Tax planning - Europese Fiscale Studies

Report
Foundation European Fiscal Studies
welcomes you!
Your chairman:
Prof. dr. A.C.G.A.C (Arnaud) de Graaf
Erasmus School of Law
Netherlands Ministry of Finance
After the seminar this presentation can be downloaded from
our website:
www.europesefiscalestudies.nl
Double Non-taxation: OECD Developments
Raffaele Russo
Head of the Non-compliance Unit at OECD Centre for Tax
Policy and Administration
Rotterdam, Novotel, 11 December 2012
www.europesefiscalestudies.nl
DOUBLE NONTAXATION: OECD
DEVELOPMENTS
Raffaele Russo
11 December 2012
OUTLINE
1.
Overview
2.
Recent ATP Reports
3.
Base Erosion and Profit Shifting
4
1.
OVERVIEW OF THE OECD
WORK ON AGGRESSIVE
TAX PLANNING
5
OECD Work on ATP
• Since 2008 the OECD intensified its work in the area of aggressive tax
planning (ATP) and set up the ATP Steering Group.
• The OECD's work in this area focuses on helping governments:
 to respond more quickly to tax risks,
 to identify trends and patterns already identified and experienced by
some tax administrations,
 to share experiences in dealing with them.
• The timely sharing of such information:
 assists governments in understanding new schemes,
 facilitates their detection,
 enables countries to adapt their risk management strategies and identify
successful legislative and administrative responses.
• The work is supported by the OECD ATP Directory
6
What’s ATP? A non-definition
•
The following two areas of concern are referred to as “aggressive tax planning”:
 Planning involving a tax position that is tenable but has
unintended and unexpected tax revenue consequences. Revenue
bodies’ concerns relate to the risk that tax legislation can be
misused to achieve results which were not foreseen by the
legislators. This is exacerbated by the often lengthy period
between the time schemes are created and sold and the time
revenue bodies discover them and remedial legislation is
enacted.
 Taking a tax position that is favourable to the taxpayer without
openly disclosing that there is uncertainty whether significant
matters in the tax return accord with the law. Revenue bodies’
concerns relate to the risk that taxpayers will not disclose their
view on the uncertainty or risk taken in relation to grey areas of
law (sometimes, revenue bodies would not even agree that the
law is in doubt).
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2.
RECENT ATP REPORTS
8
Tackling Aggressive Tax Planning through
Improved Transparency and Disclosure (2011)
Conclusions
• Having timely, targeted and comprehensive information is important both
from a compliance and tax policy perspective.
• Properly targeted disclosure initiatives will also benefit taxpayers at large.
• Tax audits will continue to play a key role in the detection, deterrence and
prevention of aggressive tax planning. However, traditional audits alone may
not be a resource-effective way to obtain timely, targeted and comprehensive
information on aggressive tax planning schemes.
• Disclosure initiatives can help to fill the gap between the creation/promotion
of aggressive tax planning schemes and their identification by the tax
authorities.
Recommendations
The report suggests countries concerned with ATP to:
• Review the disclosure initiatives in this report with a view to evaluating the
introduction of those best suited to their particular needs and circumstances.
• Continue to share experiences on the design and implementation of
disclosure initiatives to assist in creating a compliance framework that
benefits both governments and taxpayers at large.
9
Corporate Loss Utilisation through
Aggressive Tax Planning (2011)
Conclusions
•
The size of loss carry-forwards is constantly increasing and this increase accelerates in
downturn years. Loss carry-forwards as a percentage of GDP show large differences among
countries, with some as high as 25%.
•
Schemes detected by participating countries aim at achieving a variety results, such as shifting
profits or losses to related or unrelated parties, circumventing restrictions on the carry-over of
losses, circumventing rules on the recognition or treatment of losses, creating artificial losses,
and claiming multiple deductions for the same loss.
•
Financial instruments, corporate reorganisations and transfer pricing are the techniques
commonly used to achieve these different results and have been identified as key risk areas by
revenue bodies.
Recommendations
• Consider introducing or revising restrictions on use of losses to the extent they are concerned with
aggressive tax planning on the use of losses in these cases;
• Analyse the policy and compliance issues of schemes such as after-tax hedges and evaluate the
options available to address them;
• Continue to share relevant intelligence on aggressive tax planning schemes on losses,
• Consider the introduction of co-operative compliance programmes, where appropriate to a
country’s circumstances, based on the benefits to both taxpayers and tax administrations;
• Consider the introduction or the revision of disclosure initiatives targeted at aggressive tax
planning schemes on losses.
10
Hybrid Mismatch Arrangements - Tax
Policy and Compliance Issues (2012)
Conclusions
• Hybrid mismatch arrangements that arguably comply with the letter of the laws of two
countries but that achieve non-taxation in both countries generate significant policy
issues in terms of tax revenue, competition, economic efficiency, fairness and
transparency;
• The same concern that exists in relation to distortions caused by double taxation exists in
relation to unintended double non-taxation;
• Specific and targeted rules which link the tax treatment in the country concerned to the
tax treatment in another country in appropriate situations hold significant potential to
address certain hybrid mismatch arrangements;
• Countries’ experience in relation to the design, application and effects of specific and
targeted rules is positive but a constant monitoring of the application of the rules is
needed.
Recommendations
The report suggests countries to:
• Consider introducing or revising specific and targeted rules denying benefits in the case of
certain hybrid mismatch arrangements;
• Continue sharing relevant intelligence on hybrid mismatch arrangements, the deterrence,
detection and response strategies used, and monitor their effectiveness;
• Consider introducing or the revising disclosure initiatives targeted at certain hybrid
mismatch arrangements.
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3.
BASE EROSION AND
PROFIT SHIFTING
12
Perceptions ...
• There is a growing perception that governments lose substantial
corporate tax revenue because of planning aimed at eroding the
taxable base and/or shifting profits to locations where they are
subject to a more favourable tax treatment.
• Civil society and non-governmental organisations (NGOs) have been
vocal in this respect, sometimes addressing very complex tax issues
in a simplistic manner
13
Perceptions ... and Media
14
Perceptions ... and politics (1)
•
19 June 2012, Los Cabos
“...We reiterate the need to prevent base erosion and profit shifting and we
will follow with attention the ongoing work of the OECD in this area”.
•
4-5 November 2012, Mexico City
“…We also welcome the work that the OECD is undertaking into the
problem of base erosion and profit shifting and look forward to a report
about progress of the work at our next meeting”.
•
UK – Germany Joint Statement, 5 November 2012
“Britain and Germany want competitive corporate tax systems that attract
global companies to our countries, but also want global companies to pay
those taxes. That is best achieved through international action in the G20
and other relevant international fora to ensure strong standards.
... Britain and Germany back the OECD – BEPS (tax base erosion and
profit shifting) initiative of the OECD and expect its first analysis report to
the next G20 meeting in Russia in February 2013.
15
Perceptions ... and politics (2)
•
22 November 2012, Australia Assistant Treasurer
But when multinational companies can achieve effective tax rates of a few
per cent - or even zero - trying to compete with these rates is no different to
abandoning our corporate tax base. This kind of international 'race to the
bottom' is not protecting the sustainability of the tax system- it's just
cutting out the creativity required to avoid paying company tax in
Australia. If enormous multinational corporations aren't paying their fair
share of tax on economic activity in Australia, then that's not fair game.
We do not want to see a future where hard-working Australian families
and businesses have to pay disproportionately high taxes because
multinational corporations are not pulling their weight.
•
5 December 2012, New Zealand Minster of Revenue
The reality is that tax regimes internationally have generally been
developed for an industrial age, and have struggled to keep pace with new
business models and technologies not contained by location or national
borders …
16
What the BEPS are we talking about?
• Domestic rules for international taxation and internationally agreed
standards are still grounded in an economic environment
characterised by a lower degree of economic integration across
borders, rather than today’s environment of global taxpayers.
• Broadly speaking corporate tax planning strategies typically ensure:
– minimisation of taxation in a foreign operating or source country
– low or no withholding tax at source
– low or no taxation at the level of the recipient
– no current taxation of the low taxed profits (achieved via the first three steps) at
the level of the ultimate parent.
• While these corporate tax planning strategies may be technically
legal and rely on carefully planned interactions of a variety of tax
rules and principles, the overall effect of this type of tax planning is
to erode the corporate tax base of many countries in a manner that
is not intended by domestic policy.
17
Key pressure areas
• Hybrid mismatch arrangements and arbitrage
• Digital economy
• Related party financing
• Transfer pricing
• Anti-avoidance measures (in particular GAARs, CFC regimes and
thin capitalisation rules) and
• Preferential regimes for certain activities
18
Next steps
• Report to the G-20 before February …
19
www.oecd.org/ctp
Double Non-taxation: EU Developments
Jaap Walter Tilstra
Political adviser at TAXUD of the European Commission
Rotterdam, Novotel, 11 December 2012
www.europesefiscalestudies.nl
Seminar European Fiscal Studies
DOUBLE NON-TAXATION
Developments in the EU
Rotterdam 11 December 2012
Jaap Tilstra - EU Commission
DG Taxation and Customs Union
OUTLINE
1.
2.
3.
4.
5.
Background
Double non-taxation (Public Consultation)
The June Communication (COM (2012) 351 final of 27.02.2012)
The December Action Plan
The Recommendations
a) Recommendation on aggressive tax planning
b) Recommendation to encourage third countries to apply good
governance (tax havens)
6. Follow-up
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1. BACKGROUND
International Press:
• Google (Facebook, Microsoft): "2.4% Rate Shows How $60
Billion Lost to Tax Loopholes" (Bloomberg 2010)
• Starbucks: Special Report: "How Starbucks avoids UK
taxes" (Reuters 2012)
• Apple & Co: "Große Gewinne, kleine Steuern"
(Suddeutsche 2012)
• Etc.
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1. BACKGROUND

2.03.2012: the European Council invited the Commission to present a
report on concrete ways to improve the fight against tax fraud and tax
evasion, including in relation to third countries, by June 2012
"The Council and the Commission are invited to rapidly develop concrete
ways to improve the fight against tax fraud and tax evasion, including in
relation to third countries and to report by June 2012." (point 9 of
conclusions)

19.04.2012: the European Parliament adopted a Resolution calling for
concrete ways to combat tax fraud and tax evasion.

European Semester: many CSRs in 2012 exercise on the need to improve
tax collection – this provides a COM contribution
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1. BACKGROUND – Role of EP
e.g. EP Resolution 19 april 2012 re. tax fraud and evasion
•
•
•
•
•
•
•
•
"Onderschrijft de conclusies van de Europese Raad van 1/2 maart 2012
Snel akkoord Spaartegoeden Richtlijn + onderhandelingen CH
Rol CCCTB bij fraudebestrijding
Benadrukt belang van country-by-country reporting
Herziening van de MD Richtlijn en I&R Richtlijn (bestrijden hybrides) in de EU;
Implementeer innovatieve strategieën ter bestrijding van BTW-fraude in de EU;
EU-coördinatie bij de wijziging van bilaterale overeenkomsten tussen lidstaten;
Meer transparantie en strengere controle ter voorkoming van het gebruik van
belastingparadijzen:
•
•
•
•
buitenlandse rechtsmachten die niet tot samenwerking bereid zijn
ontbreken van belastingen of nominale belastingtarieven,
gebrek aan daadwerkelijke informatie-uitwisseling
ontbreken van transparantie in wetgevings-, rechts- of bestuursbepalingen"
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1. BACKGROUND - G20
G20 April 2009 - London
• "[W]e agree…to take action against non-cooperative jurisdictions, including tax
havens."
• "We stand ready to take agreed action against those jurisdictions which do not
meet international standards in relation to tax transparency."
G20 June 2010 – Toronto
• "We stand ready to use countermeasures against tax havens."
G20 November 2011 – Cannes
• "We underline the importance of comprehensive tax information exchange and
encourage work in the Global Forum to define the means to improve it."
G20 February 2012 – Mexico City
• "We call for (..) necessary steps to improve comprehensive information
exchange, including automatic exchange of information and, together with the
FATF, on steps taken to prevent the misuse of corporate vehicles (…)."
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1. BACKGROUND – Member States
• Joint statement by the United Kingdom and Germany in the
aftermath of the G20 meeting, 5 November 2012
• "(..) German Finance Minister Wolfgang Schäuble and British
Chancellor of the Exchequer George Osborne called at the G20
meeting today for concerted international cooperation to
strengthen international standards for corporate tax regimes. (…)
international tax standards have had difficulty keeping up with
changes in global business practices, such as the development of
e-commerce in commercial activities. As a result, some multinational businesses are able to shift the taxation of their profits
away from the jurisdictions where they are being generated (…)"
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1. BACKGROUND - OECD
Global Forum (117 members)
• Restructured September 2009 Mexico
• Peer Review Process: Phase 179, Phase 250 (end 2013)
• International Standards – Terms of Reference
OECD "BEPS" Project
• G20 June 2012, Mexico: “...We reiterate the need to prevent base erosion and profit
shifting and we will follow with attention the ongoing work of the OECD in this area”
• Base Erosion and Profit Shifting: "whether, and if so why, MNEs taxable profits are
being allocated to locations different from those where the actual business activity
takes place."
• CFA to coordinate
• Tax policy analyses, tax treaties, transfer pricing, aggressive tax planning and
harmful tax practices
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2. DOUBLE NON-TAXATION
PUBLIC CONSULTATION
Communication on Double Taxation in the Single Market,
COM(2011) 712:
• that it is important that Member States take the necessary
measures to remove double taxation and double non-taxation.
• that it would launch a fact-finding consultation procedure as
regards double non-taxation.
• Public consultation on double non taxation between 29th
February and 30th May 2012.
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2. DOUBLE NON-TAXATION
PUBLIC CONSULTATION
The public consultation listed the following issues:
1)
2)
3)
4)
5)
Mismatches of entities
Mismatches of financial instruments
Application of Double Tax Conventions leading to double non-taxation
Transfer pricing and Unilateral Advance Pricing Arrangements
Transaction with associated enterprises in countries with no or
extremely low taxation
6) Debt financing of tax exempt income
7) Different treatment of passive and active income
8) Double Tax Conventions and third countries
9) Disclosure
10) Other issues?
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2. DOUBLE NON-TAXATION
PUBLIC CONSULTATION
The Commission received 25 contributions
• - 15 from business community,
• - 4 from NGO's and
• - 4 from academics and other tax professionals
• Several contributions from non-EU (i.e. USA)
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2. DOUBLE NON-TAXATION
PUBLIC CONSULTATION
Non-Governmental Organisations
• welcomed consultation
• most of listed issues relevant for further discussions
• difficult to provide factual examples
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2. DOUBLE NON-TAXATION
PUBLIC CONSULTATION
• Business community:
•
•
•
•
•
Double non-taxation vs. tax competition
Member states sovereignty in the tax area
Double non-taxation and double taxation
Impact on European economic competiveness
Coordination with other international initiatives
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2. DOUBLE NON-TAXATION
PUBLIC CONSULTATION
Most contributors seems to find the following issues of
double non-taxation least acceptable:
• Mismatches of entities
• Mismatches of financial instruments
• Application of Double Tax Conventions
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2. DOUBLE NON-TAXATION
PUBLIC CONSULTATION
• COM Envisaged the following follow up:
• Code of Conduct continue its work on mismatches
• Possibly: Forum on double taxation and double nontaxation
• Initiative on good governance in relation to tax havens
and aggressive tax planning
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3. THE JUNE COMMUNICATION
(COM (2012) 351 FINAL OF 27.06.2012)
• The June Communication identifies:
• Key challenges posed by tax fraud and evasion
• Concrete approaches and actions, using a combination of:
• existing instruments and systems (e.g. new legislative tools for
administrative cooperation for all taxes)
• legislative proposals already in the pipeline (e.g. the EU savings
directive)
• new initiatives which need to be fast-tracked, wherever possible
(e.g., enhancing exchange of information, tackling trends and
schemes of fraud/evasion, ensuring taxpayers' compliance,
enhancing tax governance)
• a coherent policy vis-à-vis third countries (promoting EU
standards)
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3. THE JUNE COMMUNICATION
(COM (2012) 351 FINAL OF 27.06.2012)
• The June Communication also announced an Action Plan for
the end of 2012:
"Before the end of 2012 the Commission intends to come forward with an action plan based on a
proportionate impact assessment, which will identify specific measures which could be developed
rapidly if the appropriate political priority is given. The presentation of this plan is foreseen
together with the initiative on tax havens and aggressive tax planning. This action plan will set out
concrete steps to enhance administrative cooperation and will support the development of the
existing good governance policy, the wider issues of interaction with tax havens and of tackling
aggressive tax planning and other aspects, including tax-related crimes."
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3. THE JUNE COMMUNICATION
INPUT FROM MEMBER STATES AND STAKEHOLDERS
• 14.07.2012: Tax Policy Group (MS)
• 17.07.2012: FISCALIS seminar (MS and stakeholders:
business representatives and NGOs)
• 11.09.2012: Council HLWP
• 11.10.2012: Council HLWP
• 13.11.2012: ECOFIN Council Conclusions
 allowed the Commission to define priorities
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4. THE DECEMBER ACTION PLAN
A. Better use of existing instruments and Commission
initiatives to be progressed:
1. A new framework for administrative cooperation for all taxes and for
recovery
2. The proposal to amend the EUSD / Mandate to open negotiations with
EU neighboring countries
3. The draft EU-Liechtenstein anti-fraud and tax cooperation agreement
/ Mandate to open negotiations with EU neighboring countries
4. The quick reaction mechanism for VAT
5. The optional application of the VAT reverse charge mechanism
6. The EU VAT forum
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4. THE DECEMBER ACTION PLAN
B. New Commission initiatives
7. Recommendation regarding measures intended to encourage third
countries to apply minimum standards of good governance in tax
matters
8. Recommendation on aggressive tax planning
9. Creation of a Platform for Tax Good Governance
10.Improvements in the area of harmful business taxation and related
areas
11."TIN on Europa" portal
12.Standard forms for exchange of information in the field of taxation
13.A euro denaturant for completely and partly denaturated alcohol
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4. THE DECEMBER ACTION PLAN
C. Future initiatives and actions to be developed
1. Actions to be undertaken in the short term (2013)
14.Tackle mismatches: a revision of the parent subsidiary directive
(2011/96/EU)
15.Review anti-abuse provisions of Interest and Royalties, Mergers and
Parent-Subsidiary Directives
16.Promote EU standards, instruments and tools (AEOI and IT tools) at
international level
17.Enhance tax compliance: a European taxpayers' Code
18.Enhance tax governance: reinforced cooperation with other law
enforcement bodies
19.Enhance administrative cooperation: promote use of simultaneous
controls and the presence of foreign officials at audits
20.VAT Admin Coop agreements with 3rd countries: Council authorisation
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4. THE DECEMBER ACTION PLAN
2.
Actions to be undertaken in the medium term (2014)
• Enhance exchange of information
21. Develop computerised formats for AEOI
22. Use an EU tax identification number (TIN)
23. Rationalise IT instruments
• Tackle fraud trends
24. Guidelines for tracing money flows
25. Enhance risk management techniques (risk management)
26. Extend EUROFISC to direct taxation
• Enhance tax compliance
27. Create a one-stop-shop approach in all MS
28. Develop motivational incentives
29. Develop a tax web portal
30. Propose an alignment of administrative and criminal sanctions
31. Develop an EU standard Audit file for tax (SAF-T)
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4. THE DECEMBER ACTION PLAN
3.
Actions to be undertaken in the longer term (beyond 2014)
32.A methodology for joint audits by dedicated teams of trained
auditors
33.Develop mutual direct access to national data bases
34.Elaborate a single legal instrument for administrative
cooperation for all taxes
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4. THE DECEMBER ACTION PLAN
CODE OF CONDUCT (BUSINESS TAXATION)
• 1 December 1997 ECOFIN conclusions:
• Resolution of the Council and the Representatives of the Governments
of the Member States, meeting within the Council, of 1 December
1997 on a Code of Conduct for Business Taxation
• 9 March 1998 ECOFIN conclusions concerning the
establishment of the Code of Conduct Group:
•
•
•
•
•
•
High level representatives
Fixed chairman
Special Council working group
Supporting role for COM
Unanimity
4 – 6 meetings per year + bi-annual Report to ECOFIN
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4. THE DECEMBER ACTION PLAN
CODE OF CONDUCT (BUSINESS TAXATION)
• Is a measure potentially harmful (par. A)
• Assessment against Code criteria (par. B)
• Standstill + Rollback (par. C – D)
• Assessment is based on political commitment: soft law (peer
pressure)
• Includes associated & overseas territories
• Driven by Member States (Council leads)
•
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4. THE DECEMBER ACTION PLAN
CODE OF CONDUCT (BUSINESS TAXATION)
• Work Package 2008 & 2011 more focus on "horizontal issues"
•
•
Par. K : "The Council calls on the Member States to cooperate fully in the fight
against tax avoidance and tax evasion, notably in the exchange of information
between Member States, in accordance with their respective national laws."
Par. L: "The Council notes that anti-abuse provisions or countermeasures
contained in tax laws and in double taxation conventions play a fundamental role
in counteracting tax avoidance and evasion."
• General guidelines rulings / unilateral APAs (spontaneous EoI)
• General guidelines on anti-abuse measures in relation to inbound
profit transfers (CFC & switch-over)
• Guidance in relation to mismatches (hybrid arrangements)
• Dialogues with 3rd Countries (CH en LIE)
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4. THE DECEMBER ACTION PLAN
CODE OF CONDUCT (BUSINESS TAXATION)
• Cssr Semeta speech 7 December:
•
•
"Tax competition must not open the door to fraudulent or abusive tax practices."
"In the EU, we have an instrument to ensure fair tax competition: the Code of
Conduct. I believe that this Code could be used with more ambition by Member
States than it is today" (strengthen + expand).
• Action Plan:
•
•
•
•
Political discussions ECOFIN
Mismatches: Find and implement solutions  legislative action
Expatriates ad wealthy individuals
Third country initiatives
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5. RECOMMENDATIONS
• Some tax payers use complex, artificial arrangements relocating
tax base to other countries and hiding it from MS tax
administrations
• They thrive on mismatches in cross border situations creating
double non-taxation and set up their arrangements using MS with
the weakest remedies
• Within the EU this can only be effectively tackled by an approach
shared by all MS
• COM therefore Recommends as a first step MS to take effective
action in two specific areas:
1.
2.
Take a common stance against artificial arrangements and double non-taxation,
and
A common definition of non-compliant 3rd countries and joint actions
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5. RECOMMENDATIONS
LEGAL FRAMEWORK
• Recommendations are a "legal act through which the Union
exercises its competences", Article 288(1) TFEU.
• Recommendations have no binding force (Article 288(5)
TFEU). Legal basis Article 292 TFEU:
• Council Recommendations (Article 292, 1st, 2nd and 3rd
sentence): adopted following a proposal from the Commission
in all areas provided by the Treaties (e.g. Article 114(1)).
• Commission Recommendations (Article 292 4th sentence):
self-standing legal acts once agreed by the College.
• ECB Recommendations (Article 292 4th sentence): adopted
by ECB only in specific cases provided for by the Treaties (e.g.
Article 129(4))
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5a. RECOMMENDATION 1
AGGRESSIVE TAX PLANNING
1. Double non-taxation clause
a) Tax treaties between Member States and/or Member States and
third countries;
• Member States are encouraged to include a clause which permits them
to tax an item of income if it is not subject to tax in the other
contracting State.
b) Where there is no tax treaty;
• Member States are encouraged to ensure that they tax an item of
income if this is not subject to tax in another jurisdiction (source
country).
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5a. RECOMMENDATION 1
AGGRESSIVE TAX PLANNING
2. General Anti-Abuse Rule (GAAR)
Mainly against novel aggressive tax planning structures
outside the scope of specific anti-abuse measures.
• Main features:
1.
2.
3.
4.
Finding of artificiality: lack of commercial substance;
Existence of an arrangement (or series thereof);
The essential purpose of the arrangement(s) is to avoid taxation (any
other purpose at least negligible);
Taxpayer derives a tax benefit as a result of the arrangement(s).
Detailed wording is determined by existing ECJ jurisprudence
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5b. RECOMMENDATION 2
CONCERNING "TAX HAVENS"
• Main objective: improve compliance of 3rd countries with EU
standards
• Concerns 3rd countries commonly referred to as "tax
havens"
• How? Ensure a minimum common approach between MS
vis-à-vis 3rd countries:
1. Joint definition
2. Joint actions (against non-compliant and in favour of compliant)
1. Joint definition / common criteria based on two pillars:
• Transparency & Exchange of Information (OECD standards)
• Harmful tax measures (Code of Conduct criteria)
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5b. RECOMMENDATION 2
CONCERNING "TAX HAVENS"
2. Joint Action:
• Listing of non-compliant & de-listing of compliant 3rd countries
• Renegotiate, suspend or cancel Double Tax Conventions with listed 3rd
countries
• Conclude DTCs with compliant 3rd countries
• Cooperation & assistance to committed 3rd countries that need help
• MS are invited to take complementary actions in full respect
of EU law
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6. FOLLOW-UP
• Member States to inform COM on measures taken in order
to comply with Recommendations, as well as any changes
made to such measures
• COM to publish a report on the application of the
Recommendations within three years
• COM to establish a Platform for Tax Good Governance
composed of experts from Member States and stakeholders
representatives to provide assistance in:
• preparing its report on the application of the two
Recommendations
• its on-going work on aggressive tax planning and good
governance in tax matters
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Comments from the Confederation of
Netherlands Industry and Employers (VNONCW)
Jeroen Lammers
Manager fiscal affairs , corporate governance and corporate
law at the Confederation of Netherlands Industry and
Employers
Rotterdam, Novotel, 11 December 2012
www.europesefiscalestudies.nl
Double (non-)taxation from a
VNO-NCW perspective
11 december 2012
Jeroen Lammers
VNO-NCW
• Largest employers and industry organization in the
Netherlands
• Looking out for the common interests of Dutch business,
both at home and abroad
• Representing about 90% of employment in the
Netherlands
• Covering almost all sectors of the economy, including
more than 80% of all medium-sized companies in the
Netherlands and nearly all of the larger, corporate
institutions.
58
European Commission work
• February 2012
• Public consultation on factual examples and possible
ways to tackle double non-taxation cases
• May 2012
• Reaction VNO-NCW on public consultation
• Preserve delicate balance between tax sovereignty and
legitimate protection of tax revenue
• The possibility of double non-taxation is more often than not
the result of deliberate national tax policy
• No clear distinction is made between cases due to
mismatches and cases due to tax competition
• Efforts to converge tax systems cannot impede on tax
sovereignty
59
European Commission work
• December 2012
• An action plan to strengthen the fight against tax fraud
and tax evasion
• Better use of existing instruments
• New Commissions initiatives
• Future initiatives and actions to be developed
• Commission recommendation on aggressive tax planning
• Commission recommendation on a coordinated tax policy
towards third countries not meeting certain minimum
standards on good governance in tax matters
60
OECD work
• 2011
• Guidelines for Multinational Enterprises
• Chapter XI. Taxation
[...] enterprises should comply with both the letter and the
spirit of the tax laws and regulations of the countries in
which they operate […]
[…] An enterprise complies with the spirit of the tax laws and
regulations if it takes reasonable steps to determine the
intention of the legislature and interprets those tax rules
consistent with that intention in light of the statutory
language and relevant, contemporaneous history […]
• March 2012
• Hybrid mismatches arrangements
• Tax policy and compliance issues
61
OECD work
• November 2012
• Background document on the OECD work on
Base Erosion and Profit Shifting
• Key pressure areas:
•
•
•
•
•
•
International mismatches
Treaty application to digital goods and services
Inter-group financial transactions
Transfer pricing
Effectiveness GAARs, CFC-regimes and thin capitalization
Preferential regimes
• Early 2013
• Report on actions to tackle BEPS
62
VNO-NCW comments
• Business welcomes the initiatives of the EC and
OECD
• Business supports efforts to eridicate tax fraud and
tax evasion
• Tax fraud and tax evasion are illegal
• Tax fraud and tax evasion distort the level playing field
• Business wants and needs a level playing field to operate
• Business supports efforts to increase information
exchange between states
• Enhance tax co-operation, tax administration, tax
enforcement and tax collection for cross border situations
• Both between member states and third countries
63
VNO-NCW comments
• Tax fraud and tax evasion cannot be grouped
together with tax avoidance and tax planning
• Tax fraud is a form of deliberate evasion of tax punishable
under criminal law
• Tax evasion is a from of illegal arrangements designed to
pay less tax than legally obligated to by hiding income or
information from tax authorities
• Tax avoidance is the use of legal methods to modify tax
payers financial situation in order to lower the amount of
income tax owed.
• Tax planning is to accomplish (financial) activities in the
most tax-efficient manner possible, as provided in tax
laws.
64
VNO-NCW comments
• Wholly artificial constructs that lead to double nontaxation can result in undesirable competitive
(dis)advantages
• These constructs are also not in accordance with ECJ
jurisprudence and the MNE Guidelines
• Optimizing fiscal position is an integral part of doing
business. Companies have to reduce their overall
tax burden to be able to compete on the
international labour markets, capital markets and
consumer markets.
65
VNO-NCW comments
• International discussion in the OECD and UN has
lead to further convergence of global tax systems
over the years
• Efforts to converge tax systems cannot impede on
tax sovereignty
• Tax competition works
• Tax competition forces states to keep on innovating and
updating their tax systems and tax policy
• Research shows that without tax competition economic
activity tends to gravitate towards the largest markets
• OECD countries have a responsibility towards non-OECD
countries to assist them in developing a sound tax policy
and reliable tax system
66
VNO-NCW comments
• Tax competition can lead to aggressive tax planning
• The distinction between harmful tax competition and
benign tax competition is not always clear
• Within the EC work on this has been done in the Code of
Conduct group
• The OECD and EC initiatives provide opportunity to
improve debate on the issue
67
VNO-NCW comments
• Discussion on aggressive tax planning is multifacetted
• It is a legislative issue, a moral issue, a political
issue and a budget issue
• Business has adopted a mostly legislative viewpoint,
however it is legitimate to consider moral implications
• NGO’s have adopted a mostly moral viewpoint, however
business needs objectively set rules to operate.
Otherwise there is too much uncertainty to make
investment decisions.
• Legislators are quick to forget that rules that make cross
border tax planning possible are the result of very
deliberate tax policy and political consideration
• Reducing cross border tax planning possibilities does not
result in more tax revenue for all states involved
68
VNO-NCW comments
• EC considers on aggressive tax planning
• […] taking advantage of the technicalities of a tax system
or of mismatches between two or more tax systems for
the purpose of reducing tax liability
• Member states find it difficult to protect their national tax
bases […]
• States […] in their double taxation conventions […] may
not necessarily take account of whether […] there is a risk
of double non-taxation.
• EC does not seem to address
• the role of tax policy of individual member states
• the importance of upholding the principle of tax
sovereignty
• The responsibility of states in concluding DTC’s
•
69
VNO-NCW comments
• EC attempts to give a working definition on
aggressive tax planning
• More work on this is necessary
• Definition is too broad
• Overlap with OECD standards such as transfer pricing
rules
• Overlap with general and/or specific anti-avoidance rules
in national legislation
• Effect on generally accepted concepts such as the
participation exemption
70
VNO-NCW comments
• Business wants to resolve the issue
• International fiscal problems can be solved by
business and government through a constructive
partnership and dialogue
• Tax fraud and tax evasion have to be eradicated
through increased checks and balances
• Double (non)-taxation can be reduced by
strengthen international OECD and UN standards
concerning attributing taxing rights and determining
transfer pricing rules
71
VNO-NCW comments
• Discrepancies between tax systems can be
resolved through international agreement on how to
coordinate tax policy on these issues and
implement this in DTC’s
• Further collective work on transfer pricing is
needed.
• Political perception of Transfer Pricing
• EU Joint Transfer Pricing Forum
• Joint Transfer Pricing audits
72
VNO-NCW comments
• Tax competition needs to be preserved with regard
to the delicate balance between tax sovereignty and
legitimate protection of tax revenue
• A global level playing field has to be ensured to
strengthen investment climate for both foreign and
domestic investments
• The possibilities for arbitration and dispute
resolution have to be improved and expanded
• There is much to be done
73
Thank you for your attention!
VNO-NCW en MKB-Nederland
Manager Fiscaliteit, Corporate Governance en Ondernemingsrecht
tel: 070 349 0 423 / 06 158 38 434
fax: 070 349 0 417
Postbus 93002, 2509 AA Den Haag
e-mail: [email protected]
web: www.vno-ncw.nl
74
Discussion
Your chairman:
Prof. dr. A.C.G.A.C (Arnaud) de Graaf
Erasmus School of Law
Netherlands Ministry of Finance
www.europesefiscalestudies.nl
Foundation European Fiscal Studies thanks
you for your presence and wish a good
journey home
Closure and drinks
More information about our activities can be found at our
website:
www.europesefiscalestudies.nl

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