In recent times the European and International communities have attributed an increasing interest to multinational enterprises (MNEs, from now on) and their business strategies in the continent, and beyond. The global financial crisis (before) and the pandemic (now) have brought under the spotlight a number of situations and cases where these entities used taxation, European taxation and international tax law as means of eroding their tax liabilities, thus creating a significant damage to the national budget of the counties, and to the European one too. This is a scenario the European Parliament has been aware of for years and that also prompted the European Commission (and the EU Council) to react.
The need for more financial resources to address the crisis and the pandemic have brought international stakeholders such as the OECD and the EU to enact a number of measures aimed at curbing the ground around tax planning and tax avoidance, including aggressive tax planning.
In the US, the new Biden administration has boldly proposed a minimum tax to be charged on MNEs doing their business across the ocean, in the attempt to curb harmful tax competition and the race to the bottom by several states (both developed and developing) in the attempt to attract more investments. Apparently, this proposal has found some sort of consensus during the latest G-7 Meeting in Cornwall possibly opening the ground to an overhaul of the international tax system that this research thesis shall address.
Besides these policy statements, and important commitment for the future, the current applicable law is essentially based on country-based measures, regional initiatives (such as the European ones) and position papers by relevant stakeholders.
In Europe in particular these unilateral measures and these policy recommendations (most of them in the BEPS Project) have to consider EU Primary law, that is the Treaty, including fundamental freedoms, and of course taxpayers rights. Although the struggle against international tax avoidance is a priority, nonetheless it must be waged consistently with the rule of law. Indeed, on one side it is necessary to tackle avoidance and preserve the power to tax by the states, yet on the other this goal cannot be achieved via a disproportionate compression of the freedoms Europe has built on ever since its inception. The newly introduced Shell company directive – ATAD 3 brings up a debatable argument in this regard.
There is, therefore, a delicate balance that needs to be preserved under the rule of law principles, and that this research proposal wants to investigate. Although this project is essentially built on European law and devoted to the investigation of it, the problems summarised above engage several other jurisdictions, such as the American one.