Introduction to European Tax Law on Direct Taxation

S. 222I. Introduction

A. Background and Origins

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The fight against tax evasion and tax avoidance has attracted significant media attention over the past few years. This is mostly due to instances of tax avoidance by multinational enterprises revealed through various media reports, the Luxemburg-Leaks (2014), the Swiss-Leaks (2015), the Panama-Leaks (2016) and the Pandora-Papers (2021). In an attempt to multilaterally tackle this issue, at the behest of the G-20, the OECD released reports on 15 actions dealing with the fight against base erosion and profit shifting (BEPS) in 2013, which were ‘finalized’ in 2015. As countries work towards implementing the BEPS actions, the efforts of the EU toward coordinated action in this regard has assumed great significance.

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The implementation of measures against tax avoidance and aggressive tax planning becomes even more challenging in the context of a common internal market with strongly diverging direct tax legislation amongst the Member States, where, in particular, the fundamental freedoms provide taxpayer protection and free movement. The danger of aggressive tax planning and tax avoidance has been recognized politically at the EU level. Even prior t...