Fiscal Aid Research Articles

Selectivity in Fiscal Aids: Recent Developments

The notion of fiscal aid is becoming crucial in determining the relationship between supra-national integration and national tax sovereignty; the selectivity criterion is often key in the assessment of compatibility of fiscal measures with Article 107(1) TFEU. Therefore, the notion of selectivity as defined by the recent case-law of the CJEU and decision-making practice of the Commission is fundamental in order to understand the actual allocation of powers in direct taxation matters. Against this backdrop, the aim of the present article is to establish what the current notion of selectivity is in fiscal aids, assessing whether the approach used by the CJEU and the Commission share common patterns, and evaluating the impact of such interpretation on the division of competences within the EU. In particular, this article offers a critical reading of the recent European Commission v. World Duty Free case and of the so-called Tax Rulings Decisions.

State Aid and Direct Taxation and the Big Eruption Between the U.S. and the EU

This article critically assesses the division that the recent decisions of the European Commission in the field of State aid have exposed between the EU and the U.S. It examines how the two legal orders address the issue of government subsidies and explores the reasons for their different approach. It argues that State aid law has become increasingly important as a competition policy issue and its enforcement is much more aggressive compared to the past. The article tries to untangle the long-term effect that the recent cases of fiscal aid will have for the tax relationship between the U.S. and the EU. Finally the article concludes with some tentative solutions and stresses the importance of international cooperation in the field of taxation.

The Rebus of Selectivity in Fiscal Aid: A Nonconformist View on and Beyond Case Law

The application of State aid rules to tax measures has become highly controversial, particularly in the last decade; a number of theoretical difficulties and a fierce criticism surround this topic today. The conceptual framework currently deployed by the State aid legal doctrine is insufficient to address the phenomenon of fiscal aid in its entirety. This has resulted in a case-by-case approach by the courts that has generated inconsistencies and legal uncertainty. The author shares his views on how the current legal standards should be revised, also in terms of law policy, e.g. by taking the underlying objectives of the Treaty into full account. The goal being to foster the development of a new approach to assess fiscal aid, built on the distinction between truly macroeconomic measures and measures that (also or mainly) pursue more specific goals. To this end, some broad categories of fiscal measures are discussed. Drafted in a deliberately concise manner, this opinion article does not provide an exhaustive account of the European Union (EU) case law or the decision-making practice of the Commission. Rather, also considering the number of appeals currently pending against Commission decisions and the General Court’s judgments on these issues, reference to specific cases is limited to what is necessary to provide examples of the broad categories of fiscal measures under discussion.

Do State Aid Rules Still Allow European Union Member States to Claim Fiscal Sovereignty?

This contribution provides an overview of the European Union (EU)’s fiscal aid regime. State aid rules impacted national tax policy from the 1960s onwards, although awareness really grew at the end of the 1990s and then again in recent years (2014– 2016). The author places the European Commission’s May 2016 guidance notice on what state aid is meant to be in the context of taxation. He also touches upon the Commission’s June 2016 Staff Working Paper on tax rulings and provides a brief overview of state aid procedure. Next he reflects on how foreign tax rules might (not) affect the net amount of tax benefits that is to be retroactively recovered in case of a finding of unlawfully granted state aid. Special attention will be given to Member State fiscal sovereignty in relation to the adoption and use of anti-tax avoidance measures, such as transfer pricing adjustments.

Using Tax as an Investment Promotion Tool

This chapter for a forthcoming text on investment promotion explains the concept of “luring with tax”. It first lays out in broad strokes how nation states compete with each other for direct and portfolio investment using their tax systems. It then analyzes whether using the tax system as an investment promotion tool should be considered fundamentally competitive (following market/economic principles) or anti-competitive (deliberately distorting a market with subsidies). It considers these questions from the perspective of the EU’s “fiscal state aid” framework and in light of WTO prohibitions against subsidies. It concludes that the distinction drawn between “fair but fierce” tax competition among free-market economies and “harmful” tax practices has been hotly contested ground in international tax policy for many decades, and it is likely to remain so despite international efforts to coordinate tax policy among nations for mutual benefit.

The Spanish Tax Lease case: identifying the beneficiary under the selectivity test in fiscal aid schemes

The Spanish Tax Lease case: identifying the beneficiary under the selectivity test in fiscal aid schemes

Keynes, Friedman, or Monnet? Explaining parliamentary voting behaviour on fiscal aid for euro area member states

This article investigates the determinants of parliamentary support for international fiscal aid. Departing from the literature on presidential systems, it analyses an exemplary case of a parliamentary system, Germany. Two theoretical accounts are distinguished. The first perceives MPs as policy-seekers and focuses on the positioning of government and opposition parties and individual MPs on an economic left‒right and a pro- versus anti-EU dimension. The second regards MPs as vote-seekers and presumes an electoral district connection. The statistical analysis of a new data-set containing information on 17 Bundestag roll-call votes from 2009 to 2015 finds support for the first account: voting in favour of fiscal aid measures is mainly driven by government membership and EU support. By contrast, neither economic ideologies, nor district or mandate characteristics influence support for fiscal aid. The article contributes to a growing literature on the domestic politics of international political economy.

Interregional migration of value-added and its determinants in Korea

In Korea, it is expected that the interregional migration of regionally produced value-added may be considerable because of the typical characteristics of the Korean residential pattern: high population density in urban areas and discrepancy between work and residence places. Such migrations bring about interregional external effects and regressivity, where value-added flows from provincial to urban areas. To cope with these inefficiencies of resource distribution, from a short-term perspective fiscal aid from the central government for the regions suffering from out-migration is needed to internalize the externality and to compensate for the regressivity. From a long-term perspective, balanced regional development policies are necessary to prevent such migrations. The purpose of this study is to provide information for the fiscal aid arrangements of the central government by analyzing the realities of interregional migration and to outline policy implications for regional balanced policies by examining the influential determinants of value-added migration.

From Soft Law to Soft Law Through Hard Law: The Commission's Approach to the State Aid Assessment of Tax Rulings

This article wishes to contribute to the ongoing debate surrounding the European Commission's State aid investigations into multinationals' tax arrangements. It does so in three distinct ways. First, it tracks the evolution of the Commission's soft law approach to tax rulings' State aid assessment. Second, it examines whether this soft law evolution reflects the Commission's hard law approach in its recent fiscal aid decisions and investigations. Finally, it argues that the Commission's approach and argumentation are not bulletproof; in fact, the author uses one of the Commission’s argumentative pillars as an example in order to illustrate that, to a certain extent, they are not as legally sound as the Commission presents them. Keywords: Soft Law; Hard Law; Notion of Aid; Forum 187; MOL; Arm’s Length Principle; OECD.

Tax Legislation and the Notion of Fiscal Aid A Review of Five Years of European Jurisprudence

State aid discipline under Art. 107, 108 TFEU has established itself as a major constraint to the tax sovereignty of national legislators. By analyzing a great number of CJEU judgments delivered during the last 5 years, this article lays out both the conceptual and the political issues which arise when tax benefits are subject to control under European competition law. This affects the concepts of “advantage”, “selectivity” and “discrimination” as well as special cases like “negative state aid”, “indirect selectivity” or “de-facto selectivity”. The author proposes to apply Art. 107 par. 1 TFEU only if a tax provision deviates beneficially from a “normal” or “benchmark” treatment and rejects the trend to interpret Art. 107 par. 1 TFEU as a general ban on discrimination. Moreover, this article pleads for a limited reading of “selectivity” which is only given when a tax advantage confers a financial benefit on certain branches of the economy or certain individualized enterprises.

Motivation Towards Prescribing Pharmaceutical Product

Pharmaceutical industry in India had been enjoying relationship based on trust and credibility, which has shaken by gifts culture in industry to doctors. Pharmaceutical companies use different promotional strategies for different medicine classes. Role and importance of each promotional tool vary according to the medicine class. Present paper deals with the opinion of medical representatives about various promotional tools used by them. Researcher used 48 parameter and collected data on five-point scale. Factor analysis has been used to find out factors influencing the sales in pharmaceutical industry in Indian scenario. After the factor analysis, it has been analyzed that there are nine component groups. The nine groups are labeled as 'motivational weapons', 'product matrix', 'Association', 'tune-up for business', 'perfect blend', 'precision', 'skill sets', 'fiscal aids' and 'contest'. Each group extracted similar type of parameters.

Entrepreneurship Education at Universities: Suggestion for a Model Using Financial Support

The public sector is not the only one that creates more and better jobs in developed countries. In addition, the private sector seems to have a major role in solving the problem of unemployment. But according to recent studies, the oldest and largest private companies cannot seem to provide new opportunities to combat unemployment. This poses a question: which type of companies can provide employment to those individuals seeking it? Lately, it seems that only companies which use advanced technology and startup companies can provide new jobs to those seeking employment. Currently, the mission of the university as an institution has changed. Education of entrepreneurship is the one of the important areas of study in universities all around the world. Developments on information and technology have reached a high level, creating new challenges and problems for universities. Additionally, universities have to change their teaching models and methods to reach contemporary levels. It is possible for universities to revise their missions and visions. These missions should include objectives of education and a suitable strategy that considers the private sector and its expectations from universities. Collaboration with industry and other related sectors can support universities, and encourage them to add courses like “Entrepreneurship” to their curricula. In addition, this encourages universities looking for new partnerships. One such partnership is called KOSGEB (in Turkish), which is a state owned “Small and Medium Enterprises Development Organization”. KOSGEB can provide fiscal aid, some refundable and some not, to all small and medium enterprises. KOSGEB also provide huge opportunities to potential entrepreneurs who want to establish a new business through its Entrepreneur Support Program. One component of the program is to provide monetary support – up to 100,000 TRL in total. In this study, we will discuss the Entrepreneur Support Program of KOSGEB, and whether it is feasible for solving the problem of unemployment after university education. We ask if this program is a good collaboration to help students, and how universities can apply this support program to their academic program.

Investigation of Economic Activities of Single Parent Families

The purpose of this study is to explore the economic activities of single parent families and make valid recommendations for improving these activities. Participants of this study consisted of single parent families employees at the Hacettepe University in Ankara, Turkey (n=119). According the results, it is more than half among families who are not taking support about child care with or without a payment (56.3%) and not getting help for house cleaning with a payment (65.5%). Attract the attention that the families who couldn’t make savings or investment (57.1%), who became indebted (74.8%). Most of the families do not get support from any institution/ agency/ foundation or immediate vicinity (90.8%). Among the families, getting help who take fiscal aid (45.5%) and who receive support from their family (45.5%) are less than half.

European Union’s Fiscal Aids and Its Effects on Member and Non-Member Countries: Turkey Case

Avrupa Birligi’nin kurulusundan beri zaman icinde olaganustu derecede gelismis ve bugunku duzeyine ulasmistir. Uyelerine finansal yardimlar yaparak bazi mekanizmalarinin gelismelerini saglamak ve uye olmayan ulkelerin entegrasyonunu kolaylastirmak Avrupa Birligi’nin temel amaclarindan birisi olmustur. Avrupa Birligi’nin finansal yardimlarinin temel amaci genellikle; uye ulkelerin Avrupa Birligi’nin kabul edilen ekonomi politikalari ile uyumlu olarak surdurulebilir kalkinma sureclerini garanti almak ve Avrupa Birligi ile uye olmayan ulkeler arasindaki uyumun artmasini saglamaktir. Bu yuzden bu calisma ile Avrupa Birligi mali yardimlarinin uye ve uye olmayan ulkeler ustundeki etkileri aciklanmaya calisilmistir.

Le logement dans les grands agrégats économiques

Le logement est le premier poste de dépenses des ménages et sa part a progressé de manière quasiment continue depuis 20 ans, en lien avec l’amélioration du confort. De son côté, l’investissement en logement représente 28,9 % de l’investissement national. La construction neuve focalise l’attention et elle est le poste le plus sensible à la conjoncture, mais elle ne représente que la moitié de ce pourcentage. Le logement, financé en majorité par le crédit banalisé, constitue également un levier essentiel d’accumulation du patrimoine des Français, dont il représente près des deux tiers, avec de fortes inégalités. Enfin, les aides au logement, dans un contexte de tension des finances publiques, ont fortement crû durant la dernière décennie pour atteindre en 2011 un pic de 44,9 Md€, soit 2,3 % du PIB, une décrue ayant été amorcée en 2012 et 2013. L’État apporte un peu plus de la moitié des aides : les aides à la personne sont les plus élevées mais relativement contenues, les aides à la pierre sont très minoritaires, et ce sont les multiples aides fiscales qui ont été les plus dynamiques lors de la dernière décennie, avec une forte inertie des aides à l’investissement locatif. Espérons que ces chiffres permettront d’éclairer les débats – trop souvent teintés d’idéologie et de vécu personnel – sur l’efficacité des politiques du logement. Classification JEL : R20, R30, R28, R38.

Corporate Social Responsibility and Taxation

The stakeholders are interested in the election of the fiscal policy at the company. When facing the risk, justifications for the managerial decisions due to non-tax purposes. Moreover, the commitments made in order to benefit from fiscal aids must be respected (in favour of certain activities, in some regions, or even, to promote the establishment in several countries). Other issues particularly discussed are the following: the use of "non-tax" areas, the relocation for tax competition, the tax amnesties, and environmental taxation.

Defining the Scope of State Aid: How Tax Cases Affect the State Aid Framework

As the European Court of Justice rightly pointed out in the 1960’s, it makes little sense regulate national governments' provision of traditional subsidies to companies while leaving the option to grant financial benefits by other means unrestricted, for instance via the tax system. So, in essence, the European Union's state aid framework does apply to a broad range of government benefits. This working paper is based on a lecture given at a conference of EU (non-tax) lawyers so it will not address the many cases and complexities that arise in interpreting state aid rules when confronted with taxes. What it will do is point out how some of the peculiarities in decisions and judgements concerning fiscal aid may affect the state aid regime in general. For this purpose I have selected some issues that will be briefly addressed: (i) the treatment of indirect aid, and in particular the discrepancy that may exist between the financial advantage enjoyed by an aid recipient and the amount of resources given up by the state; (ii) the attribution of state aid to governments in light of compliance with EU directives; (iii), the renewed General Block Exemption Regulation and the procedural nightmare it may become for diligent taxpayers, (iv) ex-officio references to the ECJ by national judges in the context of them being asked to rule on the awarding of subsidies or tax benefits in domestic proceedings, (v) analytical versus synthetic taxation and its place within the general state aid framework, with a focus on royalties and (vi) the treatment of public enterprises as profit-pursuing market participants, when they are not involved in services of general economic interest (SGEIs).

‘The Rhinish Greeks’. Bailout funds for local government in German federal states

In response to the budgetary problems of local government in Germany, some federal states (Länder) have established bailout funds for their highly indebted local authorities. These schemes commit local governments, on a contractual basis, to strengthen their own consolidation efforts in return for fiscal aid. The ambitious aim is to reduce short-term borrowing considerably or to eliminate annual deficits completely.This article provides an overview of the structure of the schemes with respect to the amounts and sources of funding as well as the conditions of participation and potential sanctions. Furthermore, this contribution explains the motives of the governments of the federal states to establish these schemes.

The Art of Grieving: West Sumatra's Worst Earthquake in Music Videos

The article illustrates how a series of commercial music videos released in the aftermath of West Sumatra's worst earthquake present powerful local encodings of the disaster that allow Minangkabau communities to comprehend, rationalise, come together, and survive the catastrophe. The analysis, supplemented with ethnographic interviews with musicians, lyricists, and record storeowners, illustrates how the music videos draw on and transform existing Minangkabau literary and musical conventions, philosophies, ideologies, and social habits. I explore how music, lyrics, and visual images were utilised to commemorate the events and places affected, convey grief, and elicit physical and fiscal aid from migrants. While the disaster has been musically articulated through an array of Minangkabau genres ranging from regionally specific traditions with limited audience bases to more mainstream popular styles, my interest in the art of grieving focuses on the emotional power of indigenous practices, particularly saluang jo dendang (flute with song). The article makes a contribution to the growing literature on the ethnomusicology of disasters, but offers a different approach by asking what music can tell us about the localised ways people experience, process, frame, and otherwise comprehend catastrophes through musical practices. I argue that such studies help us engage more fully with the cultural dimensions of disasters.

EU Review of Direct Tax Measures: Interplay between Fundamental Freedoms and State Aid Control

The State aid review of business tax measures under Article 108 TFEU (Treaty on the Functioning of the European Union) essentially concerns tax advantages which favour certain undertakings or productions, without there being a justification from the nature or scheme of the system. The presence of unjustified discriminations caused by national tax measures affecting the functioning of the Internal Market is also the condition for the Commission to promote infringement procedures, pursuant to Article 258 TFEU. The case law relating to the joined review of national tax measures both under the application of State aid and the elimination of discriminations contrary to other Treaty rules is scarce but significant. Typically, the review of State aids and discriminatory tax measures is disjoined because the incompatibility of the latter measures, unlike State aids, is directly enforceable by national courts. Moreover, not all forms of discriminatory taxation are also State aid and the Commission has exclusive competence to review the compatibility of State aids, including fiscal aids. However, the State aid review can sometimes lead to contextually determine, besides the selective nature of a tax advantage in favour of certain undertakings, the presence of additional market effects of a discriminatory tax system measure, without prejudice however to the separate examination of its justification for overriding reasons of public interest which can only take place in the framework of the more protective procedure pursuant to Article 258 TFEU. The assessment of the selective nature of a tax measure under State aid rules remains, however, separate from the one to ascertain possible tax restrictions or discriminations. A Joint review provides for a complex framework by which when an aid measure is also discriminatory in a sense prohibited by other Treaty rules, the existence of a link between the discrimination and aid under review obliges the Commission to take into account the ulterior effects of the measure in assessing its compatibility with the Internal Market.