Base Erosion and Profit Shifting (BEPS)

I. S. 166Introduction

On 16 September 2014, the OECD released a first set of deliverables to advance its base erosion and profiting shifting (BEPS) initiative. The initiative comprises 15 Actions and is bringing the issue of “aggressive tax planning” and the exploitation of disparities to the forefront of the international tax law debate in an unprecedented way. Among the deliverables was Action 6, which proposes to “Prevent the Granting of Treaty Benefits in Inappropriate Circumstances”, a matter which is declared to be “one of the most important sources of BEPS concerns”. In its effort to target “treaty shopping” arrangements, an entitlement to benefits article, modelled after the limitation on benefits articles originating from the United States, has been included among its recommendations for a new international standard of treaty anti-abuse mechanisms. This limitation on benefits article calls for extensive analysis, as such clauses are infamous for their complexity and questionable in light of EU law. This latter point is of particular interest for ensuring a successful implementation of the BEPS project, as 21 of the 34 OECD members are also EU Member States.

This chapter picks up o...