Presentation delivered at the 2019 edition of the Tax Research Network Meeting at the University of Central Lancashire, Preston, UK.

1. Addressing the BEPS and the
Rise of Tax Sovranism in Europe
Marco Greggi
Preston, September 9th 2019

2. How It All began
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3. Analysing some
trends in European Taxation
• Value added taxation in Europe;
• Thou shalt have no consumption tax before me!
• Web Tax;
• Playing the Great Game;
• “Danish” cases (DTCs and EU Law);
• EU Law first !
• State aid latest developments;
• Market rules … rule;
• Connecting EU law and BEPS;
• The road together (… yet with a different destination);
• Preliminary findings.
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4. The Strange Case
of (European) VAT
• VAT harmonization a “Success story” of European tax law;
• The Genetic Code of a Tax:
• Market oriented tax;
• Distortion (quasi) free;
• Neutral for the business;
• Conundrum:
• (Quasi)Monopoly of VAT of the taxable base of the case: consumption
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5. The Latest Developments
• Case: C-475/17 “Viking Motors” (2018);
• Findings of the decision:
• States have power to introduce consumption taxes others than VAT if
they do not mirror its pattern;
• Single-stage taxes are possible;
• National ways to consumption tax are revamped after the ECJ ruling;
• Conclusion: momentous time for State taxation in the EU.
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6. The Great Game
of Web Taxation
• Two directive proposals by the (former) European Commission;
• Value creation, the Holy Grail of Web Taxation in the next millennium;
• Digital web Tax addressing:
• The value creation with a careful apportionment amongst the member states
considering the place the pro-sumer is active from;
• A revisited definition of digital permanent establishment to be used in intra-
EU scenarios;
• Goals:
• Expanding the taxable base of the States;
• … consistently with a European scenario where powers to tax are not
overlapping each other.
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7. The State of the Art
• European proposals frozen during the March 2019 Ecofin meeting;
• States going alone with no check from the EU so far:
• French Digital Tax already in force in force;
• Italian Digital tax in the pipeline (since 2017 !) …
• … and definition of Digital permanent establishment (hidden) already
in force “... a significative and enduring economical presence in the
territory of the state arranged in a way to not to match the physical
presence test at the same time”.
• Conclusion: momentous time for State taxation in the EU.
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8. The (much celebrated)
“Danish Cases”
• Cases in reference: C-115/16, C-118/16, C-119/16, C-299/16 as
decided by the CJEU on February 26th 2019 (the so called “Danish
cases”);
• Possibility to grant the application of the “Royalties directive” in
situations where the claimant company could be regarded as a
(potential) conduit;
• Issues under discussion:
1. The concept of beneficial owner;
2. The abuse of right doctrine and the conditions to prove it;
3. The Free movement of capital as fundamental right.
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9. Warning !
(Adapted and oversimplified)
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Actual circumstances of the case adapted and edited
A
B
C
Participation
Passive income

10. The State of the Art
• §§ 90 and 91 of the Sentence:
• OECD Model and OECD Recommendations may be used as to understand
what “Beneficial owner” means to the purposes of the directive;
• §§ 101 and 102:
• Abuse of law is a general principle applicable to the Treaty, to the directives,
and to regulations.
• Conclusion: momentous time for State taxation in the EU.
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11. State Aid Regulations
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• Quantitative study on the ECJ case law in the period November 2018 – May
2019;
• UK: 1
• Belgium: 4
• Denmark: 2
• Portugal: 1
• Spain 11
• France: 7
• Italy: 4 (one of these, the “Tercas” case)
• Slovenia: 1
• Slovakia: 1
• Germany: 7
• Poland: 2
• European Commission lost 17 cases over 41.

12. A Raw Analysis on Numbers
• Average loss score of the Commission: 20% (source: datapoint
PoliticoPro);
• Average loss score in the months under observation: 41,5%;
• Remarks: state aid decisions have a strong political bias (at least, the strongest
amongst the other decision fields);
• Situation: Tribunal and ECJ more reluctant in challenging state
decision;
• Conclusion: momentous time for State taxation in the EU.
• Warning: data analysed are not limited to tax decisions. They cover cases related to: Sport
regulations (3), Transport and infrastructures (3), (Bio-)chemicals (3), Banks (1), Financial
activity (1), Energy (2), Food retails (1), Postal services (1), Other services (1), Hospitality (1).
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13. The Interconnection
between EU law and the BEPS
• OECD-BEPS ultimate goal: reinstate a balance between the power to
tax (of the State) and the place where value is actually created (the
state the taxable base belongs to);
• EU: making of a common market where businesses (and their taxable
bases) may move freely;
• ATAD1 and 2: OECD approach is prevailing over the EU traditional
priorities;
• Conclusion: momentous time for State taxation in the EU … as the
BEPS project is intrinsically State-centric.
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14. Going beyond Gebhard
• The “Gebhard Rule” (§ 37) C-55/97;
• Raison d’État prevails over EU law if:
1. National regulations are not applied with discrimination;
2. Clear and manifest reasons of public interest exists (to be motivated);
3. Measure mentioned (1) are adequate to reach the goal;
4. Measures mentioned in (1) are proportionate to the scope;
• Conclusion: arguably the BEPS approach is expanding the possibility
to apply the Gebhard Rule ?
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15. Time to
draw Conclusions
• Questions open:
• Europe and European system is under Siege:
• From the South: Italian reluctancy to abide by the Euro-system as it is, in a “win-lose”
scenario;
• From the North: the Brexit situation;
• From the East: the alleged rule of law violations by Hungary and Poland
• From within: latest EU directive in the field of taxation aimed essentially to foster
anti tax measures to the advantage of the state following the OECD-BEPS path;
• Consequence (in policy-making): primacy of the state interest on the EU
common market and possibly on EU.
• The BEPS relentless project implementation is seriously stressing the
development of EU law built on taxpayer’s rights and freedoms.
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16. Mario Draghi’s Blueprint
for a Possible Way out
• Sovereignty not to be confused with independency;
• Independency: need to address the demands of the citizens in terms of
welfare, social justice, public services, …
• There are states that are sovereign but not independent;
• The making of the European Common house demands for states to
surrender a bit of sovereignty but not independency;
• Consequences in the field of taxation:
• OECD-BEPS project not compatible in the long run with EU development
and might ignite national backfire on the European project ?
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17. Thanks you for your Attention
marco.greggi@unife.it
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18. An Elephant !
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