Is the interest in international taxation a passing fashion or is it here to stay?
By Sergio Gorina, Associate Director of Postgraduate Studies in Tax Law
In an increasingly globalised world, transactions are continuously being made that transcend national boundaries and which are therefore subject to international tax regulations. Due to their volume, the operations of greatest relevance are those made within a multinational group, for it is estimated that these account for more than 60% of the commercial transactions made worldwide.
Among these types of operations, we find the signing of manufacturing and/or distribution agreements between entities from the same group situated in different countries, the charging of royalties for licensing intangibles such as patents or trademarks, the payments made by certain subsidiaries as a result of the centralisation of management services (management fees) or in the form of interest on the provision of loans, etc.
From a fiscal point of view, price fixing in commercial and financial relations between associated companies, especially if they are registered in different jurisdictions, has acquired immense importance due to its very high potential for artificially shifting taxable profits from certain jurisdictions to others.
Large multinational groups and small companies
Leaving aside the large multinational groups, there are a great many companies, both big and small, that operate on a daily basis with suppliers or customers located in other countries, and which are making a firm commitment to the internationalisation of their business (both with or without a physical presence overseas).
In the same vein, the freedom of movement of capital and labour also makes it relatively easy to change where a person or company is registered for tax purposes, to use investment vehicles situated in other countries, and to enhance the diversification of financial and equity investments of individuals, companies and large estates.
This complex global reality, which greatly facilitates the transfer of businesses, incomes and assets abroad, is going to be watched increasingly closely, principally by States with high public deficits that desperately seek to balance their accounts by increasing taxes and cutting spending; but also by a body of public opinion that is becoming less tolerant of the strategies of so-called "fiscal engineering".
At an international level, in 2013, following the mandate of G20, the OECD launched an unprecedented initiative known as the BEPS (Base Erosion Profit Shifting) project, the purpose of which is to reappraise the architecture of the international tax system, so that coordinated efforts may be made to fight against aggressive tax planning and artificial profit shifting.
At a national level, the launch of this project coincided with the creation of the new National Office of International Taxation. This is a specialised unit which will have responsibility throughout Spain for the management, planning, drive and coordination of operations in matters of international taxation.
International taxation is here to stay
In conclusion, we believe that international taxation is here to stay. We foresee that in the professional legal services sector there will be a growing number of specialists trained in tax regulations applicable to international transactions, be these performed by individuals or companies. These specialists will have the capacity to design fiscally efficient planning mechanisms and to eliminate tax contingencies.
In order to meet this need, in October 2015 ESADE will launch a new programme leading to qualification as an Expert in International Taxation; a programme that will offer participants the opportunity to gain an integrated and practical overview of the problems and solutions in the field of international taxation in a relatively short period of time.
