Browsing by Author "Vanhanen, Antti"

The past few years have seen a surge of new political initiatives with the aim of combating tax evasion and tax avoidance. As a part of these initiatives on the level of the European Union, the Council enacted in January 2015 a new general anti-abuse provision to the Parent-Subsidiary Directive. The Parent-Subsidiary Directive regulates tax benefits to cross-border distributions in the EU with the purpose of eliminating obstacles to formation of corporate groups across the Member State borders. The Directive contained previously a provision that authorized the Member States to apply their national anti-abuse provisions within the scope of the Directive although the application of these provisions was voluntary, and the content and scope of the national provisions was not regulated by the Directive. In the words of the Commission, the purpose of the change was to prevent misuse of the Directive and to create consistency, and these aims were to be achieved by introduction of a common anti-abuse rule in all the Member States. The new general anti-abuse rule in the Parent-Subsidiary Directive represents an approach without precedents in the field of European direct tax law since it creates a detailed anti-abuse provision with the objective of harmonizing the national anti-abuse rules applicable to the benefits of the Directive. Most of all, the Member States are, from now on, obliged to combat abuse within the scope of the Directive since the new provision has to be implemented and applied nationally. The provision raises, however, several questions regarding its application and its effects as a part of European tax legislation. The wording of the provision, which contains several conditions with the aim of defining abuse in the context of the Directive, reflects the varying formulations the ECJ has used in its case law on anti-abuse measures. It may appear prima facie that the provision marks a departure from the consistent case law and creates a new concept of abuse in the field of European tax law. The purpose of the research is to discuss the possible interpretations and the impact of the new provision. The different conditions of the provision are evaluated in the light of the ECJ case law in order to clarify their scope and meaning. The effects of the provision are discussed with respect to the immediate effects of its application, the effects on the Member States and their national anti-abuse rules, and the possible conflicts with the primary law of the EU. The ECJ direct tax case law contains a line of case law where the Court has examined abuse of tax law and the possibility to enact measures in order to combat abusive transactions. The concept of abuse within the field of European direct tax law has been developed especially in relation to such Member State anti-abuse measures which have had restrictive effects on the fundamental freedoms. In this case law, the ECJ has required that these anti-abuse provisions must combat only "wholly artificial arrangements", and the Court has developed specific tests which the national rules must respect when establishing the abusive nature of a transaction. This case law is discussed extensively in order to establish the possible interpretations for the new provision. Regarding the interpretation of the new anti-abuse provision, most questions arise in relation to the relevance of tax purposes and the genuine-nature of the arrangement. Given the variance in the ECJ case law, several ways to interpret the provision are compared in order to establish the most reasonable interpretation. In addition, the discussion reveals different points of uncertainty with regard to the way how the benefits of the Directive are meant to be denied and how the implementation of the provision affects national anti-abuse clauses and the freedom of movement. The research establishes that the new anti-abuse provision can be interpreted in accordance with the established ECJ case law although the wide latitudes of the provision mean that it can be subjected to various interpretations. The most important effects of the provision reside in its compulsory application and the impact on national legislation. The provision can, effectively, prevent the national legislators from adopting different solutions in its scope of application. The actual consequences for the companies that fall within the ambit of the provision contain several questions that cannot be given an unequivocal answer based on the wording of the provision alone. Most of all, the provision is set to cause uncertainty before its scope has been definitely scrutinized by the ECJ.