Company law Lithuania: Entering a new era of corporate structures with redeemable shares
16.09.2025
On 30 June 2025, the Lithuanian Parliament adopted amendments to company law which aim to enable more efficient company management, more flexible forms of raising capital and more modern investment structures. The changes include the introduction of redeemable shares and changes to the board election process. The Ecovis experts explain the new rules.
New opportunities for companies: redeemable shares legalised
Redeemable shares are issued for a limited time, after which the company must buy them back. This model has long been used in other jurisdictions, especially in common law countries, and has frequently been utilised in Lithuania through shareholder agreements on share buybacks.
The amendments legalise financial assistance for acquiring company shares. A company will now be allowed to grant a loan or secure obligations for such purposes (with some restrictions).
Please feel free to contact us for strategic advice and expert support in implementing these changes in corporate law. Loreta Andziulytė, partner and attorney at law, ECOVIS ProventusLaw, Vilnius, Lithuania
Other changes
Growing significance of management bodies
Certain decisions, previously within the exclusive competence of the shareholders’ general meeting, may now be delegated to the board or CEO (if no board exists).
Changes to the board election procedure
The right of a minority shareholder holding at least 10% of votes to demand the re-election of the entire board when individual board members resign is abolished. Additionally, a company’s collegial (supervisory board or board) or its members may start their duties not only immediately after the meeting/session that elected them, but also at a later date specified in the resolution.
These measures are designed to facilitate the growth of startups, support investment transactions, and strengthen companies’ ability to compete in the European capital market.
For further information please contact:
Loreta Andziulytė, partner and attorney at law, ECOVIS ProventusLaw, Vilnius, Lithuania
Email: loreta.andziulyte@ecovis.lt
Capital gains tax Italy: The tax treatment when Italian property is involved
15.09.2025
Capital gains arising from the disposal of real estate located in Italy, or from the sale of shares in real estate-holding companies, may be subject to taxation in Italy. The Ecovis experts explain the correct tax treatment when an Italian property is involved in such transactions.
If a non-resident taxpayer directly or indirectly owns real estate in Italy and intends to sell it, the associated tax aspects must be carefully examined. This also applies to the development of a real estate investment. The reason: in some cases, taxpayers must pay tax on the capital gains realised in Italy.
Indirect disposal of real estate
In the case of an indirect disposal, pursuant to article 23, paragraph 1-bis of the Italian Income Tax Code (TUIR), income derived from the sale for consideration of shares in non-resident companies or entities is considered to be produced within the territory of Italy if more than half of the value of such entities is derived from real estate located in Italy. This type of income is subject to taxation at a rate of 26%.
In a recent ruling no. 175/2025, the Italian tax authorities confirmed this interpretation, even when the entity disposing of the shares is a foreign-law Trust. This rule is in line with paragraph 4 of article 13 of the OECD Model Tax Convention, as well as article 9 of action 15 of the BEPS Project (MLI).
We provide tax advice if you want to sell real estate or shares in companies with real estate holdings in Italy. Alberto Gandini, Chartered Accountant and Associate, ECOVIS STLex, Milan, Italy
Direct disposal of real estate
If the property is directly sold, it must be checked whether the holding period exceeds five years or not. According to article 69 of the TUIR, capital gains will not be subject to taxation if the property has been held for more than five years prior to the sale. Otherwise, the gains will be taxable in Italy.
As a result, when selling real estate located in Italy, or disposing of shares in companies owning real estate in Italy, it is essential to carefully verify the conditions and review any applicable double taxation treaties between the countries involved.
For further information please contact:
Alberto Gandini, Chartered Accountant and Associate, ECOVIS STLex, Milano, Italia
Email: a.gandini@stlex.it
Raffaele Esposito, Junior Associate, ECOVIS STLex, Milano, Italia
Email: r.esposito@stlex.it
GmbH liquidation Germany: How investors safeguard capital
12.09.2025
What happens to an investor’s capital when a GmbH or UG is liquidated in Germany? While these legal forms limit personal liability, they do not automatically protect investors. In the event of insolvency or voluntary dissolution, the risk of a total loss is real. The Ecovis consultants explain how this can be avoided.
GmbH and UG – popular but risky
GmbH and UG are common for start-ups, project companies, and investments. Yet in liquidation, company assets can be depleted quickly, and unsecured investors are often subordinated in insolvency proceedings. Without protection, most or all of the investment may be lost. The good news: There are legal and contractual instruments that can be used to protect capital
What is liquidation protection?
Liquidation protection involves measures designed to reduce the risk of total capital loss if a company is dissolved or becomes insolvent. This includes protective clauses in the articles of association, the use of collateral or guarantees, and the careful structuring of shareholder loans, all combined with a clear understanding of priority rules in insolvency.
Typical investor risks
Shareholder claims, such as those from loans, are legally subordinated to other debts (§ 39 Abs. 1 Nr. 5 InsO). Even in voluntary liquidation, capital is only repaid after all liabilities are settled (§ 60 Abs. 1 Nr. 2 GmbHG). Without participation rights, investors also have little influence over crisis decisions.
Our legal and financial experts will help you develop customised protection strategies for your investments. Richard Hoffmann, Lawyer, ECOVIS Rechtsanwaltskanzlei Richard Hoffmann, Ladenburg, Germany
How investors can protect themselves
The articles of association are the central tool for protection. Well-drafted provisions can regulate repayment rights in the event of liquidation, grant information and control rights, and ensure participation in key decisions. These clauses should be precise and legally enforceable to withstand disputes.
Security can also be strengthened through collateral and external guarantees, such as bank guarantees, the pledging of shares or assets, or guarantee statements from parent companies. This is particularly relevant for UGs, which often have minimal share capital.
Finally, shareholder loans should be structured in a way that avoids automatic subordination in insolvency. This can be achieved by limiting qualified subordination, using secured and interest-bearing loans with clear termination rights, or in some cases renouncing shareholder status if it improves repayment chances.
Be prepared
Anyone investing in a GmbH or UG should prepare for worst-case scenarios. With strong contractual provisions, reliable security instruments, and a sound legal structure, the risk of losing capital can be significantly reduced.
For further information please contact:
Richard Hoffmann, Lawyer, ECOVIS Rechtsanwaltskanzlei Richard Hoffmann, Ladenburg, Germany
Email: richard.hoffmann@ecovis.com
Transfer pricing Spain: The tax authorities are tightening the reins
11.09.2025
With a strong focus from the Spanish tax authorities (AEAT) and clear regulatory evolution, multinational groups operating in Spain must now ensure that their transfer pricing documentation and methodologies are not only compliant, but also technically sound and defensible.
Transfer pricing in the focus of auditors
The 2025 Spanish Tax Control Plan prioritises transfer pricing (TP) as a central area of inspection. It places particular emphasis on intra-group services, financial transactions, business restructurings, intangible asset transfers, and entities with recurring losses. The authorities are increasingly verifying whether “low-risk” entities – typically distributors or contract manufacturers – actually assume the limited risks they claim, with proper functional and financial segmentation.
Tax authorities with new methodology
At the same time, Spain continues to refine its practical approach. One important trend is the use of interquartile ranges for setting and assessing arm’s length prices. Following OECD guidelines and national case law, the AEAT generally allows taxpayers to justify their pricing within a reliable interquartile range. However, if results fall outside the range, adjustments are commonly made to the median – unless, based on facts and circumstances, the taxpayer can prove why another point within the range is more accurate.
We advise clients on the design of transfer pricing strategies, audits, APA negotiations, and litigation. Mariajosé Díez Escalona, Transfer Pricing Manager, ECOVIS Audit Madrid, Madrid, Spain
Documents required by the tax administration
All of this underlines the growing technical sophistication expected by the Spanish tax administration. It is no longer enough to submit formal documentation: authorities are requiring substantive analysis, robust comparisons and economic logic. Spain is also actively using mutual agreement procedures (MAP) and advance pricing agreements (APA) to avoid double taxation and reinforce cooperative compliance.
Multinational groups operating in Spain should reassess their TP documentation, validate their economic models, and review their internal comparisons – especially where low-risk entities are involved, recommend the Ecovis experts. Pre-emptive dialogue with authorities via APAs may also be a strategic tool to reduce audit risk.
Facial recognition in China: What business leaders need to know about the new regulations
10.09.2025
Since 1 June 2025, China has been enforcing some of the world’s strictest rules on facial recognition. The new security management measures for the application of facial recognition technology demand tighter controls, clearer consent, and stronger data protection. For companies operating in China, the changes bring both compliance risks and a chance to build trust.
The central rule of the package of measures adopted by the Cyberspace Administration and the Ministry of Public Security is necessity: facial recognition in China may only be used when it is truly required and never simply for convenience. Businesses must prove a legitimate purpose, document it, and offer alternatives such as ID cards or PINs. Facial recognition can no longer be the default or the only option for accessing services, explain the Ecovis experts.
Informed consent is mandatory. Companies must clearly explain who collects the data, for what purpose, how long it will be stored, who can access it, and what rights the individual has, including withdrawal and deletion. Consent must be freely given, specific, and verifiable – vague notices or pre-checked boxes are banned.
Strict data storage regulations
Facial data must be stored locally in China, preferably on the device or a secure domestic server. Internet transfers are only allowed with legal approval or explicit user consent. Retention must be minimal, and deletion is required once the purpose is fulfilled. Firms using global biometric platforms must adapt or risk non-compliance.
Large-scale collectors – those holding data on more than 100,000 individuals – must register with provincial authorities, file detailed reports, and deregister with proof of deletion when operations cease.
Companies should act promptly to minimise risks. We can help you do this. Pingwen Hu, Senior Partner and Certified Public Accountant, ECOVIS Ruide Certified Public Accountants Co., Ltd, Shanghai, China
Risk of high fines
Penalties for violations can reach RMB 50 million or 5% of annual revenue, alongside reputational harm and possible loss of business licenses. Breaches involving facial data must be reported to authorities within 24 hours.
Offering additional access options will be mandatory in the future
Employers must now offer non-biometric options for attendance or access and inform staff in detail about data use, access rights, and deletion procedures. Retailers, banks, and hospitality providers face limits on customer tracking and personalisation, while developers must ensure training data meets consent requirements. Certain uses – such as emotion detection or classification by ethnicity, religion, or health – are banned.
Business leaders should act quickly: audit all uses of facial recognition, review data flows, update consent mechanisms, train staff, and ensure vendor compliance.
For further information please contact:
Pingwen Hu, Senior Partner and Certified Public Accountant, ECOVIS Ruide Certified Public Accountants Co., Ltd, Shanghai, China
Email: pingwen.hu@ecovis.cn
The Czech Act No. 262/2006 Coll., the Labour Code as amended regulates the legal relations arising in connection with the performance of dependent work between employees and their employers, labour relations of collective nature and other aspect related to employment. Also the Czech Act No. 89/2012 Coll., the Civil Code as amended, has a subsidiary function to the regulation and further acts such as Act. No. 435/2004 Coll., Act on Employment as amended apply. The relevant acts can be found also on the web page of the Czech Ministry of Labour and Social Affairs.
The fundamental principles in labour law are especially legal protection of employee status, satisfactory and safe working conditions for performance of work, fair remuneration and equal treatment of employees and prohibition of their discrimination.
Ecovis welcomes its new partners from ECOVIS Prima Group from Tashkent, Uzbekistan.
ECOVIS Prima Group is one of the leading providers of consulting, valuation, auditing, and ISO certification services in Uzbekistan. Under the leadership of Mirzailkhom “Mike” Anvarov, the firm brings together a team of over 10 professionals. The client portfolio of ECOVIS Prima Group includes organizations from various sectors, such as banking, insurance, manufacturing, oil & gas, pharmaceuticals and trade.
Mirzailkhom “Mike” Anvarov comments following on joining ECOVIS International: “We are honored to represent Ecovis in Uzbekistan during a time of dynamic economic reform and growth. The opportunity to become part of a globally respected network not only strengthens our commitment to delivering world-class services but also motivates us to raise the standards of professional excellence across our region. Our team is driven by integrity, competence, and the genuine desire to contribute to the development of sustainable businesses in Uzbekistan and beyond. By combining local insight with Ecovis’s international expertise, we are confident in our ability to bring real value to clients operating across diverse industries — from banking and insurance to energy, pharmaceuticals, and trade. We strongly believe in Ecovis’s philosophy of being close to the client, and we are committed to building long-lasting relationships based on trust, professionalism, and accountability. We are excited to begin this new chapter and are ready to contribute actively to the Ecovis community. Should there be any initiative, collaboration, or support we can offer, please consider us at your full disposal.”
We warmly welcome our new colleagues from Uzbekistan to the Ecovis family!
Withholding tax refunds: New ruling aims to accelerate procedures for foreign companies in Germany
29.07.2025
The Federal Fiscal Court (BFH) has ruled that foreign shareholders who are entitled to a refund of withheld capital gains tax on profit distributions are entitled to interest under EU law. This generally applies three months after the application for a refund of the excess capital gains tax is submitted. The Ecovis experts explain more.
Under German domestic regulations, if foreign companies receive dividends from German subsidiaries or license fees from domestic customers, withholding tax is due on this, which must be paid to the German tax office. In the case of dividends, the withholding tax is 25% capital gains tax + solidarity surcharge. Withholding tax of 15% is normally due on royalties and other items, such as performances by foreign artists in Germany. Withholding tax on interest, e.g. from cross-border intra-group loans, is not levied in Germany.
The withholding tax can be partly or completely reduced through the provisions of double taxation agreements or EU directives. However, corresponding applications at the German Federal Central Tax Office are subject to a strict review to prevent abuse. This can take up to 2 years, or even longer in individual cases.
Are you entitled to a refund? We can help you claim it quickly and possibly even with interest. Armin Weber, Auditor, Tax Advisor, ECOVIS Wirtschaftstreuhand, Munich, Germany
The significance of the ruling for companies
Thanks to a new ruling by the BFH (February 25, 2025, VIII R 32/21), there is now hope of faster refunds. The court is of the opinion that the foreign applicant is entitled to interest if the refund is delayed without any indication of abuse. In these cases, the court feels that a review period of 3 months is appropriate. The ruling concerned an application by the EU Parent-Subsidiary Directive, but these principles can possibly also be applied to refunds in the context of double taxation agreements, as well as to other cross-border withholding tax situations. The same may then also apply to applications for exemption in advance. Under German regulations, the interest rate on the refund amount is currently 1.8% per year.
There is good reason to hope that the German tax authorities will take the ruling as an opportunity to reform the procedure for refunding withholding tax to foreign applicants. Further developments remain to be seen.
Trademark protection China: How companies can protect their brands
28.07.2025
Companies seeking to protect their trademarks in China can utilise various administrative and judicial methods. The Ecovis experts explain what needs to be considered.
China’s economic development has driven national demand for goods and services, prompting many foreign enterprises to register trademarks in China to distinguish the source of their goods or services and promote their brands. China has its own systems for trademark registration, use, administrative management, and judicial protection.
1. Use trademarks in accordance with registered classes and specified forms
Trademarks must be used in the approved classes of goods or services and strictly in the form stated on the trademark certificate. Otherwise, the Trademark Office may cancel the trademark in accordance with the Trademark Law of the People’s Republic of China (hereinafter referred to as the Trademark Law). This makes standardised use a prerequisite for trademark protection.
2. Ensure statutory use of trademarks
Trademarks should be used in the sense stipulated by the Trademark Law, i.e., applied to goods, packaging, containers, transaction documents, or used in advertising, exhibitions, and other commercial activities to identify the source of goods. The law stipulates that if a registered trademark is not used for three consecutive years without justifiable reason, any entity or individual may apply to the Trademark Office for its cancellation. Such cases are very common in China.
3. Avoid trademark dilution
Careless use of a trademark may lead to its “dilution” into a generic name for goods (e.g., “JEEP” has become a generic name for off-road vehicles), and the trademark may be lawfully cancelled.
4. Employ a Chinese trademark agency for legal proceedings
Foreign enterprises must apply for trademark registration or deal with trademark matters through a Chinese trademark agency. This reflects China’s judicial sovereignty and facilitates the timely receipt of official documents and notices from the Trademark Office. In opposition, cancellation, or invalidation proceedings, respondents are generally required to respond within 15 days. If the deadline is missed due to document transfer delays, the Trademark Office may reject late submissions, and the trademark owner may lose their rights.
We support you in matters relating to trademarks, patents, copyright and the fight against unfair competition. Wu Haiyin, Senior Partner, K-Insight law firm – Member of ECOVIS International, Shanghai, China
5. Enforce rights against infringements
After obtaining registration, the trademark owner has the right to prevent others from using similar trademarks on the same goods or identical/similar trademarks on similar goods without permission. To determine trademark similarity, refer to the Trademark Trial and Examination Guidelines; for similar goods, refer to the Nice Classification. Note that these references mainly apply to Trademark Office reviews during registration.
In actual infringement cases, courts may expand the criteria for similarity, considering factors such as the trademark’s distinctiveness (including enhanced distinctiveness through use) and the practical usage scenarios of goods (e.g., whether consumers see non-classified goods such as lighters and cigarettes, or coffee and café services as related).
6. Protection for unregistered well-known trademarks
If a foreign enterprise’s trademark is well-known abroad but unregistered in China, the Trademark Law and the Anti-Unfair Competition Law of the People’s Republic of China may provide special protection in certain cases (e.g., preventing malicious registration, extending protection across goods categories, or stopping the use of the well-known trademark as a corporate name). Chinese judicial authorities tend to determine the “well-known” status on a case-by-case basis according to the trademark owner’s evidence of reputation, providing targeted protection.
7. Proactive monitoring and legal remedies
Foreign trademark owners should regularly search the Trademark Office’s website for new registration applications, file oppositions within 3 months of a potentially infringing trademark’s preliminary announcement, and initiate cancellation proceedings within 5 years of its registration. They can also monitor e-commerce platforms through keyword or image searches to identify infringing products. As Chinese courts may issue “investigation orders”, lawyers can use these to obtain evidence (e.g., illegal profit data) from platforms. Under specific conditions, trademark owners may be awarded punitive damages of 3 to 5 times the general compensation.
For further information please contact:
Wu Haiyin, Senior Partner, K-Insight law firm – Member of ECOVIS International, Shanghai, China
Email: wuhaiyin@k-insight.com
