bluuebunny/crossref_metadata_2025 huggingface dataset:
Is Aggressive Tax Planning Socially Irresponsible?
Authors: Panayi Christiana HJI
Published: February 2022

In this article, the link between Corporate Social Responsibility (CSR) and aggressive tax planning was considered, in the backdrop of recent parliamentary hearings and investigations over the aggressive tax planning of multinationals. It was questioned whether companies that engage in aggressive tax planning are indeed socially irresponsible. It was argued that it was a slippery slope for a country to expect to raise or increase corporate tax revenues from CSR. The international tax system is all about choices. A company should not be deemed socially irresponsible for benefitting from certain choices if those choices are available and there are no rules against them. It was, however, recognized that while it might be difficult to justify how the payment of full (or higher) taxes is a significant act of social responsibility, there could be business reasons for avoiding aggressive tax planning. Therefore, notwithstanding the lack of conclusive evidence on the point and the author’s belief that CSR should play no role on how a company conducts its tax affairs, it was conceded that CSR implications are likely to become very important in the whole debate. 6
The OECD-BEPS Measures to Deal with Aggressive Tax Planning in South America and Sub-Saharan Africa: The Challenges Ahead
Authors: Mosquera Valderrama Irma Johanna
Published: February 2022

The aim of this article is to assess the feasibility to introduce the Organisation for Economic Co-operation and Development (OECD)-BEPS measures to deal with aggressive tax planning in South America and Sub-Saharan Africa. The BEPS and its Action Plan have been developed by the OECD following the G20 mandate and it provides new international tax standards to be applicable to all countries including OECD and non- OECD countries. This article will provide a comparative analysis of the South America and the Sub-Saharan African region taking into account the country’s economic development, tax administration capacity and resources, and the use (or not) of domestic laws and tax treaty rules to tackle aggressive tax planning. The South American and Sub-Saharan African regions have been chosen since they consist mostly of developing (non- OECD) countries. The comparative analysis of the exchange of best practices and challenges in these two regions will be useful for the OECD-BEPS Project and for the BEPS Multilateral Instrument that will be open for adoption by developing and developed countries. This article is structured as follows: Section 2 contains a short introduction to the BEPS Actions dealing with aggressive tax planning and the discussions at OECD and UN level. Section 3 will provide the assessment of feasibility of the BEPS in South America and Sub-Saharan Africa. Finally, in section 4, conclusions and recommendations will be presented.
Tax Jurisdiction in a Digitalizing Economy; Why Online Profits Are So Hard to Pin Down
Authors: de Wilde Maarten F.
Published: February 2022

Although we live in an age in which everything and everyone is ‘online connected’, countries’ profit taxation systems are still based on an economic reality of around a century ago. And that creates tension. The problems this tension causes are particularly evident in the case of profits generated by internet-related activities. The fact that these ‘online profits’ are difficult to tax is becoming increasingly critical, given the rising share of the economy now accounted for by digital activities. Although the time may not yet be ripe for fundamental reform, we perhaps ought in any event to start thinking about the direction in which our corporation tax systems should be moving. Suggestions in international tax literature, as well as from the OECD and EU, point in the direction of attributing the taxable base to the market jurisdiction; in other words, of imposing corporation tax on, or also on, the basis of the destination principle. There is certainly something to be said for these suggestions. The world is changing. And perhaps it is now time for our tax systems to change along with it.
Challenging Prejudice to Creditors Involving Abuse of Separate Identities in Tax Matters; a Dutch Approach
Authors: Elbers Jan
Published: February 2022

Separateness of identities implies that (juristic) persons are exclusively liable for own debts. This concept, however, could result in prejudice to creditors or might even lead to such prejudice involving abuse of separate identities of (juristic) persons. When a director (A), with the help of a juristic person (B) who is affiliated to a tax debtor-juristic person (C), frustrated recovery against (C), the tax collector in the Netherlands has the power to invoke several means of legal redress. The tax collector could hold (A) liable for specific tax debts, on the basis of Article 36 Tax Collection Act 1990. However, if the claim cannot be recovered from (A), the tax collector would prefer to hold (B) liable. Normally, in such cases, liability provisions in the Tax Collection Act 1990 do not offer a sufficient solution. The tax collector could, however, on the basis of the so-called “open system” (Article 124 of Book 4 of the General Administrative Law Act) invoke “piercing the corporate veil”, in order to extend liability to (B). The author makes an assessment of the question as to whether “piercing the corporate veil” for tax collection purposes in the Netherlands is “lawful” within the meaning of Article 1 of Protocol No. 1 to the ECHR (the peaceful enjoyment of one’s property).
The OECD International VAT/GST Guidelines: Completion of a (First) Major Step towards Global Coordination of Value-Added-Tax Systems
Authors: Lamensch Marie
Published: February 2022

Through the adoption of ‘International VAT/GST Guidelines’, the Organisation for Economic Co-operation and Development (OECD) has taken up the ambitious challenge of prompting international consensus on how Value Added Tax (VAT)/GST systems should be designed and implemented with the aim of reducing the risks of double taxation and unintended non-taxation created by inconsistencies in the application of VAT/GST systems to cross-border trade in goods, services and intangibles. In 2014 and 2015, more than 100 countries endorsed several chapters of these guidelines, which concern basic neutrality principles and place of taxation and collection rules for supplies of services and intangibles (thus leaving supplies of goods aside for the moment). This article retraces the context in which the International VAT/GST Guidelines started developing and provides for a detailed and critical analysis of the recently adopted chapters.
The Quest for a New Corporate Taxation Model and for an Effective Fight against International Tax Avoidance within the EU
Authors: Cerioni Luca
Published: February 2022

The European Commission’s Action Plan for a Fair and Efficient Tax System within the EU, and the subsequent ‘Anti-Tax Avoidance Package’ (ATAP), set out a number of short-term initiatives aimed at achieving an optimal corporate tax system and at fighting international tax avoidance within the EU. Pending the desired introduction of the Common Consolidated Corporate Tax Base (CCCTB) as a long-term goal, these initiatives have been considered as capable of stabilizing Member States’ revenues and of allowing corporate taxation where profits are really generated. Since specific suggestions made in the academic literature – namely, the suggestions for a ‘destination-based corporation tax’, for a ‘corporation tax 2.0’ and for a ‘new common consolidated tax base’ – have the same objectives, this article critically discusses these suggestions and it analyses whether they can be considered as more consistent or as less consistent with the common objectives than the Commission’s initiatives. It also elaborates the hypothesis for a solution capable of both collecting the key input offered by these suggestions and being complementary to the CCCTB.
Financial Budget for 20162017: Has India Put Its BEPS Foot Forward?
Authors: Nagappan Meyyappan , Varanasi Samira
Published: February 2022

This article analyses the first attempt made by the Indian government, through the Finance Budget of 2016–2017, to implement the measures proposed under the OECD / G 20 BEPS Action Plan released on 5 October 2015. It closely examines the Equalization Levy, a unilateral measure that has been taken by the Indian government to address Base Erosion and Profit Shifting (BEPS) in the digital economy, from an international tax perspective. It also analyses the constitutionality of this levy. Further, it examines issues relating to the legal protection of the confidentiality of information reported under the Country-by-Country Reporting requirements as adopted in India. The impact of other measures, including the newly introduced test of residency for companies and the rationalization of certain tax rates through the Finance Budget of 2016–2017, have also been examined in light of the objectives of the BEPS Action Plan.
Recent Developments in the Dutch Loss Carry Over Restrictions for Holding and Intercompany Financing Entities
Authors: Yeung Shie Yee Au , Hofman Arthur W.
Published: February 2022

Based on Dutch tax law, losses resulting from holding and financing activities are ring-fenced in such a way that these losses can only be offset against profits derived from similar activities. Recently, two developments took place with regard to those rules. First, the Dutch tax law was changed in reaction on a verdict of the Dutch Supreme Court. Second, the European Court of Justice (ECJ) ruled a verdict that could have an impact on the rules. In this article, the authors describe those developments and they discuss the current scope of the relevant Dutch legislation.
Italian Perspective on BEPS and Focus on Implementation of Action 13 of the BEPS Action Plan
Authors: Valente Piergiorgio
Published: February 2022

Italy has been paying special attention, to recent developments in the struggle against tax evasion and avoidance. Many of the provisions recommended by the Organization for Economic Co-operation and Development within the context of the Base Erosion and Profit Shifting Project were introduced into, and enacted by, the National tax system, in particular, by effect of Legislative Decree No. 147 of 14 September 2015, which contained ‘Provisions setting forth measures for the development and the internationalization of enterprises’, and of Law No. 208 of 28 December 208 setting for ‘Provisions for the drawing up of the yearly and multi-year State Budget’.
The Concept of Permanent Establishment at the Spanish Courts: Special Reference to the Roche and Dell Cases
Authors: Ferrer Francisco Antonio Vaquer
Published: February 2022

An accurate definition of the concept of permanent establishment is crucial to the application of the distributive rules provided by the Double Taxation Treaty, particularly, on business profits. In Spain, the cases of Roche and Dell have been very much talked about since the decisions of the Courts brought about a construction of the figure of permanent establishment far from the prevailing orthodox approach to the Commentaries of the Organization for Economic Co-operation and Development Model Tax Convention. The purpose of this broad interpretation of the concept of permanent establishment seems, then, clear: to avoid, with varying degrees of success, that multinational companies carrying on sizable business activity in Spain fail to pay taxes by means of a fabricated business structure scheme. This article shall, therefore, analyse this concept in the light of the Court’s decisions in the above mentioned cases.
Formulary Apportionment: A Revamp in the Post-Base Erosion and Profit Shifting Era?
Authors: Cottani Giammarco
Published: February 2022

In this article, the author analyses the advantages and drawbacks of adopting Formulary Apportionment (FA) as the governing mechanism for the commercial and financial relations between associated enterprises of multinational enterprises (MNE) groups. The author considers the origin of FA, which countries are adopting it, and what its future may be in light of the implementation of the base erosion and profit shifting (BEPS) Action Plan. In particular, the author suggests that international organizations should go more in depth on the analysis of the mechanism, from an empirical as well as a theoretical standpoint, as a by-product on the current work on the application of the profit split method carried out by the Organisation for Economic Cooperation and Development (OECD) in light of the BEPS project.
Smartphones, Research and Development and Corporation Tax: Current Treatment and Future Possibilities
Authors: Sheridan Iain
Published: February 2022

The object of this article is to summarize the parts of UK corporation tax law relevant to businesses that contribute to the research and development (R&D) of smartphones, and to propose future improvements. From 1 July 2016, English statute concerning the UK Patent Box regime mirrors the existing or expected requirements of all European Union (EU) Member States Patent Box laws and Organisation for Economic Co-operation and Development (OECD) standards, so the legal analysis is relevant to many other jurisdictions. The article then proposes some future corporation tax law enhancements relevant to lawmakers globally. These proposals require imagination, and aim to simultaneously encourage more R&D investment by businesses and increase the total long-term amount of corporate tax raised.
Free Movement of Capital: The European Union Anti-Tax Avoidance Package and Brexit
Authors: Dourado Ana Paula
Published: February 2022

In this article, the meaning and scope of free movement of capital under Article 63 of the Treaty on the Functioning of the European Union is (re) assessed, taking Brexit as an example. The scenario assumed herein is that Brexit will be extreme. Within this scenario, the United Kingdom (UK) can be handled as the USA or Brazil, for example.

In the bilateral relationship between the UK and the European Union (EU) Member States, there will be no legal obligations for the UK deriving from either primary or secondary law, whereas the EU Member States are still forbidden to restrict capital movements from and to the UK.

The CFC Rule in the Anti Tax Avoidance Directive, the EU standard on exchange of information, EU Good Governance Clauses, and their application in the Brexit extreme scenario are also discussed.
The Questionable Legality of the Diverted Profits Tax Under Double Taxation Conventions and European Union Law
Authors: MacLennan Stuart
Published: February 2022

This article considers the operation of the UK’s Diverted Profits Tax (DPT), and postulates as to whether or not the tax is compatible with both the UK’s obligations under its Double Tax Conventions (DTCs) with other states, and with European Union (EU) Law. In both instances, analogous case law regarding the introduction of Controlled Foreign Corporation rules is considered. This article considers whether or not the DPT constitutes a unilateral extension of the UK’s jurisdiction to tax, in breach of the jurisdiction provisions of DTCs. In doing so, it considers whether or not the DPT is sufficiently similar to Corporation Tax such as to fall within the ambit of the UK’s DTCs. This article further considers whether or not the DPT is compatible with freedom of establishment and free movement of capital provided for by the EU Treaties. It considers the DPT in light of a string of EU jurisprudence that has consistently held that anti-avoidance measures in domestic tax laws are only compatible with EU law insofar as they apply to wholly artificial arrangements. This article concludes that in both instances, the legality of the DPT is highly questionable.
What Has Changed in the Limitation on Benefits Clause of the 2016 US Model?: Technical Modifications, Policy Considerations and Comparisons with Base Erosion and Profit Shifting Action 6
Authors: Julien Rita , Koch Petra
Published: February 2022

The Limitation on Benefits (LOB) clause of the US Model Income Tax Convention (US Model) has undergone significant changes in the latest version of the US Model published in February 2016. The aim of this article is to analyse the changes to the LOB clause in the 2016 US Model as compared to its predecessor in the previous 2006 US Model and the LOB clause recommended by the Action 6 Final Report of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. The article first focuses on changes which simultaneously affect multiple tests, namely the changes to the ownership requirements and the changes to the base erosion requirements, which are found throughout the LOB. Second, the article examines two tests which made their way into the US Model for the first time, namely the derivative benefits test and the headquarters company test. It assesses what balance has been struck between the desire to open up and modernize the LOB clause, while maintaining its effectiveness in counteracting treaty shopping. Throughout its detailed study of these changes, it offers lessons that could be taken into account by the Organisation for Economic Co-operation and Development (OECD) in the finalization of its proposed LOB clause under Action 6 and by those states that choose to adopt a detailed LOB provision in their tax treaties in order to meet the minimum standard under Action 6.
Transformation of Tax Laws: A Global Perspective
Authors: Awasthi Atul
Published: February 2022

The global outreach of the Base Erosion and Profit Shifting (BEPS) program has surpassed the expectations of many around the world. Significant headway has been made since the Organisation for Economic Co-operation and Development (OECD) was tasked by the G20 leaders to devise a global strategy to deal with the menace of black money and tax evasion. Governments have woken-up to the need of integrated efforts to fight against the mechanisms used by Multinational Enterprises (MNEs) to use loopholes in the tax systems enabling evasion or underpayment of taxes. Enactment of unilateral tax laws; re-negotiation of existing Double Tax Avoidance Agreements (Tax Treaty); inserting anti-abuse provisions within the existing Tax Treaties; entering into agreements for exchange of information, are some of the key measures adopted by the Governments so far. Some of the key developments in the recent past are discussed.
Beneficial Ownership and Derivatives: Has the Swiss Federal Supreme Court Decision in the SMI Futures Case Put an End to Cash-Futures Arbitrage?
Authors: Weidmann Oktavia
Published: February 2022

The Swiss Federal Supreme Court recently decided a second case dealing with the question of beneficial ownership of dividends. The dividends were economically passed on to third parties in transactions involving cross-border derivatives. In the SMI Futures Case, the court denied a Danish bank a refund of dividend withholding taxes under Article 10 of the Switzerland/Denmark Double Taxation Convention (1973) as it did not regard the Danish bank as the beneficial owner of the dividends.

The Danish bank was the legal owner and physical holder of equity baskets comprising the twenty largest Swiss equities, which form the Swiss Market Index (SMI). The Danish bank was also the direct recipient of the dividends from these shares. The equity baskets were hedged with SMI futures. The Federal Supreme Court suggested that the Danish bank failed in its obligation to provide information and cooperate with the tax authorities. The resulting lack of information on the facts of the transactions could not be remedied. The court maintained that the Danish bank passed the dividends on by way of non-market standard purchase and disposal prices of the Swiss shares. It regarded the interposition of a broker acting as a principal in the share purchase and sale as an indicator of the circularity of the whole transaction. It further suggested that the Danish bank transferred all market risks in the transactions to its parent company and to third-party counterparty banks. The court concluded that there was an interdependence between obtaining the dividends and passing them on to the Swedish parent company and/or other counterparty banks.

After a critical analysis of the case, the article illustrates various examples of cash-futures arbitrage transactions (equities versus futures) with slight economic differences between the various forms of cash-futures arbitrage but potentially different taxation results. Beneficial ownership of the dividends may only be attributed to the physical holder (and legal owner) of the shares and direct recipient of the dividends in those cash-futures arbitrage transactions which are traded anonymously on exchange. Based on the decision of the Swiss Federal Supreme Court, beneficial ownership could be denied to the legal owner and physical holder of the shares (and direct recipient of the dividends) in cases where transactions are executed either over-the-counter (OTC) or as OTC-style block crosses on exchange.
Trouble Always Comes in Threes: The Taricco Case Saga and the Italian Limitation Period in VAT Fraud
Authors: Scarcella Luisa , Grisostolo Francesco
Published: February 2022

The European Court of Justice (ECJ) decision on the so-called Taricco case has been a source of significant debate among Italian scholars for the past year. The peculiarity of this case derives from the fact that more than one legal discipline is involved, ranging from tax law, criminal and procedural criminal law to constitutional law.

The purpose of this article is therefore to examine the entire Taricco case by considering in turn the three different judicial phases which have characterized it. Beginning with the ECJ decision, it is then necessary to take into account how the Italian Supreme Court (Corte di Cassazione) has implemented in its case law the dispositions contained in the European decision. Finally, it is important to analyse the recent ordinance of the Italian Constitutional Court addressing again the ECJ and therefore opening new phases in the ongoing debate. Particular attention is given to the implications of this case on fundamental principles characterizing most of the European Member States and the role this decision might have in the adoption of the European Directive on the fight against fraud to the Union’s financial interests by means of criminal law that will replace Convention on the Protection of the European Communities’ Financial Interests (PFI) Convention.
Group Provisions in the Common (Consolidated) Corporate Tax Base
Authors: de Groot Isabella
Published: February 2022

In this article the author discusses the participation exemption, the switch-over provision and the controlled foreign company (CFC) rules in the proposals for directives on a Common Corporate Tax Base (CCTB) and a Common Consolidated Corporate Tax Base (CCCTB) published on 25 October 2016.
Fairness: A Dire International Tax Standard with No Meaning?
Authors: Mosquera Valderrama Irma Johanna , Burgers I. J. J.
Published: February 2022

In their discussions on corporate income tax systems the International Organizations (IOs) OECD, UN, IMF and World Bank, Supranational Organizations (SOs), Non-Governmental Organizations (NGOs), associations of practitioners and Governments often refer to the concept of fairness without proper definition of what in the context of their arguments is fairness and how the fairness can be achieved. The consequence is that fairness in taxation is a blurred concept.

This article shows that fairness in taxation has an economical, juridical, philosophical and political perspective. Following the overview of these perspectives, this article calls for more research on global perceptions of fairness and for formulating an agenda for discussing this issue by IOs, SOs, NGOs and Governments.
A Global Framework for Capital Gains Taxes
Authors: Kemmeren Eric C.C.M.
Published: February 2022

Globally, tax systems are continuously discussed. That is more than a good thing! Taxes are in the midst of society and should, therefore, also be discussed in and by societies. Tax research can contribute to these discussions.

 In a number of countries, such as New Zealand, the Netherlands and the United States, it is debated in society whether capital gains should be included in the income tax base and, if so, how this should be done. In this context, the author will discuss whether, as a matter of principle, taxation of capital gains should be part of a comprehensive tax system that taxes a comprehensive concept of real net income and, if so, what are the key issues in the design of capital gains tax regimes. Attention will be paid not only to general aspects, but also to some international aspects of capital gains taxes. This article will ultimately present a global framework for capital gains taxes based on the developed benchmark. In the author’s view, this framework should be taken into account globally when designing a capital gains tax regime. It will contribute to creating a level playing field and to enhancing horizontal and vertical equality and equity.
Codes of Conduct as a Means to Manage Ethical Tax Governance
Authors: Gribnau Hans , Baisalbayeva K. , van der Enden E.
Published: February 2022

The tax practices of multinationals are in the eye of the storm. The public outcry reflects deep concerns about the moral integrity of the tax system. Taxes make society and freedom possible, and paying taxes is about sharing the financial burden involved in societal cooperation. The distribution of the tax burden is an expression of the values of distributive justice and solidarity. Tax laws translate the moral obligation to contribute to society into a set of legal obligations.

 Good tax governance should be ethical tax governance. Ethical and reputational tax risks should be carefully managed. Codes of conduct are important instruments to enhance moral corporate behaviour. They generate transparency, thereby enabling stakeholders to evaluate the ethical quality of a corporation’s strategy.

Tax codes of conduct are aimed at providing guiding principles to businesses and tax administrations to increase trust in the tax system on the part of society. The element of trust comprises not only the fact that both parties remain within the boundaries of the law, but also that everyone plays fairly and acts in an ethically compliant manner. Thus, tax codes of conduct are a good starting point to operationalize a company’s commitment to ethical tax governance.
EU policy forum: Fighting VAT Fraud and Enhancing VAT Collection in a Digitalized Environment
Authors: Herbain Charlène A.
Published: February 2022

The digital transformation of the economy is successfully exploited by fraudsters who develop ways to avoid paying value-added tax (VAT) and steal VAT revenues for their own gain.

 Means are available to not just counter such fraudsters, but at the same time facilitate VAT collection. This article investigates different kinds of VAT frauds and the collection challenges they pose, following which it evaluates a number of technology solutions for their capacity to improve the EU VAT system.
The New Tie-Breaker-Rule for Companies According BEPS Action Point 6: A (Too) Radical Change?
Authors: Niemeyer Nicola , Gerlach Cosima
Published: February 2022

This article investigates whether the general introduction of a Mutual Agreement Procedure under Article 4 section 3 OECD Model through BEPS Action Point 6 is more capable of effectively and practically breaking the tie for dual resident companies than the former place of effective management criterion. Based on an empirical analysis of the tie-breaker-rule in treaty practice in more than 2,000 Double Tax Conventions concluded by the OECD Member and Partner States it is demonstrated that the place of effective management criterion is still predominant in treaty practice and that the application of a Mutual Agreement Procedure under Article 4 section 3 OECD Model only slightly increased following the MLI implementation process. Furthermore, it is shown that the cautious implementation of the new tie-breaker-rule can be explained due to various procedural shortcomings of the Mutual Agreement Procedure with respect to the core requirements that Article 4 section 3 OECD Model has to fulfil. Based on the empirical and theoretical assessment further suggestions for improvements to enhance the application of both, the MAP and place of effective management criterion, on a standalone basis, are provided. A combined application of both tie-breaker-rules within a two-step hierarchical test is presented as the preferred solution.
Revisiting the Fiscal and Social Security Status of Highly Mobile Workers in the Road and Railway Transportation: Quo Vadis?
Authors: Niesten Hannelore
Published: February 2022

The increasing mobility due to globalization and the increasingly integrated nature of regional economies, for example in the European Union, provides an excellent opportunity to subject the fiscal and social security status of international highly mobile workers employed in the road and railway transportation to a critical evaluation. As far as the international taxing rights over cross-border employment income are concerned, most double tax treaties, based on Article 15 of the OECD Model Tax Convention, use ‘the actual physical place of employment’ as the main starting point. However, the criterion of the state where the employee is physically present is insufficiently attuned to the situation of highly mobile workers carrying out activities in the international road and railway transportation. Because of their mobility and the cross-border nature of their activities, highly mobile workers are exposed to complex interpretation and application problems. An excessive fragmentation of (the exercise of) the place of employment by multiple working states can increase the exposure to conflicting characterizations of facts, additionally on the basis of differences across domestic laws, thereby giving rise to a greater potential for unrelieved double taxation. Further inconveniences may arise from the fact that the obligations demanded by social security law are not always geographically aligned with those determining the place of employment for tax purposes.

 

The special focus of the present contribution lies in a critical comprehensive, in-depth attitude and evaluation of the interpretation and application problems with regard to (1) the place of exercise of employment of international transportation workers, and (2) the affiliated (dis) coordination between the tax allocation rules (double tax treaties) and the social security law rules (Regulation (EC) No 883/2004). Suggestions are made for a minimization of the detected application and interpretation problems regarding the tax jurisdiction over employment income of international transportation workers and the provision for better coordination between fiscal and social security law.
Case law note: ECJ Confirms Function-Based Approach to the VAT Exemption of Transactions Concerning Payments and Transfers
Authors: Herbain Charlène A.
Published: February 2022

On 25 July 2018, the Court of Justice of the European Union (ECJ or the Court) rendered its judgment in the DPAS1 case, in which it examined the concept of ‘transaction concerning payments or transfers’ and the VAT exemption applicable thereto. 

While VAT exemptions have existed since the inception of VAT in the Union3 and the scope of VAT exemptions – in particular, that applicable to transactions concerning payments or transfers – has been explored by the ECJ on many occasions,4 this referral shows that doubts linger. With the advent of the Revised Payment Services Directive,5 new service providers, especially financial technology (FinTech) businesses, operating outside the banking system render services connected to transfer and payment; and make this case a timely one.

This case note identifies and reflects upon the criterion used by the Court to reject the classification as ‘transaction concerning payments or transfers’ within the meaning of the VAT exemption provided by the VAT Directive. It also highlights significant points (some which were ignored by the ECJ) and evaluates these findings, thereby calling into question the correctness of the conclusion reached by the ECJ.
The Independent Agent Exception and Group Membership
Authors: Monsenego Jérôme
Published: February 2022

This article considers the independent agent exception to the dependent agent permanent establishment rule in income tax treaties. The author analyses the impact of group membership on the availability of the independent agent exception under the 2014 and 2017 versions of Article 5(6) the OECD Model Tax Convention. Whereas the 2014 version did not explicitly take into consideration group membership for the application of the independent agent exception, the 2017 update marks a shift in policy as the quasi-exclusivity of the action of an agent on behalf of closely related enterprises now excludes the independent agent exception. After analysing in depth the Commentary on the two versions of Article 5(6) of the OECD Model, the policy reasons justifying this shift are investigated, in particular the possible presumption of tax avoidance that seems to be pinned on multinational enterprises. The author emphasises how the change brought to Article 5(6) relates to the lower threshold for a dependent agent PE under the new Article 5(5), the general principles of transfer pricing, and the additional guidance for the attribution of profits to permanent establishments. The author concludes that the change brought to Article 5(6) is mostly one of principle, but that to the extent that this amendment has a material effect on the taxation of multinational enterprises, it expresses more a tax policy concern than a need to prevent tax avoidance.
Applying Modern, Disruptive Technologies to Improve the Effectiveness of Tax Treaty Dispute Resolution: Part 2
Authors: Turcan Laura , Govind Sriram , Dimitropoulou Christina
Published: February 2022

In Part 1 of this article, the authors analysed the main drawbacks of the existing tax treaty dispute resolution process and considered the fundamental features of the main types of disruptive technology, keeping in mind how they could improve this process.

In this part, the authors make some specific suggestions as to how the analysed technologies can be used to improve the mutual agreement procedure (MAP) and supplementary solutions. This will include the use of video conferencing to cut costs and speed up resolution (section 2); electronic filing and checking of the MAP request with respect to documentation requirements (section 3); automatic notification as regards the deadline before arbitration is triggered and automatic forwarding of the request and any supplementary information to the other competent authority(ies); automatic notification of the taxpayer of each material step taken in the resolution of the case (without providing access to secure data); communication and exchange of information between competent authorities via secure electronic means in real time; and information storage in secure shared-data platforms (i.e. controlled access) allowing access to competent authorities and even to the arbitral panel, where required (section 3); the use of data analytics to cluster cases by type, allowing for easier inventory management, and to generate risk profiles that could help in both the prevention of MAP cases and the speedier resolution thereof (section 4); the use of artificial intelligence to review past cases, thereby allowing easier assignment to case workers, depending on their schedule, and thus, easier and more timely solutions based on precedents (section 5); and the use of blockchain to validate transactions and information and to remove the need for trust, thus allowing for an easier and quicker resolution, especially in multilateral cases (section 6).

Finally, the authors’ proposal posits that due to communication requirements, costs and security considerations, the implementation of technology solutions requires a global, coordinated approach, which should be spearheaded and managed by international organizations such as the OECD and the UN. The implementation could be completed in several stages and be subject to peer reviews.
Case law note: New Frontiers in the EU VAT Regime for Public Bodies
Authors: D’Angelo Giangiacomo
Published: February 2022

The regime for public bodies has always been problematic in the overall system of EU VAT. In recent years the Court of Justice of the European Union (CJEU) has handed down rulings leading to unexpected developments in this connection. These rulings cast light on the scope of the economic activity and relevant transactions carried out by public bodies as well as on the activity of bodies controlled and funded by the public sector. The CJEU has ruled that in certain cases bodies established as private companies may be considered ‘other bodies governed by public law’, and narrowed the ‘major distortion of competition’ exception set forth in Article 13 CSVD. These developments indicate a general orientation of the CJEU adapting the provisions in the Directive to the current economic scenario where the distinction between public and private is increasingly difficult to draw.
Measuring and Interpreting Countries Tax Attractiveness for Investments in Digital Business Models
Authors: Werner Ann-Catherin , Olbert Marcel
Published: February 2022

This article analyses the tax attractiveness of locations for investments in digital business models. It identifies and assesses relevant tax rules affecting domestic and cross-border digital business models across thirty-three countries. The computation of average effective tax rates is based on the neoclassical investment model of Devereux/Griffith. Our results help to evaluate tax-related location factors in the digital economy by combining the most relevant tax parameters and rules for taxable nexus in an objective measure. We find that investments in digital business models face generally lower average effective tax rates than those in traditional business models since a high share of investment costs is immediately expensed and a higher share of activities falls within the scope of countries’ tax incentives for R&D input and/or output. While more generous depreciation rules for digital investments such as software make countries relatively more attractive, our results are mostly driven by statutory tax rates, special incentive schemes such as Intellectual Property (IP) Boxes, R&D credits, and super-deductions. Overall, we acknowledge an increasing trend in tax competition for digital businesses.
Open versus Closed Competence to Tax: A Comparative Legal Study of Municipal Taxes in Belgium and the Netherlands
Authors: de Jonckheere Miguel
Published: February 2022

This article describes and compares the possibilities under Belgian and Dutch law for taxation by local authorities. The most striking difference is that Belgian local authorities may decide on their own as to which taxes they wish to impose, save for interdictions imposed by law, whilst local authorities in the Netherlands can levy only those taxes allowed by national law.

 

The main purpose of this study is to enquire if the differences in tax competence are as substantial as one might expect at first glance. More specifically, the authors compare the existence, meaning and scope of some general principles and principles of tax law which are considered to limit the municipal tax competence.

The conclusion is that the scope of some principles and even their very existence seems to be affected to a considerable degree by the extent of the municipal tax autonomy. The Belgian open tax system has been widely constrained by general principles of tax law, that are absent or have less far reaching consequences in the closed tax system existing in the Netherlands. Further research is needed to determine whether the authors’ findings can be extrapolated to other Member States who are operating systems of open or closed tax competence.
Country Note: Three Emblematic Measures in Portuguese Business Taxation: A Preliminary Quantitative Appraisal
Authors: Martins António
Published: February 2022

This article evaluates, at a preliminary level and from a quantitative perspective, three measures influencing corporate income taxation in Portugal: the treatment of intangibles, efforts to promote investment; the creation of a simplified tax regime for micro-firms, to reduce compliance costs; and the limitation of financial expense deduction, to reduce leverage. Using aggregate tax data made available by the tax authorities, the article assesses the influence of these measures in terms of firms affected and the taxable income they increased or exempted. The simplified tax regime had a modest rate of success, given the small share of firms adopting it; the incentives to intangibles had a limited effect; and the limitation of financial expense deduction had a significant impact, given the leverage of many firms. The article presents empirical evidence of the consequences of significant corporate tax measures. A posteriori quantitative assessments of tax changes are useful for policy makers, taxpayers and tax professionals
Case law note: Svig og Misbrug: The Danish Anti-Abuse Cases
Authors: Korving Jasper , van Hulten L. C.
Published: February 2022

‘Svig og misbrug’, Danish for fraud and abuse, is the focus of attention in tax circles. In the Danish cases T Danmark and N Luxembourg 1, the Court of Justice of the European Union recently further concretized the concept of anti-abuse. This is but the most recent of a series of developments in anti-abuse. In this article, we try to shed some light on the question of how these judgments relate to other developments relating to the prevention of tax abuse.
Present at the Creation: Archival Research and Evidence on the Origins of the Single Tax Principle
Authors: Mazzoni Gianluca
Published: February 2022

This is the first of a series of articles on the origins of the so-called “single tax principle,” whose normative value has been denied or at least undermined by some tax legal scholars. It is based on archival research conducted at Harvard Law School Library - Historical & Special Collections on the unpublished Stanley S. Surrey’s papers and on unpublished minutes of meetings of the League of Nations available at the United Nations Archives in Geneva. The purpose is to contextualize and provide an historical background for the single tax principle by guiding the readers through these unpublished materials. It aims at identifying who theorized (Clavier) and practically implemented (Thomas Adams) the single tax principle at the international level as well as at domestic level (published and unpublished materials show that Adams and Surrey were the two main architects of both US international tax rules and the international tax regime). The author shows how the single tax principle originated in 1927 when Clavier theorized that, ‘international incomes be prevented from escaping taxation altogether is as desirable as that the same income shall not be taxed by several different countries;’ but only reached its maturity during the nine years 1957 – 1966 when Surrey, firstly, was successful in persuading Senate not to ratify Art. XV(I) of the Pakistan - US Income Tax Treaty (1957); secondly, adopted the Subpart F regime; thirdly, introduced the Investment or Holding Company article in the treaty with Luxembourg; and, finally, closed the loophole in the US-Canadian tax treaty. Claiming that the single tax principle does not have any normative value at all simply clashes with the above statutory provisions whose original intent was to suppress anomalies such as double exemptions as well as with what Martin Norr wrote in his 1964 Tax Law Review article, ‘the presumption that international income should pay tax at least once is becoming part of the common law of the Western industrial community, our new law merchant. If international income does not bear tax in some country, the burden will increasingly be on its recipients to justify the deviation from the norm.’
The PPT: The Introduction of a Uniform Standard with an Uncertain Application
Authors: Taramountas Konstantinos
Published: February 2022

This essay focuses on the new proposed treaty-GAAR, Principal Purpose Test (PPT), and analyses its potential impact on conduit arrangements from an international perspective. Firstly, it traces the problem of treaty shopping that occurred back in the pre- Base erosion and profit shifting (BEPS) era and, secondly, argues that its increasingly complicated terminology and insufficient guidance to uniformly navigate tax authorities and courts afford opportunities for divergent applications that will undermine the reliance that has been placed on the double tax treaty (DTT) network. This incites concerns about the compatibility of the PPT with the principle of legal certainty which is enshrined in some national constitutions or under Article 1 of the First Protocol of the European Convention of Human rights (ECHR).

In this context, the author contends that the signatories of the Multilateral Instrument (MLI) should introduce a number of procedural checks upon the application of the PPT via ‘the conference of the parties’. This should discourage taxpayers from entering into the widest possible range of conduit arrangements but ensure a sufficient degree of foreseeability in order for it to comply with the principle of legal certainty.
Policy Forum: Implicit Support and Its Implications on Guarantee Fee Pricing: Fact or Fiction
Authors: Dettmann Georg , Lambert Gary , Pletz Amanda
Published: February 2022

In recent discussions as part of the Base Erosion and Profit Shifting (BEPS) initiative, the OECD has raised a number of questions regarding financial transactions relied upon in an intragroup context. These include questions on determining the shadow credit rating, implicit support, and data to be relied upon when evaluating the arm’s length nature of financial transactions. (OECD, Public Discussion Draft Financial Transactions, BEPS Actions 8–10, (3 July – 7 Sept. 2018), https://www.oecd.org/tax/transfer-pricing/BEPS-actions-8-10-transfer-pricingfinancial- transactions-discussion-draft-2018.pdf (accessed 29 July 2019).) More recently, comments by an OECD representative have asserted that a compromise between OECD members on the issue had been reached. (See comments made on 4 June 2019 by Tomas Balco (Head of the Transfer Pricing Unit, OECD Centre for Tax Policy and Administration) during the OECD International Tax Conference in Washington DC. See J. Martin, Agreement reached on OECD transfer pricing guidelines for financial transactions, official says, MNE Tax (8 June 2019), available at (accessed on 29 July 2019).) In this respect, the OECD acknowledges that Article 9 is relevant, but confirms that domestic law has priority, except to the extent that domestic provisions discriminate. This ongoing discussion demonstrates the complexity that tax payers and tax administrators face when considering financing arrangements.

 

Although the focus of this article is on intra-group financial guarantees in a broad sense, it focuses attention on of implicit support, a concept potentially relevant to all intra-group financial transactions. This article will also consider some of the issues currently discussed in the context of intra-group financing, including the importance and impact of implicit support on financing arrangements, from the viewpoint of tax courts, the OECD, and financial market participants. It then considers approaches used to determine the extent, if any, of implicit support by the main credit rating agencies as well as other financial market participants, and it goes on to consider the pros and cons associated with different pricing methods to assess the arm’s length level of guarantees, once credit ratings adjusted for implicit support have been derived.