An Answer to Aggressive Tax Planning with Intangibles: Designing Anti-Avoidance Measures that Comply with International, Trade and European Law

In contemporary business landscapes, the paradigm of success has shifted from traditional metrics of scale, such as extensive infrastructure and large workforces, to the strategic exploitation of intangible assets. This transformative trend, evident in multinational enterprises, underscores the pivotal role played by intellectual property in value creation and international tax optimization. In this context, the OECD and other international actors have on multiple occasions tried to address the alarming phenomenon of base erosion and profit shifting facilitated by multinational enterprises reallocating ownership of intangibles to low-tax jurisdictions.

This book critically dives into one such aspect – namely, cross-border intra-group royalty payments – as an integral component of aggressive tax planning structures. While international organizations and public outcry have drawn attention to tax scandals involving major corporations, the author demonstrates how the response from international tax law has been largely insufficient, particularly concerning the use of intangible assets. This void has prompted some nations to enact multi- and unilateral measures to counter this specific pathway for profit shifting.

Filling a significant gap in scholarly literature, this book pioneers a monographic study focused specifically on royalty payments and their role in base erosion and profit shifting. Employing a deductive-analytical methodology, it meticulously dissects legislative measures that might aid in the fight against base erosion and profit shifting in the context of intellectual property. The analysis spans a range of instruments, including controlled foreign company rules, general anti-avoidance rules and transfer pricing regulations, as well as withholding taxes and royalty deductibility barriers, also in the context of the OECD Pillar Two minimum tax. These measures are then tested against the background of their effectiveness and, more importantly, their compatibility with higher-ranking law.

The author particularly endeavours to provide a normative best-practice approach for realistically resolving this issue, offering a balanced, technical solution in the ever-evolving landscape of international tax law. This comprehensive analysis contributes to ongoing discussions on global tax reform, urging a nuanced and context-sensitive approach to address the challenges posed by aggressive tax planning structures in the post-BEPS era.

This book thoroughly covers tax planning structures (ab)using intangibles and the compatibility of current and future measures against such structures in relation to higher-ranking law.