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One minute with… Julia McCullagh

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What’s keeping you busy at work?

Well, obviously given I am writing this during the lockdown, Covid-19 is front of mind at the moment. I advise on international corporate tax issues and I specialise in cross-border operating models, so I’m seeing lots of questions from clients who are making changes to supply chains, trade flows and international service delivery models, as well as their country footprints. They are looking for integrated advice on corporate tax, transfer pricing, VAT, customs and employment tax aspects.

Are any new rules causing a particular problem?

We have only just started down the journey to understand the implications of the multilateral instrument on the international tax treaty network. We are now getting through the logistical challenges of working out which treaties have been changed, how and with effect from when. We still need to get to grips with the interpretation of new treaty wording and the revised guidance – both at a model convention level and at a local territory level, as tax authorities are likely to take differing views. I spend a lot of time looking at permanent establishment (PE) questions; areas that stand out are threshold issues around definition of dependent agency PE and fixed place of business, including the new anti-fragmentation clause.

What’s a topical issue you’re facing?

The current situation means that some employees are no longer able to commute to or work in the territory of their employer (or may be working from home more than usual). This causes a wide range of tax issues, including potential creation of PE for employing entities. The OECD and some tax authorities have issued helpful guidance which says that they don’t expect the extraordinary and temporary dislocation to impact the PE analysis. In some cases, this is on the basis of the application of existing treaties; in other cases, it’s on the basis that tax authorities will be prepared to disregard such presence. However, neither of these approaches really gives businesses the total comfort they need.

Given that the period of disruption will continue for longer than many originally anticipated, it would be helpful to see multilateral legislative and treaty action to provide greater certainty for companies and increased flexibility for seconded employees to enable them to be temporarily closer to their families.

What should we look out for this year?

As multinational groups get through Covid-19 situation, we are going to see some of them re-thinking their business approaches in response to the new normal. On the one hand, groups may look at reshoring activities given the current challenges of operating cross-border, and there may be less international activity in some areas. On the other hand, Covid-19 is making us all more adept at working remotely, so the country location of certain employees may be become less relevant for business, although, of course, remaining highly relevant for tax. These developments and tensions mean we can expect to be busy helping businesses with the tax aspects of changes to their operating model.

What do you know now that you wish you’d known at the start of your career?

I was very focused on progression through the grades in the large accountancy firm environment. I now realise that a career is a long time and the value of different experiences, successes and failures, on personal development. In retrospect, I would like to have taken more risks and tried more different things earlier in my career. I’m sure I would still have ended up where I am as I enjoy what I do, but I might have added to my stories of adventures along the way.

You might not know this about me…

I’ve now spent more than half my life advising multinationals on international tax issues, but I’ve also pursued interests in horse riding (with a horse called Tom who I see at weekends) and skiing, as well as cinema, concerts and theatre.

Issue: 1488
Categories: One minute with