Base erosion and profit shifting

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The term Base Erosion and Profit Shifting (BEPS) refers to the planned reduction in tax assessment bases and the cross-border shifting of profits by multinational corporations. The term "base erosion and profit shifting" was responsible for tax issues task force of the OECD coined.

Starting position

According to the OECD, an example of BEPS is Google's abusive tax planning strategy : The Google parent company (based in the USA) transfers licenses for the use of the search engine to the subsidiary in Bermuda ( tax haven ). In Europe, Google has an Irish subsidiary. The Bermuda Company would grant royalties to the Irish subsidiary that could be taxed. However, this taxation is circumvented by interposing a company with its registered office in the Netherlands, since it is no longer the Bermuda company but the Dutch subsidiary that issues licenses to the Irish subsidiary. In this case, the EU License Fee Directive will apply and no Irish withholding tax will be charged. The income from licensing goes untaxed to Bermuda. The industrialized countries no longer wanted to accept these abusive design strategies and at the G20 summit in Los Cabos, Mexico in June 2012 commissioned the OECD to develop a solution.

aims

According to the OECD, the erosion of the tax base poses a threat to tax revenue, tax sovereignty and tax fairness. The tax planning of multinational corporations has become more aggressive over time. It is therefore necessary to standardize the tax framework at international level to a certain extent in order to ensure that each tax jurisdiction receives a fair share of the tax base to which it is entitled.

Most of the measures in the BEPS Action Plan therefore aim to identify and prevent tax structuring options. In addition, the states want to make international cooperation more efficient and work out cross-border international tax regulations to prevent tax competition. Since the BEPS phenomena are most pronounced in the area of online trading , international tax regulations should be more closely adapted to these modern companies and groups, for example by recognizing digital permanent establishments as a tax point of contact.

development

In February 2013, with the report “Addressing Base Erosion and Profit Shifting”, the OECD for the first time elaborated and published research results on the extent and functioning of profit shifting. The focus is on multinational corporations such as Google , Amazon , Apple or Microsoft , which are assigned to the digital economy.

In July 2013 the BEPS action plan was published by the OECD as part of the G20 summit in Moscow, in which 15 concrete measures to combat BEPS are proposed. In 2014 the BEPS action plan was drawn up.

The plan should be implemented gradually by the end of 2015.

The BEPS project was completed in October 2015. The specific need for implementation in Germany is currently being examined.

In the European Union , the implementation of the BEPS proposals within the framework of the EU list of non-cooperative tax areas is in progress.

Central measures of the BEPS action plan

The catalog of measures from July 2013 contains 15 central measures:

  1. Determination of the tax challenges posed by the digital economy : The main difficulties that arise as a result of the digital economy are to be analyzed and concrete solutions are proposed. At this point, the problem of digital presence should be mentioned in particular, without these companies becoming taxable in the source country by setting up a permanent establishment.
  2. Neutralization of the effects of so-called hybrid mismatch arrangements: Hybrid mismatch arrangements are hybrid companies that combine the tax advantages of a partnership with the liability advantages of a corporation for outbound investments.
  3. Provisions on additional taxation are to be strengthened: National provisions on additional taxation are to play a more important role. In German law, these can be found in the Foreign Tax Act (Sections 7-14 AStG).
  4. Limitation of the erosion of tax bases by deducting interest or other expenses: Rules are to be drawn up to avoid reducing the tax base by deducting interest deductions, e.g. B. in the case of excessive interest payments.
  5. More effective fight against tax-damaging structures, taking into account transparency and substance (see also the article license box )
  6. Prevention of misuse of treaties (so-called treaty abuse): Measure 6 has set itself the goal of preventing treaty benefits in inappropriate cases. It should also be emphasized that double taxation agreements (DTAs) should not lead to double non-taxation.
  7. Prevent artificial avoidance of permanent establishments: The definition of the establishment of a permanent establishment is to be revised so that an artificial avoidance of the permanent establishment status can be prevented.
  8. Intangible assets : Measure 8 deals with the development of rules to avoid tax shifts caused by the transfer of intangible assets between affiliated companies.
  9. Risks and capital: Measure 9 develops measures to prevent the transfer of risks to group companies and the transfer of capital (excessive funding).
  10. Combating other high-risk transactions: High-risk transactions are transactions that would not occur between unrelated third parties or that do not stand up to the arm's length principle .
  11. Development of methods to collect and analyze BEPS data and countermeasures
  12. Obligation of taxpayers to disclose aggressive tax planning models
  13. Review of transfer pricing documentation: Companies have to make their documentation, in which the selected transfer pricing methods and the amount of transfer pricing are explained and justified, more transparent for the financial administration.
  14. Improving the efficiency of dispute settlement mechanisms: Measure 14 develops an approach to improve international cooperation and to remove barriers that prevent states from settling disputes related to agreements.
  15. Development of a multilateral instrument for the implementation of the BEPS measures and the corresponding amendment of double taxation agreements (DTAs)

evaluation

The approach of the OECD to establish a stronger connection between value creation and taxation assumes that value creation activities can always be reliably assigned geographically. This also applies, for example, to economies of scale and synergy effects that are difficult to quantify. Ditz, Pinkernell and Quilitzsch consider this assumption to be unrealistic.

According to Pinkernell, the critical problem with taxing multinational corporations is international tax competition . The focus must therefore be on pushing for the most uniform international corporate taxation possible. Pinkernell sees a major problem in preferential tax regimes for foreigners in industrialized and emerging countries . The approach of taxing actual value creation activities is ineffective if companies relocate functions to countries with preferential regimes.

Others

The Grand Duchy of Luxembourg wants to get rid of its reputation as a tax haven (as of November 2016) . The government wants to significantly reduce the scope of the "tax deals" and join the action plan against profit reduction and profit shifting (BEPS) agreed at G20 level.

See also

Web links

Individual evidence

  1. ↑ Gillamariam, D./Binding, J. In: DStR 2013, p. 1153.
  2. ↑ Pinkernell R .: International Tax Design in E-Commerce In: IFSt -schrift No. 494, 2014, p. 133.
  3. ↑ OECD: about What the BEPS are we talking . [1]
  4. ↑ Musil, A./Schulz, J. In: DStR 2013, p. 2205.
  5. ↑ Fehling, D. In: IStR 2014, p. 638.
  6. ↑ OECD: Adressing Base Erosion and Profit Shifting , 2013. [2]
  7. ↑ Gillamariam, D./Binding, J. In: DStR 2013, p. 1153.
  8. ↑ Action plan to combat profit reduction and profit shifting  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice. OECD, 2014@1@ 2Template: Dead Link / www.oecd-ilibrary.org  
  9. ↑ Werner Mussler, Manfred Schäfers: Closer tax leeway for Google, Starbuck's and Co. Advances in the fight against aggressive designers . In: Frankfurter Allgemeine Zeitung, September 14, 2015, p. 19.
  10. ↑ Federal Ministry of Finance : Questions and answers on the conclusion of the BEPS project ( Memento of the original from November 2, 2015 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 5th October 2015  @1@ 2Template: Webachiv / IABot / www.bundesfinanzministerium.de
  11. ↑ German working translation of BEPS Action Plan , 2013. [3]
  12. ↑ Kudert, S./Jarzynska, P./Jamrozy, M .: Hybrid legal forms as a design tool for outbound investments by medium-sized investors , 2012, p. 1.
  13. ↑ Ditz, Xaver, Pinkernell, Reimar, Quilitzsch, Carsten: BEPS reform proposals on license fees and transfer prices for intangible assets from the point of view of consulting practice , in: IStR 2014, pp. 45–51.
  14. ↑ Pinkernell, Reimar: Internationale Steuergestaltung im Electronic Commerce , ifst -schrift No. 494, January 2014.
  15. ↑ FAZ.net December 9, 2016: That's why McDonald's is fleeing to Great Britain