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Tax havens are more and more used as locations for international capital flows. This is not only the case for traditional small island economies, but also for larger conduit countries. Globalisation and lower taxes on corporate income can explain the rise of tax havens to some extent. A more logical explanation is the increase in international corporate tax avoidance. Although the evidence is not definitely conclusive, various developments point in the same direction, such as the rise of indirect capital flows and the fast increase in international payments for the use of intellectual property rights. These developments also suggest that the implemented measures against corporate tax avoidance are only partially effective, and that new international measures are necessary to curb the role of tax havens and conduit countries in international capital flow structures.

This contribution considers the use of the principle of proportionality to review measures combatting international tax abuse (avoidance and evasion). Our claim is that proportionality, which tends to be viewed as the key analytical tool to balance tax equity against the interests of taxpayers, is ill-suited to the review of such measures. This we will demonstrate from a theoretical angle, but also through the analysis of the CJEU, international investment tribunals and WTO adjudicatory bodies: rather than balancing tax certainty against tax equity or focusing on the efficiency of the anti-tax abuse measures in the pursuit of substantive policy goals (the types of enquires normally associated with proportionality), what we observe is an assessment and gradual demarcation of the rightful territorial extent of the State’s taxation powers.

The primary aim of this article is to question whether the general anti-abuse rule (GAAR) of Anti-Tax Avoidance Directive (ATAD) is an effective tool to tackle tax avoidance. By using a comparative technique as a method, other directives that include a GAAR will be analysed as a companion to the ATAD to identify whether there is a common understanding of the concept of abuse of tax laws within the EU legal order. Then the general consequences of the application of the GAAR of the ATAD will be exposed. The difficulties which could be encountered in the application procedure will be explained around some potential scenarios, based on simple models developed by the author. Tax Avoidance, Abusive Tax Practices, Artificial/Genuine Arrangement(s), Main Purpose(s) Test, Tax Advantage, General Anti-abuse Rule(s) (GAARs), Anti-Tax Avoidance Directive (ATAD), Interest-Royalties Directive, Merger Directive, Parent- Subsidiary Directive.

Tax complexity is a multi-faceted and pervasive phenomenon. Narrow, detailed drafting of the law is a particular manifestation of tax complexity. Tax legislatures often try to control and regulate every conceivable situation by issuing very specific rules covering the full range of circumstances. The result is a tax system is populated by dense thickets of often thorny rules, which lacks transparency and goes at the expense of certainty and equality. Principles-based legislation is sometimes termed as an alternative regulatory instrument to counter both the complexity of detailed tax drafting and tax avoidance. However, it should not be seen as a magic formula but rather as a helpful addition to the legislature’s toolbox. In this article we will elaborate on principles-based legislation, rule-based drafting, and two other drafting styles - legal fictions and standards. We investigate these three ‘friends’ as alternatives, or supplements, to precise rules from the perspective of (legal) principles as advocated by the legal philosopher Dworkin. It will be argued that securing the integrity of tax law requires a balancing act between different legislative drafting styles such as fictions, standards and principles-based legislation.

This article analyses the recent rulings from the European Court of Justice in two Danish cases and examines their possible impact on international tax avoidance. These rulings regard limitations of tax benefits related to cross-border dividends and interest payments resulting from the interposition of holding companies in the EU. We conclude that from a legal perspective, the rulings demonstrate the alignment of international tax policies to combat tax avoidance between the EU and the OECD. This alignment is historical in international tax law as it encompasses a record-high number of states and because it introduces a minimum standard of tools to combat tax treaty abuse directly into national state legislation. This could be the end for certain tax-motivated structures of international companies. From a quantitative perspective, the conclusion is that the rulings limit the potential for Multinational Enterprises to lower their tax burden considerably. The worldwide average potential gain from treaty shopping is reduced by 1.1 percentage points from 5.6% to 4.5% when the EU member states cannot be used on treaty shopping routes. With more countries, and treaties, involved, the combat against tax avoidance is more effective. However, the fact that some countries have a standard withholding tax rate of zero percent hampers the combat. If a prohibitive penalty is applied on indirect routes to all partner countries, the policy is much more effective. The gains from treaty shopping all but disappear in such a setting.

The primary goal of this article is to analyse the use of the term ‘tax avoidance’ in the legislative framework and case law of the European Union to point out the absence of a common linguistic approach. The consequences derived from the terminological chaos will also be discussed; thus, the study will try to display how big and deep the problem is by giving special attention to the semantic aspects that cannot, in fact, be ignored anymore. Furthermore, the principles stemming from the case law will be reviewed, since they are regarded as the outcome of the interpretation of tax avoidance by the judiciary.

The purpose of this contribution is to explore the possibility of integrating tax with corporate social responsibility (CSR). Some corporate directors seem to argue that they do not have a choice with regard to tax planning, implying that a responsible tax planning strategy is not an option. This contribution shows such argument to be wrong. First, the issue of management accountability and choice will be dealt with in the context of corporate governance systems in order to find out what kinds of obligations corporate governance entail for managers. It will be shown that corporate directors enjoy sufficient discretion for making socially responsible decisions. To this end, two existing theoretical frameworks will be analysed, according to which corporate decisions should prioritise either shareholders or stakeholders interests. Both theories allow managers a choice to act with a wider interest than purely shareholder value maximisation. Furthermore, it will be argued that managerial discretion to take CSR into account does not oblige managers to aspire to some kind of ideal social responsibility but rather to stay away from corporate social irresponsibility (CSI). Therefore, corporate managers in different corporate governance regimes have sufficient room for aligning their tax planning strategies with societal expectations and avoiding aggressive tax planning. Thus, this paper aims to make two contributions to academic theory. First, it is shown that both shareholder and stakeholder-oriented corporate governance regimes allow for managerial discretion to take CSR on board in tax matters. Secondly, the concept of corporate social irresponsibility is introduced to enhance a more balanced debate about multinationals’ tax planning practices.

While the EU Treaties do not contain a general anti-abuse rule, the Court of Justice of the European Union (ECJ) uses the concept of abuse of law when interpreting the EU Treaties in multiple substantive areas of law, including direct taxation. Current EU mechanisms for protection against abusive practices have that case law as a common root. This report therefore starts by evaluating the emergence of the concept of abuse in the case law of the ECJ with regard to the fundamental freedoms. In this respect, the Court has accepted that discriminatory anti-avoidance rules can be justified by overriding reasons in the general interest but only where such rule specifically relates to wholly artificial arrangements aimed at circumventing the application of the legislation of the member state concerned. Moreover, general and special anti-abuse provisions are enshrined in secondary EU law instruments. This concerns the general anti-avoidance rule for the area of corporate taxation, which was introduced by the Anti-Tax Avoidance Directive (ATAD) and will be effective from 1 January 2019, and the more specific rules in the Parent-Subsidiary Directive (PSD), the Merger Directive (MD) and the Interest-Royalty Directive (IRD). This report explains the scope of these provisions, their interpretation and application, and their relationship with primary EU law, tax treaties and national law. Finally, this report provides a brief outlook on the impact of EU law on domestic tax systems in this field, stressing that general anti-abuse measures might create tensions with fundamental taxpayers’ rights, such as the right to legal certainty and the freedom to arrange one’s economic affairs.

This presentation discusses the Turkish approach on the perception of tax avoidance at national and international level.

The international corporate tax system is considered a network. Just like for transportation, “shortest” paths are computed, which minimize tax payments for multinational enterprises when they repatriate profits. We include corporate income tax rates, withholding taxes on dividends, double tax treaties, and double taxation relief methods. We find that treaty shopping leads to an average potential reduction of the tax burden on repatriated dividends of about 6% points. An indicator for centrality in the tax network identifies the UK, Luxembourg, and the Netherlands as the most important conduit countries. Low-tax havens do not have a crucial role in reducing dividend repatriation taxes. By contrast, tax haven financial centres do. In the regressions we find that the centrality measures are robustly significant explanatory variables for bilateral FDI stocks. This also holds for our treaty shopping indicator.

The international tax system is the result of the interaction of different actors who share the responsibility for its integrity. States and multinational corporations both enjoy to a certain extent freedom of choice with regard to their tax behaviour – which entails moral responsibility. Making, interpreting and using tax rules therefore is inevitably a matter of exercising responsibility. Both should abstain from viewing tax laws as a bunch of technical rules to be used as a tool without any intrinsic moral or legal value. States bear primary responsibility for the integrity of the international tax system. They should become more reticent in their use of tax as regulatory instrument – competing with one another for multinationals’ investment. They should also act more responsibly by cooperating to make better rules to prevent aggressive tax planning, which entails a shift in tax payments from very expert taxpayers to other taxpayers. Here, the distributive justice of the tax system and a level playing field should be guaranteed. Multinationals should abstain from putting pressure on states and lobbying for favourable tax rules that disproportionally affect other taxpayers – SMEs and individual taxpayers alike. Multinationals and their tax advisers should avoid irresponsible conduct by not aiming to pay a minimalist amount of (corporate income) taxes – merely staying within the boundaries of the letter of the law. Especially CSR-corporations should assume the responsibility for the integrity of the tax system.

This is an Opinion Statement, submitted to the EU institutions in May 2022, of the CFE ECJ Task Force on Commission v. Spain (Case C-788/19) (also cited as the Form 720 case), in which the First Chamber of the Court of Justice of the European Union (ECJ) delivered its decision on 27 January 2022. The Court, in its decision, ruled in favour of the action brought by the Commission and did not fully follow the reasoning of Advocate General Saugmandsgaard Øe in his Opinion of 15 July 2021, who proposed only partially accepting the action brought by the Commission. The Court held that the Kingdom of Spain had failed to fulfil its obligations under article 63 of the Treaty on the Functioning of the European Union (TFEU) (2007) and article 40 of the EEA Agreement (1992) [4.] by imposing disproportionate measures on the failure to duly comply with the obligation to provide information concerning assets and rights located abroad. The Spanish legislation provided for very serious economic consequences, such as the taxation of the value of not duly declared assets and rights as unjustified capital gains with no limitation period. The legislation also provided for a proportional fine of 150% of the tax calculated on amounts corresponding to the value of those assets or those rights, which could be applied concurrently with flat-rate fines. At the same time, such flat-rate fines were much higher than the penalties imposed in respect of similar infringements in a purely national context, which were not capped. Commission v. Spain is an important case, as it addresses a number of relevant issues regarding the limits that the Member States must respect when implementing measures to counteract international tax avoidance and evasion.