bluuebunny/crossref_metadata_2025 huggingface dataset:
Ruling in Vodafone Tax Dispute in India: Final or Fallible!
Authors: Kumar Awanish
Published: February 2022

The article analyses the judgment of Supreme Court of India in Vodafone tax dispute which rekindled the debate on tax avoidance and tax evasion in India. The dispute relates to the taxability of the alleged capital gains to Vodafone Holdings in restructuring of the group. The author showcases the illegality and perversity committed by the Honourable Supreme Court by not taxing the transaction. It also analyses the curious developments in the form of a validation clause in Income tax laws, post Vodafone verdict. The constitutionality of the validation clause is examined. The article pinpoints the lacunae in the proposed validation clause. The article concludes that the Vodafone transaction was taxable, and the Government has been put to huge loss by none other than the Supreme Court of India which was established to look after the well being of the Constitution and the nation.
The Experience with Advance Pricing Agreements
Authors: Stiastny Marion , Kerschner Ina
Published: February 2022

In times of increasing cross-border transactions, multinational enterprises are faced with the obstacle of rising legal uncertainty and therefore reduced planning reliability in tax matters. Advance pricing agreements (APAs) provide an appropriate means of tackling such problems relating to transfer pricing issues. In the last two decades APAs have risen from relative obscurity to become an important transfer pricing controversy management tool, offering benefits to taxpayers as well as tax administrations. These issues are dealt with in Markham's study, Advance Pricing Agreements - Past, Present and Future, by focusing on the United States and Australia, the two countries that were at the forefront of adopting APAs and whose wealth of experience over two decades confirms their APA programmes as the global paradigms. Markham's study gives the opportunity to further develop the scientific thoughts and apply them to a European context, especially taking into account the practice of Austria.
Destination Principle in Intra-community Services and the Fixed Establishment in the VAT. A Comparative Study of Polish and Spanish Law
Authors: Benito David Elvira , Gorazda Marcin
Published: February 2022

This article deals with one of the most important and controversial topics in Value Added Tax (VAT): the concept and functions of fixed establishment. Hitherto works have approached the topic from only one perspective: either that of EU law or the national law of the author, obscuring the global nature of it. This two-sided (Polish and Spanish) view in the article intends to bring to the table some of the issues concerning fixed establishment, its role in the location of taxable events and the implementation of VAT principles.

The concept of fixed establishment and its relation to its 'brother', permanent establishment, are considered in the article together with the fact that Polish and Spanish law have different starting points. Whereas in Polish law there have traditionally been two separate notions with two definitely different meanings, only one, 'establecimiento permanente', has been used in Spanish law for both direct and indirect taxes. In Spanish law, one consistent concept has now, through the development of EU law and European Court of Justice (ECJ) cases, produced two different legal ideas under the same name.

At the end, some important conclusions and postulates are formulated. This article serves as an invitation to open the door into 'fixed establishment in the VAT wonderland'.
Designing Arbitration Provisions in Tax Treaties: Reflections Based on the US Experience
Authors: Monsenego Jérôme
Published: February 2022

This article analyses some of the features of the arbitration provisions included in the tax treaties concluded by the US. The purpose of the article is to analyse these arbitration provisions in the light of the recommendations of the OECD and the UN Model Tax Conventions. The differences emphasized between the arbitration provisions included in the tax treaties concluded by the US and Article 25(5) of the Model Tax Conventions may be of interest to countries considering different options for designing arbitration provisions in their tax treaties.
The Protection of Taxpayers Property Rights in Light of the Recent ECtHR Jurisprudence: Anything New on the Horizon, or Just More of the Same?
Authors: Seara Alberto Quintas
Published: February 2022

The relationship between taxpayers' property rights and the wide discretion of the legislature in the tax field has traditionally been discussed, both in domestic and international courts. In this regard, the protection of the European Convention on Human Rights (ECHR) should not be underestimated as is clearly shown in the recent decisions of the ECtHR in the N.K.M., Gáll, and R.Sz. cases where the Court has declared a violation of Article 1 to Protocol No. 1.
Transfer Pricing in North African Countries
Authors: Gargouri Slim
Published: February 2022

In North African region, Only Egypt and Algeria have already implemented a Transfer Pricing regulation: Egypt introduced the concept in 2005 while the Algerian rules were implemented in 2007. Though, the measures in force are still under the urgent requirement to be improved: The Egyptian case shall focus on the transfer pricing documentation while Algeria has to further develop transfer pricing methods as well as to authorize the conclusion of Advance Pricing Agreement (APA).

Tunisia and Morocco have not introduced transfer pricing rules yet, but they require that transactions between related entities should be performed in compliance with the arm's length principle.
New European Approach to Combat VAT Fraud?
Authors: Griffioen Menno , van der Hel-van Dijk E.C.J.M.
Published: February 2022

The Member States of the European Union (EU) are missing billions of Euros each year as a result of cross-border VAT fraud. After its introduction, the current VAT system appeared to contain flaws and proved to be vulnerable to fraud. Tackling VAT fraud since then has become serious business within the EU. Despite the fact that there seems to come no end to new measures to combat fraud, so far though those measures seem not to be very effective. In June 2013, the European ministers again agreed on some (temporary) measures to combat fraud. Do these new measures make sense? And will they lead to an effective European approach to VAT fraud?
The German CFC Rules: Overview, Deficits and Reform Proposals
Authors: Moser Till , Kraft Gerhard
Published: February 2022

German CFC Rules rank among the oldest in the world. They have been in existence for more than forty years. Today, the body of CFC rules is increasingly accused of being outdated, vague and ambiguous, and no longer in alignment with the needs of a modern globalized world economy. Consequently, not only tax payers and their advisors but also tax authorities and tax courts face dramatic und partly unsolvable application problems. Some particular German CFC-provisions have been said to be inapplicable by all parties involved. With this background in mind, the following article revisits the most challenging problem areas and offers possible solution approaches. Our paper also identifies possible tax risks in connection with the German CFC legislation and therefore may turn out for investors as a decision making support tool.
Member States Must Apply Most Favoured Nation Treatment under EU Law
Authors: de Groot I.M.
Published: February 2022

According to case law from the Court of Justice of the European Union (CJEU), a Member State is not obliged to enact most favoured nation treatment if a tax treaty prescribes a certain type of tax treatment (bilateral most favoured nation treatment). In this article, the author discusses whether EU law does oblige a Member State to enact most favoured nation treatment if national law prescribes a certain type of tax treatment (unilateral most favoured nation treatment). The conclusions reached by the author are based on her analysis of the relevant CJEU case law on this issue.
The Territorial Scope of VAT Grouping Schemes in the Financial Sector
Authors: Dias Soares Claudia
Published: February 2022

There is an increasing interest on the part of the Member States in using the option of Value Added Tax (VAT) grouping provided in Article 11 of the VAT Directive, whose main effect is to allow related legal entities to make inter-company supplies of goods and services without charging VAT. The exact terms and effects of VAT grouping vary widely among Member States threatening the internal market. Cross-border national schemes involve control issues as well as revenue sharing problems and opportunities for harmful tax competition and legal disputes. Therefore, they are opposed by the European Commission. However, based on the lack of guidance in EU law on how to apply Article 11 and apparent lack of consensus between the main institutional stakeholders, namely the Member States and the EU institutions, several national tax designs do not limit their effects to the national territory. Such design is particularly useful for sectors where transnational entities perform VAT exempt activities, such as financial institutions, who can gain from using such schemes to avoid embedded non-recoverable VAT. This article briefly describes the current legal and jurisprudential status quo on the territorial scope of VAT grouping and discusses the main arguments in favour of national VAT groups as well as the ones underpinning VAT groups with cross-border effects. The main conclusion following from this analysis is that an economically acceptable and practical solution to address issues raised by charging VAT on intra-group supplies in exempt or partially exempt sectors is still necessary, since the 'dissolution effect' proposed by the Commission has some theoretical flaws and cost sharing groups, though helpful, face their own limitations. Moreover, cross-border VAT grouping will not be an attractive option in the EU until conflicts of jurisdiction and revenue sharing issues are addressed by the EU institutions and the Member States.
Anti-avoidance Legislation of Mayor German Language Countries with Reference to the 2014 Corporate Income Tax Burden of the Thirty-Four OECD Member Countries: Germany, Switzerland and Austria Compared
Authors: Zielke Rainer
Published: February 2022

The mayor German language countries, Germany, Switzerland, and Austria exhibit continuously economic growth and stability. Germany is the engine of the European Community and it might be interested to organize a group of affiliated companies in a way where all speak German. In this article anti-avoidance legislation will be reviewed with reference to the tax differential to the thirty-four Organisation for Economic Cooperation and Development (OECD) Member Countries. The pivotal question is, therefore, to what extent can internal tax planning with German language countries be optimized by inclusion of anti-avoidance legislation. This article outlines the primary corporate objective and key concepts of international tax planning with regard to anti-avoidance legislation and discusses the corporate income tax burden in the thirty-four OECD Member Countries analysing the tax differential as incentive in relation to transfer pricing, the reduction in ETR as the primary corporate objective and key concepts and the he importance of current and reliable information. After that anti-avoidance legislation in these mayor German language countries is presented and strategies of international tax planning with relation to these countries are developed. Afterwards this is evaluated from the OECD's perspective of Base Erosion and Profit Shifting (BEPS). Finally the concluding remarks are presented.
Exchanges of Information: What Does the IRS Receive? With Whom Does the IRS Speak?
Authors: Shervashidze Rusudan , Ruchelman Stanley C.
Published: February 2022

The U.S. government receives significant amounts of information regarding non-U.S. financial institutions, their U.S. customers, and schemes to assist those customers in avoiding taxation. Whether the information is received through domestic law, the offshore voluntary disclosure programs, income tax treaties, tax information exchange agreements, or in the future, FATCA, the data is voluminous and its content sheds light on information that is of interest to tax authorities in other jurisdictions. Although the global financial community has accepted information transparency with the U.S., and the information should be confidential under U.S. tax law, it is not clear that the information will stop with the Internal Revenue Service (IRS). Indeed, the infrastructure exists for the IRS to be a conduit of information to tax authorities around the world. This article explores the ways in which information is submitted to the IRS and the avenues available to the IRS to transfer the information to tax authorities in other jurisdictions.
Tax Treaty Entitlement Issues Concerning Dual Residents
Authors: Sanghavi Dhruv
Published: February 2022

The question whether a dual resident taxpayer is entitled to tax treaties concluded by each residence state with a third state has been controversial. Since 2008, the Organisation for Economic Co-operation and Development (OECD) Commentary on Article 4(1) of the OECD Model states that such a taxpayer would be entitled to only the tax treaty network of residence state as determined by the tiebreaker rule of the tax treaty between the two residence states. While this may be desirable policy, this article examines whether the interpretation espoused by the commentary is legally accurate.
Too Little, Too Late: The Uneasy Case for a Wealth Tax as a Means to Mitigate Inequality
Authors: Wijtvliet Laurens W.D.
Published: February 2022

Economic inequality looming large, wealth tax is often applauded as a means to mitigate inequality and to break up large concentrations of wealth. This article argues that the advent of a wealth tax should nevertheless be met with scepticism and questions the suitability of a wealth tax to mitigate inequality. It is argued that a wealth tax does not offer a sustainable contribution to the pressing problem of inequality, because: (1) it fails to address the root causes of inequality, which are institutional, and (2) it leaves intact the conditions in the income tax that incite inequality. Instead, it is advisable to put a first break on wealth formation by implementing a comprehensive income tax before resorting to ultima remedia such as a wealth tax.
Evaluation of Turkish Corporate Tax Law under the Principle of Freedom of Establishment
Authors: Eroglu Onur
Published: February 2022

Corporate tax law has been closely related to the principle of freedom of establishment. Because European Union (EU) Member States have declined to resign sovereignty in the field of direct taxation, harmonization progress in corporate taxation in the EU has been slow. Although EU treaties, regulations, and directives are all measures of positive integration, case law of the Court of Justice of the European Union (CJEU) declaring national tax measures incompatible with primary EU law is that of negative integration. This paper discusses the corporation tax field and its' many important decisions within the principle of freedom of establishment and what affects these decisions have on Member States' corporate tax law. This article demonstrates Turkey's significant efforts to fulfil requested accession criteria concerning economic and tax legislation with the EU in light of CJEU's case law.
Limit Base Erosion via Interest Deduction and Others
Authors: Cencerrado Emilio , Roch María Teresa Soler
Published: February 2022

BEPS Action 4 focuses on excessive deductible interest and other financial payments, thus recommending the design of rules in order to prevent base erosion through the use of interest payments and double non-taxation both from an inbound and an outbound perspective.

This article deals with some relevant questions related to this topic, such as the grounds for justification, the limitations based on classification and the financial expenses related to exempted income, with special reference to some relevant experiences and case law in the European Union. Taking into account that some tax jurisdictions have enacted provisions in this respect, the authors also analyse some comparative examples as well as the main concerns related to legal principles and taxpayers' position and Tax Treaty issues.
Taxing Virtual Currency: Challenges and Solutions
Authors: Bal Aleksandra
Published: February 2022

Virtual currency is a relatively new phenomenon. Its most prominent example, Bitcoin, appeared in 2009 at the height of the financial crisis, came to widespread prominence in 2013 and has been in the headlines ever since. The aim of this article is to outline the main challenges that virtual currency has created for the tax administrations and give some recommendations on how to tackle them. It also provides an overview of the diverging views of tax authorities on the taxation of virtual currency.
IPOS and the Italian Financial Transaction Tax
Authors: Buzzi Valentina , Rossi Luca
Published: February 2022

The Italian Financial Transaction Tax introduced by the 2013 Stability Law applies in general to transfers of the ownership of shares. However, exclusions from taxation and tax debenture reduction are provided for transactions that take place in regulated markets and in multilateral trading facilities, with the clear aim of favouring development of these trading venues. Regarding initial public offerings, it may be observed that an offer for the subscription of newly issued shares in the primary market is not subject to the Italian Financial Transaction Tax (IFTT) while an explicit exclusion is not clearly stated by the regulatory framework in respect to an offer for the sale of existing shares on the secondary market. In this article, the authors analyse the latter issue.
Free Zones in the United Arab Emirates: Domestic and International Tax Issues
Authors: Truby Jon
Published: February 2022

Free Zones in the United Arab Emirates (UAE) offer an abundance of tax and economic advantages for companies wishing to incorporate in the UAE and develop their business with a high degree of flexibility. However, the application of Double Taxation Agreements (DTAs) makes it increasingly difficult to their access benefits, namely the reduction of withholding tax on dividends or interests, as Contracting States tend to require at least Tax Residency Certificates (TRCs).

This increasingly pressing requirement leads to a double issue: the choice of the Free Zone in which it is conceivable to obtain a TRC and the general anti-abuse clause which could still allow the Contracting State to deny the right of benefiting from the provisions of a DTA even when a TRC has been issued. This article utilizes the example of the DTA between the UAE and Switzerland to illustrate and analyse this problem.
Singapore: Transfer Pricing Guidance Released
Authors: Slim Gargouri
Published: February 2022

Whether they are sales or purchase of goods, provision of services, borrowing or lending of money or use and transfer of intangibles, transactions between related parties present a high concern regarding possibilities to shift profits and to evade taxation, as related parties transacting with each other are highly exposed to set their pricing at a level which does not reflect market conditions due to a lack of independence in their commercial and financial relations. It is the case basically when related parties are located in different jurisdictions with different tax rates.
Does the Merger Directive Violate EU Primary Law by Excluding EU Companies Having Their Place of Effective Management in a Third Country?
Authors: Kollruss Thomas
Published: February 2022

Confirmed by case law, the freedom of establishment (Articles 49, 54 TFEU) applies for companies formed in accordance with the law of a Member State and those having their registered office, central administration or principal place of business within the European Union. Thus, the company’s place of effective management (POM) itself and its location are irrelevant criteria for applying the freedom of establishment. Therefore, an EU company with a POM in a third State can generally rely on the freedom of establishment. Moreover, pursuant to the ECJ, cross-border mergers within the EU are also covered by the freedom of establishment (A OY, SEVIC Systems). However, Article 3(b) of the EU Merger Directive generally disallows a tax-neutral cross-border merger if the transferring or acquiring company has a POM outside the EU. In this article the author discusses whether Article 3(b) of the EU Merger Directive infringes the freedom of establishment by excluding EU companies with a POM in a third State from taking part in a tax-neutral cross-border merger. In this regard, a short overview of the Directive’s implementation in national tax law is given. On this basis, the article highlights general implications for the reorganization tax law in other Member States and other EU direct tax directives.
Germany Adopts New Regulations Governing Allocation of Income to Permanent Establishments
Authors: Luckhaupt Hagen , Ditz Xaver
Published: February 2022

As a result of the ordinance on the application of the arm’s length principle to permanent establishments pursuant to section 1(5) of the German Foreign Tax Act (Betriebsstättengewinnaufteilungsverordnung, Ordinance on Income Allocation for Permanent Establishments) of 13 October 2014, income allocation for domestic and foreign permanent establishments stands on a new legal foundation. In particular, the new ordinance means that the ‘Authorized OECD Approach (AOA)’ with unlimited application of the separate enterprise fiction of permanent establishments for the purposes of income allocation is introduced into national law. The authors present the key principles of the ordinance and put forward a first critical appraisal.
The Relation of Article 9 Paragraph 1 German Double Taxation Treaties to Domestic Tax Law and the Consequences for Current Value Depreciation under Section 1 Paragraph 1: Foreign Tax Act
Authors: Becker Johannes
Published: February 2022

In its decision dated 17 December 2014, I R 23/13,1 the Federal Tax Court (BFH) defined its opinion on the barrier effect of Article 9 of the double taxation treaty with the USA in cases involving the arm’s-length principle more precisely. The author show the consequences of that decision for the German treaty policy and points out that there can be no doubt that Germany is following a restrictive approach applying Article 9 paragraph 1 OECD Model Convention (OECD-MC). Hence domestic tax law can solely be applied if it is not contrary to the arm’s-length principle. Furthermore, the author shows that the BFH had accepted the group support as being part of the arm’s-length conditions for unsecured loans. In consequence it is convincing that the BFH rejected the view of the tax administration, which had not allowed a current value depreciation due to domestic tax law, i.e., section 1 Foreign Tax Act.
The German Exit Taxation According to Section 6 Foreign Transaction Tax Law and Section 50i Income Tax Law: Current Developments and Areas of Concern
Authors: Moser Till
Published: February 2022

German residents moving abroad face an exit taxation regime under section 6 Foreign Transactions Tax Law if they hold shares in domestic or foreign corporations. In 2013, the respective provision was amended by section 50i Income Tax Law, which was again fundamentally reformed in July 2014. This provision has been accused to be vague and ambiguous and, as a consequence, implies serious application problems in practical terms both for the fiscal authorities and the tax payer, with tremendous consequences for foreign investment in Germany. Given this background, the following article revisits the most challenging problem areas and offers possible solution approaches.
Use of Foreign Losses: The Advocate General Wants to Turn on the Marks & Spencer Exemption, but the ECJ Rejects the Argument and States That EU Law Constitutes Rights to Deduct Foreign Losses
Authors: Ronfeldt Thomas
Published: February 2022

The article will – based on Advocate General Kokott’s opinion in the case C-172/13 Commission v. United Kingdom, prior cases on deduction of foreign losses and the ECJ’s ruling in case C-172/13 – analyse the option of either deducting foreign losses or rejecting the option of deducting the losses. In Advocate General Kokott’s opinion in the Commission v. United Kingdom case, the Marks & Spencer exemption is set out to not fall within EU law on freedom of establishment. Advocate General Kokott’s opinion states that EU law does not require Member States to allow for foreign losses to be deducted even if it is possible within a specific Member State. The ECJ confirmed the prior ruling in case C-446/03, Marks & Spencer and states that the Marks & Spencer exemption is still a part of EU law and the freedom of establishment.
VAT and Fixed Establishments: Mysteries Solved?
Authors: Boender J.M.B. , Schippers Martijn L.
Published: February 2022

The authors discuss European case law and the VAT Implementing Regulation with regard to the concept of the fixed establishment and question whether, thirty years after it was introduced into the field of VAT, all the mysteries surrounding the fixed establishment have now been solved.
The New Italian Patent Box: First Evaluation and Compatibility Issues with the OECD Indications
Authors: Pappalardo Luca Marco
Published: February 2022

The 2015 Italian Stability Law introduced a preferential taxation regime for income produced by intangible assets, commonly known as ‘Patent Box’. The article analyses it from a comparative perspective and in light of the Organisation for Economic Co-operation and Development (OECD) indications concerning the fight against base erosion and profit shifting (BEPS). It ultimately argues that the regime does not fully comply with the aforementioned indications, specifically because of the inclusion of brand and trademarks among eligible assets.
The Need to Avoid Double Economic Taxation Triggered by CFC Rules under Tax Treaties, and the Way to Achieve It
Authors: Kuzniacki Blazej
Published: February 2022

The present article deals with the problem of double economic taxation triggered by CFC rules under tax treaties based the Model Tax Convention of the Organisation for Economic Co-operation and Development (OECD tax treaties). In that respect, the author first provides and analyses several arguments speaking in favour of the thesis that OECD tax treaties target double economic taxation triggered by an application of the CFC rules and the treaties therefore require Contracting States applying CFC rules to avoid said double economic taxation. Subsequently, the way in which the double economic taxation should be avoided by Contracting States is discussed. Finally, the author concludes that the need to avoid double economic taxation triggered by the application of CFC rules under OECD tax treaties is internationally recognized and respected and that the appropriate way to achieve it is to credit taxes paid by the CFC if this company does not constitute a PE of its participants, or, exempt its income from taxation if it constitutes a PE of its participants and the exemption method applies to its income.
Legal Issues in Respect of the Changes to the Parent-Subsidiary Directive as a Follow-Up of the BEPS Project
Authors: Brokelind Cécile
Published: February 2022

This article identifies and analyses a number of questions raised by the amendments to the EU Parent-Subsidiary directive in respect of both the GAAR and the anti-hybrid rules. It capitalizes on the findings of previously published articles in this Review and concludes to an increased complexity, showing that Member States of the EU already had all necessary protective tools against ‘aggressive tax planning’ and did not need to amend the Directive.
Dutch Corporate Income Tax and Dividend Withholding Tax Treatment of Separated Private Estates
Authors: de Leeuw Arianne , Bobeldijk Arco C.P.
Published: February 2022

Since 2010, the Netherlands have (anti-abuse) regulations regarding the fiscal treatment of so-called ‘separated private estates’, with as a main rule the attribution of assets and income for personal income tax and gift and inheritance tax purposes. The authors discuss the consequences these regulations have for the corporate income tax and dividend withholding tax.
Source versus Residence State Taxation of Cross-Border Pension Payments: Trouble Shared Is Trouble Halved
Authors: Starink Bastiaan
Published: February 2022

The phenomenon of cross-border pension benefits has gained exponential traction in recent decades, the assumed main causes being greater mobility among taxpayers, globalization, the blurring of borders within Europe, and technological advances that have made it relatively easy for people to settle permanently abroad following their retirement. From a tax perspective, one question that is relevant in this context is which country has the right to impose tax on pension benefits following emigration. In this article I will discuss what I believe to be an appropriate allocation of taxing rights for cross-border pension payments.
The Concept of Aggressive Tax Planning Launched by the OECD and the EU Commission in the BEPS Era: Redefining the Border between Legitimate and Illegitimate Tax Planning
Authors: Seara Alberto Quintas , Calderón Carrero Jose Manuel
Published: February 2022

In recent years, the need to prevent and combat aggressive tax planning has played a key role not only in the agendas of international organizations and supranational institutions (OECD, EU, G-20, UN), but also in the agendas of national tax administrations. In this context, given the constraints and problems that result from the traditional model of enforcing tax obligations, the OECD is working towards the implementation of a complementary model of cooperative compliance, which shall be regarded as an instrument to improve voluntary tax compliance and to prevent tax fraud, tax evasion and aggressive tax planning. This piece of work addresses the fuzzy concept of aggressive tax planning in the framework of cooperative compliance programs and assesses how the ‘tax paradigm’ shift that is taking place at the international level (BEPS global tax reset) affects the delineation of the border between legitimate tax planning and tax avoidance, thus raising a number of issues and problems for taxpayers insofar as the redrawing of this thin red line has not been conducted in a globally uniform, transparent and consistent manner.
Reconsidering the Application and Interpretation of Anti-treaty Shopping Rules in the Context of Developing Countries
Authors: Silva Bruno da
Published: February 2022

The application and interpretation of tax treaties within the particular context of developing countries is still a largely unexplored area. The proposed idea in this article is to reconsider the application and interpretation of anti-treaty shopping rules considering their impact on Foreign Direct Investment (FDI) and the fundamental need of developing countries to attract investment inflows. This article demonstrates that the most common measures to address treaty shopping create administrative costs, uncertainty and are likely to dissuade FDI. Therefore, tax treaties concluded by developing countries should be fundamentally more concerned with promoting FDI than with preventing abuse and therefore legal certainty should be a priority rather than addressing treaty shopping practices.
The Compatibility of Exit Tax Legislation Applicable to Corporate Taxpayers in France, Germany, Italy, The Netherlands, Portugal, Spain and The United Kingdom with the EU Freedom of Establishment - Part 3
Authors: Beare Tony , van Os Pieter , Silvestri Andrea , Pötgens Frank P.G. , Durand Pierre-Henri , Lasarte Guillermo Canalejo , Robert Anne , Dony Aliénor , Scheifele Matthias , Wagner Gunther , Lancellotti Lucia , Romão Filipe , Caldas António Castro , Pichel Paulo , Pombo David López
Published: February 2022

This three-part article discusses the compatibility of exit tax legislation applicable to corporate taxpayers in France, Germany, Italy, the Netherlands, Portugal, Spain and the United Kingdom with the EU freedom of establishment, especially in the light of the ECJ’s landmark National Grid decision. In part 1, which was published in Intertax volume 44, issue 1, the authors scrutinized whether a company transferring its tax residence or effecting an outbound cross-border conversion has access to Articles 49 and 54 TFEU under the laws of the Member State. It also addressed whether these laws restrict Article 49, and, if so, whether the restriction can be justified and is appropriate to ensure the attainment of its objective. Part 2, which was published in the previous Intertax issue, provided a general overview of the proportionality test in connection with exit tax legislation under Articles 49 and 54 TFEU, and subsequently discussed whether the exit tax legislation in France, Germany, Italy and the Netherlands is proportional. Finally, this part 3 reviews whether the exit tax legislation in Portugal, Spain and the United Kingdom is proportional, addresses which other transactions the ECJ’s exit tax principles apply to, and provides conclusions and recommendations.
Responsiveness (Buoyancy) of Union Taxes to GDP in India (199091 to 201516)
Authors: Jain Parul
Published: February 2022

Changes in tax receipts of government take place with changes in Gross Domestic Product (GDP). Such changes in tax receipts may be the result of two factors: (1) there may be automatic changes in the tax yield when tax parameters are held constant. Such automatic changes are referred to as elasticity or built-in flexibility. (2) Increasing tax receipts may also necessitate imposition of new taxes, changes in rate structure of existing taxes, expansion of tax base, changes in scheme of exemptions, etc., or briefly referred to as discretionary changes. The overall responsiveness of tax revenues to discretionary changes in tax scheme (including automatic responses) is called responsiveness or buoyancy of the tax system and it is measured as the percentage change in tax receipts over percentage change in GDP.

The tax structure of the Union Government in India is composed of direct and indirect taxes. In terms of tax receipts, direct taxes are mainly composed of corporation tax and income tax while indirect taxes mainly include customs, excise duties and service tax. An analysis of responsiveness (buoyancy) reveals that the overall buoyancy of union taxes has been 1.04. Direct taxes have had a higher buoyancy coefficient. Within direct taxes, corporation tax has exhibited higher buoyancy as compared to income tax. Buoyancy coefficient of indirect taxes has been less than 1.0 and within indirect taxes, buoyancy of excise duties has been lower than that of customs. Service tax has, however, revealed the highest buoyancy coefficient.

Some of the factors responsible for lower buoyancy (responsiveness) of Indian taxes have been relatively slower expansion in base, increase in threshold limits, and large number of exemptions, rebates and deductions under tax laws, reduction in customs and excise duty rates under the impact of New Economic Policy, increasing tax evasion etc. It is high time that tax/GDP ratio in India be considerably raised through improving buoyancy coefficients. This would necessitate considerable expansion in tax base, bringing agricultural incomes under the Central Income tax net, rationalization of tax-preferences/incentives, bringing non-filers in unorganized sectors under the tax net, concentrating on High Net Worth Individuals, checking avoidance and evasion of taxes and improving tax administration. There is also need for introducing ‘accountability’ and switching over to ‘family’ as the unit of assessment.
Conflicts of Qualification and Interpretation: How Should Developing Countries React?
Authors: Marchgraber Christoph
Published: February 2022

From October 27 to 31, 2014, the tenth session of the United Nations (UN) Committee of Experts on International Cooperation in Tax Matters was held at the Palais des Nations in Geneva. During this meeting, it was, inter alia, discussed whether the OECD’s approach regarding conflicts of qualification and conflicts of interpretation shall be incorporated into the UN MC and the respective commentary. Whereas the Committee agreed on adopting the OECD’s interpretation of Articles 23 A(1) and 23 B(1) OECD MC (partly referred to as the “new approach”), some members argued that “including paragraph 4 of Article 23A of the OECD Model in the UN Model would not be desirable” or even “detrimental to the interests of the source state”. This article takes up these considerations by analyzing the OECD’s approach regarding conflicts of qualification and conflicts of interpretation in the light of the UN MC’s attempt to generally favor “retention of greater so called ‘source country’ taxing rights under a tax treaty – the taxation rights of the host country of investment – as compared to those of the ‘residence country’ of the investor”.
A BIT Too Much: Or How Best to Resolve Tax Treaty Disputes?
Authors: Piotrowski Sophia
Published: February 2022

State to state disputes under tax treaties are increasingly open for mandatory arbitration when intergovernmental negotiations do not reach a timely agreement. The present contribution seeks to understand this procedure. It also examines what institutional architecture ensures the best resolution of such disputes. It argues that the current mechanism works fairly well and that, while some incremental improvements seem warranted, arbitration clauses should be adopted more widely in tax treaties concluded by industrialized countries and countries with emerging economies. It then proposes a more ambitious novel approach which would seek a comprehensive solution binding on all parties involved, i.e., on the states and on the taxpayers. By contrast, the article is very sceptical of the potential of investor-state-arbitration for resolving tax treaty disputes. It contends that such arbitration under international investment agreements is incompatible with the structure and the aim of tax treaties. A clause that excludes such arbitration for tax treaty disputes should therefore be inserted in these treaties.
Avoir Fiscal and Its Legacy after Thirty Years of Direct Tax Jurisprudence of the Court of Justice
Authors: Haslehner Werner
Published: February 2022

On occasion of the thirty-year anniversary of the Court of Justice of the European Unions (CJEU’s) landmark judgment Commission v. France, 270/83 (‘Avoir Fiscal’), this article reviews the decision of the Court and its lasting impact on EU tax law. It finds that most of the principles developed in that case remain relevant in current doctrine. At the same time, several questions that were left open in 1986 are still unresolved today.
Causality under Tax Treaties
Authors: Bosman Alexander
Published: February 2022

This article examines the concept of causality, a somewhat underexposed aspect of categorizing income under the distributive rules of tax treaties. The author gives his views on causality under tax treaties, and suggests a method of approaching this concept.
Institutional Hybrid Financial Instruments and Double Non-taxation under Domestic Rules and Tax Treaty Law: The Example of Spain
Authors: Martínez Laguna Félix Daniel
Published: February 2022

Attention has been paid to double non-taxation resulting from contractual hybrid financial instruments, which are instruments that share debt and equity features in their very design. This article focuses on a specific Institutional Hybrid Financial Instrument instead. Institutional Hybrid Financial Instruments are equity instruments that could equally lead to conflicts of qualification and double non-taxation considering certain level of legal deductibility from a tax perspective according to a tax policy decision. The analysis deals with the application of the Spanish exemption method to Brazilian Juros sobre o Capital Próprio from a domestic law and tax treaty perspective. Moreover, the implementation of linking rules and its implications regarding hybrid financial instruments are also under consideration.
Tackling VAT Fraud in Europe: The International Puzzle Continues
Authors: Griffioen Menno , van der Hel-van Dijk E.C.J.M.
Published: February 2022

The G20, the Organisation for Economic Co-operation and Development (OECD) and the EU have taken several initiatives to improve transparency and exchange of information to combat tax avoidance and tax evasion, including VAT fraud. A coordinated international approach seems to be the only solution to effectively fight VAT fraud within the EU. An analysis of the developments in international cooperation, however, shows that Member States (MS) seem to underuse other means of international cooperation that exist besides the exchange of information. The exchange of information on its turn seems to be mainly used within the national context. We conclude that due to a lack of coherence in the ‘control’ systems of MS and due to the fact that ‘coordination’ does not always mean ‘collaboration’, MS still seem to address this ‘European’ problem mainly on a national level which does not lead to a substantial decrease of the level of VAT fraud (including a lower tax gap) within the EU.
Transfer Pricing: An Overview of the Italian Supreme Courts Recent Rulings
Authors: Valente Piergiorgio
Published: February 2022

Rulings on transfer pricing matters issued in the last few years by Italian Courts covered various themes. Among these, the Tax Authorities frequently challenged the selection and application of transfer pricing methods, comparability analyses developed by taxpayers supporting intercompany policies, the analysis of special transactions such as intercompany loans and services as well as transactions related to intangibles. The lack of a frame of reference, on the one hand, and the (perceived) uncertainty of the subject, on the other hand, engendered difficulties as to the crafting of a uniform jurisprudential orientation, leading Judges oftentimes to settle disputes through a line of reasoning, not always consistent with the Organisation for Economic Co-operation and Development (OECD’s) arm’s length principle.
Common Interpretation as a Method for Interpreting Double Tax Conventions in Germany: Theoretical Foundation and Results of Empirical Research
Authors: Sixdorf Franziska
Published: February 2022

With ninety double tax conventions with respect to taxes on income and on capital (DTC) in force as of 1 January 2016 Germany is among those countries with the densest treaty network. The author depicts the status of DTC within the German legal system and analyses how DTC are interpreted in Germany. In doing so, the author emphasises the method of common interpretation, which was proclaimed by Klaus Vogel already in 1986. Based on an analysis of current German case law the author shows that this method is still not fully implemented within the methods utilized in Germany for interpreting DTC. Subsequently, the author shows the respective reasons and analyses selected current international and domestic developments for their usefulness in establishing this method.
The Interaction of Articles 6, 7 and 21 of the 2014 OECD Model Tax Convention: A Historical Analysis
Authors: Sanghavi Dhruv
Published: February 2022

The discussion regarding the interaction between Article 6 (Income from Immovable Property), Article 7 (Business Profits) and Article 21 (Other Income) of the OECD Model is not new. However, the historical documents of the Organisation for European Economic Co-operation and the Organisation for Economic Co-operation and Development, which have now been made available, throw new light on the issue. It has been argued that Article 6(4), and not Article 7(4), governs the relationship between Articles 6 and 7, therefore excluding the possibility of applying Article 7 to any income from immovable property. Therefore, it is argued, that Article 21 is the only correct distributive rule to apply in cases where the bilateral scope of Article 6 is not satisfied. This article traces the evolution of Article 6, as evidenced by the historical documents, which reveals a different intention underlying Article 6(4).
Issues in Reforms of Union Taxes in India
Authors: Jain Parul
Published: February 2022

The correction of fiscal imbalances in India should focus on the root cause of disequilibrium – the government not being able to balance its consumption outlays with revenue receipts. Restructuring of public expenditure seems to be very difficult under the present circumstances. Hence, significant improvement will hinge increasingly on improvement in revenue collection through direct and indirect taxes. There is need for comprehensive reforms in direct and indirect taxes through decisive action in many crucial areas rather than marginal improvement on all fronts.

Broadening of the tax base is necessary to ensure growth of revenue. In direct taxes, there is a need to analyse the extent to which taxpayers actually belong to the higher slabs than they reveal in their tax returns and non-filers should be brought into the tax net. In the case of central excise and service tax, there is need to build a strong mechanism to ensure filing of returns by all registered taxpayers. To improve tax collections, it would be desirable to ask firms and companies to pay tax in equal instalments and adopt ‘family’ as a unit of assessment. The exemption/threshold limit should not be raised from the present level and Indian tax system should have smooth progression The Indian tax system incorporates a number of tax preferences/incentives to promote different activities which result in huge tax expenditure in case of both direct and indirect taxes. Tax expenditures, despite their drawbacks, need to be retained in the Indian tax system. However, they should be well targeted and be linked to performances. There is also a need to check the problem of increasing tax avoidance and evasion through stricter imposition of penalties and following of vigorous prosecution policy.

Efficient tax administration calls for building up of a professional cadre of administrators who may implement the tax system more equitably and efficiently. It is desirable that voluntary compliance be encouraged and non-compliance be penalized. There is need to minimize arrears of assessment and collection, pendency of appeals, issue quick refunds, and so on. The main challenge at the present juncture is to integrate the large number of Central and State taxes to address the problem of multiplicity of taxes. The introduction of the Goods and Service Tax would be

a significant step in the field of indirect tax reform in India and pave the way for a national common market.