Interest Deductibility and the BEPS Action Plan: nihil novi sub sole?

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