Trial lecture - time and Place
Adjudication committee
- Professor Beate Sjåfjell, University of Oslo (leader)
- Professor Bertil Wiman, Uppsala University (1. opponent)
- Professor Arvid Aage Skaar, University of Oslo (2. opponent)
Chair of defence
Supervisor
Summary
Tax treaties and tax avoidance
There are more than 2,000 tax treaties around the world and an important question is whether these agreements limit a state's ability to crack down undesirable tax planning. The PhD thesis demonstrates that in many situations tax treaties puts serious limitations on a state's ability to make use of domestic rules to prevent undesirable tax planning.
Hot topic
The thesis is particularly relevant in these days where there is a massive focus on the OECD/BEPS work, Panama Papers, Starbuck, Apple, Google etc. Many of the big multinational companies make use of basically fully legitimate methods to reduce taxes. Meanwhile, governments are increasingly focusing on the part of this tax planning is undesirable and states want to put a stop to this by using their domestic rules. The tax authorities often forget that the use of such domestic rules could be in conflict with tax treaties and therefore cannot be used.
Methodology
In order to decide whether the treaty restricts the use of domestic anti-avoidance rules the treaty must be interpreted. A basic principle in tax treaty law is that if the national rules are contrary to the treaty the tax treaty prevails. In other words, if the treaty gives the taxpayer a benefit (typically a lower tax than what follows from domestic law) the tax authorities may not deny the taxpayer this advantage by applying a national circumvention rule. State A and State B have agreed between themselves on how the taxation between these two countries should be shared to avoid double taxation. One of the contracting state may not, after the taxing right is shared between these two countries, and apply the domestic anti-avoidance rule to override the tax treaty.
The future
Both domestic law and tax treaties are under constant development. An important question is to what extent these developments affect the tax authorities’ ability to crack down on undesirable tax planning. Is it true that tax agreements signed in recent years increasingly allows the tax authorities to apply their domestic anti-avoidance rules? The PhD thesis shows that it is of great importance when the tax treaty was signed for the question of whether the tax authorities is restricted from using their domestic anti-avoidance rule to deny undesired tax planning. The older the treaty is, the more is the tax authorities restricted by the tax treaty to crack down on unwanted tax planning.