Countering tax avoidance at the EU level after "Luxleaks". A history of tax rulings, transparency and BEPS: Base Erosion Profit Shifting or Bending European Prospective Solution?

The journalistic scandal that reached the headlines with the iconoclastic expression “LuxLeaks” has raised an EU wide debate about national tax administrations’ advance ruling practices and it calls for a need to establish the acceptable boundaries between fair and harmful tax competition in the interplay between national systems of corporate income taxation. The current work is therefore deeply focused on procedural tax law issues: Advance tax ruling practices, country-by-country reporting and automatic exchange of information between tax authorities are the three cornerstones in the development of the analysis. First of all, the stage will be set through a description of the background that has lead to the current attempts to fight against aggressive tax avoidance. From the definition of what advance tax rulings and advance pricing arrangements are, the analysis will then shift towards the means through which the EU has dealt with these practices so far. Accordingly, an overview of the work steered by the Code of Conduct on Business Taxation and of the Commission’s action under EU State aid law will be conducted. A final insight on transfer pricing issues and the Court of Justice’s assessment of the so-called “arm’s length principle” will be granted. Considering the lack of transparency as the main problem related to procedural secretive practices such as tax rulings, the possible forthcoming solutions supported at supranational and at international level will be scrutinized. On one hand, the OECD works in the framework of the BEPS Project on the development of an instrument such as the “Country-by-Country Reporting”, which asks taxpayers to actively enhance transparency. On the other hand, the EU is focusing on administrative cooperation and automatic exchange of information, requiring national tax authorities to carry the burden of ensuring transparency in tax rulings matters. In how far this push from different angles, although apparently collective and solid, could actually lead to a concrete and fair use of transparency in the fight against aggressive tax avoidance and harmful tax competition is a question that remains on the table. However it will be, it is of crucial importance that all legitimate interests at stake are borne in mind in a virtuous process of cross-fertilization between the concerned actors.