Proposal for a Council Directive on BEFIT: an Initial Assessment

124 Pages Posted: 9 Nov 2023

See all articles by João Félix Pinto Nogueira

João Félix Pinto Nogueira

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

Pasquale Pistone

International Bureau of Fiscal Documentation (IBFD); Vienna University of Economics and Business

Ivan Lazarov

International Bureau of Fiscal Documentation (IBFD)

Alessandro Turina

International Bureau of Fiscal Documentation (IBFD)

Sergio Messina

International Bureau of Fiscal Documentation (IBFD)

Date Written: October 12, 2023

Abstract

This study analyses the critical issues of legal interpretation that might arise from the application of the proposed BEFIT Directive and puts forward possible solutions, focusing on four main areas.

The first area (scope) analyses (i) the unequal treatment of companies that the annex may create and the Commission’s delegated power to amend it; (ii) the possible conflict with double tax treaties, namely on PE profit attribution and on ownership non-discrimination rules. The second area (preliminary tax result) emphasises the need for greater coordination with other secondary law, especially the GMT directive. The third area (tax base allocation) evaluates: (i) the issues surrounding losses; (ii) the distortions caused by the transitional 'presumptive' transfer pricing rules on the tax base allocation and the conflict with CJEU case law; (iii) and shows how the unlimited power of Member States to adjust their BEFIT base may undermine the fundamental goals of the proposed Directive. Finally, the fourth area (administration and procedures) shows that (i) the two-tier procedural obligations are hard to reconcile with the spirit of the announced one-stop shop compliance mechanism, and that; (ii) legal uncertainty might arise as to the impact of the proposed Directive on domestic procedural rules.

Keywords: BEFIT directive, European Union, European Commission, CJEU

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

Suggested Citation

Pinto Nogueira, João Félix and Pistone, Pasquale and Lazarov, Ivan and Turina, Alessandro and Messina, Sergio, Proposal for a Council Directive on BEFIT: an Initial Assessment (October 12, 2023). Available at SSRN: https://ssrn.com/abstract=4600456 or http://dx.doi.org/10.2139/ssrn.4600456

João Félix Pinto Nogueira (Contact Author)

International Bureau of Fiscal Documentation ( email )

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

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

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

Pasquale Pistone

International Bureau of Fiscal Documentation (IBFD) ( email )

Rietlandpark 301
Amsterdam, 1019 DW
Netherlands

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Ivan Lazarov

International Bureau of Fiscal Documentation (IBFD) ( email )

Rietlandpark 301
Amsterdam, 1019 DW
Netherlands

Alessandro Turina

International Bureau of Fiscal Documentation (IBFD) ( email )

Rietlandpark 301
Amsterdam, 1019 DW
Netherlands

Sergio Messina

International Bureau of Fiscal Documentation (IBFD) ( email )

Rietlandpark 301
Amsterdam, 1019 DW
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
473
Abstract Views
1,253
Rank
125,932
PlumX Metrics