Advocate General’s Opinion in the X BV Case (C-585/22) – Exploring the Potential Interaction between Wholly Artificial Arrangements and the Arm’s Length Principle – Convergency or Divergency?

Abstract

The proper characterization of the arm’s length principle (ALP) still represents an unresolved issue in the context of EU tax law since it is not clear whether it represents a rule on allocation of income aimed at avoiding economic double taxation or if should be interpreted de iure condendo as a specific provision aimed at determining the minimum level of substance requirement applicable to intercompany transactions. In this article, the authors express their preliminary comments on the Advocate General’s recent opinion in X BV (C-585/22) which concerns the notion of the ALP in the EU context, its departure from Lexel (C-484/19) and the related interplay between the concept of wholly artificial arrangements and the ALP within the EU tax law framework.