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Revisiting Tax Avoidance EATLP 2016 Ana Paula Dourado SESSION 4

Explore the challenges and implications of aggressive tax planning and the BEPS project, including the need to improve transfer pricing rules and exchange of information. Discuss the compatibility of CFCs, switch-over rules, LOBs, and exit taxes with the Benefit Principle.

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Revisiting Tax Avoidance EATLP 2016 Ana Paula Dourado SESSION 4

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  1. Revisiting Tax Avoidance EATLP 2016 Ana Paula Dourado SESSION 4 MULTILATERALISM, COORDINATED BI-/UNILATERALISM OR CHAOS

  2. BEPS: Aggressive Tax Planning and a Holistic Approach • Enforcing the single taxation principle? • Eliminating both unintended and intended gaps, without changing the core of the current system? • At its core are the transfer pricing rules and the arm’s length principle and the need to improve them • Are CFCs, switch-over rules, LOBs, exit taxes compatible with the Benefit Principle?

  3. BEPS and Exchange of Information • Exchange of information intrinsically associated with the BEPS project? • The Benefit Principle (passive & active income) and Exchange of information • Withholding taxes for developing countries • Switch-over in source countries

  4. Coordinated or Uncoordinated Unilateralism? • The UK diverted profits tax • Unilateral interpretation of BEPS measures • The Anti-Hybrid regimes in France and in Austria • Action 2: the recommended primary rule is «that countries deny the taxpayer’s deduction for a payment to the extent that it is not included in the taxable income of the recipient in the counterpart jurisdiction»

  5. Coordinated or Uncoordinated Unilateralism? • The French rule: • Interest paid to a related entity is deductible to the extent that is subject to «sufficient taxation» at the level of the recipient • «Sufficient taxation» means 25% of French corporate income tax

  6. Coordinated or Uncoordinated Unilateralism? • Article 12 (1), n.º 10 of the Austrian CITA: • Interest payments are not deductible at the level of the payor if the payments are made to a foreign corporation, the paying and the receiving company belong to the same group and the payment is not taxed at the level of the receiving company due to an exemption»

  7. Coordinated or Uncoordinated Unilateralism? • Courts reactions to the BEPS initiative and output • The Spanish Supreme Court judgments of 9 February 2015, rec. 188/2014 and 3971/2013: • «illegal tax avoidance»

  8. Coordinated Unilateralism (?), Complexity, Legal Uncertainty • De minimis rules in the EU ATAD: • Complexity, legal uncertainty, overlapping of competences between national courts and the CJEU • Increasing complexity in general

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