Anti-Avoidance — Measures Against Tax Avoidance

Anti-avoidance refers to the entirety of national and international regulatory frameworks designed to prevent or sanction abusive tax arrangements, aggressive tax planning, and artificial profit shifting. The field has evolved significantly since the OECD/G20 BEPS project (2013–2015) and now encompasses both general anti-avoidance rules (GAAR) and specific rules for interest, hybrid mismatches, controlled foreign corporations, and permanent establishments.

The fundamental tension lies in the fact that international tax planning is in itself legal, yet legislators aim to prevent taxpayers from systematically exploiting structural gaps between national tax systems. Anti-avoidance rules therefore frequently operate through substance and principal purpose tests, economic substance analyses, and abuse presumptions to distinguish legitimate structures from impermissible tax arrangements.

Within the EU, the Anti-Tax Avoidance Directives (ATAD I and II) form the legislative core, while at the OECD level the BEPS Action Plan with its 15 action points and the Multilateral Instrument (MLI) enable implementation into existing treaty networks. The Pillar Two concept of the global minimum tax is the most recent and far-reaching measure in this domain.

National general anti-avoidance rules (GAAR) have existed in many countries since the early 20th century. However, internationally coordinated measures long remained rudimentary. This changed with the 2008 financial crisis and subsequent revelations about tax avoidance structures of major corporations (Google, Apple, Amazon, Starbucks), which generated substantial public pressure. In 2013, the OECD and G20 launched the BEPS project (Base Erosion and Profit Shifting), which concluded in 2015 with a comprehensive 15-point action plan.

The EU responded with ATAD I (2016) and ATAD II (2017), introducing minimum standards for interest limitation rules, exit taxation, general anti-avoidance rules, CFC rules, and hybrid mismatch arrangements. The Multilateral Instrument (MLI, 2017) enabled implementation of BEPS minimum standards into thousands of existing double taxation treaties. In 2021, the G20/OECD agreed on the Two-Pillar approach, whose second pillar (Pillar Two / GloBE) provides for a global minimum tax of 15% for large multinational groups.

Anti-avoidance rules cover the following arrangements and actors:

• Multinational groups: Rules against profit shifting to low-tax jurisdictions and base erosion
• Hybrid arrangements: Structures exploiting tax qualification differences between jurisdictions (ATAD II, BEPS Action 2)
• Interest payments: Deduction limitations for excessive debt financing (interest limitation rule, BEPS Action 4)
• Controlled foreign corporations (CFC): Attribution of passive income from controlled low-tax entities to the parent company
• Artificial avoidance of permanent establishment status: Measures against abusive structures to circumvent permanent establishment taxation (BEPS Action 7)
• Treaty shopping: Prevention of abusive use of treaty benefits through the Principal Purpose Test (PPT) and LOB clauses
• Exit taxation: Protection of accrued gains upon transfer of assets abroad
• Mandatory Disclosure Rules for cross-border arrangements (DAC6/MDR): Intermediaries and taxpayers must report notifiable cross-border arrangements to the tax authorities (BEPS Action 12, EU Directive 2018/822)

Core obligations and regulatory content in the anti-avoidance domain:

• Interest limitation rule: Net interest expenses are generally deductible up to a maximum of 30% of tax-adjusted EBITDA (ATAD Art. 4, BEPS Action 4)
• General Anti-Avoidance Rule (GAAR): Arrangements lacking economic substance and aimed primarily at tax benefits are disregarded (ATAD Art. 6)
• CFC rule: Passive income of controlled foreign entities in low-tax jurisdictions is attributed to the domestic parent company
• Hybrid mismatch rules: Double deductions and non-taxed income inclusions are neutralized by deduction denial or inclusion requirements
• Mandatory Disclosure Rules (DAC6/MDR): Intermediaries (advisors, banks) and in certain cases taxpayers themselves are required to report cross-border tax arrangements bearing specified hallmarks to the competent authority (EU Directive 2018/822, BEPS Action 12)
• Pillar Two / GloBE: Large groups (revenue ≥ EUR 750 million) must demonstrate an effective tax rate of at least 15% per jurisdiction; undertaxation is offset through top-up taxes
• MLI minimum standards: Treaties must include a PPT clause or LOB clause; dispute resolution mechanism must be available

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- key_dates: Pillar Two timeline incomplete (GloBE Model Rules 2021, EU Directive 2022 missing)
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