Advance tax rulings revisited - European Parliament · Introduction into Advance Tax Rulings,...
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Introduction into Advance Tax Rulings, Advance Pricing Agreements and other ‘Arrangements’ Prof. dr. Elly Van de Velde [email protected] European Parliament June 2, 2015
Transcript of Advance tax rulings revisited - European Parliament · Introduction into Advance Tax Rulings,...
Introduction into Advance Tax Rulings,
Advance Pricing Agreements and other ‘Arrangements’
Prof. dr. Elly Van de Velde [email protected] European Parliament June 2, 2015
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I. Towards a renewed relationship
Fundamental debate on complex, extensive, variable, uncertain and vague income tax law
Change of mentality within the tax administration (Tax-on-web, help line, …)
From a ‘conflict model’ to a ‘dialogue model’ concerning a more mutual and co-operative approach with mutual trust and transparency (‘enhanced’ relationship?)
Two keywords: tax compliance and legal certainty
Legally organized ADR or informal ‘arrangements’
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II. Advance tax rulings
Definition? (BE)
1. Binding legal decision
2. Given by the federal Advance Tax Ruling Service
3. In accordance with the current law (national, European, international)
4. With respect to the application of tax law
5. On specific (no hypothetic) situations
6. Before any tax consequences
7. No exemption or reduction
Procedure?
Prefiling meeting, formal application, other meetings, written procedure
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II. Advance tax rulings
1. Binding legal decision
For the taks authorities (including tax auditor, inspector)
Unilateral (the taxpayer is not required to carry out the transaction)
Legal qualification? (Unilateral) Agreement? Opinions? Decision? … Legal uncertainty
Prescribed by a legal provision or in accordance with principles of estoppel, legitimate expectations, …
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II. Advance tax rulings
2. Competent authority
Tax authorities (local, central)
Autonomous service within the tax administration (independent? impartial?) that issues rulings or gives binding advice
Experts Commission (always or for important tax rulings)
Not one person!
Consistency and uniformity!
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II. Advance tax rulings
3. In accordance with the law
ATRs contra legem are not binding the tax administration – Changements in tax law
No taxation without representation
ATRs can be obtained as long as very strict interpretation of essential elements – discussion on the margin of appreciation of taks authorities when taks law is unclear
International, European, national (case) law
Appeal?
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II. Advance tax rulings
4. Application of tax law
Decision about how tax law will be applied in the taxpayer’s particular situation
Personal income tax, corporate income tax, VAT, …
Specific tax matters
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II. Advance tax rulings
5. Specific situation or transaction
Individual situation
No hypothetic question
No precedential value, but general policy
Apply for a ruling for another taxpayer?
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II. Advance tax rulings
5. Specific situation or transaction
Constitutional principle of equality
‘No privileges at all, no exemption or reduction of taxes can be levied except by statute’
similar cases must be treated equally, different cases unequally (exceptions – conditions)
problem: how to prove comparability?
solution: anonymous summarized publication of ATRs (unilateral APAs included) and published annual reports OR publication of (binding) policy guidelines
Legal certainty? Apply for an ATR yourself
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II. Advance tax rulings
6. Before any tax consequences
ATR before filing the tax declaration?
Even after the transaction and after the income taks year?
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II. Advance tax rulings
7. No exemption nor reduction
Some excluded tax matters
Tax rates and calculation of taxes
Amounts and percentages of taxes
Tax declaration, examination and control, evidence, tax assessment, terms, professional secrecy, ...
Administrative sanctions, tax increase
Principle of legality
Principle of equality
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II. Advance tax rulings
Procedure
Informal prefiling meeting
Formal filing meeting
Written procedure?
Mutual relationship: taxpayers have to hand over all the necessary information spontanously or on request of the taks administration
BE:
2005 2006 2007 2008 2009 2010 2011 2012 2013
Prefiling 250 575 642 698 742 866 866 951 1103
Filing 375 570 553 465 500 576 576 592 647
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II. Advance tax rulings
No strict term – depends on the complexity of the ruling application
ATR is binding for max. 5 years (exceptions)
Internal exchange of tax rulings
Publication of the individual ATR/unilateral APAs on the website of the Ministry of Finance? Annual reports? Guidelines? Databases?
Fee?
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III. Advance pricing agreements
Starbucks, Apple, Fiat, Amazon, Excess profit rulings: allocation of profits
On transfer pricing methodologies – if the transaction price between 2 related parties within a group is at arm’s lenght compared by the transaction price with an unrelated party – in accordance with the law, OECD guidelines, …
EU APA Guidelines on the procedure of APAs
Unilateral: between the tax administration and the taxpayer, without the participation of any other state involved – exchange of information?
Bi- or multilateral: between tax administrations (art. 25 DTC - MAP)
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IV. Informal tax agreements
Informal tax agreements or tax ‘arrangements’:
flourishing and daily practice to accomplish legal
certainty BUT
they create legal uncertainty itselves…
Doctoral thesis (2009):
1. Legal limits/possibility?
2. Legal qualification?
3. Legal consequences?
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IV. Informal tax agreements
Whether and to what extent provide tax ‘arrangements’ (informal tax agreements) legal certainty?
Does the Constitution allow agreements with the tax administration?
Are there any international, European, constitutional or administrative limits to take into account?
Is tax law (entirely) of public order?
Does the tax administration has discretionary power?
Is there any unity of policy?
What is the difference between interpreting the law and qualifying facts? (question of law/of facts)
What is the legal qualification and its consequences?
Is the taxpayer legally protected?
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Questions?
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