bluuebunny/crossref_metadata_2025 huggingface dataset:
Personal Genuine Links under Domestic Inheritance Tax Rules in the Light of International and European Standards
Authors: Szczepanski Jan Karol
Published: February 2022

The first section of the article deals with the characterization of genuine links in general, and the comparative analysis of personal genuine links present in the selected national inheritance tax statutes. The aim of this section is to show the diversity and incompatibility of personal genuine links, which may lead to dozens of cases of international double (or even multiple) taxation of cross-border inheritances. This is followed by an attempt to talk about international and European standards in respect of personal genuine links in national law as well as to comment on the comparability between the personal genuine links depicted in the first section with the aforementioned standards. The article is finished with a plea for adequacy in describing conflicts of genuine links in inheritance tax cases and for more impact of the European legislator on potential harmonization mechanisms.
A Rose by Any Other Name ? The OECDS Proposed Revised Definition of Intangibles
Authors: Markham Michelle
Published: February 2022

Recent political events and a rewrite of the OECD TP Guidelines’ chapter on intangibles are causing a considerable compliance challenge for multinationals. Tax authorities are running out of ways to increase tax revenues. Without venturing into the politically undesirable territory of tax rate increases, intangibles are one of the very few areas left to explore.
Open Door Tax Policy for Foreign Direct Investments in South Eastern Europe: Tax Incentives and Flat Tax in Action
Authors: Kjoseva Elena Neshovska , Maksimovska-Veljanovski Aleksandra , Pendovska Vesna
Published: February 2022

Open door tax policies have been offered as a key ingredient for attracting foreign capital in the region of South Eastern Europe. In the last decade, these countries have strived to respond to the global tax competition and to create attractive business environments for economic growth and foreign direct investments (FDI). Promptly, seven of nine South Eastern European countries introduced flat taxes for corporate income, and re-modeled fiscal surrounding for FDI. Were these transformative policy decisions, or just cosmetic alterations to the existing conditions for doing business? How much impact have the flat tax and tax incentives had on the FDI?

This article analyses open door tax policies, in particular the nexus between, on the one hand, the flat tax and related tax incentives, and on the other, the FDI. A comparable measure of each country’s implementation of open door tax policy is created, and countries are analysed separately, with focus on the legal and economic aspects. Innovative methodology of awarding points to each determinant of the open door tax policy is applied in combination with measuring of political and legal variables, that drives the conclusion about the significance of each factor for FDI in the Region
The Prevention of Tax Treaty Abuse in the BEPS Action 6: A Brazilian Perspective
Authors: Barreto Paulo Ayres
Published: February 2022

In the context of the OECD BEPS project, Action 6 (‘Prevent treaty abuse’) is considered to be a key element in the reform of the current international tax regime, calling for an immediate reaction by all countries. The OECD studies and reports on this subject regard treaty shopping and rule shopping as abusive practices that must be tackled in order to prevent international base erosion. It is clear that this subject requires more in-depth consideration by tax policymakers. It is mandatory to seek a point of convergence under this subject that reconciles the interests of tax administrations of OECD member countries, which are conducting and implementing the BEPS Action Plan, and the interests of taxpayers, who assert their need for legal certainty in the structuring of their business activities. This article analyses the OECD proposal to prevent ‘treaty abuse’; investigates the feasibility and consequences of the inclusion of a limitation-on-benefits provision or a principal-purpose test in income tax treaties and, in particular, whether such specific anti-avoidance rules are consistent with the Brazilian tax system.
Approaches towards the Application of Tax Incentives for Cross-Border Philanthropy
Authors: Buijze Renate
Published: February 2022

Most governments of high income countries stimulate domestic philanthropy. For philanthropy crossing borders, however, governments are less consentient. These varying standpoints are reflected in the tax legislation of countries. In many of the countries concerned, donations to domestic charitable causes are rewarded with a tax incentive. When a donation crosses borders, however, the tax incentive does not always apply.

This article examines the different approaches governments hold towards the application of tax incentives in cross-border situations and the underlying rationales. Through the analysis of the relevant tax sources, tax jurisdictions are classified into four common models that summarize the spectrum of different approaches governments hold. They vary from jurisdictions that support cross-border donations with a tax incentive to governments that restrict tax incentives to donations within the country and two models that represent the more moderate approaches between these extremes.
Timing Issues under Double Tax Treaties: The Dutch Approach
Authors: Smit Daniël S.
Published: February 2022

This article explores in more detail some of the timing issues that may arise when a new tax treaty becomes applicable or when there is a relevant change in the factual situation of the taxpayer, both resulting in a shift in the allocation rights of the tax treaty states involved. In both cases, the question is to what extent this change in allocation rights is applicable ratione temporis. It is concluded that this question cannot be answered in a general sense. In each situation, it boils down to a case-by-case analysis that must be performed under both international and national law.
Tax Inversions: Time to Take a Look in the Mirror Reflections on the Inversion Phenomenon
Authors: Behagg Charles
Published: February 2022

This article aims to utilize the evolution of the inversion phenomenon and its countermeasures as a mirror which can be held to the current tax regime, both globally and locally, in order to highlight some of the issues which it faces. Whilst the US has typically favoured a direct, reactive method of countering inversions, the UK has largely relied on more generalized anti-avoidance principles to achieve the same aim. Although the inversion phenomenon seems to have slowed, it remains to be seen whether these differing approaches have eradicated the practice completely. This article posits that the story of the inversion phenomenon up to this point is illustrative of many of the problems which the tax regime must deal with both presently and in the future. In particular, it is suggested that the allure of tax competition seems too strong for the optimism of increased international cooperation, notably in the form of the BEPS project, to overcome in the near future.
Tackling VAT-Fraud in Europe: A Complicated International Puzzle
Authors: Griffioen Menno , van der Hel-van Dijk E.C.J.M.
Published: February 2022

In Europe, the fight against VAT fraud has attracted a lot of attention since the introduction of the current VAT system. The reason for this is simple: VAT fraud leads to significant distortion of the internal market, creates unfair competition and leads to missing tax revenues in the Member States. The latter can also lead to ‘skewness’ in the contribution of Member States to the EU budget. The European Commission (EC) has presented in the last decade numerous measures to combat VAT fraud. An analysis of these measures shows that Member States seem to address this ‘European’ problem mainly on a national level. The consequence hereof is that problems are not resolved at a European level and fraudsters have a ‘free play’, despite the flood of measures.
The Key BEPS Action Items Causing Discussion in the United States
Authors: Levey Marc M. , Gerdes Imke , Mansfield Aliss
Published: February 2022

In late 2015, the Organisation for Economic Cooperation and Development ("OECD") released its final Base Erosion Profit Shifting (“BEPS”) Reports. Although the United States has been generally supportive of the general policies surrounding the BEPS proposals, it has been more skeptical than any other country concerning certain suggested recommendations. Also, the United States believes that few or no changes are required under domestic law to be aligned with the BEPS proposals the United States supports, because of strict laws that are already in place. At the same time, the United States Treasury’s main goal is to prevent other countries from taxing what it views to be “its” tax base or “nowhere income” through the BEPS proposals. This article seeks to review the main action items that have been of contention in the United States, namely Actions 7-10, 13 and 15 and the United States Treasury’s position on these items.
The Principal Purpose Test in Tax Treaties under BEPS 6
Authors: Kok Reinout
Published: February 2022

In report 6 of the BEPS action plan, Preventing the Granting of Treaty Benefits in Inappropriate Circumstances, the Organisation for Economic Co-operation and Development (OECD) proposes (amongst others) to include a principal purpose test (PPT) in tax treaties. Under this test a treaty benefit shall not be granted if it is reasonable to conclude that obtaining that benefit was one of the principal purposes of any arrangement or transaction (subjective test), unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty (objective test). The subjective test is, from the viewpoint of the tax authorities a relatively ‘easy’ test. The objective test, however, can provide for some relief for taxpayers. In this article the PPT is being investigated and discussed. Especially, attention is given to the objective test. An attempt is being made to develop practical guidance to interpret the PPT, based on Dutch case law and doctrine.
ECHR Melo Tadeu: A Tax Case Which Should Bring on More Carefully Selected Criminal Procedures
Authors: Poelmann E.
Published: February 2022

The European Court of Human Rights (ECHR) judged in the Melo Tadeu case that the refusal of the authorities to undo the seizure of assets after a criminal acquittal, is disproportional, regardless whether the appeal was too late. The Melo Tadeu judgment implies mainly that the presumption of innocence remains in full force after a criminal acquittal. In this article the author discusses the Melo Tadeu judgment of the ECHR.
BEPS Action 7: Evaluation of the Agency Permanent Establishment
Authors: Eisenbeiss Justus
Published: February 2022

The article is devoted to one of the most controversial items of the Base Erosion and Profit Shifting (BEPS)-Project – Action 7, particularly the agency Permanent Establishment (PE) of Articles 5(5) and 5(6). Marking the threshold for source-state taxing rights, the PE has been at the centre of an entrenched debate since the concept’s emergence in the nineteenth century. Thus, working on the agency PE the OECD soon found itself caught between a rock and a hard place. With strong national interest for a high threshold on the one side and the increasing need to rebalance taxing rights due to globalization and the emergence of modern business models on the other side. This conflict shaped the consolations process and final output of Action 7. Ultimately, the Final Report settled for much less than the initially pursued globally supported holistic approach. The need for a substantial reform, however, remains and becomes more pressing with the introduction of unilateral measures. Moreover, with the agency PE in the spotlight, attention will inevitably be directed to the attribution of profits, an issue neglected in the BEPS Project. The inadequacies of the current attribution rules are examined in the second part of this article and a proposal is put forward.
Prospects on the Relationship between Chinese Direct Tax Incentives and Subsidy Rules of the World Trade Organization
Authors: Xu Diheng
Published: February 2022

After the accession to the World Trade Organization (WTO), China encountered an increasing number of international trade disputes with other Members with respect to Subsidies and Countervailing Measures (SCM). Among all the countervailing investigations towards China, the main complaints were Chinese tax incentives such as specific tax reductions and exemptions, or tax preferences related to export or import. This article introduces the general situation of Chinese direct tax incentives, and their compatibility with subsidy rules in the WTO. Further, it attempts to find out tensions between the Chinese direct tax incentives and the WTO’s subsidy rules, and the main reasons behind the tensions. Consequently, it provides recommendations for China to alleviate the tensions. On the other hand, it offers further prospect for the WTO with respect to its subsidy rules and its role in regulating taxation. This article finds out that there are tensions between the Chinese tax incentives and the WTO’s system. China has a state-oriented attitude towards tax incentives, and there is a lack of internal legal control over the granting of them. Therefore, Chinese tax incentives can easily cause tensions with the WTO’s subsidy rules. Moreover, the tensions can be explained by the differences of the relationship between the government and the market, and the differences on the rule of law in China and the WTO system. Consequently, this article suggests a common platform based on the common objects and purposes of Chinese tax systems and the WTO to alleviate tensions.
Establishment and Substance of Intermediate and Other Holding Companies from an EU Law Perspective
Authors: Straathof M.J.E. , Pötgens Frank P.G.
Published: February 2022

This article examines the conditions European Union law imposes on the meaning of ‘establishment’ as defined in Articles 49 and 54 Treaty on the Functioning of the European Union, particularly with regard to intermediate and other holding companies. The material requirements for the establishment of intermediate or other holding companies are relatively marginal. An essential element is the link that a company has with the host Member State through its pursuit of genuine economic activities, where ‘genuine economic activities’ must be interpreted widely.
VAT on Arbitration
Authors: Thygesen Jette
Published: February 2022

The value added tax (VAT) classification of services provided in connection with arbitration proceedings will be illustrated on the basis of the law and practice in Denmark, Germany and Sweden. Since VAT is a tax that has been harmonized in the European Union, the VAT position ought to be the same for similar services in all Member States, unless a Member State has a standstill clause.1 The VAT treatment of services does not appear to be the same in these three countries. In Germany and Sweden it is agreed that services provided in connection with arbitration proceedings are subject to VAT, but in Denmark they are not regarded as subject to VAT. For the background to why VAT is not levied on services connected with arbitration proceedings in Denmark, it is necessary to look at some past rulings of the Danish VAT Tribunal (Momsnævn). These decisions were made prior to the amendment of the Danish VAT Act in 1994 and so they are based on the old rules. The question is whether the amendments to the Danish VAT Act in 1994 ought to have led to these services concerned being subject to VAT in Denmark.
Centralized and Decentralized Business Models in a Post-Base Erosion and Profit Shifting World
Authors: Almling Sara , Edesten Åsa
Published: February 2022

Åsa Edesten and Sara Almling are writing about business models in a post-Base Erosion and Profit Shifting (BEPS) world. Will the implementation of the BEPS Actions impact the way multinational enterprises (MNEs) chose to organize themselves? Should it? And if so, was that something the Organisation for Economic Co-operation and Development (OECD) and its Member States wanted to happen?
Shortcomings in the European Union Merger Directive: Lessons for Future Harmonization
Authors: Boulogne Frederik
Published: February 2022

The European Union (EU) has recently demonstrated with the Anti-Tax Avoidance Directive (ATAD) that it can deliver harmonized measures in areas where controversies exist. With even further-reaching measures, such as the common consolidated corporate tax base (CCCTB) and the Financial Transaction Tax (FTT), (re)gaining momentum it is sensible to learn from the experiences with previous harmonization measures. One of them is the EU Merger Directive. This article will address five broad shortcomings that have been identified in this directive and conclusions will be drawn from them. The lessons to be learned from the EU Merger Directive – and those would apply to any future harmonization measure – are, amongst others, that the objective of the measure has to be defined razor sharp, that minimum harmonization measures may still lead to distortions among the Member States, and that it should be crystal clear on which foundations certain demarcations are made.
Comparing Tax Entities in a European Perspective, Part II
Authors: Ronfeldt Thomas
Published: February 2022

Against the backdrop of recent practices of the Court of Justice of the European Union (CJEU), these articles will seek to analyse which group structures are assumed to be comparable and are thus tax entities protected by the European Union (EU), and which group structures are assumed to be non-comparable and thus do not constitute tax entities protected by the EU. This is covered in two consecutive articles. This is the second article. The first article was published in INTERTAX vol. XX.

Due to unforeseen circumstances with the publication, it has been necessary to publish this part II of a double article before part I . Part I will be published in the next issue of INTERTAX.
Tax Treaty Interpretation: Interaction Between Article 3(2) Organisation for Economic Co-Operation and Development Model Convention and Article 31 Vienna Convention
Authors: Velásquez David O. Corredor
Published: February 2022

Tax treaty interpretation is the cornerstone for the correct application of a convention. Due to its undeniable importance it is vital to know how to approach the intricate world of tax treaty interpretation. The objective of this article is to understand the interaction between Article 31 of the Vienna Convention on the Law of Treaties (VCLT) and Article 3(2) of the Organisation for Economic Co-operation and Development Model Convention (OECDMC), the way they interact and when to apply each of them, with special reference to the concept of ‘context’ which is used in both articles. The article addresses the nature and scope of the subject of interpretation, the interpretation rule in the VCLT and in Article 3(2) of the OECDMC. It further deals with the interaction between these two sets of rules, structuring their relationship in scenarios. The conclusion provides a brief overview of the main findings together with proposals on how to deal with some issues and a final statement that pursues for the enrichment of the research on tax treaty interpretation.

There is no part of the law of treaties which the text-writer approaches with more trepidation than the question of interpretation
Redefining the Relation Between Articles 6, 7 and 21 of the OECD Model
Authors: Bosman Alexander
Published: February 2022

The relation between the Articles 6, 7 and 21 of the OECD Model Tax Convention (OECD Model), and in particular the scope of the exception for immovable property in Article 21(2), has been widely debated in academic literature. The approach proposed in this article gives the immovable property exception a proper role, thus defining the relation between the Articles 6, 7 and 21 of the OECD Model in e.g. triangular cases involving immovable property of an enterprise. In the case of immovable property of an enterprise that is situated in the residence state (State R) or in a third state (State T) and that is attributable to a permanent establishment (PE) in the other contracting state (State S), the author takes the view that the ‘context’ within the meaning of Article 3(2) of the R-S tax treaty prevents State S from categorizing the income under Article 7, regardless of its domestic law classification of the income as business profits. This context consists, inter alia, of Article 21(2) of the R-S tax treaty. Consequently, Article 21(1) of the R-S tax treaty must be applied in respect of the income from the immovable property located in State R or in State T, assigning the exclusive taxation right under this treaty to State R. To reinforce the proposed approach, the author recommends adding language to the OECD Commentary on Article 21 which confirms the inapplicability of Article 7 to income from immovable property situated in State R or State T. Regardless of the proposed changes to the OECD Commentary, the author believes that the effectiveness of the exclusion of immovable property from the scope of Article 21(2) could be further improved by amending Article 21 as suggested.
Developments in the Analysis of the Tie-Breaker Rules for Individuals Under Article 4 (1) OECD
Authors: Olivier Timothy Borg
Published: February 2022

Since access to a treaty is dependent on the taxpayer being resident in one of the Contracting States, the classification of a taxpayer as resident becomes of utmost importance. Article 5 of the OECD Model Convention, defines the term ‘resident’, and also provides a series of tests which should apply when a taxpayer is a dual resident.

None of the tests put forward in the tie-breaker rules for individuals are defined by the treaty, and the Organisation for Economic Cooperation and Development (OECD) commentaries fail to provide much guidance. For many years, an article by John Avery Jones et al., entitled ‘Dual Residence of Individuals: The Meaning of the Expressions in the OECD Model Convention’ (1981), has been adopted by practitioners in understanding the concepts portrayed in such tie-breaker rules.

This article will explore whether the principles put forward in the above-mentioned article are still relevant in todays developed world, and if not, what interpretation should be given to these concepts.
Protection of the Taxpayer in the Information Exchange Procedure
Authors: De Flora Menita Giusy
Published: February 2022

Economic globalization and the interdependence of tax authorities highlight the limits of strict national approaches to combating fraud, tax avoidance and evasion. In this context, mutual assistance between tax authorities, in search of direct information to enable the control on the fulfilment of tax obligations by taxpayers, has assumed an increasingly central role.

However, the information exchanged through the different stages and tools of administrative cooperation in tax matters should be adequate regarding the various interests involved. On the one hand, those of the States to both exercise their power of taxation as well as fight tax avoidance and evasion; while on the other, those of the taxpayers in the correct use of this instrument to safeguard their rights.
Subcontracting Services to a Company and a Permanent Establishment According to Article 5 Paragraph 3 Letter b) UN-Model-Convention
Authors: Ma Giai-Mau
Published: February 2022

This articles examines the question whether subcontracting another company can amount to a Permanent Establishment (PE) according to Article 5 paragraph 3 letter b) UN-Model-Conventions. In doing this, it looks at alternative service-PE-clauses, decisions and regulations in other jurisdictions and the interrelationship with the PE-profit-allocation-clause and the non-discrimination-clause. It argues that a PE through subcontracting another company would lead to dissatisfactory results.
Holding Companies in the BEPS Era
Authors: Silvestri Andrea
Published: February 2022

Holding companies have always played a central role within international groups. While the tax climate for holding companies has already changed over the last decade, their role will be further affected by some of the measures under the Base Erosion and Profit Shifting (BEPS) initiative.
G7 Priorities in Taxation
Authors: Valente Piergiorgio
Published: February 2022

The international tax framework is being overhauled to keep pace with a business environment transformed by the globalization’s and digitalization’s forces. This transition period is a challenge and an opportunity. Fiscal policy is a priority worldwide and key concern in this year’s G7 Summit. The 10 Key Priorities in this area were presented in a special Forum held under the auspices of the Italian G7 Presidency to give voice to Academia and Research. Inherent ultimate purpose of sound fiscal policy is the achievement of sustainable economic growth and widespread prosperity in a system worthy of people’s trust.
Recent Competitive Tax and Immigration Measures are Turning Italy into an El Dorado for Foreign Investors, Workers and HNWIs
Authors: Giovannelli Giusto , Mastellone Pietro
Published: February 2022

The end of globalization, following the Brexit and Trump’s election, is having immediate repercussions also on the approach of States on tax policies. Although the international community is still engaged in various multilateral projects (e.g. Base Erosion and Profit Shifting (BEPS), etc.), in the recent years various States, especially in the European area, have unilaterally introduced optional tax regimes specifically designed to attract foreign individuals, reopening a new phase of (lawful) tax competition. Italy has recently aligned with this trend by introducing significant amendments to its immigration and tax rules aimed at permitting a ‘fast-track’ visa procedure for relevant foreign investors and a fifteen-year long exception to the worldwide income tax principle, which allows for the payment of an annual flat tax of EUR 100,000 (plus EUR 25,000 for each family member transferring to Italy with the main applicant) for foreign-sourced income in lieu of the standard progressive tax rates. This measure, which is very interesting also because it allows ‘new Italian residents’ to start accumulating the years necessary for applying for citizenship, appears compatible both with EU law and Italian constitutional principles, and guarantees a coordination with the double tax treaties in force.
Tax Book Deviations from Accounting: Brazils Long Standing Case of Goodwill
Authors: Koury Paulo Arthur Cavalcante
Published: February 2022

The article argues that the relationship between accounting and taxation in each country and in relation to a given item of income is a matter of juridical interpretation, with important consequences for the determination of the taxable basis. Furthermore, it contends that current analytical classifications of the relationship between taxation and accounting do not cover all possibilities. Such conclusions are drawn from the analysis of the issue of fiscal amortization of goodwill paid on business combinations, in Brazil. First, the article analyses theoretical models that aim at describing relations between taxation and accounting. Then, it exposes Brazilian legislative changes that have led to litigation concerning fiscal amortization of goodwill. The article examines four interpretive positions that deal with the interactions between accounting and taxation concerning goodwill amortization in Brazil, all based on the search for the substantive justification of the tax rule. Apart from the more general conclusions regarding the nature of the relationship between accounting and taxation, the article also concludes that the model of justification that has been used in Brazil is not sufficient and that the principle of legal certainty can play a significant role.
BEPS and the Paris Agreement: Unthinkable Bonds
Authors: Falcao Tatiana
Published: February 2022

The article analyses the impact of the Paris Agreement on a country’s tax policy framework, following the end of the OECD’s Base Erosion Profit Shifting (BEPS) programme. Following from the premise that the BEPS programme was devised with the intent to increase countries’ revenue collection ability by fighting tax evasion and avoidance transactions, the article discusses how the Paris Agreement could be used as a devise for further revenue accumulation. In doing so, the article examines the underlying history pursuant to climate change agreements, identifying the context under which the Paris Agreement was received by countries and why it has the potential to be the first agreement to derive a positive outcome to the environment.
Reflections on Multilateral Tax Solutions in a Post-BEPS Context
Authors: Hidalgo Guillermo Sánchez-Archidona
Published: February 2022

The international tax landscape has changed radically in the last decades. Evidence of this development can be shown in the change of strategy pursued by the OECD and the EU in order to tackle tax base erosion and profit shifting. The unilateral or bilateral solutions traditionally adopted by States have given way to multilateral solutions based on consensus and cohesion reached at global level among States. The multilateral phenomenon is strengthened as the most efficient solution to avoid double non-taxation in the short, medium and long term. For reaching its final consolidation, a leading role needs to be played by the States.
Adapting the Concept of Permanent Establishment to the Context of Digital Commerce: From Fixity to Significant Digital Economic Presence
Authors: Requena José Ángel Gómez
Published: February 2022

This work addresses the lack of harmony between the concept of permanent establishment (PE) in International Tax Law and the advent of the digital era. The fixity requirement can easily be avoided by enterprises that operate within the digital economy and benefit from its advantages. Therefore, it is necessary to establish new taxable nexus for taxing PEs in source countries adapted to the current context of digital commerce. This work examines the possible alternatives, paying special attention to significant digital and economic presence as a proposed taxable nexus.
The Role of the Other Income Article Within the Structure of Tax Treaties
Authors: Garbarino Carlo
Published: February 2022

Article 21 of the OECD Model Tax Convention on Income and on Capital has seldom captured the attention of commentators, perhaps because of its elusive nature and yet Article 21 plays an important role within the system of the tax treaties. Indeed Article 21 has a simple structure as it consists of just an allocation rule (Article 21 § 1) together with a rule on the force of attraction on other income effectively connected to a permanent establishment (Article 21 § 2). Article 21 it also has two essential dimensions that attribute to it a central role in the structure of the Model: the ‘catch-all dimension’, and the ‘third-country dimension’. The ‘catch-all dimension’ is that Article 21 plays a residual role in respect of all the other classes of income regulated by tax treaties and focuses on income ‘other than’ that falling in other treaty rules (the so-called ‘other income’): by taxing the other income Article 21 fills gaps in the structure of the treaty but does not create new taxable situations. The ‘third-country dimension’ is that Article 21 is the only treaty rule that deals expressly with income sourced in third countries (i.e. countries that are neither the treaty residence-country nor the treaty source-country. The combination of these two essential dimensions of Article 21 provides a matrix in which the analysis of Article 21 in this article is divided into two main parts: first, the analysis of other income ‘not dealt with by other articles of the treaty’, i.e. sourced in the SC (section 1); and second, the analysis of other income ‘from sources not expressly mentioned’, i.e. sourced in third countries (section 2).
Tax Penalties: Minor Criminal Charges?
Authors: Poelmann E. , Baron J.
Published: February 2022

In European Court of Human Rights (ECtHR) 15 November 2016, No. 24130/11 and 29758/11, (A. and B. v. Norway) the Jussila-doctrine was repeated once again. The ECtHR seems to have taken the next step in the discussion whether the criminal-head guarantees of Article 6 ECHR and other fundamental rights of the Convention should not apply in the same manner concerning tax fines as they do with ‘hard core criminal law’. However, as shown in ECJ 26 February 2013, C-617/10 (Åkerberg Fransson), the European Court of Justice (ECJ) is currently on a different path. In case C-524/15 Advocate General Campos Sánchez-Bordona has advised the ECJ to stay on its present course and not to follow the ECtHR. In this article the authors discuss the different approaches of the ECtHR and the ECJ.
Ensuring Taxpayer Rights in the Era of Automatic Exchange of Information: EU Data Protection Rules and Cases
Authors: Huang Xiaoqing
Published: February 2022

With the automatic exchange of information on tax matters (AEOI) developing into the new international standard, large quantities of information have been or will be subject to cross-border transfer. As a result, data play a significant role in the mechanism. Although the European Union is equipped with various legal sources in data protection, guarantees provided to taxpayers in AEOI legal instruments need to be further developed in order to be consistent with those provided by data protection rules in the European Union. This article analyses taxpayers’ right to data protection by studying the interrelationships between rules in EU Directives regarding administrative administration and those regarding data protection. Moreover, relevant Court of Justice of the European Union (CJEU) case law will be discussed in light of the afore-mentioned rules, highlighting the insufficiencies of prevailing AEOI legislation in ensuring proportionality and taxpayer protection in third countries. Finally, the newly adopted General Data Protection Regulation will be assessed.
Designing an Inclusive and Equitable Framework for Tax Treaty Dispute Resolution: An Indian Perspective
Authors: Rao Shreya , Govind Sriram
Published: February 2022

Tax treaty dispute resolution is neither efficient nor equitable at the moment. This is particularly problematic in light of countries' adopting aggressive tax policies to tackle base erosion and profit shifting practices, resulting in an increase in disputes.

The MAP has had limited success, while discussions on new mechanisms to supplement the MAP (such as tax treaty arbitration) have proved controversial and have failed to bring developed and developing countries to a consensus. India has been one of the countries in vocal opposition to tax treaty arbitration, even as it staggers under the sheer volume of international tax disputes.

Against this backdrop, this article proposes a workable means of tax treaty dispute resolution, with specific focus on the concerns expressed by India. The authors first analyse available domestic and international mechanisms in India for resolving disputes, including the MAP under tax treaties. The authors then evaluate the pros and cons of non-binding or binding solutions to supplement the MAP under tax treaties. Next, they examine concerns raised by developing countries, with specific reference to Indian constitutional and legal concerns as regards a binding dispute resolution regime. In light of this analysis, the authors propose a possible institutional framework for tax treaty dispute resolution tailored for India that takes into account these concerns and attempts to be both inclusive and equitable.
Case law note: EU-VAT Exemption for Driving Lessons: Pending Case C-449/17, A & G Fahrschul-Akademie GmbH v. Finanzamt Wolfenbüttel
Authors: Trinks Matthias
Published: February 2022

In July 2017 the German Federal Tax Court lodged a request for a preliminary ruling on several questions regarding the VAT exemption for driving lessons. This case has the potential to fundamentally shape EU VAT law: while in Germany – like in most Member States of the EU – driving lessons are taxable, the requesting court tends to apply the tax exemption in Article 132(1)(i/j) of the VAT Directive. A corresponding decision by the European Court of Justice (ECJ) would therefore not only lead to ground-breaking tax consequences for suppliers of driving lessons, but for (almost) all kind of teaching services.
Bitcoin and Virtual Currencies Are Real: Are Regulators Still Virtual?
Authors: Valente Piergiorgio
Published: February 2022

While the bitcoin is reaching all pockets and headlines, the regulatory debate is also at its peak. Following brief analysis of the blockchain mechanism, this article focuses on the regulatory approaches taken in the EU as well as in single Member States and third countries around the world. Regulatory intervention seems to be appropriate and could build on the points of convergence of national and international policy makers.
BEPS, the Digital(ized) Economy and the Taxation of Services and Royalties
Authors: Jiménez Adolfo Martín
Published: February 2022

The BEPS project has left untouched very relevant opportunities for base erosion and profit shifting, mainly with payments for services and royalties, by MNE groups or even smaller enterprises. It is surprising that the debate about the digital or digitalized economy focuses so much on solutions (the concept of PE based on significant digital economic presence, withholding taxes for digital provision of services or goods or equalization levies) that do not contribute significantly to end up the base erosion and profit shifting opportunities that the BEPS project did not consider, is concentrating on solutions that will not be very helpful in fully aligning tax bases and economic activity and even abandons the BEPS already agreed standards to create a high degree of uncertainty and fragmentation. The article explains why the solutions proposed in the current debate on Action 1 BEPS are insufficient or disproportionate (they may be more political patches than effective remedies), and why more attention should be paid to a more evolutionary approach of the already BEPS agreed principles and standards or the traditional thresholds for taxing business profits, including the UN MC as it is evolving. A more robust international tax order will require to ponder more carefully if already known and agreed principles (including some BEPS outcomes within them), as they can evolve, will be better options to permit ‘market states’ to tax economic activity and will create less uncertainty than the revolutionary solutions proposed in the debates on Action 1 BEPS or unilaterally by the EU or some States.
Country note: Brazilian Transfer Pricing Rules: An Analysis of Effectiveness
Authors: Gregorio Ricardo Marozzi
Published: February 2022

Brazil is widely recognized as the most significant country that does not follow the international transfer pricing standards. Despite its practicability, there are many evidences that the Brazilian approach is ineffective when it comes to prevent tax avoidance in cross-border transactions. In fact, the predetermined margins combined with the free choice of methods are nothing more than the materialisation of the OECD’s warning against ‘opening avenues for tax planning’. The country’s announced intention of joining the OECD membership is now the great opportunity to amend and improve the current regime.
State Aid and Transfer Pricing: The Inherent Flaw Under a Supranational Reference System
Authors: Júnior Ricardo André Galendi
Published: February 2022

This article deals with the theoretical problem of whether the arm’s length principle could be derived from EU law and whether such principle would offer a single answer to the allocation of synergy rents. The author puts forward two main arguments. First, he asserts that, under ECJ case law, unless a deviation from the general tax system set forth by domestic law of the Member State (reference system) is identified, transfer pricing cases will be generally an issue of tax disparity. Therefore, the alleged advantage would not attributable to the Member State. Second, the author holds that deriving an EU law arm’s length principle from Article 107(1) of the Treaty on the Functioning of the European Union means to build up a supranational reference system. Such reference system is not an obvious derivation from the equality principle, but a matter of allocation of taxing rights among jurisdictions, with significant and contingent tax policy impacts. If the ECJ chooses to follow this path, it will tie future direct tax decisions to the manifold consequences of the policy elected – which currently seems to be the OECD/G20 BEPS Project ‘value creation’ trend. Both arguments are illustrated through an analysis of the Belgian excess profit regime. The article is not a defence of the Belgian system, but merely uses it as an example, stressing the inconsistencies that arise from the supranational reference system argument.
Cross-Border Mobility of Individuals and the Lack of Fiscal Policy Coordination Among Jurisdictions (Even) After the BEPS Project
Authors: Beretta Giorgio
Published: February 2022

Cross-border mobility of individuals has serious implications for states, irrespective of whether they are the emigration country or the immigration country and use citizenship or residence as the relevant criterion to exert their fiscal jurisdiction over the worldwide income of an individual taxpayer. This article illustrates in detail the various tax policies that a country can adopt to deal with cross-border mobility of individuals. The article first contrasts citizenship-based taxation with citizenship-by-investment programmes. Then, defensive strategies adopted by the emigration country against outward mobility of resident individuals are considered in parallel with preferential tax regimes for inward expatriates enacted by the immigration country. Next, the limited role – even after the Base Erosion and Profit Splitting (BEPS) Project – of tax treaties and other international tax instruments to curb competing fiscal policies of states is discussed. Finally, as a possible remedy to such clash of policies, the author tentatively proposes the abandonment of the long-established connecting factors of citizenship and residence and, in their place, the adoption of a new jurisdictional nexus based on the actual physical presence of an individual in the territory of a state, determined with the help of geo-localization technologies, which would lead to a proportional allocation of taxing rights among the countries interested in individual mobility.
Proposal for the Coordinated System of Taxation Applicable to Cross-Border Inheritances and Gifts in the Internal Market
Authors: Szczepanski Jan Karol
Published: February 2022

Double or multiple taxation of cross-border inheritances and gifts constitutes a problem in the EU internal market that has been increasing annually due to growing mobility of persons and capital. This article focuses on this obstacle to the well-functioning internal market. It sets out to explore the design of a feasible and implementable legislative solution at the EU level that would eliminate international juridical double (multiple) taxation of cross-border inheritances and cross-border gifts in the internal market.
Permanent Establishments and BEPS Action 7: Perspectives in Evolution
Authors: Garbarino Carlo
Published: February 2022

This article suggests that the judicial reasoning adopted within judicial trends developed at national level has been used in shaping evolving perspectives about the concept of permanent establishment adopted in the OECD Model. The article strives to achieve fuller comprehension of the issues raised by the Commentary in 2017, addresses different perspectives which can be adopted about preparatory/auxiliary activities that might prove useful in understanding the anti-fragmentation rule now introduced in Article 5(4.1) of the OECD Model and then focuses on the concept of the agency permanent establishment ‘PE’ in light of the functional analysis developed by the OECD, with particular attention to the concrete use of the concept of ‘authority to conclude contracts’ within the functional approach now adopted by the OECD Model, particularly with regard to commissionaire strictures.
Geotaxation and the Digital: Janus in the Mirror
Authors: Valente Piergiorgio
Published: February 2022

Geotaxation focuses on international tax relations and their development under the influence of geographical factors, considering, for example, collaborations among states, the international impact of national or local tax policies etc. Today geotaxation is required to expand to new spaces, where human activity is evolving, such as the cyberspace. Different from all other geo-tax subjects, cyber-reality is challenging established social structures and norms and international relations, including in the tax area. On these premises, this article explores the changes that cyberspace and modern geotaxation imply for the state and the potential development of the international tax scenario.
Debate on the US Tax Reform and the EU ATAD: Can GILTI + BEAT = GLOBE?
Authors: Herzfeld Mindy
Published: February 2022

The OECD is moving forward with consideration of a minimum tax as part of its solution to taxation of the digital economy. Part of a template for such a minimum tax may be the version enacted by the United States (US) in 2017 as an expansion of its Controlled Foreign Corporation (CFC) regime, known as Global Intangible Low Taxed Income (GILTI). But the OECD version will undoubtedly be different from the US iteration. It’s likely that it would also include some aspects of a minimum tax being proposed by other OECD members such as Germany and France, namely a tax on outbound payments, in addition to a CFC-type regime. The United States also enacted an outbound minimum tax in 2017, known as Base Erosion Anti-Abuse Tax (BEAT). The two-part minimum tax being pursued by the OECD – a minimum tax based on a CFC regime plus an outbound minimum tax that’s a variation on the BEAT – has been referred to as GLOBE (global anti erosion) (See S. Soong Johnston, Germany, France Explore GLOBE Proposal to Tax Digital Economy, 92 Tax Notes Int’l 782 (2018)).

This article summarizes the two features of the US 2017 tax reform (known as the Tax Cuts & Jobs Act (TCJA) (The formal name is The Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, Pub. L. No. 115–97.)) that may be incorporated into a global minimum tax, namely GILTI and BEAT, from the perspective of how such provisions might be adapted to work in a global setting. It considers the challenges to taxpayers and policy makers raised by the US law as enacted, and the attempts in recently issued regulatory guidance to address some of these concerns. It compares and contrasts the provisions enacted by the US Congress with a number of parallel European developments, including the EU Anti-Tax Avoidance Directive (ATAD)’s CFC rules and the German royalty deduction barrier.

Adaption of the minimum tax components of the Tax Cuts & Jobs Act for worldwide use will require careful understanding of the policy choices, as well as the mistakes made, by the TCJA drafters in designing the regime, in order to ensure that they are not repeated.