Base Erosion and Profit Shifting in the EU Context Impact for business and banks specificities Some in-house perspectives of the BEPS process and actions Some themes, which may contribute to and help inform:- o Any EU wide measures o Member State implementation

Base Erosion and Profit Shifting (BEPS) “To make profits “disappear” for tax purposes or to shift profits to locations where there is little or no real activity, but the taxes are low, resulting in little or no overall corporate tax being paid.” “In many circumstances, the existing domestic law and treaty rules governing the taxation of cross-border profits produces the correct results and do not give rise to BEPS” “the emergence of competing sets of international standards and the replacement of the current consensus based framework by unilateral measures, could lead to global tax chaos marked by the massive re-emergence of double taxation.”

BEPS Process Unprecedented Far reaching Astonishing speed BEPS needs to succeed Risks of unintended consequences

OECD BEPS Process Engagement Consultation All stakeholders Recognised banks present specific issues Action Plans issued “A comprehensive package of measures has been agreed upon. Countries are committed to this comprehensive package and to its consistent implementation.”

BEPS 2 nd phase - Implementation Same and new issues (risks) Country implementation – Tracking – “Gold plating” – Banks will need to be addressed e.g. stock loan and repo OECD – more to do e.g. – Interest – PEs BEPS still needs to succeed

What concerns arose? Interest PE – identification and profit attribution Hybrids Alternative Tier 1 capital Repo and stock loan Practical implementation e.g. Country by country reporting – BEPS and CRD4 Dispute resolution Not exhaustive

What themes identified? What should any EU action on BEPS consider? Encourage investment to generate trade and economic growth Complement and support The Single Market Financial regulation Consistent with BEPS Coordinated with further OECD work Practical in application Proportionate and effective