The rapid expansion of cross-border telework has exposed structural frictions between the European Union’s (EU’s) coordination of social security and the international allocation of taxing rights. This article examines how the simultaneous application of Regulation No. 883/2004 and double tax conventions affects the financing of social security systems. It first situates Member States’ heterogeneous financing models – ranging from contribution-based to tax-funded and documents cross-country divergences. It then sets out the principles of Regulation No. 883/ 2004 (notably lex loci laboris and the single-state principle) and analyses their application to cross-border telework under Articles 12, 13 and 16, including the 2023 Framework Agreement on Cross-border Telework. Turning to the OECD Model Tax Convention (OECD MC), the article explains the allocation of taxing rights in Article 15 and the role of frontier-worker clauses. Building on CJEU case law, it identifies two levels of conflict: the divergent definition of social security contributions and the structural mismatch between single-state affiliation for contributions and split taxing rights for income tax. Using threshold-based telework scenarios, it shows how double or zero financing of a social security system can arise. The article is concluded with a discussion on how potential problems arising from simultaneous application be overcome.

p class="MsoNormal"This Guest Editorial takes stock of ongoing efforts to enhance tax fairness within the European Union (EU), a challenge exacerbated by legal fragmentation across Member States and the limitations of EU primary law in the area of tax harmonization, and delves into the specific role played by the Court of Justice in this context. In particular, four key areas are examined: (1) the fight against abusive tax avoidance practices, particularly in VAT and corporate taxation; (2) the prevention of selective tax advantages granted to undertakings; (3) the promotion of cross-border cooperation between tax authorities; and (4) how to reconcile the promotion of tax fairness with the EU’s constitutional framework. The Editorial highlights how disparities in national tax regimes, while permitting economic operators to seek advantageous tax outcomes, may constitute fertile ground for tax evasion and competitive distortions. The Court of Justice however has an important role to play in addressing that risk, in particular by ensuring the effet utile of EU legislative measures aimed to fight unfair tax practices by economic operators even beyond the conceptual framework of fraud and abuse. While progress has already been made in this respect, the Editorial concludes that achieving tax fairness requires sustained coordination between EU and Member State actors. Such coordination is key to reconcile the operation of the internal market with the EU’s broader social and economic objectives, and thus to preserve the trust placed by citizens in the ability of the Union to bring about social progress.

Article 6 of the EU Anti-Tax Avoidance Directive (ATAD) introduced an EU law obligation for Member States to include a general anti-abuse rule (GAAR) in their corporate tax systems (ATAD GAAR). This article summarizes the findings of a PhD research of the ATAD GAAR. The main conclusion is that the ATAD GAAR codifies the existing general anti-abuse concept of EU law whilst it at the same time expands the reach of this concept to also cover non-harmonized areas of corporate tax. This means that Member States must prevent the abuse of their entire corporate tax systems as if it concerned abuse of EU law. The significant consequences of these changes are analysed, including the timing aspects, taxes in scope, and whether the provision is a minimum standard or full harmonization. This article also analyses the procedural tax aspects of the ATAD GAAR and its impact to the state aid framework. The ATAD GAAR is subsequently criticized with reference to ideas of Karl Popper’s The Open Society. Finally, the article provides an outlook to the future of the provision.

In Germany, it is undisputed that the fundamental rights of the German constitution, the Basic Law (Grundgesetz), set limits for tax legislation at the national level. It has not yet been fully clarified whether and to what extent legal acts of the European legislator in the field of taxation must be measured against the standard of the Charter of Fundamental Rights of the EU (CFR). In a ground-breaking ruling of 8 December 2022 (C-694/20), the CJEU has now affirmed this in relation to Directive (EU) 2018/822, which provides for an EU-wide reporting obligation with regard to cross-border tax arrangements. The CJEU declared a specific provision of the said directive invalid due to a violation of the fundamental right under Article 7 CFR to respect for private communications. This paper sets out the far-reaching consequences of the CJEU’s ruling for the directive in question in particular, and for EU tax directives in general. communication between lawyer and client, cross-border tax arrangements, DAC 6, duty of confidentiality, EU Charter of Fundamental Rights, EU tax directives, fundamental freedoms, intermediaries, reporting obligation, right to free exercise of one’s profession

As from 2023 the Directive 2021/514/EU adopted on 22 March 2021 (DAC7) require platform operators to comply with due diligence and reporting obligations on the sellers offering goods or services via digital platforms. The article discusses the different roles that the platform operators may play from a business standpoint and reflects on the implications of such different roles for the purpose of appropriately defining the scope of DAC7 reporting obligations. In the author’s opinion, such scope should be defined attributing crucial relevance to the income reporting obligation with the platform operators for (accounting and) tax purposes. In this sense, in all cases where the platform operator is already required to disclose the overall consideration paid by the customer in its income tax return the reporting obligations laid under the DAC7 should not apply, as there would not be any risk of tax evasion. DAC7, platforms, platform operators, principal, intermediary, tax evasion, disclosed agent, undisclosed agent

The arm’s length principle should maintain a tax-level playing field between multinational groups of taxpayers and standalone enterprises. Despite the fact that all EU Member States implemented an arm’s length principle in their domestic transfer pricing rules, differences in the application of the arm’s length principle remain. These differences create two challenges for the EU internal market. The first issue is a potentially unjustified restriction of the fundamental freedoms when the arm’s length principle is only applied in a cross-border context, thereby impeding the free and competitive allocation of resources within the EU internal market and favouring domestic transactions. The second issue is that EU Member States can use the arm’s length principle as a tax competition instrument through transfer pricing rulings that result in reduced tax liability, thereby potentially granting illegal State aid benefits. In light of these threats to the EU internal market, the subsidiarity and proportionality requirements could warrant harmonization of the arm’s length principle. However, the fundamental nature of the arm’s length principle as an open legal standard would render harmonization efforts less effective than intended.

Exercising rights under EU Value Added Tax (‘VAT’) law (for example recovering input tax) is often subject to certain conditions. A distinction however exists between substantive and formal requirements: Non-fulfilment of the latter does not need to be fatal for a taxpayer’s claim. That being the case, the question arises how a condition can be classified as either ‘substantive’ or ‘formal’. The author summarizes the case law of the Court of Justice of the European Union (‘CJEU’) in the area and notes that the Court has so far refrained from providing an all-encompassing test. The article therefore explores whether a golden thread can be identified and analyses if the Court may have had a general principle in mind when labelling conditions as ‘formal’ in judicial precedent. VAT, CJEU, substantive, formal, invoice, intra-Community supply

Since the Eurogate II and DHL decision (CJEU, Judgment of 2 June 2016, EU:C:2016:405), it has been clear that importation in the VAT context means ‘the entry of goods into the economic network’ of the Union. However, it is problematic that neither the EU VAT Directive nor the CJEU provide a distinct definition of what is meant by this term. This article deals with the main existing theories on the interpretation of this indeterminate legal concept in the German-language literature and by the German fiscal courts. It is concluded that these theories unfortunately ignore the exposed consumption tax character of (import) VAT and therefore deliver inconsistent results in contradiction to the recent decisions of the CJEU. importation, import VAT, customs, economic network, economic cycle, consumption tax, EU VAT Directive

This article aims to demonstrate that blockchain technology is the most optimal solution to tackle the significant challenge that Value Added Tax (VAT) non-compliance poses to the European Union (EU). VAT non-compliance, particularly evasion and fraud, is a complex and costly challenge to EU tax authorities and nations as a whole. Current compliance mechanisms fail to sufficiently ensure the collection of VAT in an effective and truly secure manner, leaving VAT and associated data open to misreporting and exploitation, posing a risk to both individual and national security. Focusing on the design aspects of security, transparency, and efficiency, it will be argued that blockchain provides the opportunity to tackle non-compliance whilst achieving a balance in both taxpayer’s wants and tax authorities’ needs. Utilizing current examples of blockchain implementation, as well as a specific VAT Coin proposal, it is demonstrated that a blockchain solution can come in many forms; be it a public, private or consortium blockchain, with each type respectively achieving compliance whilst prioritizing different aspects of data security and privacy. Ultimately, it is indicated that a blockchain-based VAT system has the potential to enable a significant reduction in the risk of non-compliance, whilst streamlining taxpayer obligations and protecting valuable datasets. blockchain, VAT, tax, cryptocurrency, MTF, VATCoin, fraud, non-compliance, security, EU

In 2021 the European Commission proposed a new framework for taxing corporate income (“Business in Europe: Framework for Income Taxation”, or BEFIT). Consolidated profits of European Union (EU) based groups will be aggregated into a single tax base, and then allocated to Member States (MS) through a formulary approach. Critical issues in defining the formula comprise how assets (including intangibles) should be reflected. The purpose of this article is to discuss some core topics related to intangible recognition and its potential impact in the formulary approach considered in BEFIT. More precisely, the topics addressed are: (1) should intangibles be included in the asset component of the formula, alongside with sales and employment? (2) considering the several types of intangible assets, which ones would merit inclusion? Our view is that intangibles acquired to other companies belonging to the group (related party transactions) and intangibles developed internally by group members but that do not meet criteria for accounting recognition, should be out of the formula. Contrarily, intangibles developed internally that fulfil criteria for accounting recognition, and intangibles acquired to third (independent) parties should be included, with an exception for recognized goodwill. BEFIT, formula apportionment, EU corporate taxation, intangibles