bluuebunny/crossref_metadata_2025 huggingface dataset:
The Impact of European Union Law on the Possibilities of European Union Member States to Adapt International Tax Rules to the Business Models of Multinational Enterprises
Authors: Kardachaki Alexia
Published: February 2022

European Union (EU) law has played a key role in enforcing the EU base erosion and profit shifting (BEPS) agenda, while also introducing limits to the application thereof. The European Commission (EC) sees a clear link between aggressive tax planning and competition law. Against this background, EU State aid law has been employed to challenge the business models of multinational enterprises. At present there are a number of opened cases, where a decision either by the EC or the General Court of the EU is pending. These cases deal with the application of EU State aid law on inter alia tax regimes (e.g. exemption of interest and royalty payments), transfer pricing, and the misapplication of law. The approach the EC is taking in those cases, especially in matters of competence, raises a number of questions, which can only be addressed in a definitive manner by the EU Courts. Similar issues may arise in the field of positive harmonization through the recently adopted Anti-Tax Avoidance Directive (ATAD). For instance, given that a general anti-abuse rule has been included in Article 6 ATAD and has therefore become EU law, the EC and the EU Courts are competent to decide whether it should be applied in certain situations, and whether non-application thereof may amount to unlawful State aid. However, EU free movement law should be respected by Member States when implementing anti-BEPs measures. Accordingly, so far, the limitation on benefits clause contained in double tax treaties has been challenged by the EC, while the compatibility of the anti-avoidance rules against hybrid mismatches with EU free movement law is questionable.
Stateless Income, State Aid and the (Which?) Arms Length Principle
Authors: Wattel Peter J.
Published: February 2022

The arm’s length principle has a new function. When used by the European Union (EU) Commission for State aid control purposes, it is aimed at protecting a level playing field for all economic operators in the internal market, i.e. at protecting free competition, rather than at tax base protection or prevention of double taxation. In that function, it is part of competition law, rather than of tax law. It may, therefore, deviate from the traditional Organisation for Economic Co-operation and Development (OECD) understanding of that principle. The case law on which the Commission relies, is not very explicit, and it remains to be seen whether the EU Courts will endorse the Commission’s approach, but from a competition law perspective, that approach makes sense. Both from the Belgian excess profits scheme case and the Apple case, it transpires that the Commission is of the opinion that a company cannot have stateless income. A branch State cannot suffice by saying ‘not in my yard’ if that implies that real income is allocated into a tax void, disappearing for tax purposes into a physically non-existent head office.

Whether or not the EU Courts, if they accept the Commission’s approach, will also accept recovery ten years back with interest, will most likely depend on the question of whether, even if the Commission’s approach may be novel, the companies and the Member States involved should anyway have known better.
A Multilateral Instrument for Implementing Changes to Double Tax Treaties: Problems and Prospects
Authors: Kleist David
Published: February 2022

The Base Erosion and Profit Shifting (BEPS) package developed by the Organisation for Economic Co-operation and Development (OECD) and G20 countries along with developing countries includes a number of measures that, in order for the measures to become fully effective, require changes to be made to the tax treaties of the states involved in the project. As a renegotiation of the tax treaties on a treaty-by-treaty basis would take years, the OECD has initiated the development of a multilateral instrument intended to swiftly implement tax treaty changes agreed on as part of the BEPS Project. Negotiation of the instrument is currently going on and involves about 100 states. This article sets out to describe the background of the multilateral instrument and aims to discuss some difficulties that need to be overcome if the instrument is to become a reality. Furthermore, it aims to provide a high-level analysis of what the instrument may mean in the short and long term.
Equalization Levy: A New Perspective of E-Commerce Taxation
Authors: Basak Sayan
Published: February 2022

E-commerce has grown tremendously in the last few decades facilitating cross-border trade and commerce with a click of a mouse. This has given leverage to the multi-national enterprises to exponentially increase its revenue by shifting profits across jurisdictions. The disparity in tax treatment among the foreign players and their domestic counterparts has increased to a new high. The developing countries like India are losing their revenue which is eventually hindering the growth of digital industries in these countries. The old legal structures concerning international taxation are failing to keep a check on these digital transactions. Therefore, in order to stop this malpractice of profit shifting, India has enforced an equalization levy to tax the non-resident entities providing online specified services to the residents. UK and Australia also implemented the same in the nature of Diverted Profits Tax. This is in consonance with the Final Report 2015 of the BEPS Action Plans which formulated strategies to weed off the tax avoidance techniques adopted by the multinational enterprises.
The UK Brexit Referendum: A Catalyst to Reform the European Union Institutional Architecture in Tax Matters?
Authors: Traversa Edoardo , Pirlot Alice
Published: February 2022

The results of the UK referendum in favour of leaving the European Union (EU) clearly put into question the European economic and political project as well as its institutional structure. This article argues that the Brexit may be a momentum to reform the institutional structure and procedural rules through which tax policy is made at the EU level.

The UK referendum is indeed unlikely to further slow down the EU harmonization process in tax matters, which has always followed a tortuous path. Instead, the Brexit may give momentum to reform major weaknesses of the EU institutional and decision-making process in tax matters, in particular the unanimity rule and the role of the European Parliament. Finally, with regard to taxation specifically, the establishment of an EU tax, providing the EU with sufficient genuine own resource, could also reinforce EU’s legitimacy by countering the criticisms related to Member States’ contribution to the European budget.
Transfer Pricing Aspects of Intra - Group Loans in Light of the Base Erosion and Profit Shifting Action Plan
Authors: Chand Vikram
Published: February 2022

This article primarily focuses on transfer pricing aspects of intercompany loans. The analysis will take into consideration the current Organisation for Economic Co-operation and Development OECD transfer pricing guidelines as well as the revised transfer pricing guidance issued under the OECD/G20’s Base Erosion and Profit Shifting (BEPS) Action Plan. Moreover, the impact of other BEPS related actions on intercompany loans and their relationship with transfer pricing rules is discussed. Finally, the author concludes by making a suggestion to the OECD to adopt his analysis when providing transfer-pricing guidance on intercompany loans.
Proposed Goods and Services Tax in India: A Rosy Beginning or Are There Thorns Too?
Authors: Das Anand Swaroop , Tiwari Dhruv
Published: February 2022

Goods and Service Tax (GST), hailed as the most revolutionary indirect tax reform in India, aims to bring about the unification of market economy while grappling with the issues of fiscal federalism and multiple levy of taxes. The present article specifically underscores the most vexatious issues of the proposed GST framework and scrutinises the same in the backdrop of the prevailing indirect taxation system. The authors are of the view that though GST is a courageous effort on part of the Government, it faces certain legal impediments highlighted in the article.
Fair Taxation: Truth is in the Eye of the Beholder
Authors: Lamberts Paul B.W.L.
Published: February 2022

To objectively define the ideas of ‘fair taxation and ‘fair share’ is in the eyes of the author very difficult to achieve, since they are very subjective and political. The fight against tax avoidance led by western politics and non-governmental organization (NGO)’s appears not to be about fair taxation, but more about where taxes are paid. Author states that the commonly used notion of ‘fair taxation’ is not purposeful and should therefore be avoided in the current debate on tax avoidance. A more objective standard is proposed to define ‘fair taxation’. Moreover, the economic risks of the debate and related measures are detailed, so that the other side of the coin is highlighted for once as well, amongst which the multinationals’ important contributions to the budgets of developing countries and the negative consequences of tax treaties to their growth.
The International Tax Regime in the Twenty-First Century: The Emergence of a Third Stage
Authors: Rigoni João Marcus de Melo
Published: February 2022

This article presents a new approach to the study of the international tax regime (ITR) since its creation in the 1920s by the League of Nations. It benefits from two leading frameworks which provide the normative structure explaining the existence and dynamic of the ITR. This article assumes that the ITR is built on three building blocks: the single tax principle, the benefit principle and market leaders for quasi-legal rules. Following the development of each one of them during the last century, a new three-stage division of the history of the ITR is proposed here; two different stages are already completed. The Base Erosion and Profit Shifting project, regardless of the outcome, has just inaugurated the third one.
The Extraterritorial Reach of the German Progression Clause in Income Tax Law in the Light of International Law
Authors: Sternberg Christian , Heber Caroline
Published: February 2022

In this article, the authors examine the legal limits set by international law for an extraterritorial application of national laws. Since the German progression clause has an extraterritorial reach, these limits are applied to this provision in order to determine whether the German progression clause is in line with international law.
The Special Tax Regimes Clause in the 2016 U.S. Model Income Tax Convention
Authors: Borrego Félix Alberto Vega
Published: February 2022

This contribution focuses on one of the new provisions of the 2016 U.S. Model, i.e. the special tax regimes clause provided for in Article 3 (1) (l), which impinges on several Articles of the Model. The main purpose of this provision is to deny certain treaty benefits at the source when the person claiming the benefits enjoys a preferential tax regime in the resident state. The referred contribution analyses the legal framework of the provision taking into account the Base Erosion and Profit Shifting (BEPS) project and the US tax treaty policy. In this regard, the special tax regimes clause deviates from the approach taken by most states in respect of to how to avoid the application of tax treaty benefits to preferential tax regimes. Until now, tax treaties have usually listed the regimes which were excluded whilst disregarding the possibility of establishing a general wording concerning the meaning of preferential tax regimes.
From Lax to Tax: Indias Changing Policy on Overseas Taxation
Authors: Bose Debadatta
Published: February 2022

International taxation law has had its fair share of morality v. legality debates in the domain of tax havens. With increasing global trade, this debate has become increasingly important for emerging economies like India who, although earlier considered tax havens as an important source of foreign investment, is slowly changing its stance. India is slowly asking for its fair share of contributions since its tussle with lost revenue from tax havens in the Vodafone Essar tax dispute. This article elaborates certain general key points of the emergence and importance of tax havens in the twenty-first century era of globalization and then discussing how tax planning is carried out through treaty shopping. This article elaborately discusses the Indian legal regime with respect to treaty shopping and moves on to the discuss the issue of India’s change in policy regarding treaty shopping. This article thus elucidates and explains the change taking the specific example of the recent changes to the Indo-Mauritius treaty and how it has a ripple effect on other international treaty systems with India – India is choosing the path of increasing tax revenue rather than blindly trusting tax havens as a major source of foreign investment.
A New Approach to International Taxation Dispute Resolution Process (ITDRP)
Authors: de Carolis Daniele
Published: February 2022

This work puts forward an interdisciplinary approach to the study of International Taxation Dispute Resolution Process (ITDRP) which combines legal analysis with International Relations theory. It is argued that the strengths of this approach are twofold: it underlies a number of aspects embedded in ITDRPs which are not immediately evident according to a pure legal analysis and develops a framework for the comparison between ITDRPs and the main systems of international dispute settlement in other domains allowing to overcome a number of shortcomings which a comparison conducted on pure legal terms entails.
Singapore: Updated Transfer Pricing Guidelines Released by IRAS
Authors: Gargouri Slim
Published: February 2022

Addressing Base Erosion and Profit Shifting are the main challenges facing various countries whether being OECD members or not. Implementing or amending the transfer pricing regulation is not enough for Tax authorities to reach a reasonable level of compliance. It should be combined with the release of guidelines clarifying such rules taking into account the local economic and legal specificities and updates. Aware of such challenges, the Inland Revenue Authority of Singapore issued, on 12 January 2017, a new version of its transfer pricing guidelines in order to help taxpayers comply with the arm’s length principle.
Changing the Paradigm of Shipping Activities Taxation in Portugal
Authors: Borrego Luis M. P.
Published: February 2022

This article intends to describe the latest developments regarding the options on the taxation of shipping companies in Portugal. The recent policy developments aim at a reformulation of the taxation system, in particular with the possible adoption of a tonnage tax regime, like most of its European counterparts.

Thus, this article includes an overview of the current taxation options for shipping companies and seafarers in the EU, their framework for State aid and a general description of the tax policy options that may be adopted in Portugal; it also considers whether, in the Portuguese case, a simple change in the taxation model will be sufficiently attractive to encourage the return of ships to the conventional registry.
Transfer Pricing Audits: Suitability of Transfer Pricing Documentation
Authors: Caraccioli Ivo
Published: February 2022

Article 26 of Legislative Decree No. 78/2010 introduced in Italy a rewarding regime related to the non-application of penalties involving intercompany transfer pricing adjustments in connection with taxpayer’s submission to the Tax Authorities of ‘suitable’ documentation to support taxpayer’s transfer pricing policies. Assessment on the ‘suitability’ of such documentation by Tax Inspectors has given rise to a variety of critical issues in the last few years.
Case X (C-283/15) and the Myth of Schumackers 90% Rule
Authors: de Groot Isabella
Published: February 2022

Case law stemming from the Schumacker judgment, has confirmed that the Member State of employment does not, in principle, have to grant deductions related to personal and family circumstances to a non-resident. However, the CJEU has allowed for an exception to this rule (the socalled ‘Schumacker-exception’). In its judgment of 9 February 2017 in the X case, the CJEU sheds more light on the applicability of this exception and on the situation of multiple Member States of employment. In this article the author first analyses the relevant case law rendered before X that provides more clarity on when the Schumacker exception applies and follow this with an analysis of the X case and its consequences. She concludes by discussing some remaining issues.
Formulary Apportionment in the European Union
Authors: Llopis Estefanía López
Published: February 2022

The European proposal on a Common Consolidated Corporate Tax Base suggests a sharing mechanism based on the application of an apportionment formula. This formula includes three different factors (labour, assets and sales) with equal weighting. Despite the virtues of this method, we believe that the suggested formula is far from being consistent from an economic point of view and that European institutions should revise it before continuing with the negotiation process. In order to design a new formula, it is vital to take into consideration the objectives of the European proposal and the growing concern about the phenomenon of profit shifting in the EU context. In the light of these premises, two different alternatives are analysed in this article. On the one hand, we refer to the possibility of using a two-factor formula for distributing the tax base amongst Member States, based on assets and labour as productive factors. On the other, we suggest a formula exclusively based on sales as an income-generating factor. Although both alternatives are far from being perfect, we conclude that a single-sales factor formula offers a large number of advantages and is an efficient method to fight against profit shifting strategies.
General Aspects of the Multilateral Instrument
Authors: Bosman Alexander
Published: February 2022

The Multilateral Instrument (MLI) can be regarded as the most innovative and far-reaching development in the area in the area of tax treaties in recent decades. The implementation of the tax treaty related Base Erosions and Profit Shifting (BEPS) measures through the MLI will have major consequences for the global network of bilateral tax treaties. The actual impact of the MLI on tax treaties depends to a large extent on the choices and reservations made by each participating state, especially with regard to provisions that do not reflect BEPS minimum standards. These positions will also influence the impact of the MLI for each state’s participating treaty partners. This article examines certain general and procedural aspects of the MLI, including the scope and interpretation of the MLI. This is followed by a discussion of the operation and legal consequences of the compatibility clauses, the reservations and the notification obligations. The focus is then shifted to various procedural aspects related to the final provisions of the MLI, including the entry into effect and timing aspects.
Understanding the Legislative Process and Political Realities Behind Enacting US Tax Reform
Authors: Levey Marc M. , Minkovich Alexandra , Odintz Joshua D.
Published: February 2022

This article discusses the legislative process for US tax reform. With Congress having failed with healthcare reform and needed cost savings necessary for Republicans to unilaterally push their tax agenda, tax reform will likely now require a bi partisan approach. While all believe that tax reform is needed the question becomes whether Congress can rise above partisanship to get the job done.
Is India Ready for BEPS?: Foreseeable Problems and Suggestions
Authors: Laddha Harsha
Published: February 2022

Base Erosion Profit Shifting (BEPS) has recently been a matter of great concern. Globally, the disparity among the various tax schemes aided Multinational Companies (MNCs) to shift their profits to low tax jurisdictions and practice double non-taxation. In order to deal with this unstable situation that led to diminution in the collection of tax, the Organisation for Economic Co-operation and Development (OECD) came up with the 15 Action Plans as an initiative on BEPS at the call of Group of Twenty (G20). It extends a global guideline, which will facilitate the governments with the national and international devices to preclude companies and businesses from escaping their tax liability by paying little or no taxes. Even after not being a member to OECD, India has been participating in an active manner in the advisements on BEPS. Undoubtedly, it is the biggest international effort to combat abusive tax planning without substance; however, we need to see how far it is successful in achieving the objectives it was set for. The aim of this article is to identify the foreseeable problems that are likely to emerge in the future and propose recommendations and suggestions, if any needed, to implement the tax practice that can help wipe out the problem of BEPS in context of the Indian taxation regime.
The Improper Use of Country-by-Country Reports: Some Concerns on the Brazilian Approach to BEPS Action 13
Authors: Borges Alexandre Siciliano
Published: February 2022

Common among several ‘aggressive’ tax planning schemes used by multinational enterprises (MNEs) is the fact that the negotiating structures undertaken by taxpayers relied, to some extent, on the unique features of the transfer pricing rules of the countries involved. In this context, BEPS Action 13 proposes the development of rules that may enhance transparency for tax administrations through the improvement and standardization of transfer pricing documentation. However, a tax administration is not free to use information obtained through the exchange or implementation of country-by-country reports in order to pursue its own means and goals, according to its tax policy. The authors suggest that the use of this information remains bound to the concept of ‘appropriate use’ and that an improper use of the information may lead to improper results with regard to domestic tax assessments or the evaluation of the relevant aspects of legal facts.
Selectivity in Corporate Tax Matters After World Duty Free: A Tale of Two Consistencies Revisited
Authors: Piotrowski Sophia
Published: February 2022

In World Duty Free Group, the CJEU has reaffirmed that de jure-selectivity requires a derogation from the reference system of taxation giving rise to a different treatment of undertakings that are in a legally and factually comparable situation in light of the objective of the reference system. In corporate tax matters, the reference system is generally the corporate tax system itself. It is thus not necessary to identify a certain group of undertakings as the only ones that can benefit from a tax measure. The CJEU’s emphasis on discrimination in the second step of the selectivity test will not effectively restrict the concept of selectivity. By contrast, the CJEU did not address the internal justification where problems persist which respect to permissible grounds of justification, to the relationship between derogation and justification and finally to proportionality. In World Duty Free Group, the CJEU has also confirmed the existence of a second dimension of selectivity, namely de facto-selectivity. While de jureselectivity amounts to an obligation to design Member States’ tax systems in an internally consistent manner, de facto-selectivity can be understood as an example of the obligation also to adhere to certain external consistency standards.
Country note: Irregular and Wasteful Expenditure, Tax, and Fiscal Citizenship in South Africa
Authors: Tickle Deborah
Published: February 2022

The Auditor General of South Africa, in his consolidated audit reports for 2015/2016, reported ZAR 65.5 billion of ‘irregular’ and ‘wasteful’ expenditure by central, provincial and local government in South Africa, together with ten of the twenty-one state-owned enterprises. This figure was almost double that of the previous year. Against a background of government corruption, significant poverty and a taxpayer base in 2015, whereby 130,000 individuals paid a third of the personal income tax and 616 companies paid two-thirds of the corporate income tax, the question arises whether the levels of ‘irregular’ and ‘wasteful’ expenditure result in reduced levels of fiscal citizenship in the country.

This article further looks at the general concept of fiscal citizenship and establishes that reduced trust in government results in reduced tax morality and fiscal citizenship. It finds that this rule applies equally in South Africa. The levels of ‘irregular’ and ‘wasteful’ expenditure in the country arise to some extent, and are perceived to arise to a large extent, from corruption. The South African tax authority acknowledges, together with professional commentators and journalists, that the ensuing lack of trust in the State has a negative impact on fiscal citizenship.
Tax Information Exchange Agreements and the Prohibition of Retroactivity
Authors: Scapa Passalacqua Anna B. , Mazz Addy , Quiñones Natalia , Roeleveld Jennifer
Published: February 2022

This article presents a study of the retroactive application of tax information exchange agreements (TIEAs) in Brazil, Colombia, South Africa and Uruguay, with a view to articulating policy recommendations for similar emerging economies.

 Contracting states should adopt clear rules in their TIEAs as regards their temporal application. In the absence of such rules, contracting states should abstain from applying a TIEA retroactively. The authors further recommend that legislatures adopt clear rules in domestic law governing whether a TIEA should apply to pending proceedings at the time of signature of the TIEA.

Countries wishing to provide for retroactive effect in respect of information that is still open for review under statute of limitations rules may include provisions to reflect this both in domestic law and in the TIEA itself. It is recommended that countries carefully review and agree whether exchanges of information should be restricted for cases that already have been subject to a reassessment proceeding and, thus, are closed, even when the statute of limitations period has not lapsed.

Legislatures in emerging countries should also take a position in domestic law on the issue of whether taxpayer rights may be limited as the result of a retroactive TIEA application.
Which Source Taxation for the Digital Economy?
Authors: Turina Alessandro
Published: February 2022

This article is concerned with source-based approaches to the international tax challenges raised by the digitalization of the economy. It focuses, in particular, on what, in the current debate, is often referred to as a possible set of short-term or interim measures. After introducing the context from a broader socio-historical and business perspective, the article addresses the current complex tax policy agenda, aiming at outlining possible policy models to be derived from the OECD and EU “platforms for proposals”, as well as from selected domestic experiences. In doing so, the article addresses a set of micro-research questions that appeared very relevant to the author in the current climate of uncertainty surrounding the taxation and digitalization agenda. First, the article is concerned with the need to conduct an exposition of terms by introducing some clarifying distinctions against the backdrop of the very blurred lines between the various policy options under consideration. In particular, it attempts to shed light on how a short-term or interim approach could actually be defined and in tracing some boundaries between equalization levies and a withholding tax-based approach. This exercise allows for some possible proposals to be set forth regarding how the concerned measures may be made more easily compliant with the pre-existing international legal framework and more attuned with their inherent policy objectives, also bearing in mind the need to minimize distortions as far as possible. This normative perspective is inherently tied to another set of ‘micro-research questions’ addressing how the policy and legal planes interact in this area and to what extent such initiatives might be pursued in accordance with a coherent set of policy goals in a way that would not prove disruptive for the existing legal framework of reference. In attempting to do so, however, the author realizes that there may be a clear trade-off between the above different sets of concerns, so that the undertaking of any action would need to implicitly express a fundamental option in that regard. Such findings are substantiated against the backdrop of some key unilateral experiences (including regional ones, as per the recent Directive proposal on the common system of a digital service tax) that have so far been enacted or ventilated, assessed in particular in the light of the recently released Interim Report on the Tax Challenges Arising from Digitalization.
Hybrid Entity Mismatches and the International Trend of Matching Tax Outcomes: A Critical Approach
Authors: Parada Leopoldo
Published: February 2022

The international tax debate as regards hybrid entities has certainly changed after the OECD BEPS Project. Since then, the trend has been focused exclusively on matching transactions involving hybrids and reverse hybrid entities and double non-taxation, however without questioning whether these two elements are necessarily interconnected or whether they should serve each other in the design of domestic anti-hybrid provisions. This is particularly evident as regards the notion of ‘hybrid (entity) mismatch arrangements’ the design of which is based on the assumption that income should be taxed somewhere – no matter where – and as regards the complex set of domestic solutions proposed (‘linking rules’) the true efficacy of which is nevertheless still unknown.

In this vein, this article adopts a critical approach both as regards the diagnosis of the problems and as regards the solutions proposed. As to the diagnosis, the author argues that the artificial attempt to match transactions involving hybrid entities and double non-taxation not only disregards the fundamental issue as regards hybrid entity mismatches (i.e. the disparate tax characterization of the same entity by two different states), but also carries with it the risk of creating presumptions of abusive practices in all those cases in which a hybrid entity structure is simply not taxed at all. As to the remedies, the author argues against the complexity, excessive reliance on foreign laws and potential economic double taxation issues that the implementation of linking rules might cause from a tax policy perspective. From a practical perspective, the author questions the proper interaction between linking rules and other anti-base erosion provisions, such as interest limitations and CFC rules. This article ultimately concludes that a re-orientation in the international debate regarding hybrids and reverse hybrid entities is crucial in order to open the door for more fundamental – and perhaps also more coordinated – solutions.
Case law note: A Noncumulative Single Stage Sales Tax Does Not Infringe on the VAT Directives Prohibition to Introduce a Turnover Tax
Authors: Vanhee Thomas
Published: February 2022

On 7 August 2018, the Court of Justice of the European Union (CJEU), in case C-475/17, (CJEU 7 August 2018, Case C-475/17, Viking Motors and Others, TKM Beauty Eesti OÜ, TKM King AS, Kaubamaja AS, Selver AS v. Tallinna linn, Maksu- ja Tolliamet, ECLI:EU: C:2018:636) issued a ruling on the interpretation of Article 401 of the VAT directive (Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, OJ L 347/1 (11 Dec. 2006)). The article prevents Member States from introducing another turnover tax similar to VAT, which may impair the functioning of the internal market. 

The Court debated the nature and concept of a turnover tax, the prohibition of maintenance or implementation of national taxes that resemble the same nature of VAT, as well as the essential characteristics of VAT.

This case note reflects on the decision adopted by the Court interpreting the same Article 401 in respect of the sales tax imposed by the Tallin City Council, Estonia.
BEPS Action 4 and Its Compatibility with the Principle of Non-Discrimination Under Article 24(4) of the OECD Model Convention
Authors: Burkhalter-Martinez Natassia
Published: February 2022

The final reports of the OECD Base Erosion and Profit Splitting (BEPS) Project were published in October 2015. The OECD’s recommendations include an approach to address the risks of base erosion and profit shifting caused by the deduction of interest and other financial payments, namely by implementing a fixed ratio rule, which can be complemented by a group ratio rule. The implementation of the BEPS Action 4 recommended approach could lead to certain issues related to its compatibility with domestic law and with tax treaty obligations. This article addresses one of these issues by analysing the compliance of the BEPS Action 4 recommended approach with tax treaty obligations, mainly with the principle of nondiscrimination under Article 24(4) of the OECD Model Convention.
Equalization Taxes and the EUs Digital Services Tax
Authors: Kofler Georg , Sinnig Julia
Published: February 2022

Equalization taxes have a number of potential disadvantages and shortcomings, including their negative impact on growth, innovation and productivity, non-neutrality, double taxation, and problems in compliance and administration. However, some also view them as a politically feasible way to address perceived ‘unfairness’ in the territorial allocation of taxing rights in a digitalized economy. In any event, however, there are also certain technical features any such tax should comply with, including, e.g. compliance with international obligations (e.g. EU and tax treaty law), administrative simplicity, and a scope that is not overreaching. This contribution will address the general background of ‘equalization taxes’, the fundamental objections raised against it, and the relevant design features, both on a general level and specifically with regard to the proposal for an EU ‘Digital Services Tax’.
Country note: Implementation of Current Withholding Tax in France: The French Exception is Gone!
Authors: Poras Geoffrey , Charpenet Agnès , Jaffe Michael , Murray Elliott
Published: February 2022

Almost every developed country has put in place a system of current year withholding. What better way to ensure that taxes will be paid than to require the employer to withhold current year taxes from current year wages! Yet France has been virtually the last country to change from its current system where payment is made the year after income is earned and the employer is completely eliminated from the tax process. Each time moving from the old system to the standard current year withholding system has been discussed, resistance to change has prevailed. This time, after some last minute prevarication, President Macron will be leading the country forward with the reform starting 1 January 2019. It is important to understand what changes are in store, what happens during the 2018 transition tax year, and some unintended consequences on US taxpayers residing in France.

 

We will first review how the new French withholding tax applies to salaries. We will then examine the transition measures that have been put in place to avoid tax abuse and yet avoid double taxation. Finally, we will look at an exceptional issue that the transition creates for US taxpayers residing in France for whom immediate action may be necessary.
Country note: Joint and Several Liability as a Measure to Tackle VAT Fraud: The Spanish Perspective
Authors: Prósper-Almagro Ana B.
Published: February 2022

The major downside of the current transitional VAT system is that it has proven to be particularly susceptible to VAT fraud. This is a real problem that not only results in revenue losses for Member States, but also disrupts competition and increases compliance costs for businesses. In this context, over the last several decades, governments around the world have adopted a large variety of measures that are aimed at tackling VAT fraud and encouraging VAT compliance. This article explores the effectiveness of the anti-fraud measure based upon a chain liability from a Spanish perspective.
The EU Standard of Good Governance in Tax Matters for Third (Non-EU) Countries
Authors: Mosquera Valderrama Irma Johanna
Published: February 2022

This article analyses the standard of good governance in tax matters introduced by the Economic and Financial Affairs Council (ECOFIN) in 2008, with a view to tackle tax fraud and tax evasion. At that time, the standard included transparency, exchange of information and fair tax competition. Later on, several OECD and EU developments have changed the content of this standard. As of April 2018, the standard of good governance includes also the four Minimum Standards of the Project to tackle base erosion and profit shifting (BEPS) practices by multinationals. This standard has been introduced by the EU as a precondition for third (non-EU) countries that receive EU development aid, conclude strategic partnership agreements, free trade and economic partnership agreements and more recently as a standard that determines whether the third (non- EU) country should be included in a single EU common list of non-cooperative jurisdictions. This article aims answers two questions (1) whether the standard of good governance in tax matters is an import and/or export of EU norms? and (2) what is the legal status of this standard vis-á-vis third (non-EU) countries? Finally, this article provides conclusions and recommendations for further research.
A Finale Incomparabile to the Saga of Definitive Losses? Deduction of Foreign Losses and Fundamental Freedoms After Bevola and Sofina
Authors: Kandel Harald
Published: February 2022

The Court of Justice of the European Union (CJEU) has developed a rich case law on the impact of the fundamental freedoms on the need for deducting foreign losses. The contribution analyses the CJEU’s case law both with respect to loss relief in the residence and in the non-residence state and shows that the case law is consistent. Such losses only need to be taken into account in the residence state when they are comparable to domestic losses and to the extent definitiveness implies the source state cannot fulfil its primary responsibility to grant loss relief. The recent decisions in Bevola on loss relief in the residence state and Sofina in the source state fit into the Court’s line of reasoning.
Case Law Note: The Vetsch Case: New Liability for Fiscal Representatives Acting in a Supply Chain Subject to VAT Fraud?
Authors: Charpenet Aloïs
Published: February 2022

It is not the first time that the Court of Justice of the European Union (CJEU) has had to determine whether fraud committed by one actor in a supply chain may affect the VAT rights of other actors in that same chain. In Vetsch (DE: CJEU 14 February 2019, Case C-531/17, Vetsch Int. Transporte GmbH v. Zollamt Feldkirch Wolfurt, ECLI:EU:C:2019:114.), the Court had to decide to what extent fraud committed by purchasers of goods could prevent their fiscal representative from making use of a specific VAT exemption, thus making the representative liable for paying the VAT due.
Towards a Standing Committee Pursuant to Article 10 of the EU Tax Dispute Resolution Directive: A Proposal for Implementation
Authors: Serrano Fernando , Traversa Edoardo , Piotrowski Sophia , Monsenego Jérôme , Voje Jasna , Perrou Katerina , Reimer Ekkehart , Petruzzi Raffaele , Stankiewicz Lukasz
Published: February 2022

The European Union Tax Dispute Resolution Directive 2017/1852 requires Member States to introduce mandatory arbitration for tax treaty disputes. In addition to the standard arbitration procedure laid down in the directive, Member States may also provide for dispute resolution by a Standing Committee. This contribution presents proposals for the implementation of such a Standing Committee.
Does the Achmea Case Prevent the Resolution of Tax Treaty Disputes through Arbitration?
Authors: Monsenego Jérôme
Published: February 2022

In this article the author investigates whether, and if so to what extent, the Achmea case may have an impact on the resolution of disputes involving tax treaties through arbitration. It is concluded that both tax treaty arbitration under Article 25(5) of the 2017 OECD Model and the dispute resolution mechanisms included in the Dispute Resolution Directive are compatible with the Achmea case.
Arbitration institutes forum: Arbitration Institutes: An Issue Overlooked
Authors: Mooij Hans
Published: February 2022

Tax treaty arbitrations to date have only been rare. With the MLI and the Dispute Resolution Directive, however, numbers of arbitrations may reasonably be expected to go up. Authorities will have to face the question, whether they want to administer arbitrations themselves, or prefer to instead call on facilitation by professional arbitration institutes as is customary practice in such important areas as commercial or investment arbitration. Proper and effective administration will be a significant factor to the eventual success of tax treaty arbitration. Absent any guidance in either the MLI or the Dispute Resolution Directive, the issue requires careful consideration from authorities.
Taxing Carbon Emissions from International Shipping
Authors: Falcao Tatiana
Published: February 2022

According to the International Maritime Organization (IMO), maritime transport emits around 1 billion tonnes of CO2 annually and was responsible for approximately 2.5% of global greenhouse gas emissions in 2014. The prediction is that greenhouse gas emissions from maritime transport alone may increase between 50 and 250% by 2050, depending on future economic and energy developments.

In spite of that, there is no concerted action or plan to tax or capture the CO2 emissions derived from international maritime shipping – the most widespread and popular form of transportation. This occurs in an environment where, from the perspective of corporate taxation, the international maritime industry is one of the sectors that is often taxed at some of the lowest tax brackets, if compared to other business.

This article fulfils the threefold purpose of (1) discussing the international standards to which the international maritime transport network is subjected, from international public law and environmental law perspectives; (2) analysing the international tax regime applicable to the taxation of income derived from international shipping transport; and finally, (3) suggesting future policy approaches based on the principles and premises identified, to tackle carbon emissions derived from international maritime transport.

The article purports to provide a full overview of the direct and indirect tax obligations which the maritime industry is under, and suggest policy approaches to assure that the environmental cost of transport is captured in the final price of products traded internationally, in order to reestablish geographic economic equity through the application of a carbon tax instrument.
The Principal Purpose Test as Introduced by the OECD MLI: Is It Time for a Compromise with EU Tax Law?
Authors: Cuoco Antonio
Published: February 2022

The OECD Multilateral Instrument (MLI) introduced the principal purpose test (PPT) as a considerable step forward in counteracting treaty abuse. This article analyses the PPT rule in light of the possible restriction of EU freedoms. The first part analyses the wording, structure, rationale and effect of the PPT rule. Particular attention is paid to the reasonableness test and to the circumstance that the PPT rule introduced by the OECD MLI does not literally incorporate a reference to the genuine activity and the business purpose and, as such, seems to lower the threshold of abuse compared to the EU Court of Justice (ECJ) standard.

Subsequently, compatibility with EU law is explored via the three-step process as developed under settled case law of the ECJ. An interim conclusion is reached concerning the risk of incompatibility of the PPT rule with EU law. Next, an interpretative effort is made on the basis of a systematic interpretation (1) of the Commentary on the OECD Model (2017) and (2) of recent ECJ case law in order to show that PPT rule may be reconciled with the ECJ standard of abuse and a compromise may be achieved. Finally, the achieved compromise is briefly exemplified having regard to an ‘equity wall’ structure in order to illustrate a fact pattern (different from the clear-cut examples given by the OECD Commentary) that might fall within the scope of the PPT for tax treaty purposes.
Alternative Approaches to Address the (Yet to Be Defined) Treaty Shopping Phenomenon
Authors: Escribano Eva
Published: February 2022

The present article intends to provide alternative solutions beyond the traditional countermeasures to counteract the treaty shopping phenomenon. It departs from the premise that the treaty shopping phenomenon has never been accurately defined, a fact that significantly conditions – and hinders – the process of conceiving measures to address it. Be that as it may, the paper briefly summarizes the key features of its three most paradigmatic countermeasures (beneficial ownership, limitation on benefits (LOBs) clauses and the principal purpose test) and further notes that the recently advocated international expansion of the latter two may not be appropriate (section 1). In this context, the paper advocates for four alternative approaches to neutralize treaty shopping. The first approach involves a reconsideration of domestic corporate tax residence tests, whose configuration ought to be regarded as the genuine ultimate root of treaty shopping concerns (section 2.1). The second and third involve a (re)interpretation and a minor amendment of Article 4.1 of tax treaties respectively (sections 2.2 and 2.3). The last one entails the adoption of a more targeted LOB clause (section 2.4). The first and fourth approaches rely on a specific (and personal) perception of the treaty shopping phenomenon (section 2.1).
Country Note: The UAE Fiscal Federalism
Authors: Scalia Roberto
Published: February 2022

The United Arab Emirates (UAE) is a federal State formed in 1971. Since its establishment, federal taxes have not been adopted nor has a Federal Tax Authority been set-up which have led to little attention being paid to the UAE federal tax system. The perception is steadily changing due to the increasing importance of compliance with international standards, on the one side, and the introduction of a ‘federal’ VAT, on the other. In this article, the author discusses the UAE Constitutional principles that directly and indirectly affect taxation. An hystorical analysis helps to outline the context in which the UAE federalism arose (mainly since 1968) and how it later developed after the establishment of the UAE. The spheres of the Union and the Emirates are strictly interdependent, and the distribution of taxing powers and cooperation between the two levels of government is based on a residual competence of the Emirates (with regard to all matters not assigned to the Union). However, the distribution of taxing powers in the UAE reveals that its tax system is a phenomenon ‘in evolution’, driven by social and economic changes that are gradually shaping the unique UAE federal tax system. Against this background, this system, as it was addressed until 2016, currently displays different features and deserves careful attention by scholars, practitioners, and policymakers who are concerned with UAE tax-related issues.