Michael Scharf

Phone: +49 (9 11) 91 93 - 10 70
Fax: +49 (9 11) 91 93 - 70 70

Dr. Kai-Uwe Bandtel

Phone: +49 (89) 92 87 80 - 560
Fax: +49 (89) 92 87 80 - 860

On 5th October 2015, after more than two years of work, the OECD released the final package against ”Base Erosion and Profit Shifting” (BEPS). The initiative between the OECD and the G20 members was formed as a reaction to an increase in fiscal challenges that governments have been faced with. Especially multinational enterprises were under massive public criticism in the last couple of years. They are supposedly using loopholes in domestic tax systems in order to reduce their taxable base and/or to shift their profits to countries with low tax rates. The OECD estimates that the worldwide annual loss of potential tax revenue is around 100 to 240 billion USD.
In response to this challenge the OECD/G20 states established working-groups in respect to 15 action points. The BEPS Action plan addresses, among other things, topics regarding

  • base erosion,
  • profit shifting and
  • the prevention of double taxation

BEPS Package

Action 1: Addressing the Tax Challenges of the Digital Economy

Action2: Neutralising the Effects of Hybrid Mismatch Arrangements

Action 3: Designing Effective Controlled Foreign Company Rules

Action 4: Limiting Base Erosion Involving Interest Deductions and Other Financial Payments

Action 5: Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance

Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances

Action 7: Preventing the Artificial Avoidance of Permanent Establishment Status

Actions 8-10: Aligning Transfer Pricing Outcomes with Value Creation

Action 11: Measuring and Monitoring BEPS

Action 12: Mandatory Disclosure Rules

Action 13: Guidance on Transfer Pricing Documentation and Country-by-Country Reporting

Action 14: Making Dispute Resolution Mechanisms More Effective

Action 15: Developing a Multilateral Instrument to Modify Bilateral Tax Treaties   

Some final outcomes of the BEPS project with special regard to transfer pricing are summarized in the following articles: