The European Commission has published working paper no 71 on Aggressive tax planning indicators. The aim of this study is to provide economic evidence of the relevance of aggressive tax planning (ATP) structures for all EU Member States.
The discussed ATP structures can be grouped into three main channels: i) ATP via interest payments, ii) ATP via royalty payments and iii) ATP via strategic transfer pricing. In addition to general indicators assessing the overall exposure to ATP, they also derive specific indicators for each of the ATP channels. In combination, these indicators allow to classify entities within multinational enterprises (MNEs) into three types: i) target entities, where the tax base is reduced ii) the lower tax entities where the tax base is increased but taxed at a lower rate, and iii) conduit entities which are in a group with ATP activities but no clear effect on the tax base is observable. The analysis of the relative prevalence of these three types of entities across Member States complements the results from the country-level distribution of the indicators.
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