Multilateral Cooperation in Tax Law

1. Introduction

The financial crisis of 2008 has brought fundamental changes to the international tax landscape with the OECD BEPS being the most prominent example. Additionally, the post-BEPS world has shifted initiatives from solving bilateral issues of cross-border taxation to finding multilateral solutions by allocating taxing rights multinational. This can most prominently be highlighted by the two-pillar proposals at the level of the OECD Inclusive Framework that includes rules such as allocating tax revenue to market jurisdictions based on allocating parts of excess profits of multinational enterprises (MNE) by using formulary allocation keys. FurS. 346thermore, the GloBE proposal in Pillar II includes rules to allocate taxing rights to various jurisdictions at once, if the ultimate parent entity (UPE) is in a low tax jurisdiction. The allocation key for an undertaxed profit rule (UTPR) is based on a jurisdiction’s number of employees as well as tangible assets.

All of these recent developments are raising the immanent fear that they will lead to yet more disputes between jurisdictions and will require increased resolution mechanisms. This will be especially challenging considering ...