Leonard's Tax Posts

  • Pavic’s Dictionary of Khazars

    Blog post only The Dictionary of Khazars (Dictionary of the Khazars – Wikipedia) is a ‘lexicon novel’ by Milorad Pavić, detailing a fictional account of what happened to the Khazar empire (a Jewish empire in the 6th century on the banks of the Caspian Sea that suddenly disappeared without a clear historical explanation (Khazars –… Continue reading

  • BEPS 2.0 and Pillar Two implementation developments

    Originally published: January 2024 Next week, there’ll be a webcast that can update you on the current status of implementation of Pillar 2 (https://lnkd.in/efiavp-P). Now that it’s 2024, Pillar 2 has entered into force in a lot of jurisdictions. I expect the webcast will talk about implementation in the EU (almost all done, although (1)… Continue reading

  • There’ll Be Some Changes Made

    Originally published: January 2024 You may have noticed, but there’ll be less posts from me up here in 2024. There is time, effort and benefits involved in content creation and though people probably overestimate my time and effort involved, they overestimate the benefit too. More than that, I have said so much on tax already and… Continue reading

  • Mucha’s The Abolition of Serfdom and living through times of change

    Blog post only  Alphonse Mucha was a Czech painter and Slavic nationalist active in the first half of the 20th century. In the years before the First World War, he was working on a series of paintings celebrating Slavic peoples on their moment of historical triumph. He made paintings about the Polish army pushing back… Continue reading

  • My conversation with Jefferson Vanderwolk

    Blog post only I got together with Jefferson Vanderwolk in June last year. Here is the soundtrack to the conversation over lunch: https://open.spotify.com/playlist/0czEcCs4xRME8sczbKUTfo?si=zPJId-WZTri0Whc40TxAjA&pi=e-tmtVzTHpReSH Tax came up, but frankly, the conversation about music was – as always – more engaging. The whole idea of getting together came after I posted something about Harry Belafonte who had… Continue reading

  • Gluck’s Orfeo ed Euridice and the human condition

    Blog post only The ancient Greek legend of Orfeo is well known. He was a gifted musician, who was so saddened by the death of his wife Euridice that he went to the underworld begging for her to be brought back to life. Hades agrees on the condition that Orfeo escorts her out of the… Continue reading

  • Does “Initial Phase Relief” Make the EU Minimum Taxation Directive (2022/2523) Invalid?

    Blog post only In this article from last year (https://research.ibfd.org/#/doc?url=/document/et_2023_05_e2_1), Georg Kofler and Arne Schnitger convincingly argue that the “initial phase relief” (which disapplies the Pillar 2 Directive for the first few years that an MNE has cross border activities) could be discriminating against cross-border situations, which is not (generally) permitted within the EU. If… Continue reading

  • The Effectiveness of the Multilateral Instrument in Amending the Bilateral Treaty Network

    Blog post only Was the OECD BEPS MLI effective and adopted in a relatively short time frame? Yes, as compared to how long it normally took to update a double tax treaty (DTT). But it still took a long time. Ratification and entry into force sometimes took years. And it’s far from over. That’s the… Continue reading

  • Just doing me

    Blog post only People sometimes ask me for advice on how to upskill their M&A tax knowledge. Often, they go on asking how I picked up all this tax knowledge.  I never really know what to say to this. I learned my way of thinking by growing up in the Netherlands in a very strong… Continue reading

  • Future of Base Erosion: we serve the base

    Blog post only Over the past 10 years, there has been a lot of talk of base erosion and profit shifting. The concepts of “base erosion” and “profit shifting” still feel ill defined and elusive. The underlying thought (with intuitive appeal) seems to be that there is a proper “tax base” (ie the profits) and… Continue reading

  • Belgium is the new EU President

    Blog post only Belgium has taken the EU presidency and their stated priority on taxes are FASTER and digital VAT (https://www-law360-com.cdn.ampproject.org/c/s/www.law360.com/tax-authority/amp/articles/1780783). You may recall a lot of international tax files are stuck or in the slow lane at EU level now (https://t.co/NGrEXnmKVl). Having European Parliament elections during the Belgian presidency, followed by negotiations of a… Continue reading

  • Tony Allen and the meaning of “source tax”

    Blog post only Some people describe conflicts on international tax as a fight between taxing rights of the residence state and the source state. The story goes that generally, powerful countries favour taxing rights of the residence state and developing countries favour taxing rights of the source state. Now, with the UN influence seemingly growing,… Continue reading

  • Driving transfer pricing certainty in uncertain times

    Originally published: January 2024 Tax developments over the last decade has seen tighter rules on deduction of fees, higher standards for transfer pricing documentation and double tax relief under tax treaties and EU directives become more difficult to achieve. Now, with Pillar 2 and CBAM coming into effect and Pillar 1 and more ESG taxes… Continue reading

  • How to Navigate the Global Tax Landscape Webcast

    Originally published: January 2024 This will prove an interesting webcast on how high interest rates, transfer pricing (TP) and Pillar 2 (P2) affect financing and treasury activities. TP issues on financing relations reflect the functions, assets and risks for financing, which are quite distinct from the more operational value chain flows (https://lnkd.in/eku4N8Xwhttps://lnkd.in/eYftMDfF). P2 adds to… Continue reading

    ,

  • 2023: A Year in Tax in Metaphors

    Originally scheduled to be published: December 2023 There was plenty of reasons to use musical metaphors for 2023 tax developments. So here are most of the metaphors used this year in a single playlist (https://open.spotify.com/playlist/2Skv3rxXohnm505uTcscyh?si=c4411e3ab7e2463d). I have a rundown of the most prominent metaphors below, but if you can’t find some, they may have been… Continue reading

  • Best post of 2023

    Originally scheduled to be published: December 2023 I hope everyone had a great Christmas. 2023 is almost over and despite the lack of earth shattering tax changes ( ), there were still plenty of tax topics to talk about. So let’s reminisce (https://open.spotify.com/track/2Mb3zpobD0CvJGWv6NpsPy?si=c83032474bf14a31). Which story was biggest and best? You tell me. Famous quotes recast… Continue reading

  • December 2023: A Sacred Harp Christmas

    Originally scheduled to be published: December 2023 Christmas is coming, so we are wrapping up December up early (and, in a way, all of 2023). Top posts:1. Tax Policy Bingo (https://lnkd.in/estHcRKY)2. P2 challenges appear possible under bilateral investment treaties (https://lnkd.in/e_unB2-u)3. P2’s three approaches to tax base differences and losses (https://lnkd.in/eEzsji2X) Tax technical sideroads:– How much does good faith… Continue reading

  • Faith

    Originally published: December 2023 Treaties should be interpreted in good faith in line with the intentions of the parties. Good faith interpretation matters, because “not only is every state sustained by good faith, as Cicero declares, but also the greater society of states. Aristotle truly that if good faith has been taken away all intercourse… Continue reading

  • Tax Policy Bingo

    Originally published: December 2023 As we head into the end of the year, here is your regular reminder to keep tax policy debates honest. Not all taxes are bad, not all taxes are good and the answer is usually nuanced after careful weighting of the evidence. So if you find yourself stuck into a one-sided… Continue reading

  • Pillar 2’s three approaches to tax base differences and losses

    Originally published: December 2023 OECD’s global minimum tax Pillar 2 (P2) / GloBE is structured around jurisdictional blending. This means the profits and tax cost incurred for entities in the same country are added up to determine if they are low taxed. The blending means that differences between local tax base and GloBE Income and… Continue reading

  • Within an MNE group, there’ll never be royals

    Originally published: December 2023 A long long time ago, when international tax rules were created, they separated business profits from passive income. Taxing rights on business profits were allocated under a single unifying principle: the arm’s length principle (ALP). Taxing rights on passive income was diced up by income type. This created issues for businesses… Continue reading

    ,

  • The global minimum tax spurs need for faster investment agreement reforms

    Originally published: December 2023 Can Pillar 2 (P2) be challenged under international investment agreements (IIAs)? Yes, says UNCTAD (https://lnkd.in/eu-ms57B reaction from Błażej Kuźniackihttps://lnkd.in/e3-3uwrG), but a lot depends on the specific facts and IIA. Put in simple terms, some countries handed out tax holidays with strong, individual reassurances. Introducing tax (QDMTT, other tax) can break prior commitments and… Continue reading

  • November 2023: what the Dutch are really about

    Originally published: November 2023 November was not a good month to be Dutch. So let’s talk tax first. Top posts:– Please note: perils of adviser speak (https://lnkd.in/erE-aUVr)– EU hates on SPV levels (https://lnkd.in/eGxkHYbD)– UN tax: historic or footnote? (https://lnkd.in/eTfctR_F) News:– More on UN’s tax role (https://lnkd.in/erEXXQPU and https://lnkd.in/er5FR_a7)– UK full expensing now permanent (https://lnkd.in/e4fm9CWv)– Moore has few… Continue reading

  • Questions for supporters of the UN Tax Committee

    Originally published: November 2023 It’s easy to overstate the importance of the UN passing a resolution last week to move towards a binding framework treaty that would enshrine the UN’s role on international tax. In fact, people left, right and center have been using superlatives stressing how important all of this is. And sure, something… Continue reading

  • 5 Common Tax DD Risks for UK Targets

    Originally published: November 2023 Doing your diligence is an important part of any business decision (https://lnkd.in/e2Ni3-xM). The UK is no exception. The UK is an established market and most businesses try to comply with the rules. So naturally the most common tax due diligence issues arise in areas where compliance is hard and mistakes are… Continue reading

  • The Use and Abuse of Location-Specific Rent

    Originally published: November 2023 Is Pillar 1 (P1) taxing only/mostly location specific rent (LSR)? (And thereby economically efficient?) The other week, I discussed a paper that argued that global profits are increasingly quasi-rents that can be taxed with limited economic distortion, provided that profit shifting is dealt with (https://lnkd.in/eVyBG6G5). If rents were location specific, location… Continue reading

    ,

  • UK Budget – Autumn 2023

    Originally published: November 2023 There were several tax announcements in the UK Autumn Statement today (https://lnkd.in/ebN3Fzxv) ranging from confirming Pillar 2 will be implemented to a small cut to national insurance and a reform of the R&D regime. One of the more eye catching changes is that full expensing will be made permanent. Full expensing… Continue reading

    ,

  • Famous quotes in ‘adviser speak’

    Originally published: November 2023 Anyone in the tax world will be familiar with ‘adviser speak’, the weird, unintelligible sentence structures that are the result of caveats, word-for-word copying of legislative texts and mostly copying of other adviser speak. Adviser speak is unnecessary and it hurts the impact of advice. As shown here, quotes don’t nearly… Continue reading

  • SC & EHEID Reports October 2023

    Originally published: November 2023 Last month, the South Centre (SC) published reports where they suggested increasing source taxation ‘while seeking conformity with tax treaty rules’ (https://lnkd.in/erEXXQPU). Then, they followed up with another report (https://lnkd.in/eR7qiXWh) identifying specific problems in double tax treaty (DTT) networks and suggesting updating DTTs through a multilateral instrument (MLI). The new report focuses… Continue reading

    , , , ,

  • Breaking the Double Tax Paradigm

    Originally published: November 2023 Jeroen Lammers and Tarcísio Diniz Magalhães published a paper with a proposal to increase source taxing rights (https://lnkd.in/eDZ7jj-6), as alternative to Pillar 1 (P1). They suggest allocating 20% of global profits to source countries, with the ‘residence state’ retaining 100% with no double tax relief. The paper criticizes the ‘pro-residence bias’ in double tax… Continue reading

    ,

  • Complying with BEPS Substance Requirements through Remote Personnel

    Originally published: November 2023 International tax rules were made in a different world, a world where profits were created by humans, sales were done locally and employees were working locally. In the BEPS project, the OECD embedded international tax deeper into these concepts of locality, as it sought to crack down on paper shifts of… Continue reading

  • SPV Levels

    Originally published: November 2023 There are many non-tax reasons to use SPVs. You might need clean entities to separate risks, separate non-regulated activities, separate activities by type or geography, ringfence assets/liabilities, provide security, bring in investors, manage governance, etc. etc. A lot of times, companies want a simpler structure, but the effort involved in corporate… Continue reading

  • The Perils of Jurisdictional Blending

    Originally published: November 2023 OECD’s global minimum tax Pillar 2 (P2) puts a floor on tax competition. It also stops developing countries from offering tax rates below 15%. That’s kind of the point. But now and then, there’s complaints that countries need to be able to engage in low tax competition, if they don’t have… Continue reading

  • What is the best approach for low-tax countries to respond to Pillar 2?

    Originally published: November 2023 The Pillar 2 (P2) model rules are designed around a ‘single top up tax principle’. This encourages countries to adopt a QDMTT where they prevents P2 tax abroad and raises local revenue instead (eg see Barbados announcement yesterday: https://lnkd.in/esbKU83M). In this recent article, Ricardo André Galendi Júnior (https://lnkd.in/e5PHVRBm) flags that QDMTT deviates from this… Continue reading

    ,

  • Tax Prof Amicus Briefs In Moore v. United States: 22 For Government, 1 For Taxpayer

    Originally published: November 2023 If we look past all the clamour on Pillar 2, there are several pending threats to the US tax collections right now. In the US Supreme Court case Moore, the taxpayer is arguing that the fact that the ‘mandatory repatriation tax’ taxes them on unrealised income is unconstitutional. If the taxpayer… Continue reading

    ,

  • Capital Taxation and Market Power

    Originally published: November 2023 Over the past decades, the share of corporate profits of the global economy has grown significantly with those profits also more concentrated in the largest MNEs, many of whom operate in the digital economy (FAANGs) with effective monopolies, greatly exceeding normal rates of return on capital. Economists often refer to those… Continue reading

  • Do we need Pillar 2, if we have GILTI?

    Originally published: November 2023 Last year, the US famously failed to pass a tax reform to align itself closer to OECD’s Pillar 2 (P2) global minimum tax. The aim was never to adopt P2, but instead reform GILTI to 15% tax on a country-by-country basis. That wouldn’t quite be P2 as it leaves GILTI quirks… Continue reading

    ,

  • South Center Tax Policy Brief

    Originally Published: November 2023 The UN tax committee seems to have lost buy-in from key countries before it even got started (https://lnkd.in/erFMU9mc), which I suppose was always likely. So what way forward do they still have? Last week, the South Centre (SC) published a tax policy brief on Pillar 1 (P1) that hints on an… Continue reading

    ,

  • Zoek Het Zelf Maar Uit

    Originally published: October 2023 It is common practice to complain about how complicated OECD’s global minimum tax Pillar 2 (P2) is. How are developing countries with limited capacity supposed to deal with that? Of course, implementation is optional, but if they don’t implement at least a QDMTT, they risk that other countries clawback local tax… Continue reading

    ,

  • October 2023: the Baroque moved north

    Originally published: October 2023 It’s the end of October and as leaves fall from the trees and people cuddle up inside, it’s time for introspection. And the monthly wrapup. Top posts:1. UN proposes giving employer residency state the right to tax remote workers (https://lnkd.in/e3EUiAX5)2. India’s SC restricts impact of MFN clauses (https://lnkd.in/eQPS6REY)3. We’ll be waiting… Continue reading

  • Kya Hua Tera Vada

    Originally published: October 2023 Double tax treaties (DTTs) are difficult to change, locking tax policy choices in for a long time. That’s even more so for ‘most favoured nations’ (MFN) clauses, which lower tax rates to the level of another DTT. That fences a country in, so I understand if authorities are trying to get… Continue reading

    , ,

  • The Case for Taxing Away Unsustainable Profits

    Originally published: October 2023 Traditionally, environmental taxes are designed as the ‘polluter pays’. You measure the cost of pollution (negative externality) and that’s the tax due. If done correctly, the markets correct to price in the pollution (Pigouvian taxes). Carbon taxes / emission trading work like this. CBAM on imports then subtly encourages countries to… Continue reading

  • Understanding the Beps and Other OECD Tax Initiatives Including the Inclusive Framework in the Context of Treaties and State Inequality

    Originally published: October 2023 Are the various OECD brokered treaties relating to FATCA, CRS, BEPS, Pillar 1 and Pillar 2 unequal? Grahame Jackson (from International Tax Bites fame) examines this question in this paper (https://lnkd.in/e_a_uqft). He concludes that FATCA / CRS treaties between small countries and major economies might be ‘unequal’, as there is inequality of outcomes, inequality of… Continue reading

  • Pascal Saint-Amans: Paradis Fiscaux

    Originally published: October 2023 “It is no doubt easier to adopt a posture of criticism, to denounce injustices and to angrily reject any compromise as insufficient,” writes Pascal Saint-Amans in the closing remarks of his book “Paradis Fiscaux” (https://lnkd.in/e8hgA-wU, only in French). He defends the OECD’s record on tax against left wing critiques and though he admits… Continue reading

    , ,

  • The UN’s solution to taxing remote work

    Originally published: October 2023 This week, the UN Committee of tax experts is discussing a proposal to allow taxing remote workers in the country of their employer (https://lnkd.in/e5YMJxJU or Workstream C here: https://lnkd.in/eNrfQ2Jq). The proposal would add a new clause to the UN model convention: Art 15(4), allowing tax on employees in the residence state of the… Continue reading

    ,

  • Waiting for Pillar 1: Intezar Ki

    Originally published: October 2023 OECD’s multilateral convention (MLC) on Amount A of Pillar 1 (P1) is the result of a delicate negotiation, resulting in a complicated web of provisions and a rough path to implementation. It can only enter into force if countries with sufficient ‘points’ ratify it and if you look down the list,… Continue reading

  • Pillar 1 MLC released

    Originally published: October 2023 Two days ago, the OECD published the draft text for the multilateral convention (MLC) on Amount A of Pillar 1 (P1) and related documents (>1,000 pages of materials to work through: https://lnkd.in/eVxs-ETe MLC text here: https://lnkd.in/e8Ckfur5). Though it’s a lot to digest, it’s clear disagreements remain. Brazil, Colombia and India (BCI) objected to key… Continue reading

  • Navigating M&A through a sustainability lens

    Originally published: October 2023 I will be speaking at the EY Webcast “Navigating M&A through a sustainability lens” on 25 October 2023 (register here: https://lnkd.in/exjSKx-6). One of the things I will talk about is how ESG and ESG taxes directly affect deal valuations. Businesses have good reasons to track their ESG performance, as ESG performance can… Continue reading

  • The EU is slowing down on taxes

    Originally published: October 2023 The EU is slowing down on taxes. A few weeks ago, Elodie Lamer reported that the Spanish EU presidency had limited ambitions on Unshell (https://lnkd.in/eDYe4vXX). With countries unable to agree on key decisions, Unshell may be turned into an exchange of information in the first instance. Even then, it would likely take longer.… Continue reading

  • Corporate residence – the implications of the GEFI case

    Originally published: October 2023 In August, I raised a thought experiment about a country with a silly tax residency test (the Umerian dog test https://lnkd.in/ef7vupnY). This showed that mutual agreement procedure (MAP) was not a good dual residency tie breaker in a double tax treaty (DTT). Similar questions arose in the UK Upper Tribunal (UT) case… Continue reading

    , ,

About Me

I am Leonard, an experienced M&A Tax and International Tax expert. I write about tax on LinkedIn and Twitter sometimes (but mostly LinkedIn). People liked the posts, but there were too many of them to keep track of. So, now they are on a blog for future reference.

Obvious disclaimers on all my posts: this is not advice. These views are my own and do not necessarily represent my employer.

Recent Posts

LINks

LinkedIn profile: https://www.linkedin.com/in/leendertwagenaar/

Design a site like this with WordPress.com
Get started