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In this work I discuss (i) reductions limiting the net return (deductions, withholdings on gross income and allocation of income to the source state) and, (ii) issues related to the treaty characterization of software, digital products and automated digital services. In that turbulent scenario, my research shows that the supply side of innovation needs urgent attention from an academic and a policy perspective. While this research presents a fundamental and different approach to innovation and taxation, it invites to reconsider the impact of BEPS Actions 1 and 5 through the lens of innovation policy, with a particular reference to the European Union and in some cases to less economically developed countries.

This chapter discusses some of the issues relating to the concept of tax nexus arising from the interconnection between the development of tax harmonization of Member States’ domestic tax systems at the EU level and the financing of the EU budget through tax-based own resources. It shows how the concept of tax nexus can be seen in the particular context of the European Union through multiple facets. Then, it links the various dimension of the tax nexus concept to the ongoing debate as regards the reform of the EU own resources system, and it applies them to the different types of taxes that are currently envisaged as potential candidates.

La Région bruxelloise manque dramatiquement de logements sociaux, on le sait. Si le régime de la TVA avantage incontestablement la production publique des logements sociaux (par l’octroi d’un taux réduit : 6 %), il n’aide en rien les opérateurs privés ni les associations qui, pareillement, ont pour vocation de mettre à disposition des logements à un tarif modeste (sans passer par une agence immobilière sociale). En plus, ce système différencié de TVA heurte deux principes juridiques fondamentaux : l’égalité de traitement et la neutralité fiscale (suivant lequel deux opérations semblables quant à leurs résultats doivent connaître un régime fiscal lui-même semblable). Il est temps dès lors de changer ce logiciel fiscal. Mais que peut bien faire la Région bruxelloise dès lors que cet impôt relève des compétences de l’autorité fédérale ? Deux choses au moins : englober dans la catégorie de « société de logement » (qui bénéficie déjà du taux de TVA réduit) la construction privée de logements à caractère social ou, à défaut, accorder à cette dernière activité un subside qui compenserait la différence entre le taux standard de TVA (qui sera appliqué) et le taux réduit. Le tout, naturellement, moyennant une série de contreparties sociales, comme vendre une certaine proportion des biens ainsi produits à une société de logement social et assujettir à certaines conditions sociales la vente (ou la location) du solde. En impliquant de la sorte le secteur privé, il sera permis d’espérer une résorption plus rapide de la très longue file d’attente des logements sociaux. Het is geen geheim dat er in het Brussels Gewest een dramatisch tekort is aan sociale woningen. Hoewel het btw-stelsel de productie van sociale woningen door de overheid ontegenzeglijk bevoordeelt door het verlaagde tarief van 6 % toe te kennen, helpt het in geen geval de privéactoren en organisaties die evenzeer woningen ter beschikking willen stellen tegen een lage prijs (zonder daarom met een sociaal verhuurkantoor te moeten samenwerken). Bovendien druist dit systeem van een gedifferentieerd btw-tarief in tegen twee juridische basisbeginselen, namelijk gelijkheid van behandeling en fiscale neutraliteit (volgens hetwelk twee qua resultaten soortgelijke transacties een soortgelijk fiscaal regime moeten kennen). Het is dan ook tijd om deze fiscale koers te wijzigen. Maar wat kan het Brussels Gewest dan doen, aangezien btw valt onder de bevoegdheden van de federale overheid? Op zijn minst twee dingen: de private bouw van sociale woningen opnemen in de categorie van “huisvestingsmaatschappij” (die al geniet van het verlaagde btw-tarief) of anders voor de private bouw van sociale woningen een subsidie toekennen die het verschil tussen het standaard btw-tarief (dat zal worden toegepast) en het verlaagde btw-tarief compenseert. Dit alles uiteraard door middel van een aantal sociale compenserende maatregelen, zoals een deel van de geproduceerde woningen verkopen aan een sociale huisvestingsmaatschappij en de verkoop (of verhuur) van de overige woningen aan bepaalde sociale voorwaarden onderwerpen. Door de privésector op die manier te betrekken, kunnen we misschien hopen dat de ellenlange wachtlijsten voor sociale woningen sneller zullen inkrimpen. As we know, there is a dramatic lack of social housing in the Brussels Region. While the VAT system undoubtedly benefits the public production of social housing (by granting a reduced rate of 6 %), it does not help private operators or associations which also have the vocation to provide housing at a modest price (without going through a social housing agency). Moreover, this differentiated VAT system violates two fundamental legal principles: equal treatment and tax neutrality (according to which two similar operations in terms of their results must be subject to a similar tax regime). It is therefore time to change this tax measure. But what can the Brussels Region do when this tax falls within the remit of the federal government? There are at least two things it can do: include the private construction of social housing in the category of “social housing corporation” (which already benefits from the reduced VAT rate) or, failing that, grant a subsidy to the former activity in order to compensate for the difference between the standard VAT rate (which will be applied) and the reduced rate. All of this, of course, would be subject to social conditions, such as selling a certain proportion of the housing produced to a social housing corporation and making the sale (or rental) of the remainder subject to certain social conditions. By involving the private sector in this way, it could be possible to shorten the very long waiting list for social housing.

This contribution aims at giving an overview of the EU legal framework for the protection of cultural heritage with a focus on the financing of those policies . The overall stagnation at the EU level, and sometimes the steady decrease in public investment in culture in some Member States due to budget constraints, as well as a reduced cultural participation of the visit of cultural sites , renders even more necessary the intervention of other actors, whether international organizations like the EU or private contributors . Particular attention will be devoted to the interaction between the financing and tax dimension of the EU’s role in the protection of cultural heritage, namely the EU framework for tax incentives in favor of culture.

Written statement (pp. 57-71) and transcript of the discussion with the audience (pp. 72-78) that was held subsequent to the author's presentation at the symposion of the Institute for Public Finance and Tax Law on 23 October 2020., Heidelberg Working Paper Series on Public Finance and Tax Law, Bd. 16 (2021): Solid Financing of the EU

When addressing the topic of EU Taxes from a legal perspective, it is important from the outset to distinguish between two situations. On the one hand, it may refer to the creation of genuine European taxes by EU institutions, whose revenues would flow in the EU budget. This would require a major overhaul of the EU Treaties, by granting the EU level a constitutional power to tax and would de facto but also de iure transform the European Union is a fully-fledged federation, like the United States of America. On the other hand, it may also refer to a broader range of op-tions for reform, within the current Treaty framework, though which the proportion of EU own resources deriving from tax-based revenues would be significantly increased. Genuine EU taxes are not indeed the only way to make the own-resources system more dependent on tax re-sources and on this premise, the recent developments at the EU level as to the adoption of a new multiannual financial framework for the period 2021-2027 and the NextGeneration EU instrument leave some room is for caution optimism. This contribution is divided into three parts. First, it addresses the reason why the debate on the reform of EU tax-based own resources is important today. It is not just a matter of timing and of the need to com-pensate for the cost of the EU recovery program. There are other issues that have been pending for years, sometimes decades now, that justify opening this debate again. Then, it discusses legal-constitutional issues, such as the appropriate legal basis to reform EU tax-based own re-sources. Art. 311 TFEU, which entrusts the EU with the capacity to be funded by self-defined own resources and not by mere voluntary contributions of Member States, like other, more traditional, international organ-isations, is indeed not suitable to adopt legal instruments in the area of tax policy and tax harmonization, which are regulated by other provisions, with other procedures. The third part is a small policy contribution from a legal perspective to the discussion of the different options of new EU taxes on the table

The EU principle of prohibition of abuse of rights applied to taxation reflects the need to consider the financial interests of the Member States in an internal market where taxation remains largely unharmonized. Therefore, the circulation of taxpayers across tax systems may entail significant financial consequences for them, as for the Member States concerned. Although the origin of abuse is to be found in the case-law of the Court of justice, it is now codified in the legislative instruments, in particular in the EU Anti-tax avoidance directive of 2016. This directive, which entered into force in 2019, obliges Member States to adopt a general anti-abuse provision. This means a de facto harmonization of the concept of abuse for corporate taxation but which at the same time creates significant implementation difficulties for EU institutions, Member States and taxpayers. The directive also harmonizes specific anti-avoidance mechanisms in order to prevent base erosion and profit shifting between Member States and towards third countries and to ensure that “profits are taxed [on the territory] where value is created”. The contribution aims at analyzing the evolution of the concept of abuse of rights as applied to taxation in the European Union, also in the light of the OECD BEPS strategy., Studi Tributari Europei, Vol 9 (2019)

As in previous years, the CJEU has dealt with several Belgian direct tax cases. This Belgian chapter aims firstly to give a short update on two cases discussed in last year’s edition, but which were still pending at the time , (Sections II and III). Thereafter the authors selected a few cases, one being a sequel to a prior corporate income tax case (Section IV), one an inheritance matter in line with prior well-established precedents such as among others the Persche case (Section V) and another a matter relating more to a social security issue (Section VI). Finally, the chapter ends with a peculiar case pertaining to the interpretation of the Charter, but where the analysis of the CJEU is limited to the admissibility of the request for a preliminary ruling (Section VII). 1. Introduction 2. Jacob and Lennertz (C-174/18) 2.1. Facts and legal background 2.2. CJEU Ruling 3. Brussels Securities (C-389/18) 3.1. Facts and legal background 3.2. Analysis of the advocate general 3.3. Conclusion 4. Argenta Spaarbank NV (C-459/18) 4.1. Facts and legal background – Argenta Spaarbank NV of 4 July 2013 (C-350/11) 4.2. Facts and legal background – Argenta Spaarbank NV of 17 October 2019 (C-459/18) 4.3. Reasoning and decision of the CJEU 4.4. Comments 5. J. Huijbrechts (C-679/17) 5.1. Facts and legal background 5.2. CJEU decision 6. BU v Belgium (C-35/19) 6.1. Facts and legal background 6.2. CJEU decision 7. Joined cases IN (C-469/18) and JM (C-470/18) v Belgium 7.1. Facts and legal background 7.2. Conclusions of Advocate General Kokott and the CJEU decision 7.3. Comments

Offering a comprehensive exploration of EU taxation law, this engaging Research Handbook investigates the relevant legal principles in the context of both direct and indirect taxation. The important issues and debates arising from these general principles are expertly unpicked, with leading scholars examining the status quo as well as setting out a clear agenda for future research. This multidisciplinary book provides an insight into the taxation of individuals, businesses, passive investment and the non-profit sector. It reviews the harmonisation debate in the areas of corporate taxation and Value Added Tax, and also analyses the current developments as to energy and environmental taxation. Tax competition, state aid and the impact of the international polemic against aggressive tax planning are explored, as are the more procedural but equally important topics dealing with cooperation between tax authorities, exchange of information, taxpayer rights and dispute resolution. The final part of this book examines the external dimension to EU tax law – not only as far as the fundamental freedoms are concerned but also in the context of trade agreements and association agreements. An essential resource for students and scholars of EU taxation law, this Handbook will also appeal to practitioners and government officials working in taxation across the EU and beyond. Offering a comprehensive exploration of EU taxation law, this engaging Research Handbook investigates the relevant legal principles in the context of both direct and indirect taxation. The important issues and debates arising from these general principles are expertly unpicked, with leading scholars examining the status quo as well as setting out a clear agenda for future research.

The European Union Tax Dispute Resolution Directive 2017/1852 requires Member States to introduce mandatory arbitration for tax treaty disputes. In addition to the standard arbitration procedure laid down in the directive, Member States may also provide for dispute resolution by a Standing Committee. This contribution presents proposals for the implementation of such a Standing Committee.

The Belgian Income Tax Code (the‘BITC’) originatesfrom the new legislation adopted after the World War Iand, more specifically, the law of 29 October 1919.1As aresult, this fundamental piece of legislation underlyingthe Belgian income tax system is celebrating its 100thanniversary.In consideration of that occasion, this article describesthe rationale of the Law of 1919 and how it was affectedby the other major income tax reform in Belgium in thetwentieth century (1962). It concludes by discussingwhether fundamental reforms are to be expected in thisarea in the near future.

Cross-border social security fraud and abuse are certainly not new phenomena. What is clear, however, is that these problems have been dealt with in a politically negligent manner for many years. This is probably because everyone agreed that the problem was too complex to solve and that it touches on two core principles of the European Union about which criticism is effectively not allowed. Cross-border coordination of social security is based on the fundamental principle of ‘mutual trust’ between the Member States, which means that we assume that Member States do not cheat each other and do not bend the rules to give themselves an unfair advantage. This fundamental principle of mutual trust between Member States has also been repeatedly confirmed by the European Court of Justice. In addition, the rules of cross-border coordination are based on the principle of the ‘state of residence’, also called the state of origin. For example, the state of residence determines the employment relationship between employer and employee (or the latter’s self-employed status), who pays the social security contributions (employer or employee), the percentage of the social security contribution, and the method of calculation, and unilaterally issues official documents (the by now well-known A1 certificate). As a host Member State, you cannot change much about this. In fact, as a host state you are not allowed to question the rules and practices of a state of residence since there is mutual trust between Member States.

Although the EU harmonization process in the area of Value-added tax started several decades ago, issues relating to its compatibility with fundamental rights have only arisen relatively recently. As the case law of the European Court of Human Rights shows, human rights may have an impact on the application of VAT domestic rules in many areas, such as administrative penalties and sanctions, criminal proceedings, procurement of evidence, procedural guarantees, VAT fraud and abuse, VAT exemptions, VAT deductions or VAT increases. Despite the fact that the terms “tax”, “taxation” or any other concept related to it do not appear in any provision of the European Convention on Human Rights, except in Art. 1 of Protocol No.1 , many ECHR judgments have been rendered on various issues relating to the application of tax laws: the principle of legality of taxation and legitimate purpose , the principle of clarity of standards , the principle of unreasonable non-retroactivity of substantive tax rules , the principle of proportionality of the tax , the principle of non-discrimination , the right to silence and non-self-incrimination ; and the ne bis in idem principle under Art. 4 of Protocol No. 7. Other cases concern the procedural guarantees relating to due process of law and fair trial (reasonable duration, impartiality of the judging body, guarantee regarding the evaluation of the evidence, etc.). In this context, this chapter will address the question whether VAT taxable persons can rely on the right to property (Art. 17 of the EU Charter in conjunction with Art. 52 of the Charter) in order to safeguard their right to input VAT deduction, particularly in situations where tax authorities suspect a fraud or an abuse. The analysis will concentrate on two cases: the Bulves case (ECHR) and the Italmoda case (CJEU). Finally, we will comment on the legal nature of the right to deduct from a fundamental rights perspective.

In 2013, the OECD, on request by the G20, adopted a 15-point Action Plan to tackle base erosion and profit shifting (BEPS). The BEPS project is a comprehensive package of measures aiming at better coordinating domestic tax systems, at promoting transparency and exchange of information in order to ultimately realign taxation with economic substance and value creation. It targets harmful international tax arrangements taking advantage of the differences between several states legislation (two or more). The outcome of the BEPS action plan, contained in final reports published in October 2015, consists in measures that are of a soft law nature, (3) taking the form of “minimum standards,” “best practices” or “recommendations”. (4) Whilst BEPS is not an EU initiative, 21 of the 28 EU Member States are also OECD members. The EU and its Member States have since the beginning played a leading role in the BEPS initiative and it is crucial for the global effectiveness of the process that the EU continues to exercise this leadership as regards the most delicate step, i.e. the adoption of hard law rules. (5) Nevertheless, considering that the implementation of BEPS has to be done consistently with the current EU legal framework, the EU and its Member States face a particular challenge in respect of the BEPS implementation. The objective of the EU being mostly to ensure mobility of undertakings and other factors of production within the Internal market, it could potentially clash with measures aimed at limiting tax evasion opportunities by making certain cross-border operations more difficult. (6) The present contribution aims at highlighting potential points of friction between the OECD BEPS recommendations and the EU rules applicable to direct taxation such as the freedoms of movements enshrined in the Treaty and the harmonization directives. Among the topics covered, specific attention will be devoted to the proposals and recommendations forming the EU Anti-Tax Evasion Package issued by the European Commission on 28 January 2016, (7) in particular as regards abuse of tax treaties, EU and domestic law. (8) In 2013, the OECD, on request by the G20, adopted a 15-point Action Plan to tackle base erosion and profit shifting (BEPS). The BEPS project is a comprehensive package of measures aiming at better coordinating domestic tax systems, at promoting transparency and exchange of information in order to ultimately realign taxation with economic substance and value creation. It targets harmful international tax arrangements taking advantage of the differences between several states legislation (two or more). The outcome of the BEPS action plan, contained in final reports published in October 2015, consists in measures that are of a soft law nature, (3) taking the form of “minimum standards,” “best practices” or “recommendations”. (4) Whilst BEPS is not an EU initiative, 21 of the 28 EU Member States are also OECD members. The EU and its Member States have since the beginning played a leading role in the BEPS initiative and it is crucial for the global effectiveness of the process that the EU continues to exercise this leadership as regards the most delicate step, i.e. the adoption of hard law rules. (5) Nevertheless, considering that the implementation of BEPS has to be done consistently with the current EU legal framework, the EU and its Member States face a particular challenge in respect of the BEPS implementation. The objective of the EU being mostly to ensure mobility of undertakings and other factors of production within the Internal market, it could potentially clash with measures aimed at limiting tax evasion opportunities by making certain cross-border operations more difficult. (6) The present contribution aims at highlighting potential points of friction between the OECD BEPS recommendations and the EU rules applicable to direct taxation such as the freedoms of movements enshrined in the Treaty and the harmonization directives. Among the topics covered, specific attention will be devoted to the proposals and recommendations forming the EU Anti-Tax Evasion Package issued by the European Commission on 28 January 2016, (7) in particular as regards abuse of tax treaties, EU and domestic law. (8)

The authors argue it is not so much imposible to draft theoretically well founded definitions for determining the residence of companies, but to effectively address tax base erosion and other tax planning. A "substance-safe harbour" may result in "substance tax planning"and "substance competition".

This ETUC report sets out a number of recommendations to combat the problem of “letterbox practices” whereby companies circumvent their obligations to not only to pay lower taxes, but also lower wages and to impose bad working conditions. Letterbox companies are legal entities established in an EU country, where they have no (or minor) economic activities, in order to “regime shop” for lower taxes, wages and social contributions. A key feature of letterbox companies is that they can be very quickly, simply and cheaply set-up and wound down. Indeed, such entities may be established and disbanded in a matter of a few hours, making supervision very difficult. The first report ‘The impact of letterbox-type practices on labour rights and public revenue’, featured case studies from Germany, the Netherlands, Italy and Sweden, covering the meat, road transport, car manufacturing and construction sectors. It showed how tax avoidance often combines with exploiting workers. This second report focuses on recommendations and approaches to address the problem by joining up the three dimensions of tax, social security and labour law. This horizontal approach highlights how the regulatory framework is stretched over various national and EU policy areas often with inconsistent, contradictory and even conflicting rules. The report argues that ‘silo thinking’ has led to the application of different approaches to lawfulness that has opened-up avenues that allow firms to circumvent rules and safeguards. Of particular concern is that regulatory action taken in one field is often quickly undermined by another – to give one example, the deregulation of company law doesn’t help a better definition of what constitutes a genuine company.

Tax rulings and advance pricing agreements may run the risk of providing an advantage to taxpayers upon ex-post analysis. This contribution will first focus on how group companies may differ from stand-alone companies for state aid purposes and address the commission’s potential use of secret comparables as part of a transfer pricing analysis. A flowchart to determine when a ruling may be deemed selective is provided. Then mismatches will be addressed in tax treaty situations, like the (de)recognition of permanent establishments. Lastly, the (ir)relevance of the new eu tax ruling database for state aid investigations will be discussed.keywordstransfer pricegroup companytaxable profitexcess profittransfer price rulethese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

This report, commissioned by the European Trade Union Confederation, deals with the tax aspects of the phenomenon of letterbox companies within the European Union. The report draws on four case studies, inspired by real-life situations described in a previous report realised by SOMO in the framework of the same ETUC project (“the SOMO report”)282, concerning respectively the meat industry, the transport sector, the construction industry and the manufacturing industry. The four case studies have been derived from various real cases that ETUC’s affiliated organizations have been confronted with, some of them having given rise to legal action. Our report does not examine whether the assumptions underlying the case studies hold true in those real cases, nor does it prejudge in any way their judicial outcome. More precisely, the present report aims at identifying the legal and administrative framework at the EU and domestic level impacting upon the taxation of letterbox companies and their workers, at analysing how those rules would apply in the four case studies and at making recommendations as regards future reforms to fight this phenomenon more effectively within the EU. Le présent rapport a été commandé par la Confédération européenne des syndicats (CES) et porte sur l’observation des sociétés boîtes aux lettres de l’Union européenne à travers le prisme fiscal. Il s’appuie sur quatre études de cas s’inspirant de situations réelles décrites dans un précédent rapport du SOMO, lequel a été réalisé dans le cadre du même projet de la CES dont il est question ici (ci-après désigné "rapport du SOMO")282. Ces études de cas concernent respectivement l’industrie de la viande, le secteur du transport, l’industrie du bâtiment et l’industrie manufacturière. Les quatre études de cas s’inspirent de plusieurs situations réelles auxquelles ont fait face des organisations affiliées à la CES. Certaines d’entre elles ont donné lieu à des poursuites judiciaires. Notre rapport ne cherche pas à déterminer si les hypothèses qui sous-tendent ces études de cas sont validées par les situations réelles qui nous intéressent, ni à préjuger de quelque façon que ce soit du dénouement desdites poursuites. Pour être tout à fait précis, le présent rapport a pour vocation d’identifier le cadre juridique et administratif au niveau de l’Union européenne comme au niveau national ayant une incidence sur le régime fiscal applicable aux sociétés boîtes aux lettres et à leurs salariés, d’analyser le champ d’application potentiel de ces règles à travers les quatre études de cas et d’émettre des recommandations en vue de l’adoption de réformes destinées à renforcer l’efficacité de la lutte contre ce phénomène au sein de l’UE.

This contribution addresses various issues with respect to the relationship between the determination of the financial results and the corporate income tax base under Belgian law.

Interest payments between affiliated companies which aim at shifting profit from high to low tax countries are a well-known and frequently used tool in international tax planning. It is therefore not surprising that in the OECD Action Plan on Base Erosion and Profit Shifting (BEPS) (Action Plan) considerable attention is given to the measures limiting the deductibility of (excessive) intra-group interest payments.1 The Action Plan does not, however, provide any clear guidance as to which, among the domestic anti-abuse measures existing in OECD or non-OECD member countries, should be recommended. Moreover, the OECD, by sticking to the arm’s length standard, refuses to consider more radical corporate tax reforms that could put an end to tax arbitrage opportunities created by cross-borders intra-group interest payments. From the EU perspective one may observe some interesting convergences between the OECD initiatives and the new measures that are presently being discussed in the European Commission and the Council

Although it exhibits a series of interesting properties including putting an end to transfer pricing and other losses and profit distribution strategies, the allocation of cross border profits in line with international consolidation and apportionment raises some issues. One of them is the temptation for companies to locate their taxable profits outside the consolidating area, a behavior likely to ruin all the best of the system. Therefore consolidation and apportionment should be supplemented with a serious series of anti-abuse measures, especially provisions against controlled foreign companies. Those imply a revision of the taxation of foreign companies, actually a move from exemption to crediting for participating countries, and a revision of tax treaties accordingly. However, such a change, despite its economic justification, would raise several legal issues, such as its compatibility with the OECD Model and with EC Law (in the European context). The possibility of restricting this change to the sole abusive situations should be examined. Keywords: European Union, Multinational Firms, Taxation JEL: F23, H25, K34