Limiting Base Erosion

S. 1431. Introduction

1.1. Subject matter of the present contribution and associated legal issues

The present contribution undertakes to examine the European Union (EU) law aspects of upcoming tax developments as discussed at the level of international organisations. These developments will not be the result of a harmonising EU initiative that is binding on the EU Member States; on the contrary, it will be the result of implementation into national law of non-binding recommendations issued by an international organisation, namely the Organisation for Economic Cooperation and Development (OECD). The Base Erosion Profit Shifting (BEPS) Action 2 deliverable in hybrid mismatch arrangements (hybrids) of the OECD, sets out both general and specific legally non-binding recommendations addressed to the participating states of the OECD. These recommendations have been issued in order to be subsequently transposed pursuant to a national legislative initiative of each OECD participating state, including thus EU Member States, into national legally binding tax provisions. The aim of these recommendations is to neutralise the mismatch in tax outcomes with a cross-border element, i.e. in cases where the...