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National measures to counter tax avoidance under the Merger Directive


  • Joachim Englisch

    () (University of Muenster)


Taxation inevitably gives rise to tax planning. In the era of globalization, multinationals in particular may not only try to exploit options, inconsistencies and gaps in domestic tax legislation, but they will also (re-)organize their business so as to make an optimal use of international tax sheltering opportunities. In order to curb ‘aggressive’ tax arbitrage, all developed jurisdictions rely on targeted anti-avoidance provisions. In addition, most tax systems will have recourse to a statutory general anti-avoidance rule (GAAR) or judge-made anti-avoidance doctrine to that effect; by contrast, the UK tax system relies on extensive purposive construction to thwart tax saving schemes that are based on an overly literal or technical interpretation of the tax statues. Under either approach, the most difficult task for tax administrations and courts is to draw as bright a line as possible between legitimate tax mitigation and unacceptable tax avoidance schemes. In areas of taxation that are harmonized by EU law, the issue becomes even more complex due to the influence of the ECJ doctrine of prohibition of abuse of (tax) law. This working paper deals with the anti-avoidance clause of Art. 15 of the EU Merger Directive, which is considered to be the most refined reflection of that doctrine in direct tax law. The paper first examines the Union law concept of tax avoidance in general, and under the Merger Directive in particular. The corresponding sections critically analyze the doctrinal approach of the ECJ; they also discuss key criteria and structural features that are relevant in the context of any kind of GAAR in order to distinguish it from mere purposive construction and to establish a dividing line to acceptable tax planning. Second, the paper highlights the implications of Art. 15 Merger Directive with respect to national anti-avoidance rules or doctrines that apply to cross-border reorganizational operations. A possible direct effect and mandatory nature of these and other ‘anti-tax abuse’-provisions of EU law will be discussed, as well as questions of burden of proof and the admissibility of legal presumptions of tax avoidance.

Suggested Citation

  • Joachim Englisch, 2011. "National measures to counter tax avoidance under the Merger Directive," Working Papers 1113, Oxford University Centre for Business Taxation.
  • Handle: RePEc:btx:wpaper:1113

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