On March 7, 2018 the European Commission released an interesting Taxation Paper titled: “Aggressive tax planning indicators - Final Report” (Taxation Paper - WORKING PAPER No 71 – 2017). According to the prepares of the paper the aim of the study is to provide economic evidence of the relevance of aggressive tax planning (ATP) structures for all EU Member States.

The study relies on economic indicators available at macro-level and on indicators derived from firm-level data. The objective is indeed to look at the relevance of aggressive tax planning (ATP) for all Member States through these two complementary angles. For each indicator, the study identifies outliers based on a consistent methodology. None of the indicators provides per se an irrefutable causality towards aggressive tax planning. However, considered together, the set of indicators shall be seen as a "body of evidence". While there are some data limitation, the study provides a broad picture of which Member States appear to be exposed to ATP structures, and how it impacts on their tax base (erosion or increase).


The discussed ATP structures can be grouped into three main channels:

i)   ATP via interest payments;

ii)  ATP via royalty payments; and

iii) ATP via strategic transfer pricing.


In addition to general indicators assessing the overall exposure to ATP, the researchers also derive specific indicators for each of the ATP channels. In combination, these indicators allow to classify entities within multinational enterprises (MNEs) into three types:

i)   target entities, where the tax base is reduced;

ii)  the lower tax entities where the tax base is increased but taxed at a lower rate; and

iii) conduit entities which are in a group with ATP activities but no clear effect on the tax base is observable.


Click here to be forwarded to Taxation Paper - WORKING PAPER No 71 – 2017 “Aggressive tax planning indicators - Final Report” as released on March 7, 2018 by the European Commission.



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