Abstract
The article notes the development of tax competition and the growth of preferential tax measures which favour certain mobile investments. In establishing the Code of Conduct on business taxation in 1997, Member States were recognising that EU wide political coordination was necessary to combat harmful tax competition and reduce distortions in the single market. After summarising the criteria used in the Code, the article notes the differences between State aid and the Code and discusses some of the work done under the Code, such as on patent boxes and rulings. The Commission’s conclusion is that the Code needs to be reformed so that it remains effective and addresses public concerns about its lack of transparency.
The findings, interpretations, and conclusions expressed in this paper are entirely those of the author. They should not be attributed to the European Commission. Possible mistakes and interpretations are his and his only.
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Notes
- 1.
See e.g. European Commission (2015d), p. 18.
- 2.
For the tax package, see Cattoir (2006).
- 3.
- 4.
This has to be distinguished from the approach to competition taken in state aid, which aims at removing distortions between enterprises (‘selectivity’). State aid and harmful tax competition are two separate issues, even though they can affect the same tax measures.
- 5.
Procedures relating to the way conclusions are reached in the Code of Conduct Group. See Council of the European Union (2008).
- 6.
Alstadsaeter et al. (2015).
- 7.
Council of the European Union (2013).
- 8.
Council of the European Union (2014).
- 9.
European Commission (2012). In October 2015 the final reports of the G20/OECD Base Erosion and Profit Shifting (“BEPS”) Project, including the final version of the report setting out the nexus approach was published. This included important detail on a number of issues but no fundamental changes. See OECD (2015).
- 10.
Alstadsaeter et al. (2015) conclude that: “the nexus approach hence offers some potential to mitigate the role of patent boxes as new tax competition tools”.
- 11.
Document 10608/14 FISC 95; Model instruction for cross-border rulings and unilateral APAs (CACT 036); Statistics: guidelines and tables (CACT 037).
- 12.
European Commission (2015a).
- 13.
European Commission (2015b), p. 9.
- 14.
European Parliament (2015b).
- 15.
The committee’s report was published in November 2015. See European Parliament (2015a).
- 16.
Document 14302/15 FISC 159.
- 17.
European Commission (2015c).
- 18.
Council of the European Union (2015).
References
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Moutarlier, V. (2016). Reforming the Code of Conduct for Business Taxation in the New Tax Competition Environment. In: Richelle, I., Schön, W., Traversa, E. (eds) State Aid Law and Business Taxation. MPI Studies in Tax Law and Public Finance, vol 6. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-53055-9_5
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