additional periods not exceeding ten (10) years, provided that this decision is adopted by the shareholders representing all of the SAS capital.

The restrictions or prohibitions imposed on the shares must be registered in the Book of Shares. If the shares are certificated, the restrictions/prohibitions must be also registered in the applicable certificates of shares. If the shares are book entry, the restrictions must be registered in the documents issued.

The transfer of shares will be void if it does not comply with the provisions of the Articles of Incorporation.

This comprehensive article was written by Javier Canosa, Aliant partner and head of the Argentina office. It is the second part a four-part series. To read the first post, please click here

Exit Tax for Companies in Finnish Law and the ECJ Case C-292/16

Przez Tuomo  Kauttu

Many countries levy a so called “exit tax”, which is realised in situations where a country would lose its right to tax assets that are being transferred to another country. The purpose of exit taxes is to collect a tax on such assets before they would be out of reach of the national tax authority.

Currently, Finnish law does not mandate a general exit tax for companies or assets leaving the country. However, there are rules that apply in certain special cases. According to the EU Merger Directive, a merger or the transfer of assets does not usually result in immediate taxes for a company: the Finnish exit tax rules of its Elinkeinoverolaki (EVL, the law relating to the taxation of business income) are based on this directive. The Merger Directive does, however, allow the taxation of profits or capital gains from a permanent establishment resulting from a merger, division, or transfer of assets on certain conditions.

A Finnish company can have a permanent establishment in another EU country, which may get transferred to another company located in the EU. For example, in the recent ECJ case C-292/16, a Finnish limited liability company had transferred its permanent establishment in Austria to an Austrian company via a transfer of business. In such a situation, according to EVL 52e.3 § which the Finnish tax authority applied, the market value of the transferred assets, such as the provisions deducted previously in the taxation in Finland of that permanent establishment, were included in the permanent establishment’s taxable income for the tax year in which the transfer took place. Had the assets been transferred domestically, the principle of continuity would have been applied – this would have resulted in a different outcome, i.e. the unrealised capital gains would not have been recognised as income until the assets had been transferred, which is more convenient than the situation described previously.

The ECJ found that this difference in treatment can act as a deterrent to companies established in Finland wishing to do business in another member state through a permanent establishment. The ECJ considered that this was against the freedom of establishment under Article 49 of the Treaty of the Functioning of the European Union. This indicates that when it comes to exit tax, the Finnish rules need to be revised, as the court stated that the Finnish exit tax rules go beyond what is necessary to preserve the allocation of powers of taxation between the member states. This opinion seems to be in line with previous ECJ case law regarding exit taxation. Article 49 of the TFEU does not restrict the final confirmation of the amount of tax, but levying the tax immediately was considered to be in conflict with the article and the principle of proportionality.

In any case, Finland should renew its exit tax rules when implementing article 5 of the EU Anti Tax Avoidance Directive (ATAD). The deadline for this is 1.1.2020, but considering the current state of the Finnish exit tax rules, the relevant issues should be addressed earlier than this to allow Finland to continue taxing certain assets. It is also worth noting that the ATAD does not solve the issues of EVL 52e.3 §, as it contains mostly exit tax rules that cannot yet be found in Finnish law.

Simplified Corporations (SAS): The new business form that promises to revolutionize corporate structures in Argentina

Przez Javier Canosa


Law 27,349 known as the “Venture Capital Support Law” (the “Law”) promises to revolutionize the daily practice of corporate law and business affairs.

In business affairs, legislation is enacted after there is a usual business practice, that is, generally the legal regimes regulate a habitual business practice. In this case –the Venture Capital Support Law – the most important introduction is a new business form, the Simplified Corporation or SAS which anticipates the business needs. The SAS has shaken us in such a way that practitioners and qualified individuals have to modernize and adapt to this new regulation.

The Venture Capital Support Law introduces several interesting concepts, such as fiscal benefits for investors in “venture capital”, but the most important introduction is the SAS, which promises to revolutionize how businesses practice in Argentina and may bring into  question, the need and utility of the traditional business forms (i.e. the Argentine Corporation “S.A.” and the Private Limited Company “S.R.L.”).

The Simplified Corporation (SAS) – A new business form.

To begin with, this is a new business form regulated mainly by Law 27,349 “Venture Capital Support Law” and the Companies Law (Law No. 19,550).

The SAS most remarkable features include the following:

  • SAS may be created by one or more natural or legal persons whose liability will be limited to the full payment of the subscribed/acquired shares.
  • SAS are based on SRL rules, together with features of S.A., but it involves a new corporate structure.
  • Any business entities may be converted into a SAS.
  • SAS owned by one person cannot create nor participate in other one-person SAS.
  • The management body does not require a majority of Argentine residents; in fact, only one resident is enough.
  • Meetings may be held through digital means (video or teleconference).
  • In the City of Buenos Aires, the Business Entities’ Controlling Body (“IGJ”) has only registry powers, this means that it cannot control or analyze the content of the documentation, it can only control the formalities.
  • SAS may be formed either by a notarially recorded instrument or by a private instrument certified either judicially, notarially, by bank, by the applicable public registry authority, or through digital means with the digital signature (we will analyze this below).
  • Minimum content of the Articles of Incorporation:
  • Shareholders who are natural persons: name, age, marital status, nationality, occupation, domicile, ID number (DNI/CUIT/CUIL/CDI);
  • Shareholders who are legal persons: corporate name, domicile and place of business, personal information of the directors, CUIT or CDI of the foreign entity, if applicable, and information of its registration under section 118 or 123 of the Companies Law.
  • Corporate name: must include the expression “Sociedad por Acciones Simplificada” or “SAS”. Otherwise, directors or corporate representatives will be unlimitedly and jointly liable for the performed acts.
  • Domicile and place of business: If the Articles of Incorporation only indicate the domicile, the address of the place of business may be indicated in the minutes evidencing the incorporation. Notices served in the registered domicile will be valid and binding.
  • Purpose: may be plural but the main activities must be clearly and accurately indicated. These activities may be linked or not with each other.
  • Term: must be ascertained.
  • Corporate capital and shareholders’ contribution: must be expressed in national currency. The classes of shares must be indicated as well as the method of issuing shares, other characteristics of shares, and the capital increase regime, when applicable. The Articles of Incorporation must also set forth the capital subscription, the amount and the paying up of the shares, and, if any, the term for paying any owed amount, which must not exceed two (2) years as from the date on which said instrument was executed. In this regard, there is absolute freedom for establishing what is deemed necessary.
  • Management, shareholders’ meeting, and auditing body, if any: The Articles of Incorporation must indicate the directors appointed, and, if any, the members of the auditing body, their term in office and the domicile where notices will be served. In all cases, a legal representative must be appointed.
  • Profits: The rules to distribute profits and bear losses are applied.
  • Miscellanea: The clauses necessary to establish the rights and obligations of shareholders towards each other and in relation to third parties.
  • Liquidation: The clauses related to the corporate functioning, dissolution and liquidation.
  • Year-end date.
  • Publication: SAS must be published for one (1) day in the official gazette of its place of incorporation. The legal notice must include:
  • At the time of incorporation: basic information of the abovementioned Articles of Incorporation and Bylaws.
  • At the amendment of the articles of incorporation or dissolution of the SAS:
  • The decision of amending the Articles of Incorporation.
  • The date of the shareholders´ resolution at the shareholders’ meeting in which the amendment/dissolution was adopted.
  • Registration: The registration must be made within 24 hours as from the working day following the filing of the relevant documentation, provided that the petitioner uses the sample of Articles of Incorporation and Bylaws approved by IGJ.
  • Restrictions: In order to incorporate and maintain the structure of SAS, the SAS must not fall within any of the cases set forth in section 299 of the Companies Law, nor have any affiliates owning 30% of its capital that fall within any of the cases provided for in said section (except when the corporate capital is AR$10,000,00), this means that the SAS must not: (i)be subject to the public offering regime, (ii)be a state majority owned company, (iii)perform capitalization or transactions that require publicly traded securities, (iv) render public services. In the event the SAS is included in any of these cases, it must be transformed into any of the corporate structures set forth in the Companies Law in no more than six (6) months as from the occurrence of the circumstance. During this period, and until the filing with the Registry, the shareholders will be unlimitedly, jointly and subsidiarily liable to third parties, notwithstanding any other liability incurred.
  • However, the SAS will never be considered an entity that falls within section 299 of the Companies Law, even when the corporate capital exceeds the statutory amount (currently AR$10,000,000).

This comprehensive article was written by Javier Canosa, Aliant partner and head of the Argentina office. It is the first part a four-part series. To read the second post, please click here. 

The Seven Habits of Highly Successful Attorney Rainmakers

Przez Suzanne Natbony

Guess what lawyers, you are not just in the practice of law; you are also in the business of legal services. And I don’t mean that “the business of law” is pejorative or runs afoul with our professional rules of responsibility, which include the duties of loyalty, communication, financial integrity, confidentiality, diligence, competence, honesty and fairness. Lawyers usually think that, at the forefront, they need to be analytical and provide great advocacy, research and investigative skills. While all lawyers should have the 10 MacCrate Skills1 posted on their desks, lawyers also need to think about themselves as a small business and think about how to have long term successful working relationships with clients and how to attract the crème de la crème clients as well. Lawyers know that we can discriminate in selecting clients that we take on, so why not work to find and retain clients who appreciate our services for the long haul. Here are 7 habits of highly effective lawyers who run their practice like a business:

1) Good web presence. Your fancy degrees in your office may rarely get seen by anyone but your coworkers, so make sure your website and social media stay up to date with all of your achievements. If you can’t toot your own horn, no one else will either.

2) Maintaining your web presence. Downtime at work while waiting for clients to get back to you with information that you need to start billing should not be spent online gaming or shopping. Instead, write an article or blog post, ask for a testimonial/review from your client, reach out to a person/entity you are interested in working for and maintain that connection, peruse business/networking events for one to attend, use a connecting app to meet a new connection, check in with old clients/friends whom you haven’t spoken to in a while. All of the above are marketing types of activities that help you find 1 The Ten MacCrate skills include, the importance of solving your clients’ problems, legal analysis, legal research, factual investigation, communication, counseling, negotiating, litigation and alternative dispute resolution knowledge, organizational and managerial skills and recognizing issues and resolving them.
and meet new clients or get additional work from previous ones whom you like working for.

3) Get AV Rated or apply for SuperLawyers or another attorney award. When potential clients look you up, they like to see awards. Go to Martindale Hubbell, SuperLawyers, Top 10 Verdicts, etc. websites and fill out the applications or read the instructions on how you can get the awards or ratings. Then make an announcement in your newsletter, update social media and post the logo on your bio.

4) Networking is not a bad word. Every lawyer had to pass the bar, which took a lot of focused determination and introversion. Try turning that around to determined extroversion. Entrepreneurs have to have an elevator pitch and go to regular pitch and industry events. If you can’t make yourself be social at least once a week or something more than what you are already doing and, gosh forbid, go out and have fun, with a drink and talk to people, then your small business would fail.

5) Diversification is not just for investing. We all remember from our bar class when learning about trusts and estates that it’s best to diversify. Your time is like that too. You can’t just sit at your desk all day drafting letters and motions, unless you want to maintain associate or contract attorney status. You need to spend your time talking to people and building relationships, offering volunteering or pro bono work and creating content for your web presence. Rather than just writing, try shooting a video about the legal issue that you called about the most. Point new people to that video to save you time and save that potential client money on legal fees. They will likely appreciate the gesture and end up hiring you when they need real help.

6) Be more like your favorite business in pricing and refunds. If a client complains, do you act like some overseas call center personnel and hang up, do you say, “that’s too bad,” like you work at an airport retailer, or do you offer to make it right? Do you aim to offer a client satisfaction guarantee? Understandably, that’s almost impossible sometimes, but do you spin the goal of client satisfaction in a way that at least makes you someone your client will want to refer future business? Clients can be difficult, crazy, annoying and inconsistent, but try to think of yourself as the CEO of Zappos, who wrote the book, Delivering Happiness.

7) Team spirit. Do not treat people who work with you like they merely work at the same firm, rather, you work for the same team! I could not believe that I met a paralegal who said that her firm brought in expert coaches to teach only the “lowly” support staff how to deal with difficult people, and the lawyers did not have to participate! You can be both a zealous advocate and be professional to work with. Condescending, bullying and nastiness should be taken up with your therapist, not your colleagues. Finally, hazing stopped in college, grow up and treat younger lawyers with respect. High turnover rates do not help out your clients or your practice.

In conclusion, lawyers need to think about how they operate in a small business sense. Rather than watching an episode of Suits, try working on some of these tips in your free time to see an improvement in your professional life.

Suzanne Raina Natbony is a third generation lawyer, licensed in California, and practices in the areas of entertainment and healthcare law, with a private practice at the international law firm, Aliant LLP. She is also General Counsel of Beverly Hills Rejuvenation Center, a multistate franchising medical spa, with headquarters in Los Angeles and CEO of two startup companies, LawTake and Think Do It.

View Suzanne’s profile here.

Foreign Investors Should be Cautious When Using U.S. LLCs

Przez Jacob Stein

When determining what type of an entity should be used by foreign investors starting a business in the United States, an often-suggested structure is a U.S. limited liability company (U.S. LLC). This simple structure may be great for some foreign investors and disastrous for others.

  • A U.S. LLC is a disregarded entity for U.S. tax purposes. This means that its income is taxed at the foreign owner level, even if income is not distributed.
  • However, the home country of the foreign investor may treat the U.S. LLC as a corporation for its income tax purposes. This means that the U.S. LLC income is taxed at the entity level (not at the owner level).
  • This results in a mismatch (or hybrid) in how a U.S. LLC is treated for US and foreign country tax purposes.
  • This mismatch may severely impact a foreign investor’s ability to claim tax treaty benefits to reduce or eliminate U.S. income taxes.
  • The reason for this, is that only residents of a treaty country can qualify for treaty benefits – and there is a mismatch between who is the relevant resident, the individual investor or the legal entity.
  • Most modern treaties (for example: Belgium, Bulgaria, Denmark, Finland, Germany, Malta, Netherlands, New Zealand, South Africa, Sri Lanka, Sweden, and United Kingdom) recognize that a partnership or a disregarded LLC is ignored for income tax purposes and thus, focus on whether the partners/members themselves qualify as residents.
  • For example, U.S.-source income received by a U.S. LLC, which is (i) treated as a corporation under foreign country tax law and (ii) owned by a foreign person residing in such country, is not considered derived by the foreign member of that entity even if, under the U.S. tax law, the U.S. LLC is ignored.
  • Therefore, the foreign owner of a U.S. LLC may not be able to claim a benefit under the treaty for income received by the U.S. LLC.

The solution may be to use a more conventional partnership (general or limited) because a partnership is typically ignored for both U.S. and foreign country income tax purposes. This would allow foreign investors to claim treaty benefits for income received by the US partnership.

Before committing to a strategy, be aware of potential pitfalls that may change any advantages into unexpected disasters.

Regulation:  Facebook in the Crosshairs

Przez Gideon Koren

Even someone who has not yet tried her hand at submitting legal claims knows that rules of local jurisdiction in Israeli law determine that in the absence of other agreement between the parties, the service of a civil claim must be managed in the location connected to the defendant or to the event about which the suit is being litigated.

Thus, for example, if an Israeli company sells products to a company in Great Britain, both of the companies can contract that in the event of disagreement, the suit will be submitted in Great Britain and litigated according to British law. In most cases, the contractual agreement of the Israeli company will preclude submission of a suit in Israel.

In this context, most people do not give thought to the terms of service to which they are required to agree when joining a service or the internet, and few people trouble to read them. So too, when joining Facebook one is required to confirm terms of service. Among the tens of terms that constitute the agreement between Facebook and the user, appears a small and simple term, that determines that any claim against Facebook be adjudicated only in California and according to its laws.

Lately, the Attorney General, Avichai Mandelblit, was requested to offer his legal opinion on this condition in a class action suit submitted against Facebook a year ago in the District Court in Lod. Facebook claimed that as a result of this term, Israeli courts are precluded from adjudicating the suit.

Judge Esther Shtemer of the District Court held that this is a matter of a standard-form contract that serves a large population in Israel, and it is clear Facebook adapted its site for use in Israel in Hebrew. According to her, every foreign company needs to take into account the inconvenience of managing claims outside of its home country, as the interests of the consumer take precedence. Therefore, it was held that the suit would be adjudicated in Israel.

Facebook submitted an appeal to the Supreme Court, which requested the Attorney General's opinion given the importance of the issue and its repercussions for the general public. In his opinion, Mandelblit supported the District Court's decision.

The opinion and the decision of the District Court join a developing global front against Facebook. In February 2016, the High Court of Justice in Paris held, for the first time, that despite Facebook's terms of service – it is possible and even desirable to adjudicate legal claims against it in France, because the terms of service violate France's consumer laws and injure the 22 million French users of the social media service. The Court in Paris held that Facebook injures the basic rights of its users when it precludes them from adjudicating claims against it in their place of residence.

Now all that remains is for the Supreme Court in Israel to adopt the ruling of the District Court and Mandelblit's position, in order to return the power to the hands of the users of the social media service. In doing so, it appears that two goals will be accomplished: the first, an easing of the struggle of the common user against the giant Facebook; and the second, a deterrence of Facebook from arbitrary use in violation of Israeli law, in order to dictate unreasonable terms of service to its Israeli users, like those all over the world.

The involvement of the courts in this clause can even create a precedent and window for further intervention in other terms in agreements which the public signs automatically, without taking into account the repercussions on its lives, and particularly the injury to privacy.


The authors are attorneys from the Law offices of Gideon Koren and Co., specializing in intellectual property, trademarks and patents 

Poland:  Can the Seller Limit his Liability to the Consumer?

Przez Małgorzata Krzyżowska

Polish law protects consumers in relations with the sellers. The rule is that in relation with consumers, the seller cannot limit or exclude liability for the warranty. This issue is regulated by art. 558 § 1 of the Civil Code, which states that if a buyer is a consumer, limitation or exclusion of warranty liability is only permitted in the cases specified in the special provisions. Such a special case is, for example, the sale of used goods, when the seller's liability can be limited to not less than a year from the date of issue to the buyer. However, the introduction of such a limitation of liability between the seller and the consumer requires the conclusion of a contract containing the relevant provisions. Without such contractual terms, the seller is responsible to the consumer under the provisions of the Civil Code. 

The article was written by Justyna Lopuszynska, a lawyer working at the Aliant Law Firm in Poland.  Miss Lopuszynska will become an advocate next year.

Poland:  How to Determine the Witness’s Address?

Przez Małgorzata Krzyżowska

If during the proceedings we asked for the hearing of the witness, we must provide the Court the address of his residence. It happens that the party that wants to call a witness does not know the address. At this point, we can request the Center for Personalizing Documents of the Ministry of Interior and Administration to provide the witness's address data. The application is subject to a fixed fee, and its recognition takes several months. Submitting the application it is necessary to prove a legal interest in obtaining a witness's address. Unfortunately, it may be that the Personalization Center does not have a witness's current address because it only has citizen registration data, which is often outdated.

Poland:  What is the Term of Repaying a Loan if the Parties Have Not Indicated It in the Contract?

Przez Małgorzata Krzyżowska

Sometimes it happens that by borrowing some money we do not specify the exact term of the loan repayment. When the parties have not agreed on a repayment date in the agreement, provisions of art. 723 of the Civil Code shall apply, which provides that the debtor is obliged to return the loan within six weeks of the termination of the agreement by the lender. Therefore, the lender should first give the borrower a statement (preferably in writing) concerning the termination of the loan agreement and at the same letter lender should call for its repayment by indicating a 6-week term. In those letter lender should also indicate the manner of repayment of the loan, i.e. by specifying the bank account number to which the borrower should return the loan. If the amount of the loan is not repaid within 6 weeks, the lender can take the legal action. 

Poland:  When the Debtor May request to reduce the Contractual Penalty?

Przez Agnieszka Bąk-Bergander

Contractual penalty is a contractual sum of money which is compensation for non-performance or improper performance of a non-monetary obligation. This compensation is regulated by art. 483 of the Civil Code. Even if the parties specify in the contract the amount of the contractual penalty, the debtor may demand a reduction of the contractual penalties specified in the contract. Reducing the amount of contractual penalties is possible in two cases, i.e. when the liability has been substantially preformed or the contractual penalty is abnormally excessive. Evaluating the performance of a commitment, is taken into account the significance of what has been done for the creditor. On the other hand, "grossly excessive" contractual penalty is assessed individually in each proceeding. 

How to Protect Patients and Data When Using mHealth Products and Services

Przez Suzanne Natbony

“mHealth” generally refers mobile health and includes the practice of medicine or communications involving medical data via mobile devices. California Healthcare entities such as private practices, hospitals, health plans, pharmacies, or medical spas, must consider Health Insurance Portability and Accountability Act (HIPAA), Health Information Technology for Economic and Clinical Health Act (HITECH) and the California Civil Code among other regulation to protect patient data when using mobile devices.

Best practices for physicians, nurses, administrators and other healthcare providers who use mobile devices for work related tasks are evolving as technology continues to penetrate healthcare markets. It is strongly advisable to carefully manage mobile communications in healthcare markets, and minimize risk of undue privacy or security breach in violation of HIPAA, HITECH or other state and federal regulations. Some of the best practices in protecting patients and their data when using mHealth devices in medical practice include:

  1. Passcodes and other method of authentication to access a device.
  2. Encryption of email, billing, text messaging, and other programs containing protected health data or personal information.
  3. Secure Cellular Networks must be utilized. Public wi-fi are notoriously unsecure.
  4. Patient consent to use unsecure mobile device communications. 
  5. Docketing informal messages and conversations with patients. 
  6. Maintaining professionalism in electronic communications and avoidance of using medical shorthand or typos which can have significant medical consequences.
  7. Firewall, anti-malicious software (malware) should be installed and maintained routinely.
  8. Data backup.

Mobile communication has profound impacts on efficiencies and cost savings in virtually every sector of healthcare. But practitioners must balance emerging technical capabilities with the sensitive nature of patient data, the importance of providing accurate health-related information to patients, and the evolving regulatory environment.

Author: Suzanne Natbony, Esq. is a Los Angeles business and healthcare technology attorney with focuses in entertainment law, eCommerce, NonProfit, and privacy law. She is a member of the Women Lawyers Association of Los Angeles, an entrepreneur, and of counsel at Aliant LLP. Direct: 310-478-6251

Disclaimer: The content above is a discussion of legal issues and general information; it does not constitute legal advice and should not be used as such without seeking professional legal counsel. Reading the content above does not create an attorney-client relationship. Copyright 2017. All rights reserved. 

Introduction to Asset Protection

Przez Jacob Stein

There are a lot of people who have amassed a considerable amount of money during their life. Whether it is from a family inheritance, owning a successful company, having a high paying job, been fortunate with their personal investments, etc. Irrespective of how they have accrued their wealth it is vital they keep hold of their “nest egg” for as long as possible.

If you are one of those fortunate people who has a lot of assets then you must consider protecting those assets as soon as possible. It is never too late to consider asset protection because you never know what the future may hold for you and your loved ones.

You might be saying to yourself: “What is asset protection?” Asset protection is a form of advanced financial planning that helps you to protect your assets from any legal attack that may arise now or at any time in the future. These attacks may come from a government agency, a private party plaintiff, a lender or even a family member.

There is a misguided belief that asset protection is about engaging in fraud or about hiding assets. It is not. All asset protection strategies employed by asset protection lawyer are legal and legitimate.

An asset protection strategy uses estate planning tools to legally safeguard your assets. We often recommend combining asset protection with insurance coverage, including carrying a large umbrella policy.

When you want to protect your assets with an asset protection plan or strategy there is no one solution that will fit all your needs. As a matter of fact, there are dozens of commonly used structures. You will need to define your needs and goals, and with a little bit of common sense you will create a plan to protect your assets from anyone who thinks they are entitled to them. Here are some useful asset protection strategies:

  • It is better to keep a low profile and do not flaunt your wealth by being too extravagant.
  • Do not keep all assets under your name. It is better to spread the ownership of your assets and register the names of each of your assets in a separate legal entity or a trust.  If you come across as an unattractive target for a lawsuit, hopefully no lawsuit will be filed to begin with.
  • Your liability exposure and the creditor’s ability to reach your assets varies greatly from state to state.  Consult with someone who understands the laws of your state.
  • It is a good idea to ensure that you have sufficient liability insurance. Insurance has nothing to do with the value of your assets or your net worth. It should be sufficient to cover likely or possible claims.
  • Consult with someone who devotes a significant percentage of their practice to asset protection.  It has become popular for many lawyers to add asset protection as a practice area on their website.  This is one practice area where there is no substitute for practical experience. You want a lawyer who has completed a few hundred asset protection transactions.

Take a look at this book if you want an insight into how to keep hold of your hard earned cash and your personal assets. It is a must read for all Californian residents. 

The Growing Cannabis Industry

Przez Jacob Stein

Jacob Stein has just wrapped up moderating a nationwide panel presentation on Cannabis Law. More than 500 lawyers across the country listened to the presentation (presented by the Rossdale Group), and the presentation is scheduled to run several more times this year.  Speakers addressed landlord-tenant issues, lender issues, banking and licensing, trademark registrations, criminal law, tax reporting and filing. In addition to moderating, Jacob Stein presented on offshore banking and asset protection for the farmers, producers and retailers of cannabis.


Here are some interesting statistics we compiled for the presentation:


  • 55 million Americans smoke pot at least once a year (compared to 59 million who smoke cigarettes).
  • 83 percent of Americans support medical marijuana and 49 percent support recreational use.
  • Fully 70 percent of Americans who have tried marijuana at least once support legalizing recreational weed. Only 26 percent who have not tried it support it.
  • Asked why they don’t use pot, 27 percent of marijuana abstainers cited its illegality. 26 percent said they simply don’t like it.
  • 52 percent of the country’s 55 million pot users are millennials.
  • 54 percent of adults who use marijuana are parents.
  • Number of states where cannabis is legal as of today is 28
  • Current revenue from retail sales is approximately $4 billion, right behind frozen pizza and ahead of sales of Viagra and music streaming services. Expected annual growth in sales is 35%.
  • Projected revenue from legal marijuana sales by 2021 is $20 billion.
  • The beer industry is expected to lose $2 billion a year due to shifting preferences from beer to marijuana.
  • The total estimated annual market for legal and illegal cannabis is $50 billion.

Information About Poland

Przez Małgorzata Krzyżowska

Polska to demokratyczny kraj położony w Europie Środkowej, będący od 2004 roku członkiem Unii Europejskiej. Tempo wzrostu gospodarczego stawia Polskę wśród najszybciej rozwijających się państw Europy. Article available in Polish and in English.






Polska to demokratyczny kraj położony w Europie Środkowej, będący od 2004 roku członkiem Unii Europejskiej. Tempo wzrostu gospodarczego stawia Polskę wśród najszybciej rozwijających się państw Europy. Polska eksportuje głownie maszyny, urządzenia i sprzęt transportowy (głownie autobusy), a także towary przemysłowe np. meble.

Najważniejszymi partnerami handlowymi pod względem eksportu są Niemcy, Wielka Brytania i Czechy. Wzrost Produktu Krajowego Brutto Polski w 2016 r. wyniósł 3,4 % co daje 3 miejsce wśród krajów Unii Europejskiej. Usytuowanie Polski jest niewątpliwie zaletą w kontaktach handlowych – przez kraj biegnie tranzyt między Europą Zachodnią i Południową oraz państwami wschodniej części kontynentu.

Polska jest także członkiem NATO (North Atlantic Treaty Organization), WTO (World Trading Organization), OECD (Organisation for Economic Co-operation and Development) oraz EEA (European Economic Area).



Obowiązująca od 1997 r. konstytucja zakłada trójpodział władzy na ustawodawczą, wykonawczą i sądowniczą. W Polsce prawo stanowią wyłącznie organy władzy ustawodawczej czyli dwuizbowy parlament składający się z sejmu i senatu. Wybory do parlamentu odbywają się co 4 lata. Władzę wykonawczą w Polsce sprawuje prezydent wybierany w wyborach powszechnych na 5-letnią kadencję oraz Rada Ministrów zwana powszechnie rządem.

Władzę sądowniczą sprawują sądy i trybunały. Konstytucja gwarantuje ich odrębność i niezależność od innych władz.



Polskie prawo przewiduje różne ułatwienia dla zagranicznych inwestorów, w tym również zwolnienia podatkowe. Mogą oni prowadzić działalność gospodarczą w formie jednoosobowej firmy (po spełnieniu odpowiednich warunków), a także w formie spółek.

Praktycznie w każdym przypadku osoby zagraniczne mogą prowadzić firmę w formie spółki komandytowej, komandytowo – akcyjnej, z ograniczoną odpowiedzialnością lub akcyjnej.

Najpopularniejszą spośród nich jest spółka z ograniczoną odpowiedzialnością, której założenie – według polskiego prawa – wymaga minimalnego kapitału w kwocie 5.000 zł. Mogą być zakładane przez jednego lub więcej właścicieli – nie a ograniczeń co do ich ilości.

Obecnie spółkę z o.o. można założyć w dwojaki sposób: albo w sposób elektroniczny z wykorzystaniem wzorca umownego dostępnego w systemie teleinformatycznym albo tradycyjnie poprzez sporządzenie umowy spółki przed polskim notariuszem.

Korzystnym i często wybieranym rozwiązaniem dla cudzoziemca, chcącego prowadzić działalność w formie spółki z o.o. w Polsce jest zakup gotowej już spółki z ograniczoną odpowiedzialnością. Nie ma żadnych przeszkód, żeby obcokrajowiec został udziałowcem (nawet jedynym) oraz/lub prezesem spółki z o.o. nawet, jeśli nie mieszka w Polsce.

Dla podmiotów z państw nie należących do UE czy EFTA przewidziane są pewne dodatkowe wymogi.



Polski system opodatkowania jest zharmonizowany z dyrektywami UE.

Polska zawarła z prawie stoma krajami umowy podatkowe w zakresie unikania podwójnego opodatkowania.

System podatkowy obowiązujący w Polsce  przewiduje kilkanaście rodzajów podatków. Większość spośród nich to podatki bezpośrednie, np.:

  • podatek dochodowy od osób fizycznych (PIT),
  • podatek dochodowy od osób prawnych (CIT),
  • podatek od spadków i darowizn,
  • podatek od nieruchomości,

a pozostałe to podatki pośrednie, takie jak np.:

  • podatek od towarów i usług (VAT),
  • podatek akcyzowy.

Podatek dochodowy od osób prawnych

Podatnicy, jeżeli mają siedzibę lub zarząd na terytorium Polski, podlegają obowiązkowi podatkowemu od całości swoich dochodów, bez względu na miejsce ich osiągania. Podatnicy, jeżeli nie mają na terytorium Polski siedziby lub zarządu, podlegają obowiązkowi podatkowemu tylko od dochodów, które osiągają na terytorium Polski.

Dochodem jest nadwyżka sumy przychodów nad kosztami ich uzyskania, osiągnięta w roku podatkowym.

Stawka podatku dochodowego od osób prawnych wynosi 19%, a  w przypadku małych podatników i podatników rozpoczynających działalność – 15%.

Opodatkowanie dywidend

Gdy odbiorca dywidendy jest osobą fizyczną, zastosowanie znajdą przepisy  19%-owym podatku dochodowym osób fizycznych, a gdy odbiorca jest podatnikiem podatku dochodowego od osób prawnych - przepisy ustawy o podatku dochodowy od osób prawnych, która również przewiduje 19%. Jednak w przypadku wypłaty dywidendy na rzecz nierezydenta, mogą znaleźć zastosowanie również przepisy właściwej umowy o unikaniu podwójnego opodatkowania.

Podatek od towarów i usług (VAT)

Od 1 stycznia 2011 r. do większości produktów i usług stosuje się stawkę podstawową w wysokości 23%. Obniżona stawka VAT 8% ma zastosowanie do budowy, remontu, modernizacji, przebudowy obiektów budowlanych, a 5% stawka VAT do podstawowych produktów żywnościowych (np. chleb, nabiał, przetwory mięsne, produkty zbożowe: mąka, kasze, makaron, soki), książki. Stawki te obowiązują do końca 2017 r. Od 2018 r. polska planuje ich zmianę.

Podatek dochodowy od osób fizycznych

Stawka podatku dochodowego od osób fizycznych wynosi 18% ale jeśli dochód osiągnięty w ciągu roku przekroczy kwotę PLN 85.528 (ok. EU 20.000) wówczas stawka podatku wynosi 32 %.

W przypadku cudzoziemców, ich dochody podlegają opodatkowaniu w Polsce jeśli mieszkają na terytorium Polski (np. gdy przebywaja na ternie Polski przez ponad 183 dni w roku). Osoba, która nie mieszka w Polsce, płaci podatek tylko od tych dochodów, które osiągnęła w Polsce i to w zakresie przewidzianym umową o unikaniu podwójnego opodatkowania.



Poland is a democratic country located in Central Europe, since 2004 member of the European Union. The pace of economic growth puts Poland among the fastest developing countries in Europe. Poland exports mainly machinery, equipment and transport equipment (mainly buses), as well as industrial goods, e.g. furniture.

The most important trading partners in terms of exports are Germany, the United Kingdom and the Czech Republic. Increase of Poland's Gross Domestic Product (GDP) in 2016 amounted to 3.4 percent making it the third largest market in the EU. The location of Poland is undoubtedly an advantage in trade relations - transit through Western and Southern Europe and the countries of the eastern part of the continent.

Poland is also a member of NATO (North Atlantic Treaty Organization), WTO (World Trading Organization), OECD (Organization for Economic Co-operation and Development) and EEA (European Economic Area).

The constitution, which has been in force since 1997, provides for a legislative, executive and judicial tribunal. In Poland, the law is exclusively the governing body of the legislature, which is a bicameral parliament composed of the Sejm and Senate. Parliamentary elections take place every 4 years. Executive power in Poland is exercised by the president elected in the general election for a 5-year term and the Council of Ministers, commonly called the government.

Judicial power is exercised by courts and tribunals. The Constitution guarantees their distinctiveness and independence from other authorities.



Polish law provides various facilities for foreign investors, including tax exemptions. They can conduct business as a one-person business (subject to conditions) and in the form of companies.

Practically in each case, foreigners may run the business in the form of a limited partnership, limited partnership, joint stock, limited liability or joint stock company.

The most popular of them is a limited liability company whose establishment, according to Polish law, requires a minimum capital of PLN 5,000 (which is less then EU 1.200). They can be set up by one or more owners - there is no restrictions on their quantity.

Currently a limited liability company can be set up in two ways: either electronically using a contractual template available in the teleinformatic system or traditionally by drawing up a company contract at a Polish notary public.

A beneficial and often preferred solution for a foreigner wishing to operate in the form of a limited liability company in Poland is a purchase of a ready-made limited liability company. There are no obstacles for a foreigner to become a shareholder (even the sole shareholder) and / or the president of the limited liability company, even if he does not live in Poland.

For some non-EU or EFTA countries some additional requirements are provided.



The Polish tax system is harmonized with the EU directives.

Poland has signed with almost a hundred countries tax treaties on the avoidance of double taxation.

The tax system in Poland provides for several types of taxes. Most of them are direct taxes, e.g.:

  • personal income tax,
  • corporate income tax,
  • inheritance and donation tax,
  • real estate tax,

other are indirect taxes, such as:

  • goods and services tax (VAT),
  • excise duty.

Corporate tax

Taxpayers, if they have a seat or management in Poland, are subject to taxation on their entire income, regardless of where they are located. Taxpayers, if they do not have a domicile or management office in Poland, are subject to tax only on the income that they acquire in Poland.

The income is the surplus of the sum of revenues over the costs of obtaining them, achieved in the fiscal year.

The corporation tax rate is 19%, and for small taxpayers and startup taxpayers - 15%.


Taxation of dividends

When the recipient of the dividend is a natural person, the rules of  19% income tax on natural persons apply, and if the recipient is a corporate income taxpayer - the rules of the corporation tax law, which also provides 19%. However, if a dividend is paid to a non-resident, the provisions of the relevant double taxation agreement may apply.


Value Added Tax (VAT)

From January 1th 2011, a basic rate of 23% applies to most products and services.

The reduced VAT rate of 8% applies, for example, to the construction, renovation, modernization, reconstruction of buildings and a 5% VAT rate, for example for basic food products (e.g. bread, dairy products, meat products, cereal products: flour, cereal, pasta, juices), books. These rates are valid until 2017. Since 2018, Poland plans to change them.

Income tax from individuals

The personal income tax rate is 18%, but if the income earned during the year exceeds the amount of PLN 85,528 (about EU 20,000) then the tax rate is 32%.

In case of foreigners, their income is taxable in Poland if they live in Poland (e.g. when they stay in Poland for over 183 days a year). A person who does not live in Poland pays tax only on the income that he has earned in Poland, to the extent provided for in the double taxation agreement.

Applying Insolvency Exemption to Disregarded Entities

Przez Jacob Stein

A client recently posed a question regarding insolvency. The client had a single member LLC with a significant amount of debt and significant personal assets. Their business was going under. Would personal assets (the client has a significant amount) be counted by the IRS? If so, would the business still be deemed insolvent?



I have a single member LLC with a significant amount of debt. The business is going under and the debt will be forgiven by the lender. How can I minimize my tax liability on discharge of indebtedness income?  I am particularly concerned because I have significant personal assets, and if those are counted by the IRS, the business would not be deemed insolvent.

Quick Answer

Taxable income can be avoided by claiming the insolvency exclusion under Section 108 of the Internal Revenue Code and combining it with some clever structuring.


Details – Specifics

  1. If your LLC is a disregarded entity that realizes discharge­of­indebtedness (DOI) income, then the insolvency exclusion applies to the discharged indebtedness of the LLC only to the extent the owner of the LLC is insolvent.
  2. .If an individual is the sole owner of the LLC, then the insolvency exclusion of DOI income is applied at the individual’s level.
  3. Better yet, if an S corporation is the sole owner of the LLC, then the insolvency exclusion of DOI income is applied at the corporate level. Here, the shareholders’ financial condition is irrelevant. Therefore, the amount of cancelled debt that may be excluded from taxable income is the extent to which LLC’s liabilities exceed the fair market value of its assets.


How it’s done

  1. Discharge of Indebtedness (“DOI”).
    a. Taxpayers must include in gross income “income from discharge of indebtedness.”  
    b .Any DOI income recognized by an S corporation passes through to, and is reported by its shareholders.
  2.  Insolvency Exclusion.
    Under the insolvency exclusion, DOI income is excluded from gross income if the discharge occurs when the taxpayer is insolvent.

    a .Limitation. The amount excluded under the insolvency exclusion is limited to the amount of insolvency.
    S corp owes Lender $1.5 million. The fair market value of S corp’s assets is $2,750,000 million. The S corp’s liabilities $3 million, which includes the $1.5 million debt. S corp’s insolvency amount is $250,000 ($2,750,000 assets less $3 million liabilities).
    If Lender forgives $400,000 on the loan, then the insolvency exclusion is limited to $250,000, the insolvency amount. Thus, debt forgiveness results in $150,000 of taxable DOI income to the S corp ($400,000 forgiven less $250,000 insolvency amount). The $150,000 of taxable DOI income will pass through to the sole shareholder.

    b .Definition of Insolvent. “Insolvent” means the excess of liabilities over the fair market value of assets as determined immediately before the DOI.
  3.  Disregarded Entities.
    If a disregarded entity realizes DOI income, the insolvency exclusion applies to the discharged indebtedness of a disregarded entity only to the extent the owner of the disregarded entity is insolvent.  Our client was very solvent, and the LLC would not have qualified for the insolvency exemption.
  4. S Corporations
    .a. S corporations generally pass through items of income, loss, and other tax attributes to its shareholders.
    b. However, whether the insolvency exception applies is determined at the S corporation level and not at the shareholder level.
    c .By transferring the ownership of the LLC to an S corporation (we also could have checked the box to have the LLC be taxed as an S corporation), we limited the insolvency test to the assets of the business – which was insolvent. Our client’s personal assets were not counted.
  5. Reduction of Tax Attributes.
    a. The amount excluded under the insolvency exclusion reduces certain tax attributes that are carried over to the tax year of discharge.
    b. The amount of reduction equals the excluded DOI income.
    c. The tax attributes requiring reduction are to be reduced in the following order:
              i.Net operating losses,
             ii. General business credit
             iii.Minimum tax credit,
             iv.Capital loss carryovers,
             v. Basis reduction of property,
            vi  Passive activity losses and credit carryovers, and
            vii. Foreign tax credit carryovers.
    d. When an S corporation recognizes DOI income, there is a corresponding reduction in the entity’s tax attributions at the corporate level. Since S corporations do not have net operating losses, for example, this may affect a shareholder’s distributive share of losses and deductions that were excluded for the taxable year of the DOI.

    The result may be a readjustment of each shareholder’s excess losses that carry forward in the years following the DOI year. 

Asset Protection Advantages of Cook Islands International Trusts


For more than 30 years now, the Cook Islands has been leading the way in providing a trust regime which offers excellent asset protection features with all the flexibility of an English style common law trust.

The asset protection advantages offered by a Cook Islands Trust include:

  • Certainty as to the time limitation periods during which creditors must commence actions in relation to “fraudulent transfers” by settlors of international trusts.  In summary, a creditor must commence an action against a settlor within 12 months of the date of transfer of assets to the trust and against the trustee within 24 months of the date of transfer of assets to the trust, to have standing to argue a fraudulent transfer by the settlor.
  • The creditor bears the onus of proof to show that a transfer by a settlor was done with intent to defraud creditors.  The creditor must satisfy this onus of proof to a standard of “beyond reasonable doubt”
  • Judgments obtained in a court other than the Cook Islands High Court cannot be enforced against the trustee, settlor, beneficiaries or protector of an International Trust.  This forces creditors to argue their case against the trust under Cook Islands law
  • An International Trust will continue to exist notwithstanding that the settlor of the trust may be declared bankrupt.
  • If a creditor is successful in arguing that a transfer to a trust was done with intent to defraud creditors, the only remedy available to the creditor is an award of damages from the trust fund.
  • Punitive damages cannot be recovered from an International Trust.
  • The avoidance of forced heirship rights in the home jurisdiction of the settlor will not render an International Trust void or voidable.
  • Special purpose domestic or offshore entities can be placed underneath the International Trust and take advantage of the asset protection features offered by the Cook Islands regime.
  • There are several forms of trusteeship available in the Cook Islands including private trustee companies, managing trustees/custodian trustees and co-trustees.  These forms of trusteeship allow for flexibility for clients in structuring control mechanisms.

The Cook Islands International Trust is an excellent choice for a client who is seeking an international investment vehicle offering a substantial level of asset protection.

We have a long-standing relationship with Asia Citi Trust company in the Cook Islands and are very happy with their service. We would be happy to make an introduction.

2017 Changes in Polish Law for Companies and Individuals

Przez Małgorzata Krzyżowska

On 1st January, 2017, the following changes entered into force in the Commercial Companies Code. Article 209 of the CCC after changes states, that in the event of a conflict between the interests of the company and the interests of a member of the management board, his or her spouse, relatives and relatives up to the second degree and of the persons with whom he or she is associated personally, the member of the management board should disclose the conflict of interests and abstain from participation in settlement of such matters and may require entering that in the protocol.

In addition, provisions of Article 236 of the CCC provides that a partner or partners representing at least one tenth of the share capital may demand that extraordinary meeting of partners be convened and demand that specific issues be included in the agenda of that meeting of partners. In addition a partner or partners representing at least one twentieth of the share capital may demand that specific issues be included in the agenda of the next general meeting of partners. Such request must be submitted in writing to the management board not later than three weeks before the date of the general meeting of partners. The management board included the issues covered by request in the agenda of the nearest general meeting of partners and informs the partners in accordance with Article 238 of the CCC. If within two weeks of the date of presentation of the demand to the management board referred to in Article 236 § 1, the extraordinary general meeting of partners is not convened with the agenda conformable with the demand or when the agenda of the next general meeting of partners shall not include the issues referred to in Article 236 § 11 of the CCC, the Registry Court may, after calling the board to make a declaration, authorize to convene an extraordinary general meeting of partners who placed the demand. The partners on demand of which the meeting was convened, may ask the Registry Court to dispense from the obligation to cover the costs imposed by resolution of the meeting.

In the Law of 26 June 1974 - Labor Code (OJ 2016 item 1666) the following changes have been made. The employer who hires less than 50 employees not covered by the Collective Labor Agreement or the supra-institutional Collective Labor Agreement may lay down the conditions for the remuneration in the remuneration regulations. The employer who hires at least 20 and less than 50 employees not covered by the Collective Labor Agreement or the supra-institutional Collective Labor Agreement shall determine the conditions of remuneration in the remuneration regulations, if the union organization requests its determination. In the remuneration regulations the employer may determine other benefits associated with the work and the rules for their allocation. The rules of placing the employee handbook are also provided.

Furthermore, in view of the termination or expiry of the employment relationship, the employer shall immediately issue the certificate of employment to the employee, if he does not intend to sign another employment contract with them within 7 days from the date of termination or expiry of the previous employment relationship. The certificate of employment applies for the period or periods of employment for which no certificates have been issued so far. However, in the case of signing another employment contract with the same employee within 7 days from the date of termination or expiry of the previous employment relationship, the employer shall issue the certificate work only on their demand, in written or electronic format; the request may be made at any time and apply to the issue of the certificate of employment for the previous period of employment or all periods of employment for which no certificates have been issued so far. The issue of the certificate of employment may not be subject to prior settlement of employee with the employer.

It is also important to order to conclude contracts of total entrustment of property in writing under pain of nullity.

Another important change is the extension of the period for appealing that may be brought before a court against the termination of the contract of employment. This time limit will be 21 days from the date of the letter denouncing the contract of employment. The request for reinstatement or compensation shall be lodged with the labor court within 21 days from the date of the termination of employment without notice or from the date of expiry of the contract of employment. The request of a contract of employment shall be lodged with the labor court within 21 days from the date when the notification about the refusal to work was presented.

From 1st January, 2017, the Law of 22 July 2016 also entered into force, amending the Act on minimum wage and certain other acts, that specifies the minimum rate of 13 PLN gross per hour for employees on the basis of the order contracts (Article 734 of the Civil Code) and contracts for the provision of services (Article 750). The remuneration in this amount should be paid in the form of money and additionally in the case of contracts concluded for longer than 1 month, the payment should be made at least once a month. The legislator also introduced the principle, that the remuneration in the amount resulting from the minimum hourly rate cannot be waived. In addition, the amendment provides that if the confirmation of number of hours in the contract is not defined, the contractor/recipient shall provide the payer with information on number of hours of work/services. This may result in a loss of control over time by contractors and consequently give rise to additional financial burdens for the payers. The legislator also provided a few exceptions, in which the amendment shall not apply. The minimum hourly rate will not apply in the case of contracts of the order or the contract for the supply of services where: the place and time of the provision of services shall be decide by the contractor/recipient and the contractor/recipient entitled only to the remuneration depending on the results (commission reward). Please note that if the remuneration is not adapted in practice to minimum hourly rate, the contractor/recipient may claim before a labor court to the amount calculated using the minimum rate.  In addition, from 1st January, 2017 the non-payment of remuneration in the amount of PLN 13 gross per hour shall be an offense punishable by a fine of PLN 1,000 to PLN 30,000.

In addition, on 1st January, 2017, the following significant changes were entered to the Civil Code, which suggested that the procuration may include authorization also or solely to make operations jointly with a member of the management organ or a member entitled to represent the commercial partnership. The notification letters or declarations addressed to the company may be made to one of the persons granted with procuration.

The amendment has also put an end to dilemmas related to calculation of the date at which the legal action had to be carried out, e.g. in response to the request by the court on civil matters. It was therefore clearly determined that if the end of the period for the implementation of operations shall fall on the day recognized by law to be free from work or on Saturday, the time limit shall expire on the next day which is not a day free from work or Saturday.

For more information, please contact  Małgorzata Krzyżowska.

The Brexit-Silver Lining for Foreign Investors

Przez Jacob Stein

As 2016 draws to an end, the world reflects on the ‘roller coaster’ year that left us with Brexit and a politically divided country. The economic forecast for the upcoming year continues to cause uncertainty for investors. However, there may be a silver lining in all this: the potential opportunities for US lenders and investors in post-Brexit Europe.

Daniel Fireman, Head of Real Estate Finance at Howard Kennedy LLP, London, and a leading expert in commercial real estate investment, proposed that a combination of factors suggest that opportunities may be exploited to good effect by US lenders with a commercial and pragmatic approach to lending.

One such factor is the weaker currency. Historically, the Sterling has been one of the most stable currencies in the world. It is now the worst performing currency in its group. This affects many parts of the economy and creates tremendous opportunity for foreign investors trying to gain traction in the UK market.

Another factor is the combination of low interest rates and a potential for high return. Brexit has made the real estate market in the UK more affordable, and much more appealing to outside investment.

However, corporate real estate has been trickier to value post-Brexit. Real estate experts have guess-timated the dip from a range of 5% to 17% and some say nothing has changed, but several factors are certain:

  • The UK has experienced a significant drop in commercial real estate purchases
  • There is economic uncertainty
  • The best gauge of valuation is through property owners
  • Existing investors have experienced a hit and continue to face uncertainty
  • Potential investors are at an advantage especially because of the low interest rates

Aliant, LLP cooperates with colleagues at Howard Kennedy and other UK law firms and works with clients with existing and potential financial interests in the UK and other countries. We continue to monitor the situation and counsel our clients accordingly. For more information on how we may assist you, please visit

Tax Considerations in Structuring Funds

Przez Jacob Stein

There are many considerations in structuring a venture capital or a private equity fund – taxation, securities laws, alignment of interests, valuation issues and segregation of liabilities. We find that taxation tends to drive the structure of the deal.

There is no one “silver bullet” structure, but most funds will utilize an entity for the fund itself, and another entity for the interest of the fund manager. Click to read complete article. 

Brexit: Contemplating Changes and Effects

Przez Jacob Stein

It happened – the UK voted to LEAVE the EU. Stock markets dipped; social media is packed with opinions. Most importantly, what happens to EU/UK taxation?  It is too early to tell what will really happen as a result of Brexit, but the transition will be bumpy at best.


              Click to read full blog

Citizenship for Sale: Investment-Based-Immigration

Przez Jacob Stein

Investment-based immigration or economy-based immigration is a mutually beneficial relationship for nations looking to generate a source of revenue, and investors interested in gaining citizenship. 


Click the image to read the complete blog.

Could You be Named in the Panama Papers?

Przez Jacob Stein

Since the story on the Panama Papers broke, we have been receiving frantic calls and emails from people around the world worried about the legality of their offshore structures. Aliant, LLP adheres to the highest level of professional integrity with regular checks and balances to ensure that our clients are compliant. Offshore structures are not illegal; however, using offshore structures for tax evasion is illegal. 

 Aliant Partner Jacob Stein is currently helping some former clients of Mossack Fonseca rectify their offshore structures.

Panama is one of many "offshore" jurisdictions, and the Panama Papers unveil a sliver of the offshore structuring by the rich and famous. Offshore structures have legitimate uses, like asset protection, privacy and estate planning. They are not legal when used for tax evasion. Following the scandal, it is likely that all offshore jurisdictions will be pressured into transparency. We recommend all clients and other investors of offshore structures to contact their advisors for a review. 

If you have been affected by the Panama Papers scandal or you are worried that your offshore structure is not compliant, please email us today at or call us at +1 818-933-3838. 

2016 Changes to UK Taxation

Przez Jacob Stein

The United Kingdom has been quietly undergoing a tax revolution for the past few years Few days ago, Chancellor George Osborne introduced, ‘The budget for the next generation.'

Jacob Stein works with many clients on their international tax planning needs, including clients with businesses or investments in the U.K.

If you are concerned that these changes may affect you, please contact us

Presidential Elections - Tax-Mania 2016

Przez Jacob Stein

The 2016 Presidential Election is gearing up and the battle for party winner is in full throttle. With philosophies ranging from the extreme right to the extreme left, 'TAX' might just be the topic that seperates the winners from the losers. 

Is Bitcoin a Currency or Commodity? Depends on What Side of the Pond You Are On

Przez Jacob Stein

Last week, the European Union took a progressive step towards clarifying how digital currencies will be recognized in the EU for purposes of taxation. The EU now recognizes virtual currencies as legal tender, not commodity, and they are therefore exempt from VAT (Value Added Tax), a sales tax added to products.

Bitcoin is the most popular and widely used digital currency (a digital or virtual currency uses peer-to-peer technology for the payment of goods and services). It is an internet-based currency that was established in 2009 and is produced via a method called mining.

The decision made by the European Court of Justice (ECJ) was a result of a case that originated in Sweden: Skatteverket (Swedish Tax Agency) v. David Hedqvist.  The dispute was about adding a VAT to the exchange of traditional currency (pounds, euros, dollars) and Bitcoin. The case was brought to the ECJ when the Swedish Tax Authority determined that Bitcoin would be treated like a commodity and taxed as such. The ECJ overturned that ruling and set a legal precedent that digital currencies are now recognized as a legal tender, not as a commodity.

Unfortunately recognition of bitcoin as legal tender is yet to go global as the U.S. has a very different opinion on the matter.  

According to the United States Internal Revenue Service (IRS), the U.S. recognizesBitcoin (and other digital currencies) as a commodity, similar to gold, and will tax it as such. In fact, last month, the U.S. Commodity Futures Trading Commission (CFTC) made this point clear by setting an example with Coinflip, a San Francisco-based Bitcoin operator who was not complying with CFTC trading regulations. The company has since settled their case with the CFTC. 

Starbucks and Fiat in Trouble for Illegal Tax Practices

Przez Jacob Stein

The war on tax avoidance just got a few new casualties. Usually, discussion on the international taxation of multinationals could be compared to an episode of the classic cartoon series, Tom and Jerry where Jerry always gets away in the end, snickering self-satisfactory. This time though, it seems that Tom caught him and held on. 

On October 21, 2015, the European Commission for Competition ruled that the tax advantages granted to Starbucks by the Netherlands and to Fiat Chrysler by Luxemburg were illegal and did not meet the criteria of the European Union State Aid rules. Netherlands and Luxemburg have been ordered to retrieve up to $30 million dollars from the companies for back taxes. 

The European Commissioner, Margrethe Vestager, made a statement regarding the situation. “Tax rulings that artificially reduce a company’s tax burden are not in line with EU state aid rules. They are illegal.” She continued.  “I hope that, with today’s decisions, this message will be heard by member state governments and companies alike.” 

The multinationals were accused of transfer pricing, a tax strategy that is indeed legal but highly controversial. Transfer pricing is the price charged for goods or services by one entity of a company to another entity in the same company. Ideally, the transfer price in this transaction would reflect what the seller would charge an independent, unrelated source but undercharging could lead to a whole array of questionable tax practices if it is used to ‘lower profits’ thereby lowering taxes.  

“Although “comfort letters” or “tax rulings” by governments are legal, the arrangements with Starbucks and Fiat Chrysler do not reflect economic reality,” Vestager said. Luxemburg and the Netherlands are not happy with this decision and Starbucks plans to appeal the decision. The commission is already looking into several other multinationals and nations with questionable arrangements. 

Aliant, LLP provides sophisticated tax planning for multinationals and individuals with financial interests in Europe.

The Bridge to the Law

Przez Suzanne Natbony

Suzanne Natbony discusses her path to a legal career on the 'Passionate Live', hosted by Dame Nicole Brandon. 

Please click on the image below to listen to the podcast. 


The BEPS Project - International Tax Reform

Przez Jacob Stein

In a surprisingly efficient collaboration, governments are hammering the final nails into the coffin of tax avoidance. The final BEPS (Base Erosion and Profit Sharing) Project report was submitted for review on Monday, October 5, 2015, and decisions were announced three days later.

G20 finance ministers met on Thursday, October 8, in Lima, Peru to discuss the final draft of the BEPS project. To read the final report, please click here.

The OECD (Organization for Economic Corporation and Development), in partnership with the G20 spearheaded the BEPS project, a two-year program formed to address international tax avoidance. With 60 countries representing almost 90% of the world economy, this has been the most aggressive and united stance taken against multinationals with questionable tax practices.

Big name companies have been under scrutiny for their tax planning strategies. Some giants like Google, Amazon and Starbucks have been hauled into court on charges of tax evasion but many have simply walked out.

So why this aggressive push to staunch the creativity in global tax planning? Simple: Loss of revenue. An investigative study has found that various countries were losing approximately $240Billion (€213Billion) each year in tax revenue.

One of the biggest criticisms to the proposals is one that is pervasive in law making: complexity. Detractors say that the complexity of the laws will only lead to ambiguity and to inevitable loopholes.  

The final report addressed many ongoing issues with international corporate taxation including:

Taxing in the digital age
Limiting the power of hybrids
Redefining the meaning of Permanent Establishment;  
Implementing a new set of rules for Controlled Foreign Companies and
Addressing how to minimize treaty loopholes made possible by inconsistent global treaty practice.

Aliant, LLP works with many clients with international interests and will continue to inform our clients on any changes that may affect them.

China Devalues Yuan

Przez Jacob Stein

On Tuesday, August 11, 2015, China caused quite a stir in the global market by devaluing its currency, the Yuan, in what became the biggest one-day slump in 10 years.

Some commentators suggested that China intentionally created an imbalance in the export industry, to give Chinese manufacturers and exporters an advantage over foreign competitors.  The country, which is currently the #1 exporter of goods in the world, has been accused of currency manipulation for trade advantages in the past. However, the Central Bank of China claims that the controlled devaluation is actually in response to balancing its exchange rate system to be more market-oriented, something that has been pushed by the U.S. government for years.

Over the last few months, the Yuan has grown in strength alongside the dollar. This has reduced the competitive edge of Chinese exporters resulting in an 8.3 percent drop in profit margins compared to a year ago.

The Chinese government stated that Tuesday’s devaluation was a one-time event, but, as of Thursday, the Central Bank of China dropped the Yuan for the third consecutive day.

It is no secret that China is gunning to join the ranks of the Dollar, Euro and Yen as an official reserve currency which would require the Yuan to remain strong; but to maintain their advantage in the export market they would have to weaken the Yuan, which may be the tactic they are employing now.

The global market can only speculate on what the second biggest economy in the world is up to but one thing is clear: they are making governments, businesses and investors worldwide very nervous.

Aliant, LLP works with many clients that manufacture in China or use Chinese vendors. We continue to advise our clients on the best international business and tax strategies to apply in this situation. 

Modern Family Estate Planning: Not A Barrel of Laughs

Przez Jacob Stein

Maybe the reason the Emmy-winning show ‘Modern Family’ is such a hit isn’t because of the phenomenal writers on the show (although the writers are phenomenal), maybe it’s because the show is more relevant than we think. What if Claire and Phil; Ed and Gloria; Cameron and Mitchell, and all the kids in between were representative of majority of families in the U.S.? What would that mean for estate planning? News flash, they are the majority, and it makes estate planning extremely complicated.

A 2014 study done by Allianz reported that the traditional model family, that is: Dad, Mom and 2.5 kids, accounts for only 20% of families in the U.S. That means that 80% of U.S. families are modern families. Modern families include same-sex families, blended families, common-law families, single-parent families and any other variation. However, despite the fact that modern families are prevalent in the U.S., adequate estate planning that addresses the non-traditional nature is severely lacking.

Estate planning may be even more important in a modern family because there are more components to consider. For example, inheritance planning in blended families may be difficult due to strained relationships between step-children and step-parents. Retirement may be delayed because of more mouths to feed.A UBS study released last week showed that 70% of investors did not feel that there was adequate financial and estate planning advice available for the non-traditional family. The UBS study surveyed almost 3000 investors with a net-worth of at least $1 million in investable assets.  Over 34% of those surveyed are in modern families, slightly under the 35% which accounted for traditional families. The remaining 31% surveyed were single or from child-free homes.

In addition to celebrating, same-sex households are also figuring out how the new inclusive legislation affects their families and what that would mean for their family’s financial future.

Estate planning is vital for the modern family. Casey Kasem and Robin Williams are just the more public examples of ugly scenarios that play out everyday in our firm and on the news. Modern families are complicated and to avoid disputes and bitter legal fights, we must consider the questions below.  In the event of a death:

Who will be the executor?
Will everyone be treated fairly?
Will all family members be recognized as family in all jurisdictions
Will the wishes of the deceased be carried out?

The first line of defense is to work with a good estate planning attorney who will bring up touchy subjects that need to be addressed; plan for the unexpected, and provide a ‘global’ estate plan that will cover finances, investments and any other assets.

The Sharing Economy: Not Making it Easy for the Tax Man

Przez Jacob Stein

The Tax Man is having a difficult time trying to keep up with the advances in technology and the businesses that take advantage of it. In a world where technology has enabled swift global and communal evolutions, taxation of these evolutions provides challenges.

One such evolution is the ‘Sharing Economy’, AKA ‘Collaborative Consumption’ or ‘Peer Economy’. The Sharing Economy is defined as the growing preference for individuals to rent/borrow/upcycle etc. rather than purchase new products or solicit the help or expertise of the community rather than a company. In other words, cut out big corporations and share among themselves. Companies such as Uber, a taxi-type service that uses anyone with a car (who have been vetted of course), AirBnB, a hotel-type rental service by individuals renting out their homes, and others, are using technology and creating income-making opportunities for individuals at the push of a button. These service providers are often hard to tax, as there is no information being provided to the IRS by third parties.

One of the current hot topics regarding workplace protection for those working in this industry was brought up by Hillary Clinton earlier this week. "This 'on demand,' or so-called gig economy, is creating exciting opportunities and unleashing innovation, but it's also raising hard questions about workplace protections and what a good job will look like in the future," she said.

Administrators want sharing companies to switch their workers from contractors to employees, however, many in the industry disagree. In June, California proposed to categorize Uber drivers as employees. If the proposal passes, Uber would be required to withhold income tax, pay unemployment taxes and more. Currently, Uber drivers, and many others working in the sharing economy, are classified as 1099s (independent contractors). For those who are unaware, the tax bill at the end of the year could come as a shock; for those in the know, the pain of doing taxes is the tradeoff they make willingly to work independently.

What all this uncertainty means for the government is simple - loss in revenue. The sharing economy is relatively new and the government has not yet developed an enforcement mechanism that is suitable.

The Greek Tragedy

Przez Jacob Stein

As the rest of us are getting into the groove of late summer evenings and barbecues, the Greek economy is quickly going through the shredder. The last two weeks saw the country’s debt crises go from yellow to blazing red.  What happens now that the Greek people said “No” to fiscal austerity?  More importantly, what effect does it have it on our clients with investments in Greece and the EU?

The “No” vote is a bad sign.  The Greek people are heavily dependent on their government and the stronger Eurozone countries.  Such a heavy dependence on others reflects poorly on productivity, work ethic and one’s outlook on life.  It is a pessimistic view of one’s own abilities and a vote for socialism.  This has been the Greek mentality for decades, and has not been working well.  The Greek economy itself is not significant.  The significance of Greece is its impact on the other Eurozone countries.  If Greece exits, will other countries follow?  If Greece is bailed out, does Europe become a sovereign welfare union?

The vast majority of our clients have exited Greece over the past several years.  Many are now giving their EU investments second thoughts.  Europe’s reaction to the Greek austerity vote will be very telling of what Europe will look like in the coming decades.  Stay tuned.

Aliant,LLP works with many clients with investments in the Eurozone and is keeping a close eye on the situation in Greece.

Five Avoidable Asset Protection Mistakes Made by Physicians

Przez Jacob Stein

Many of our clients are physicians. Doctors are vulnerable to malpractice lawsuits, often brought by avaricious plaintiffs’ attorneys. With approximately 17,000 medical lawsuits filed each year, most doctors will get sued at least once in their career, with plastic surgeons clocking in at number five, and neurosurgeons topping the list as the number one most sued doctor in the U.S. Malpractice suits are rampant and many times unexpected. In fact in a study done on medical professionals being sued, only 1% said they had expected it. This is why it is highly advisable for doctors to get an asset protection plan in place before the seemingly inevitable happens. 

We have helped many doctors protect their assets effectively and avoid the mistakes that so many doctors are prone to make when it comes to asset protection planning. Here are five of the biggest mistakes that we continually come across: 

5. Retaining too much control
Having control over one’s assets is a gut instinct. However, there is a certain inverse correlation between control and protection when it comes to asset protection. To effectively protect assets, trusts, and other tools which theoretically involve relinquishing some power over one’s assets, must be used. Unfortunately, the inability to ‘let go’ of control leads to a shabby strategy and vulnerability to creditor claims. 

4. Underestimating the Benefits of Umbrella Insurance 
Umbrella insurance is the first layer of protection a doctor should have. Although it won’t protect against malpractice, it can provide protection for other claims. Surprisingly, many do not take advantage of this basic and cost-effective protection.  A common mistake is that clients purchase enough insurance to cover the value of their assets.  The value of the assets has nothing to do with the amount of the claim. Insurance covers the risk exposure, not the assets.

3.  Unqualified Professionals
Asset protection planning is a strategic game that picks and chooses different tools to build a solid and effective plan based on a client’s needs. It is important to use an asset protection attorney that is experienced, meticulous and has a strong track record.  Anyone can read about how LLCs work. Many lawyers are well adept at setting up LLCs. But unless you have done it a few hundred times, how would they know when an LLC is appropriate?

2. Outdated Asset Protection Plans
It is very important to routinely update an asset protection plan to take advantage of changing laws, changes in client’s risk profile, as well as to monitor how assets are titled. 

1. Waiting until it is too late
The biggest mistake doctors make is waiting until they are sued to get an asset protection plan. Unfortunately, trying to protect assets after a claim has been filed will most likely be termed a ‘fraudulent transfer’, making the planning ineffective.

Having and maintaining a good asset protection plan is essential in the medical profession. With the escalating number of malpractice suits filed every year, even the most careful physician is open to attack.

The Holy Bank Signs FATCA

Przez Jacob Stein

The Institute for the Works of Religion (IOR) otherwise known as the Vatican Bank is the latest jurisdiction to join the growing list on the FATCA bandwagon. FATCA stands for Foreign Account Tax Compliant Act, a controversial effort by the U.S. government to curb international tax evasion. 

The agreement between the Vatican bank and the United States was signed earlier this week in an ongoing effort to clean up the bank’s reputation. 
In accordance to the agreement, the Vatican bank will report any accounts owned by U.S. persons to the U.S. government for purposes of taxation. There is estimated to be more than 15-thousand accounts owned by U.S. persons in the Vatican bank. The bank has been accused of being an offshore tax haven for foreign monies.

Archbishop Paul Gallagher, the Vatican’s Secretary for the Relations with States, and Kenneth Hackett, U.S. Ambassador to the Holy See, signed the FATCA agreement acting on behalf of the Vatican City and the United States of America. 

Ambassador Hackett made the following statement. “Today’s signing marks a significant step in both the United States’ and Holy See’s efforts to work collaboratively toward a global standard to combat offshore tax evasion.” 

The Holy See’s long-term strategy is to ensure and promote legality, transparency and ethical behavior in the economic and financial fields,” said Archbishop Gallagher at the signing. 

This FATCA agreement is the latest step in a long-term plan to re-haul the Vatican bank’s reputation with a strong focus on transparency.  The Vatican bank also recently signed an information sharing agreement with Italy. 

We provide clients with complex international tax advice, always keeping an eye open for any updates that may affect our clients’ best interest.

The Kids v. the New Wife - Robin Williams’ Estate under Dispute

Przez Jacob Stein

Six months after the death of Robin Williams, his children, Zak-31, Zelda-25 and Cody-23, from his previous two marriages enter into a bitter battle with his widow, Mrs. Susan Schneider Williams, his third wife, over his estate.

Robin Williams had a successful lifelong career through which he amassed a net worth of about $50 Million. Funny-guy Williams also had a sensible head on his shoulders because he had a solid estate plan in place which included several trusts.

One trust called Domus Dulcis Domus Holding Trust (Home Sweet Home) contained his real estate properties. Another was created for Williams’ three children and was to pay out (whether he was alive or dead) when they reached the ages of 21, 25 and 30. 

A few years ago, Williams amended the second trust originally set up for his three children to include provisions for his wife Susan. According to the updated trust, she would be provided her own separate trust called the ‘Susan Trust’ which contained the home they lived in and the contents within ‘subject to certain restrictions’. She was also to be provided with enough finances (liquid or otherwise) to cover all costs related to the residence for the duration of her lifetime. It looked like Williams made sure everyone was provided for. A Forbes article written after his death stated the importance of such planning. 

“While nothing can make the horrific loss of Robin Williams better for his family, at least he appears to have taken the proper steps with his legal planning to avoid the pain from becoming worse. Because of his foresight, Robin Williams’ family can focus on grieving and not have to worry about unnecessary complications with his estate.” What's Next For Robin Williams' Family And Estate? Danielle and Andy Mayoras Forbes Magazine, August 12, 2014. 

Unfortunately, the praise may have been a bit premature. 

The amended trust stated that all “clothing, jewelry, and personal photos taken prior to his marriage to Susan” belonged to his children at the time of his death. Also, his memorabilia and awards in the entertainment industry and any items he kept at his home in Napa County, California, were to go to his children. 

In December and January, court documents revealed a battle between Robin Williams’ widow and his children. The dispute wasn’t over big ticket items but over personal effects like clothing, photographs and collectibles. Williams’ collection, which included bicycles, graphic novels and other items gathered over the years, was highly desirable by both parties because they were characteristic of the actor’s quirky and imaginative personality.

Unfortunately, as airtight as trusts can be, there are a few holes that can open the doors for a dispute. In this case, the ambiguity of what constituted personal belongings reared its ugly head. Despite carefully laid plans to limit dispute and maintain the privacy of his family, this decision will most likely be made by a probate court that will interpret the trust and decide what Robin Williams’ wishes really were.

We help clients develop strategically sound estate plans, always keeping potential pitfalls and clients’ privacy in mind. 

Foreign Investment - Is Cuba Ready?

Przez Jacob Stein

For over five decades, Cuba has been economically isolated from the U.S. and much of Western Europe. A throwback to the 50s, Cuba’s capital and metropolitan hub, Havana boasts classic American cars and cobbled roads, a place frozen in a tell-tale snap-shot of events that led to the U.S. embargo.

In December 2014, President Obama announced that the embargo on Cuba will be lifted. The announcement has naturally gotten everyone extremely excited on both ends. Companies eager to access Cuba’s highly educated and skilled work force are straining at the leash, and the university- educated yet under-utilized Cubans anticipate jobs worthy of their skill-set.

The biggest attraction for U.S. businesses in Cuba is this skilled workforce. Bloomberg Business Week calls Cuba the best-educated workforce in Latin America. And it wouldn’t be handy just for assembly plants. The country made sure that its workforce was not only educated but educated in highly desirable fields; hence the large number of engineers and doctors on this Caribbean island with a population of 11million.

At this point, the embargo lift only applies to travel and certain businesses however, investors expect that lobbying pressure will wear down Congress and get the embargo completely repealed and open Cuba up to foreign businesses.

However, specialists caution the over-eager to slow down. Cuba is not ready to handle the rush quite yet and must work toward rebuilding economic relations with the U.S. and getting a solid infrastructure in place. In addition, the U.S. would have to implement laws that meet the needs of this new market.

It is obvious that Cuba is shyly but surely opening its doors to the world. In March 2014, Cuba passed a new foreign investment policy some of which are included below:

  • Cuba will allow foreign investment in all sectors excluding – education, health and ‘armed institutions’.
  • Cuba will offer tax exemptions to foreign companies
  • 100% of ownership by foreign companies will be permitted; however, these companies will not have the same tax benefits as joint ventures between foreign and Cuban owners
  • Investors will be exempted from paying profit taxes for eight years on signing an agreement
  • Investors will be exempted from income tax

This picture points to a rosy future and an effort to reach across the channels towards economic reconciliation. But it is important to remember that as promising (and it is promising) the investment landscape on this Caribbean island is, the key word to investing in Cuba is PATIENCE PATIENCE PATIENCE.

We work with many individual investors and multinational businesses with interests across the world. We remain diligent in observing trends and new markets that may benefit our clients. 

A Win in Estate Planning for Art Collectors

Przez Jacob Stein

How do you put monetary value on a partitioned collection of art?

A recent decision by the Appeals Court 5th Circuit in the case of Elkins V. the IRS may shed some light on this question and give art collectors and their estate planners an answer to the question above.

Many people, especially those with a large amount of wealth, work with an estate planning attorney to ensure that their estates are properly structured and that upon their death, their wishes are followed.

It is more difficult to assign a value to an art collection than to quantifiable assets such as real property or bank accounts, especially when the art is divided among beneficiaries. This gives some creative license in how discounts and taxes may be applied as can be seen in the Elkins case.  

By the time James A. Elkins Jr. and his wife, Margaret Keith Wise died (Mr. Elkins in 2006 and his wife a few years earlier) they had left behind an impressive art collection estimated at $25 million. The Elkins had been diligent in implementing and maintaining a strong estate plan using many tools such as a Grantor Retained Interest Trust (GRIT), an irrevocable trust where the grantor transfers asset to the trust but still retains the right to receive income from the trust for a certain number of years.

The Elkins also split their art into two groups of which they gave their three children partial shares. By the time of their death, Mr. Elkin and his wife owned 50% interest in one group consisting of three works of art by Henry Moore, Picasso and Pollock, and 73% interest in the second group made up of the remaining 61 works. This allowed them to reduce their estate tax obligations or so they thought.

The issue in this case was how to assign a value to a partitioned art collection. The IRS claimed that because the collection had been partitioned there was no way to estimate market value therefore there should be no discount. Despite the evidence and experts brought in by the Elkins, and the lack of evidence by the IRS, the Tax Court sided with the IRS and assigned a meager 10% discount to the collection.

The Elkins contested the verdict and the case was taken to the Appeals Court 5th Circuit where, in a victory for all art collectors, the court increased the 10% discount to a 47.5% discount resulting in a refund of $14.4 million.

We work with many clients faced with this dilemma. We continue to monitor this and similar cases to tailor the best estate planning strategies for art collectors.  

Farewell to the Irish Double and Double-Dutch Sandwich: Changes to Tax Laws Imminent

Przez Jacob Stein

The ‘Irish Double’ and the ‘Irish Double with a Dutch Sandwich’ tax loopholes have provided companies like Google and other big-name players registered in Ireland with a very effective international tax strategy. Due to increasing pressure from the EU and the United States, Ireland has released new proposals to block these loopholes and comply with new international tax directives.

There are over 1000 multinationals based in Ireland including Google, Pfeizer and Apple. Unlike the U.S. where a corporation’s residence is based on where it is incorporated, Ireland recognizes a corporation based on where its management and control is located.  Therefore, companies located in Ireland but managed from another country would be considered non-resident for Irish tax purposes, aka, Irish Incorporated Non-Resident Corporation or INR. In addition, Ireland permits companies to own two entities side by side.

A corporation can take advantage of these tax laws by maintaining INR status and creating two subsidiaries, one that is incorporated in Ireland, and a second subsidiary incorporated in Ireland but a tax resident of a tax haven like Bermuda. With this setup, companies can collect revenue through their Irish INR and pass it on to the second subsidiary located in the tax haven jurisdiction. This releases them from tax obligations to the U.S. and obligates them only to a minimal tax to Ireland on royalties from intellectual property. This is called the ‘Irish Double’.

By including a third subsidiary in the Netherlands, companies can further reduce or avoid the taxes on royalties they would pay to Ireland by channeling revenue through a Dutch subsidiary before it gets to the tax haven jurisdiction. Countries within the EU do not tax one another on royalties from intellectual property. This is the ‘Irish Double with a Dutch Sandwich’ strategy.

In an effort to comply with demands from the EU and the U.S., Michael Noonan, Ireland’s Finance minister said that all companies incorporated on or after January 1, 2015 will be classified as tax-residents of Ireland and cannot benefit from this current loophole. However, all existing companies will maintain their INR status and continue to enjoy the benefits their status allows until December 31, 2020 when the law goes into effect.

If Ireland closes these controversial tax doors, it would cease to remain an attractive choice for foreign businesses. Or would it? On closer inspection, the new laws would block multinationals from the current loopholes but with careful planning, corporations can utilize the extensive treaty network to attempt the same or a similar international tax strategy.

We help many businesses with their international tax structures.