Cross-border taxation of partnerships and its impact on investments in Central and Eastern Europe: Current challenges in the context of BEPS and empirical evidence

Project lead:

• Prof Dr Christina Elschner (European University Viadrina)
• Prof Dr Stephan Kudert (European University Viadrina)

Research team:

• M. Sc. Marcel Max
• M. Sc. Martin Schewe

Cooperation partners:

• Ass.-Prof. Dr Dr habil. Marcin Jamrozy, Institute of Finance at the Warsaw School of Economics (SGH Warsaw), Poland
• Prof. Dr Adrian Cloer, Chair of Business Taxation and International Tax Law at the EBS University of Law and Business / Business and Law in Wiesbaden, Germany
• Prof Dr Christoph Spengel, Chair of General Business Administration and Business Taxation II at the University of Mannheim, Germany

Funding institution:

Ernst & Young Foundation e.V.

Project duration:

April 2016 - March 2017

Project description:

Cross-border taxation of partnerships, particularly with regard to Central and Eastern European countries, has so far been the focus of little academic literature. Nonetheless, this topic is becoming increasingly important, partly due to the finalisation of the OECD initiative "Base Erosion and Profit Shifting" (October 2015). The tax issues included in this initiative result in particular from qualification conflicts arising from the use of certain (hybrid) legal entities. The resulting divergences in national legal interpretations can be used to significantly reduce the tax burden of the parties involved with skilful restructuring.

The aim of this project is therefore to analyse the taxation of partnerships in the European Union with a particular focus on the newer EU Member States with regard to the effects of cross-border situations. Specifically, the aim is to analyse

• how the tax regulations for partnerships in cross-border activities are organised unilaterally and bilaterally in the more recent EU Member States and which qualification conflicts arise in detail
.
• how qualification conflicts affect tax planning
• how current national and multinational measures and proposals within the framework of BEPS affect and should affect the taxation and tax burden of partnerships operating both cross-border and nationally.
• how companies have so far utilised the incongruence of national tax regulations in cross-border situations and to what extent partnerships with foreign partners have specific characteristics.

The project aims to expand the existing state of research in systematic, model-theoretical, empirical and geographical dimensions.

This third-party funded project was successfully acquired as part of the Seed Money funding for the project development "Base Erosion and Profit Shifting - a multidimensional analysis of tax structures in Central and Eastern Europe".