Group taxation, transfer pricing and state aid
PhD student: Mrs P. Szotek
Promotor: Prof R.H.C. Luja
Duration: 1/1/2015 - 30/9/2019
PhD defence: Maastricht, 4/12/2020
The substantive regulatory framework of European State aid is governed by formal rules that frame the administrative and judicial review of, amongst other measures, tax incentives. The European Commission and European Courts are applying this review mechanism to evaluate tax rulings and transfer pricing arrangements of group companies. Although, as it has often been reaffirmed by the CJEU, no aspect of taxation can escape European State aid rules, there may be certain doubt as to the practical application of State aid rules to transfer pricing. The OECD provides for its own regulatory rules on transfer pricing which, although non-binding, can be implemented, or adhered to at national levels. The EU and the OECD constitute separate legal systems with distinct sets of rules. However, recently the European Commission has begun to evaluate transfer pricing arrangements of group companies by looking at the European State aid rules, and by referring to the concept of the "arms length principle in Article 107(1) TFEU". In this context, several questions arise,e.g.,: -Is there a separate notion of an "arms length principle" under the European State aid framework and, if there is, does it differ from the arms length standard regulated by the OECD in Article 9 of the OECD MTC? -Does the approach of the European Commission conflict with the OECD approach to transfer pricing and how, and to what extent, both those frameworks affect each other? Or should they rather be regarded as complementary? -Can this approach to transfer pricing, as proposed by the Commission, be a workable and sustainable clarification of the current system of transfer pricing based on broadly defined international principles? -Is this approach of the European Commission consistent with national fiscal sovereignty? -How can one balance EU and OECD interventions in national tax systems with respect of sovereign tax powers? In light of these problems, my research addresses the Commissions approach to evaluate transfer pricing, and the interactions between this stand of the European Commission and the OECD rules.