Presentation used in Sevilla, at a Conference organized by the Univesity "Pablo de Olavide".

1. Competencia fiscal y planificación fiscal
agresiva en empresas multinacionales: el plan
BEPS de la OCDE
Análisis de la acción 6: impedir la utilización
abusiva de los convenios de doble imposición.
Doble no imposición y prácticas abusivas
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2. What are we talking about ?
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http://elpais.com/elpais/2014/11/12/opinion/1415802735_350556.html

3. Summary
1. Starting point.
– Issue on the ground. Base Erosion and Profit Shifting via DTCs
2. Goal.
– Allocating a fair share of taxing rights between States
3. Tools.
– LoB Clauses, PPT Clauses, interpretive tools
4. Feasibility.
– Soft law
5. Supra-national constraints.
– Possible counter-limits to the OECD’s (soft) regulatory power
6. Concluding remarks.
– Back to classics: ability to pay and double non taxation
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4. 1. Starting Point
• Base erosion and profit shifting or source
versus residence ?
– A New Dilemma or Old Issues Rephrased ?
• OECD Model convention 1977:
– Awareness of possible misuses of it;
– Need to balance the prevention of double taxation
with an efficient struggle against tax avoidance
and abusive behaviours.
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5. 1. Continued …
Action 6
Beneficial Owner Test (1977)
Base Companies and Conduit Companies
Reports (1986)
Conduit Companies Report (1992)
Harmful tax Competition: an
emerging global issue Report
(1998)
Restricting the Entitlement to Treaty
Benefits Report (2003)
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6. 2. Goal
• Issues on the ground:
– Base Erosion;
• Eroded from what ?
– Income Shifting;
• Ordinary feature of global economy ?
– Fair allocation of taxable base(s);
• Meaning of “Fairness” in taxation;
– Proper application of DTCs
• Meaning of “Proper” in Law (consistent with the Law ?).
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7. 2. Continued …
• Fair allocation of taxing rights depends on the
proper use of DTCs;
• A Copernican revolution ?
– An instrument used to prevent Double taxation
turned into a device used to preserve and to rule
the taxing power of the State in cross-border
situations ?
• Interpretive consequences;
• Systemic consequences.
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8. 3. Tools
• LoB (Limitation on Benefit) Clauses:
– US inspired ;
– Qualitative selection of the persons entitled to
enjoy the benefits of the Treaty;
• PPT (Principal Purpose Test) Clauses:
– EU inspired;
– Main purpose (was principal in March 2014) of
the operation to be considered in granting the
Treaty benefits.
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9. 3. Continued …
• A Delicate balance between the need for an
appropriate application of the Treaty …
• … and a disproportionate reaction to Base
erosion cases;
• An example: the “Derivative benefits”
doctrine;
– 2013 Protocol to the 1990 DTC between Spain and
the US.
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10. 3. The case
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11. 4. Feasibility
• Steps forward have been made since march
2014;
• Now a OECD – G-20 Report available;
• More than 300 pages of feedbacks received;
• Critical issues on the table:
– Lack of effective consensus for more incisive
developments;
– Retroactivity of the new provisions (?);
– The relationship with domestic rules.
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12. 5. Constraints
• EU constraints (see Dr. De Pietro’s
presentation) (Inter alia):
– Cadbury Schweppes (C-196/04) ?
– SGI (C-311/08) ?
• Domestic provisions to be taken into account:
– GAAR ?
– Tailor-made anti-abuse provision ?
– Judge-made “Abuse of Law” doctrine ?
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13. 6. Conclusions
• Art. 1 OECD Model convention “Liability to tax” as
condicio sine qua non for the application of the Treaty;
– More flexibility;
– Reference to the feature of the Country of the case;
– Possibility for the source State to react to improper
behaviours by the Residence State;
• Rely on Domestic anti-abuse provisions (EU approach)
without further complications;
– Can we tolerate a dual-layer anti-abuse provision ?
(Domestic and Treaty based);
• Action 6’s proposal: over-regulation ?
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14. Thank you
marco.greggi@unife.it
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