1. The Panel on Exit Taxation and Business Restructuring The OECD Business Restructuring Project - some EC Law and EU Tax Policy Issues Kerstin Malmer former head of the unit 'Legislation in the direct tax field' of the European Commission

2. THE OECD BUSINESS RESTRUCTURING (BR) PROJECT (1) The OECD Discussion Draft on Transfer Pricing (TP) Aspects of Business Restructuring - deals with cross-border redeployment by multinational enterprises (MNEs) of functions, assets and/or risks

3. THE OECD BUSINESS RESTRUCTURING (BR) PROJECT (2) Issues outside the scope: Corporate reorganisations such as mergers and acquisitions Domestic anti-abuse rules CFC legislation NB: Exit taxation issues are not explicitly referred to

4. LINKS TO EC LAW AND EU TAX POLICY ISSUES The EC Treaty and the EEA Agreement EC Corporate Tax Directives The Arbitration Convention and the EU Joint Transfer Pricing Forum The EU Coordination exercise EU Tax Policy Issues more generally

5. The EC TREATY and the EEA AGREEMENT (1) The Treaty Freedoms and the non discrimination principle mean that in cross border situations between EU Member States and/or signatories to the EEA, taxation may in principle -not be heavier, -nor take place earlier than in a comparable domestic situation.

6. The EC TREATY and the EEA AGREEMENT (2) Special relevance for ‘dealings’ between head office and a PE or between PE:s of the same company, i.e. within the same legal person (deferral requirement – see COM(2006)825) NB: The OECD BR Discussion Draft does not specifically treat such ‘dealings’ – will be dealt with in another context (cf. the 'AOA', Authorised OECD Approach/ 'separate entity approach')

7. EC CORPORATE TAX DIRECTIVES and the OECD BR Project Merger Directive concerns legal restructurings - not of direct relevance (BR: economic restructuring) Parent Subsidiary Directive – of relevance where the BR operations lead to ‘dividends in kind’ or hidden profit distributions Interest and Royalties Directive applies to EU cross-border I&R payments between related companies – of strong relevance (cf. BR draft para 3, 4th bullet point)

8. THE ARBITRATION CONVENTION and the EU JOINT TRANSFER PRICING FORUM (JTPF) The Arbitration Convention applies to transfer pricing issues involving related companies JTPF: the current work programme (until March 2011) does NOT cover BR as such (A Communication reporting on the JTPF work from March 2007 until March 2009 is planned for early autumn)

9. THE EU COORDINATION EXERCISE: EXIT TAXATION Political agreement reached on two of the three main features relating to ‘exit taxation’, namely valuation mismatches and dispute settlement See Council resolution of 2.12.2008 The third aspect of ‘exit taxation’, deferral, has to be coordinated with those Member States actually levying exit taxes.

10. EU TAX POLICY MORE GENERALLY Avoidance of double taxation as well as double non-taxation Combating harmful tax competition ‘inappropriate’ tax base shifts No excessive administrative burden.

11. BR and EU TAX POLICY Double taxation risks:  Uncoordinated application of the OECD BR TP principles  Application of different valuation methods  One-sided / Uncoordinated re-characterisation (cf. BR draft, Issues Note No 4)  Retroactive changes in taxation/valuation following tax audits, when no corresponding adjustments are possible Double non-taxation risks:  e.g. necessary identification of transferred intangibles

12. TO SUM UP: IMPORTANT LINKS BETWEEN BR PROJECT AND EC LAW/EU TAX POLICY Notably the need to: Ensure the proper functioning of the Internal Market Avoid international double taxation Safeguard countries' legitimate taxing rights Restrict the administrative burden on – taxpayers as well as – tax administrations Create legal certainty