Double Taxation Resulting from the ATAD: Is There Relief?

Abstract

Pursuant to the preamble of the Anti-Tax Avoidance Directive (ATAD), its primary purpose is to combat abusive practices in the EU and ensure that tax is paid where profits are generated without undermining the functioning of the internal market through double taxation (ATAD, recitals 1 and 5). Regardless of the aim of avoiding the creation of a double tax burden on taxpayers, the ATAD does not obligate Member States to effectively eliminate the aforesaid burden. It is, therefore, a taxpayer’s responsibility to identify the correct source of law for providing relief from double taxation. This article focuses on the double taxation that is caused by the implementation of the ATAD and identifies the correct source of law, if possible, to provide relief for such double taxation. As the potential sources of law, the OECD MC (OECD Model Tax Convention on Income and on Capital 2017 (Full Version) (OECD Publishing 2019)), and European Union legislation have been analysed. The scope of this article is limited to the rule on interest deduction limitation and controlled foreign company (CFC) rules as provided in the ATAD. ATAD, anti-tax avoidance directive, interest deduction limitation rule, CFC rules, double taxation, European Union, OECD, economic double taxation, juridical double taxation