IDEAS home Printed from https://ideas.repec.org/a/bpj/aelcon/v7y2017i1p47n1.html
   My bibliography  Save this article

Tax Avoidance through Controlled Foreign Companies under European Union Law with Specific Reference to Poland

Author

Listed:
  • Kuźniacki Błażej

    (Public and International Law, University of Oslo, Postboks 6706 St. Olavs plass, Oslo 0130, Norway)

Abstract

This article demonstrates that tax avoidance via controlled foreign companies (CFCs) established in the most favourable tax environments among EU Member States such as Ireland, Luxembourg, the Netherlands, and Cyprus, remains a considerable problem. Not only does it affect taxpaying residents in the Member States but, indirectly, all taxpayers regardless of their EU affiliation, US multinational enterprises (MNEs), for example. Focusing on the use Polish taxpayers make of CFCs, this study undertakes a detailed legal analysis of the problem of tax avoidance under EU law by examining empirical data and EU law on tax avoidance. The choice of this topic is largely justified by the exponential rise in tax avoidance schemes through CFCs involving Polish taxpayers since the country’s accession to the EU. The legal analysis brings to light a series of weaknesses in the current EU law that make it possible for both EU and non-EU taxpayers to avoid taxation. As a solution to this problem, the author suggests that CFC rules should be designed so as to tax only “tax avoidance income” from CFCs. This would ensure their compliance with EU law as well as an effective prevention of tax avoidance via CFCs within the framework of EU law. Interestingly, the solution follows from the author’s interpretation of the concept of “wholly artificial arrangements” in favour of the internal market rather than from Action 3 of Base Erosion and Profit Shifting (BEPS) project or Anti-Tax Avoidance Directive as adopted by the Council on 12 July 2016.

Suggested Citation

  • Kuźniacki Błażej, 2017. "Tax Avoidance through Controlled Foreign Companies under European Union Law with Specific Reference to Poland," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 7(1), pages 1-47, April.
    • Handle: RePEc:bpj:aelcon:v:7:y:2017:i:1:p:47:n:1
    DOI: 10.1515/ael-2015-0018
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ael-2015-0018
    Download Restriction: Download restriction for institutions: For access to full text, subscription to the journal is required. Individual readers who register with De Gruyter Online get free access.
    File URL: https://libkey.io/10.1515/ael-2015-0018?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Biondi Yuri, 2011. "The Pure Logic of Accounting: A Critique of the Fair Value Revolution," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 1(1), pages 1-49, January.
    2. Strasser Kurt A. & Blumberg Phillip, 2011. "Legal Form and Economic Substance of Enterprise Groups: Implications for Legal Policy," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 1(1), pages 1-30, January.
    3. Fuest, Clemens & Spengel, Christoph & Finke, Katharina & Heckemeyer, Jost H. & Nusser, Hannah, 2013. "Profit shifting and 'aggressive' tax planning by multinational firms: Issues and options for reform," ZEW Discussion Papers 13-078, ZEW - Leibniz Centre for European Economic Research.
    4. Reinhard Neck & Jens Wächter & Friedrich Schneider, 2012. "Tax avoidance versus tax evasion: on some determinants of the shadow economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 104-117, February.
    5. Tsang, Eric W. K., 2014. "Old and New," Management and Organization Review, Cambridge University Press, vol. 10(03), pages 390-390, November.
    6. Kemmeren, E.C.C.M., 2014. "Where is EU law in the OECD BEPS Discussion?," Other publications TiSEM b5b1d194-848f-4fcc-95aa-7, Tilburg University, School of Economics and Management.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Biondi Yuri, 2013. "Hyman Minsky’s Financial Instability Hypothesis and the Accounting Structure of Economy," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 141-166, June.
    2. Weinstein Olivier, 2013. "The Shareholder Model of the Corporation, Between Mythology and Reality," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(1), pages 43-60, January.
    3. Ali Shalizar Jalali, 2018. "Male Fertility as a Bull’s Eye for Mastocytosis," Global Journal of Reproductive Medicine, Juniper Publishers Inc., vol. 3(3), pages 58-60, February.
    4. Hui Yan & Guixiang Liu, 2021. "Fire’s Effects on Grassland Restoration and Biodiversity Conservation," Sustainability, MDPI, vol. 13(21), pages 1-15, October.
    5. Michal Plaček & Martin Schmidt & František Ochrana & Michal Půček, 2017. "Do the Selected Characteristics of Public Tenders Affect the Likelihood of Filing Petitions with the Regulators of Public Tenders?," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(3), pages 317-329.
    6. Williams Paul F., 2019. "Really Rethinking Financial Reporting: A Discussion of Rethinking Financial Reporting: Standards, Norms and Institutions by Shyam Sunder," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 9(2), pages 1-8, July.
    7. Nikolov, Plamen & Adelman, Alan, 2019. "Do private household transfers to the elderly respond to public pension benefits? Evidence from rural China," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    8. Dana Benešová & Viera Kubičková & Miroslava Prváková, 2020. "Open innovation model in the knowledge intensive business services in the Slovak Republic," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 1340-1358, December.
    9. Holzmann, Robert & Alonso-García, Jennifer & Labit-Hardy, Heloise & Villegas, Andres M., 2017. "NDC Schemes and Heterogeneity in Longevity: Proposals for Redesign," IZA Discussion Papers 11193, Institute of Labor Economics (IZA).
    10. Selman, P., 2014. "Intercountry Adoption Agencies and the HCIA," ISS Working Papers - General Series 77404, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    11. Martinho, Vítor João Pereira Domingues, 2019. "Historical records of wine: Highlighting the old wine world," EconStor Preprints 193461, ZBW - Leibniz Information Centre for Economics.
    12. Gabriella Garbarino & Giovanni Pampararo & Thanh Khoa Phung & Paola Riani & Guido Busca, 2020. "Heterogeneous Catalysis in (Bio)Ethanol Conversion to Chemicals and Fuels: Thermodynamics, Catalysis, Reaction Paths, Mechanisms and Product Selectivities," Energies, MDPI, vol. 13(14), pages 1-19, July.
    13. Zhongcheng Yan & Feng Wei & Xin Deng & Chuan Li & Qiang He & Yanbin Qi, 2022. "Feminization of Agriculture: Do Female Farmers Have Higher Expectations for the Value of Their Farmland?—Empirical Evidence from China," Agriculture, MDPI, vol. 12(1), pages 1-22, January.
    14. Hélène Laurell & Leona Achtenhagen & Svante Andersson, 2017. "The changing role of network ties and critical capabilities in an international new venture’s early development," International Entrepreneurship and Management Journal, Springer, vol. 13(1), pages 113-140, March.
    15. Trine Filges & Anu Siren & Torben Fridberg & Bjørn C. V. Nielsen, 2020. "Voluntary work for the physical and mental health of older volunteers: A systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 16(4), December.
    16. Alexandru-Ionuţ Petrişor & Walid Hamma & Huu Duy Nguyen & Giovanni Randazzo & Anselme Muzirafuti & Mari-Isabella Stan & Van Truong Tran & Roxana Aştefănoaiei & Quang-Thanh Bui & Dragoş-Florian Vintilă, 2020. "Degradation of Coastlines under the Pressure of Urbanization and Tourism: Evidence on the Change of Land Systems from Europe, Asia and Africa," Land, MDPI, vol. 9(8), pages 1-43, August.
    17. repec:ers:journl:v:special_issue:y:2018:i:1:p:466-478 is not listed on IDEAS
    18. Sellami Sana & Verhaest Dieter & Nonneman Walter & Van Trier Walter, 2017. "The Impact of Educational Mismatches on Wages: The Influence of Measurement Error and Unobserved Heterogeneity," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(1), pages 1-20, February.
    19. Xavier Gabaix & Jean‐Michel Lasry & Pierre‐Louis Lions & Benjamin Moll, 2016. "The Dynamics of Inequality," Econometrica, Econometric Society, vol. 84, pages 2071-2111, November.
    20. Fabien Candau & Jacques Le Cacheux, 2017. "Corporate Income Tax as a Genuine own Resource," Working papers of CATT hal-01847937, HAL.
    21. Biondi Yuri, 2017. "The Firm as an Enterprise Entity and the Tax Avoidance Conundrum: Perspectives from Accounting Theory and Policy," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 7(1), pages 1-8, April.

    More about this item

    Keywords

    tax avoidance; CFC; EU law; CJEU; OECD; BEPS;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:aelcon:v:7:y:2017:i:1:p:47:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.