Year End Tax Bulletin 2016

This Year End Tax Bulletin summarises the most significant 2016 tax developments in our home markets, the Benelux and Switzerland, and highlights the main legislative changes announced for 2017. It also provides an insight into major international and EU developments. The focus is on the developments and changes with relevance for internationally operating enterprises.

Some general observations before you start reading the Year End Tax Bulletin (to be downloaded below).

OECD BEPS Action Plans
The last years have demonstrated a continuous flow of initiatives aimed at combatting corporate tax-avoidance and harmful tax competition. Looking at the OECD’s Action Plans, it strikes us that in particular the initiatives regarding ‘transparency’, such as Country-by-Country Reporting and automatic exchange of tax rulings and financial account information have a lot of traction. Also the ’multilateral instrument’ is an amazing development. Who would have thought that so many countries are about to sign a multilateral tax treaty that will implement ’anti-BEPS’ provisions in possibly thousands of existing tax treaties? BEPS is to remain on the agenda during 2017 and following years.

2016 will be labelled as the year in which the EU Commission (EC) started to execute its ambitious agenda to achieve ‘a more modern and fair tax system for businesses’. The adoption of their Anti-Tax Avoidance Directive (ATAD) is the most noteworthy achievement so far.

One of the 2016 buzzwords is ’GAAR’ (general anti-abuse rule), basically the ‘abuse of law’ provision in the ATAD and similar EU initiatives aimed at combatting corporate tax avoidance. In 2017, we can expect that the European Court of Justice (ECJ) will shed more light on the definition of ‘abuse of law’ in the French Holcim case (C-6/16) and on the definition of ‘beneficial ownership’ in cases like Z Denmark (C-299/16) and X Denmark (C-118/16). The verdicts of the ECJ will not necessarily be in line with the EC’s view.

The next important step on the agenda of the EC is the proposal to introduce a ‘common corporate (consolidated) tax base’ (CC(C)TB), which was (re)launched last October. For the time being, many EU Member States have reacted reluctantly, as it would take away a large part of their autonomy in corporate tax matters and, consequently, make it more difficult to use the corporate tax system to maintain their international investment climate competitive. Let’s wait and see if this initiative will fly.

Shift of focus?
The question is whether the nationalist tendencies in some countries, such as Brexit in the UK and the plans of President Trump in the US, will cause a shift of focus from ‘fighting corporate tax avoidance’ to ‘attracting capital from foreign investors’ in 2017? Certain is that we will again witness many international developments having a serious impact on the tax affairs of MNEs.

Download Year End Tax Bulletin
Click here to download and read the Year End Tax Bulletin.