Limits to Tax Planning

S. 165 1. Introduction

1.1. General remarks

Due to the globalization of markets, the unquestionable growth in the number of tax-relevant cross-border transactions and in the mobility of taxpayers – both enterprises and individuals – creates a challenge for national tax regimes. As recently remarked , the discrepancy between material universality and formal territoriality has increased the demand for efficient international tax cooperation and the ideas on mutual exchange of information in tax matters between States of the international community are continuing to develop. Therefore, “international tax cooperation” deals with the matter of assistance between different States of the international community in the allocation of the reciprocal tax powers.

However, reciprocity must be met as an essential condition: one State can provide exchange of information and administrative assistance in tax collection to another State, should it be required, on a reciprocal basis. As a consequence, the regulation of international administrative assistance and exchange of information must be characterized by the following two essential elements: