| Arms length pricing | See transfer prices
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| Beneficial owner | Individual ultimately entitled to interest or dividends paid on a security
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| Bond | Fixed-interest security issued by financial institutions, companies, or governments
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| Call option | Contractual provision permitting the issuer of a bond, under certain circumstances, to repay the bond at par value
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| Captive insurance company | Insurance company acting only on behalf on the company which owns it
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| Co-existence model | (In the context of draft Directive 8781/98) Scheme by which Member States would be able to choose either to introduce a withholding tax or to implement the reporting option
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| Competition | (As defined in Ruding report) "Process where, in contrast to tax co-ordination, the interplay of market forces might achieve similar goals (generally that of convergence)"
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| Convergence | (As defined in Ruding report) "Process or series of developments where Member States' tax bases, rates, systems, revenue yields etc become closer together, irrespective of whether this happens as a result of EC co-ordination or the interplay of market forces"
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| Co-ordination | (As defined in Ruding report) "Any action or measures taken by the Commission or some or all [Member States] to influence the tax practices of [Member States] (such action might take the form of Directives, conventions, recommendations, guidelines, etc)"
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| Custodian | Economic operator who collects interest on behalf of investors
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| Destination basis | (As applied to VAT) Arrangement whereby internationally-traded goods are taxed in the country to which they are imported
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| Effective incidence of tax | Where the ultimate burden of taxation is borne, as distinct from where the formal tax liability lies: thus, for example, the effective incidence of a business tax which is passed forward in higher product prices may be on consumers
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| Effective tax rate | Concept used to make a better comparison of the overall tax burden over time or between countries, whereby the tax rate at each point in time or in each country is adjusted to reflect differences in the tax base
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| Eurobond | Bond denominated in a currency other than that of the country in which it is issued, usually underwritten by an international syndicate
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| Grandfathering | (In the context of the proposed withholding tax) Provision that the new withholding tax would apply only to bonds issued after a certain date, leaving existing bonds outside its scope
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| Grossing up payment | Additional payment made by an issuer of bonds to compensate an investor for a withholding tax levied on the interest flows paid to the investor
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| Harmonisation | (As defined in Ruding report) "The occurrence of greater convergence as a result of action at the Community level by the Commission or other agencies of the Community such as the European Court of Justice. 'Full harmonisation' describes the situation where identical tax bases, rates, systems etc are proposed or achieved among Member States. By contrast, 'partial harmonisation' involves something less than identical bases, rates, systems, etc (such as approximation of the base, minimum or maximum statutory tax rates)"
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| Headline rate | Unadjusted or published rate of taxation (as opposed to the effective tax rate)
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| Issuer | Company or syndicate that organises the raising of capital by issuing bonds or other securities
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| Information system | (In the context of draft Directive 8781/98) See reporting option
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| Origin basis | (As applied to VAT) Arrangement whereby internationally-traded goods are taxed in the country from which they are exported
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| Paying agent | Economic operator who is responsible for the payment of interest for the immediate benefit of the beneficial owner of a security
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| Proportionality | The principle that the legislative means should be no more than the strict minimum required to achieve a particular end
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| Reporting option | (In the context of draft Directive 8781/98) Proposed arrangement whereby a Member State where interest was earned would report payments of interest to the tax authorities of the recipient's Member State of residence, so that the latter could levy appropriate taxes
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| Tax base | Amount (of income, sales etc) on which tax is levied
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| Tax rate | Percentage rate, or other tariff, applied to the tax base to determine the amount of tax due
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| Transfer prices | Hypothetical prices assigned to value notional transactions between the parts of a single company which are based in different countries so as to calculate the amount of profit earned in each country. In arms length transfer pricing procedures, transactions are valued at the price which would have been charged if transaction had been between unrelated companies
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| Transitional régime | (In the context of EC VAT policy) The arrangements for the taxation of goods in trade between Member States which were introduced as a consequence of the abolition of fiscal controls at intra-EU frontiers
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| Withholding tax | (In the context of draft Directive 8781/98) Tax deduction made at source from payments of interest
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