Vermeulen, H.

English

International Migration, Integration and Social Cohesion online publications

UvA-DARE is a service provided by the library of the University of Amsterdam (https://dare.uva.nl)UvA-DARE (Digital Academic Repository)How alone is ‘standalone’ in the EU Anti-Tax Avoidance Directive (ATAD)?Vermeulen, H.Publication date2016Document VersionFinal published versionLink to publicationCitation for published version (APA):Vermeulen, H. (Author). (2016). How alone is ‘standalone’ in the EU Anti-Tax AvoidanceDirective (ATAD)?. Web publication or website, Kluwer International Tax Blog.http://kluwertaxblog.com/2016/10/19/how-alone-is-standalone-in-the-eu-anti-tax-avoidance-directive-atad/General rightsIt is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s)and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an opencontent license (like Creative Commons).Disclaimer/Complaints regulationsIf you believe that digital publication of certain material infringes any of your rights or (privacy) interests, pleaselet the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the materialinaccessible and/or remove it from the website. Please Ask the Library: https://uba.uva.nl/en/contact, or a letterto: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. Youwill be contacted as soon as possible.Download date:10 Mar 2023How alone is ‘standalone’ in the EU Anti-Tax Avoidance Directive (ATAD)? - Kluwer International Tax Bloghttp://kluwertaxblog.com/2016/10/19/how-alone-is-standalone-in-the-eu-anti-tax-avoidance-directive-atad/[10-4-2019 12:07:29]Kluwer International Tax Blog       CCCTB, EU/EEA, OECD, PERMANENT ESTABLISHMENTSHow alone is ‘sandalone’ in the EU Anti-TaxAvoidance Directive (ATAD)?Hein Vermeulen (Amserdam Centre for Tax Law (ACTL) of the University of Amserdam, EU DirectTax Group (EUDTG) PwC) / October 19, 2016 / 1 CommentThe Anti-Tax Avoidance Directive (ATAD) is the European answer to the phenomenon ofBEPS: Base Erosion and Proft Shifting. Characterisically for tax avoidance by Base Erosionand Proft Shifting, is that it takes place within multinational groups (MNE’s). Therefore, theATAD applies to these groups of companies. Nevertheless, the European Commission haschosen to also apply the ATAD to ‘sandalone’ entities. However, when implementing the ATADa Member State could decide not to apply one part of it, the earnings-sripping provision, tosandalone entities. This is the case when the entity is not part of a consolidated group forfnancial accounting purposes nor has an associated enterprise or permanent esablishment(PE). Therefore, a sandalone entity is not necessarily confronted with the earnings-srippingprovision. That is, when a certain Member States indeed choses to exclude sandalone entitiesfrom this provision.To me, it is not yet fully clear how this relates to the sandpoint of the Directorate-GeneralCompetition in the context of EU State aid that companies of MNE’s and sandalone companiesshould be to be treated equally.What is clear is that an entity with a PE abroad can be subject to the earning-srippingprovision. For this is that it is not considered as a sandalone entity. What is sriking is that theATAD – unlike the Parent-Subsidiary Directive – does not provide for a defnition of the conceptof a PE.So, how should we interpret this concept? To me it is without doubt that the concept shouldhave a Union Law meaning, which is to be explained by the EU Court of Jusice (CJ). The CJ,How alone is ‘standalone’ in the EU Anti-Tax Avoidance Directive (ATAD)? - Kluwer International Tax Bloghttp://kluwertaxblog.com/2016/10/19/how-alone-is-standalone-in-the-eu-anti-tax-avoidance-directive-atad/[10-4-2019 12:07:29]however, does not consider it unreasonable for the Member States to base their bilateral taxagreements on international practice and the Model Tax Convention drawn up by theOrganisation for Economic Cooperation and Development (OECD Model Tax Convention). Thisalready follows from Gilly (C-336/96). Although DG Comp follows the same track in its 2016Notice on the notion of State aid, the Commission is also of the opinion that the at arm’s lengthprinciple follows directly from art. 107 TFEU.Nonetheless, I expect that when interpreting the concept of a PE guidance will be taken fromart. 5 of the OECD Model Tax Convention. After all, this PE defnition was already part of the2011 proposal for a Common Consolidated Corporate Tax Base (CCCTB or 3CTB). And it isclear that ATAD is inspired by this proposal. Indeed, a 3CTB is the end goal of the Commission.The Commission plans to arrive at the 3CTB through sages. Firsly, by the ATAD, secondly bya 2CTB (without Consolidation!) and, thirdly, by a 3CTB. This 4  quarter the Commission willlaunch a proposal accordingly. The Commission is of the opinion that a mandatory singleEuropean corporate tax base will be efective in coping with tax avoidance through BaseErosion and Proft Shifting, that is, within the EU. After all, a common corporate tax base will notleave room for mismatches between the Member States as a result of diferences in the legalcharacterisation of fnancial insruments or entities and those diferences surface in theinteraction between the legal sysems of two Member States.The conclusion therefore should be that an entity with a PE within the meaning of the OECDModel Tax Convention cannot be considered to be sandalone. Moreover, one can concludethat an entity with a so-called fctitious PE should be considered to be a sandalone entity. Anexample of a fctitious PE is real esate held by a foreign entity, which is covered by art. 6 of theOECD Model Tax Convention. Such an entity with foreign real esate, which does not qualify asa PE under the OECD Model Tax Convention, will therefore be a ‘loner’ in the sense of theearnings-sripping provision.________________________To make sure you do not miss out on regular updates from the Kluwer International Tax Blog,please subscribe here.th

How alone is ‘standalone’ in the EU Anti-Tax Avoidance Directive (ATAD)?

https://pure.uva.nl/ws/files/34082618/How_alone_is_standalone_in_the_EU_Anti_Tax_Avoidance_Directive_ATAD_K.pdf

How alone is ‘standalone’ in the EU Anti-Tax Avoidance Directive (ATAD)?

Abstract

Similar works

Full text

Available Versions

International Migration, Integration and Social Cohesion online publications