Abuse through the use of shell companies and arrangements for tax purposes in the EU Feedback to the EU consultation by the IBFD task force on EU law

4 Intl. Tax Stud. 7 (2021), Journal Articles & Opinion Pieces IBFD

62 Pages Posted: 16 Feb 2022 Last revised: 23 Feb 2022

See all articles by Pasquale Pistone

Pasquale Pistone

Vienna University of Economics and Business

João Félix Pinto Nogueira

Law School - Catholic University of Portugal (UCP); International Bureau of Fiscal Documentation; University of Cape Town (UCT)

Alessandro Turina

International Bureau of Fiscal Documentation

Ivan Lazarov

WU Vienna University of Economics and Business - Institute for Austrian and International Tax Law; IBFD

Date Written: July 14, 2021

Abstract

The present study was developed based on the IBFD EU Task Force’s submission within the framework of the European Commission 2021 public consultation on the use of shell entities and arrangements for tax purposes. The analysis of the broad ramifications of this central issue within corporate tax law and policy takes its inception from a fundamental taxonomy of the adjacent although conceptually distinct notions of aggressive tax planning, tax avoidance, tax evasion and tax fraud as well as from a thematization of the notion of substance in tax law contexts. In this respect, the authors argue that, within EU Law, these distinctions have not always been upheld consistently and such thematization may have not been fully developed, contributing to structural disconnects that may, inter alia, also jeopardize the proposed initiative. Within this study, such conceptual taxonomy is functional to laying the foundations for an assessment of some of the key articulations of the proposed initiative. In the first place, the opportunity and possible legal compatibility issues surrounding the introduction of so-called substance requirements, upon which some design recommendations are set forth without prejudice by the authors. Based on this reconstruction, rules targeting shell companies and arrangements are also addressed in both a de iure condito (from an EU and comparative tax angle) and a de iure condendo perspective, thereby including considerations on the most viable approach to hypothetically implementing such measures. Administrability issues are also explored, with specific regard to the possible tools – already available under the existing framework, or to be envisaged – meant to prevent and monitor abusive practices of shell companies. Such possible tools are assessed having in mind the concern to ensure a balance with the safeguard of the rights of taxpayers on the procedural as well as substantive planes. In the view of the authors, such a balance may be conducive to the reshaping of cross-border relations between taxpayers and administrations within the European Union.

Keywords: Taxation, Tax law, International taxation, European taxation

JEL Classification: K33, K34, F13, E62, D78, E62, F02, F23, F42, H20, H22, H23, H25, H26, H87, O19, O23, O24

Suggested Citation

Pistone, Pasquale and Pinto Nogueira, João Félix and Turina, Alessandro and Lazarov, Ivan, Abuse through the use of shell companies and arrangements for tax purposes in the EU Feedback to the EU consultation by the IBFD task force on EU law (July 14, 2021). 4 Intl. Tax Stud. 7 (2021), Journal Articles & Opinion Pieces IBFD, Available at SSRN: https://ssrn.com/abstract=3984981 or http://dx.doi.org/10.2139/ssrn.3984981

Pasquale Pistone

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

João Félix Pinto Nogueira (Contact Author)

Law School - Catholic University of Portugal (UCP) ( email )

Lisboa
Portugal
0650446433 (Phone)
4760-164 (Fax)

HOME PAGE: http://https://fd.porto.ucp.pt/pt-pt/pessoa/joao-nogueira

International Bureau of Fiscal Documentation ( email )

Rietlandpark, 301
Amsterdam, 1019 DW
Netherlands
+31205540100 (Phone)

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

Alessandro Turina

International Bureau of Fiscal Documentation ( email )

Amsterdam
Netherlands

Ivan Lazarov

WU Vienna University of Economics and Business - Institute for Austrian and International Tax Law ( email )

Vienna
Austria

IBFD

Amsterdam
Netherlands

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