Germany: 236. E-Banking: KPMG 2000 Banking Tax Conference

Last Updated: 20 July 2001
KPMG Germany Webpage
Click on the above link to visit the KPMG Germany webpage on the Mondaq website

For editorial cut-off date, disclaimer, and notice of copyright see end of this article.

KPMG hosted a two day bank tax conference in Zurich in October 2000 on the central topic of e-banking. The highlights of the conference, which is held at different locations every 18 months, were as follows:

  • Iain Roche, Managing Director of Cisco Systems Inc., outlined his company's meteoric rise from nothingness to being a mainstay of the Dow Jones Index, described the factors contributing to this success, especially Cisco's corporate climate of modernity, efficiency, flexibility, and speed, and discussed two of Cisco's key e-banking customers: Citigroup (which is planning a new system to replace Citi f/i and Direct Access) and Princeton Financial Systems, which will handle trading, portfolio management, operations, and reporting through Internet networks. Mr. Roche estimated that the number of e-banking customers in Europe would rise from 4.5 million in 1999 to over 21 million in 2004, almost 14 million of which would use WAP-capable mobile telephones to transact e-banking business.
  • Graeme Ross and Jane McCormick of KPMG London discussed tax planning aspects of e-commerce. Noting that issues of the appropriate division of income between tax jurisdictions (transfer pricing) were becoming acute as globalisation progresses, they theorised that governments would respond to the decreasing need for geographic proximity between a business and its customers with a sort of "world tax police" and an attempt to use taxation as a regulatory instrument with regard to the global economy. Among the key tax issues discussed were the choice of jurisdiction for companies licensing Internet know-how and the avoidance of unnecessary realisation of gain in connection with global restructuring. Finally, Mr. Ross and Ms. McCormick stressed the importance of indirect taxation (VAT, customs duties, sales taxes) in a global economy.
  • Lukas Mühlemann, Chairman of the Board of Management of Crédit Suisse, gave a talk in which he focussed on three key factors driving e-banking: cost reduction, particularly in the personnel cost area, new delivery channels, and new business models.
  • Mark Leitch of VISA discussed how e-commerce was changing the relationship between customers, retailers, credit card companies, and banks.
  • Hanspeter Kurzmeyer of Crédit Suisse (Youtrade) described the handling of online securities transactions.
  • Michael Stemmler of Deutsche Bank (emaro) described emaro as an electronic marketplace for computer hardware, computer software, and office equipment. emaro is a joint venture of Deutsche Bank and SAP in the form of a stock corporation (AG). emaro's goal is to become the leading business-to-business marketplace for the purchase of the above goods. Mr. Stemmler estimated that purchasing costs in the electronic marketplace would be 30 % under those of conventional purchases. Processing times would drop from 7.3 days to 2 days, he said. Mr. Stemmler said that emaro would expand beyond Germany to Europe and other regions, whereby further joint ventures were a definite possibility.
  • The above three products (Visa, Youtrade, and emaro) were also the subject of break-out sessions.
    • Graeme Ross of KPMG London laid out the tax implications of Visa operations.
    • Martin Scherer of KPMG Zurich explored tax aspects of Youtrade, especially the Swiss securities transfer tax of 0.15 % for Swiss securities and 0.30 % for foreign securities. The Swiss VAT exemption for securities transactions rules out an input tax credit on input supplies, thus raising allocation issues, especially since securities safekeeping and investment counselling are subject to VAT. Various compliance issues are also raised by Internet banking transactions.
    • Thomas Welte and Jürgen Hartmann, of KPMG Munich and KPMG Düsseldorf respectively, covered legal issues posed by the emaro case study, including the EU e-commerce guideline of 18 November 1998 and the German electronic signature law of 22 July 1997 as amended on 22 June 2000. They also discussed the EU proposal of 7 June 2000 on the VAT treatment of e-commerce, the essence of which is to move the place of supply inside the EU where non-EU businesses sell to private persons, thus subjecting such transactions to VAT. There was also discussion of whether a server or a website can create an objective-presence permanent establishment and whether an Internet service provider (ISP) can create an agent-based permanent establishment.

The second day of the conference was devoted to workshops (run simultaneously):

  • Global transfer pricing and e-banking (Steven D. Felgran and Robert Clair, KPMG New York, and Sian Hill, KPMG London). The workshop noted the potential for erosion of the tax base as a result of the dispersal of e-banking operations around the world and the mobility and fungibility of the relevant know-how. The workshop sought to demonstrate how the U.S. global dealing regulations (and other supranational and national provisions) might serve as a basis for a transfer pricing system that would be recognised by all jurisdictions involved.
  • Indirect taxation (Gary Harley and Frank Sangster, KPMG London, and Gerry Stuurop, KPMG Zurich). The indirect taxation of e-banking was explored by means of a hypothetical newly organised Internet bank in Ireland that markets its products (some subject to VAT, some exempt) throughout Europe using the IT resources of a related-party Swiss bank.
  • Direct taxation (Thijs Brans of KPMG Amsterdam, Eva-Maria Perske of KPMG Frankfurt, and Paul Long of KPMG London) used a hypothetical multinational structure to probe the above mentioned permanent establishment questions (server, website, and ISP as permanent establishments). The hypothetical involved a U.S. seller, a German buyer, a European website, and a German database server.
  • Regulatory and legal issues (KPMG Banking Network). Various members of KPMG's international banking network analysed legal developments affecting e-commerce both within the EU and at the international level.

The conference closed with a case study presented by Peter Gale of KPMG London in which all conference participants grappled with the question of the optimal jurisdiction in which to locate an Internet bank. The participants responded enthusiastically to Mr. Gale's stimulating exposition, which was regarded by all as a strong finish to an informative and productive conference.

Editorial cut-off date: 01 June 2001

Disclaimer And Notice Of Copyright

This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. KPMG Germany in particular insists that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note that the article is current only through its editorial cut-off date shown immediately above (not to be confused with the later date as of which the article was placed online - the date appearing at the article's outset). Related developments subsequent to the editorial cut-off are not necessarily reported on in later articles. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While KPMG Germany's articles are carefully reviewed, it can accept no responsibility in the event of any inaccuracy or omission. Any claims nevertheless raised against KPMG Germany on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Germany (KPMG Deutsche Treuhand-Gesellschaft AG). No use of or quotation from the article is permitted without full attribution to KPMG Germany and the article's stated author(s), if any. Distribution to third persons is prohibited without the express written consent of KPMG Germany in advance.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions