Viadrina Center B/ORDERS IN MOTION

Base Erosion and Profit Shifting – a multidimensional analysis of tax planning in Cental and Eastern Europe

  • Prof. Dr. Christina Elschner, elschner@europa-uni.de
  • Prof. Dr. Stephan Kudert, kudert@europa-uni.de
  • Prof. Dr. Dagmara Jajesniak-Quast, jajesniak-quast@europa-uni.de
  • Prof. Dr. Inga Hardeck, hardeck@europa-uni.de
  • M. Sc. Jesko Thiede, jthiede@europa-uni.de, Viadrina European University, Germany
  • M. Sc. Satenik Melkonyan, melkonyan@europa-uni.de, Viadrina European University, Germany
  • Prof. Dr. Bartosz Makowicz, Makowicz@europa-uni.de, Chair of Polish Public Law at Viadrina European University, Germany
  • Ass.-Prof. Dr. Dr. habil. Marcin Jamrozy, Department of Finance of the Warsaw School of Economics (SGH Warsaw), Poland
  • Prof. Dr. Adrian Cloer, adrian.cloer@ebs.edu, Lehrstuhl für betriebswirtschaftliche Steuerlehre und internationales Steuerrecht an der EBS Universität für Wirtschaft und Recht, Wiesbaden, Germany
Brandenburg Ministry of Sciences, Research and Cultural Affairs (Seed Money)
January 2016 - December 2016

For some years multinational entities are criticized by the public, because the companies minimise their effective tax rate to approximately one or two percent through cross-border tax structuring despite billions of profit. For this reason, the OECD has developed the “Base Erosion and Profit Shifting” project in 2013. 15 action points were identified to address the causes. The project is divided into three modules that consider one or more action points from an academic perspective.

The first module deals with action point 2 “Hybrid Mismatch Arrangements” in particular on the implication in Central and Eastern Europe. Hybrid mismatch arrangements can result if certain financial instruments or corporate forms are treated differently in cross-border transactions by the participating countries due to the national regulations. These hybrid structures can be used by companies as a tool of tax planning. Therefore, the project will analyse empirically the consequences for Central and Eastern Europe with regard to the action plan.

The Polish special economic zones are not in the focus of the BEPS project but the mechanism is comparable to the patent boxes which are discussed in action point 5. If investors fulfil certain conditions, they can receive a tax benefit in those special economic zones. The scope of the subsidy depends inter alia on the region and the amount of the investment. The second module analyses the form and the extent of the tax advantage which is actually used by the companies. Furthermore, the question arises if the development of the regions differs between the region with and without such a special economic zone. Moreover, the effectiveness of the regulation is examined.

Action 12 and 13 of the BEPS project are dealing with the disclosure of Country-by-Country reporting and the disclosure by aggressive tax planning. The aim of the action point is to achieve transparency in view of the company´s tax approach. In the third subproject, the reaction of the tax strategy on consumer behaviour should be examined on the basis of a laboratory experiment. Additionally, the project also provides a comparison of these reactions between different countries.

Projektbeschreibung auf Deutsch