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12.12.2012 Official
Journal
of
the
European
Union L
338/41
COMMISSION RECOMMENDATION
of 6 December 2012
on aggressive tax planning
(2012/772/EU)
THE EUROPEAN COMMISSION,
The persistence of such situations can lead to artificial
capital flows and movements of taxpayers within the
internal market and thus harm its proper functioning
as well as erode Member States’ tax bases.
Having regard to the Treaty on the Functioning of the European
Union, and in particular Article 292 thereof,
(6) In
2012
the
Commission
carried
out
a
public
consul
tation on double non-taxation in the internal market.
Whereas:
Since it is not possible to address all the issues covered

by that consultation through one single solution, it is
appropriate, as a first step, to deal with the issue which
is linked to certain frequently used tax planning
structures that take advantage of mismatches between
(1) Countries
around
the
world
have
traditionally
treated
tax
two or more tax systems and often lead to double
planning as a legitimate practice. Over time, however, the
non-taxation.
tax planning structures have become ever-more sophis
ticated. They develop across various jurisdictions and
effectively, shift taxable profits towards States with
beneficial tax regimes. A key characteristic of the
(7) States
often
undertake,
in
their
double
taxation
conven
practices in question is that they reduce tax liability
tions, not to tax certain items of income. In providing for
through strictly legal arrangements which however
such treatment, they may not necessarily take account of
contradict the intent of the law.
whether such items are subject to tax in the other party
to that convention, and thus whether there is a risk of
double non-taxation. Such risk may also occur if Member
States unilaterally exempt items of foreign income, irre
(2) Aggressive
tax
planning
consists
in
taking
advantage
of
spective of whether they are subject to tax in the source
the technicalities of a tax system or of mismatches
State. It is important to address both situations in this
between two or more tax systems for the purpose of
Recommendation.
reducing tax liability. Aggressive tax planning can take
a multitude of forms. Its consequences include double
deductions (e.g. the same loss is deducted both in the
State of source and residence) and double non-taxation
(8) As
tax
planning
structures
are
ever
more
elaborate
and
(e.g. income which is not taxed in the source State is
national legislators are frequently left with insufficient
exempt in the State of residence).
time for reaction, specific anti-abuse measures often
turn out to be inadequate for successfully catching up
with novel aggressive tax planning structures. Such
structures can be harmful to national tax revenues and
(3) Member
States
find
it
difficult
to
protect
their
national
to the functioning of the internal market. Therefore, it is
tax bases from erosion through aggressive tax planning,
appropriate to recommend the adoption by Member
despite important efforts. National provisions in this area
States of a common general anti-abuse rule, which
are often not fully effective, especially due to the cross-
should also avoid the complexity of many different
border dimension of many tax planning structures and
ones. In this context, it is necessary to take account of
the increased mobility of capital and persons.
the limits imposed by Union law with regard to anti-
abuse rules.
(4)
With a view to moving to a better functioning of the
(9) So
as
to
preserve
the
autonomous
operation
of
existing
internal market, it is necessary to encourage all Member
Union acts in the area concerned, this Recommendation
States to take the same general approach towards
does not apply within the scope of Council Directive
aggressive tax planning, which would help diminishing
2009/133/EC ( 1 ), of Council Directive 2011/96/EU ( 2 )
existing distortions.
and of Council Directive 2003/49/EC ( 3 ). A revision of
those Directives with a view to implement the principles
underlying this Recommendation is currently considered
by the Commission,
(5) To
this
end,
it
is
necessary
to
address
instances
in
which
a taxpayer derives fiscal benefits through engineering its
( 1 ) OJ L 310, 25.11.2009, p. 34.
tax affairs in such a way that income is not taxed by any
( 2 ) OJ L 345, 29.12.2011, p. 8.
of the tax jurisdictions involved (double non-taxation).
( 3 ) OJ L 157, 26.6.2003, p. 49.

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L 338/42
EN
Official Journal of the European Union
12.12.2012
HAS ADOPTED THIS RECOMMENDATION:
is treated as taxable by the jurisdiction concerned and is
not exempt from tax, nor benefits from a full tax credit or
zero-rate taxation.
1. Subject
matter
and
scope
This Recommendation addresses aggressive tax planning in
4. General
anti-abuse
rule
the area of direct taxation.
4.1. To counteract aggressive tax planning practices which fall
outside the scope of their specific anti-avoidance rules,
It does not apply within the scope of Union acts whose
Member States should adopt a general anti-abuse rule,
operation could be affected by its terms.
adapted to domestic and cross-border situations confined
to the Union and situations involving third countries.
2. Definitions
4.2. To give effect to point 4.1, Member States are encouraged
For the purpose of this Recommendation, the following
to introduce the following clause in their national legis
definitions apply:
lation:
(a) ‘tax’ means income tax, corporation tax and, where
‘An artificial arrangement or an artificial series of
applicable, capital gains tax, as well as withholding
arrangements which has been put into place for the
tax of a nature equivalent to any of these taxes;
essential purpose of avoiding taxation and leads to a tax
benefit shall be ignored. National authorities shall treat
(b) ‘income’ means all items which are defined as such
these arrangements for tax purposes by reference to their
under the domestic law of the Member State which
economic substance’.
applies the term and, where applicable, the items
defined as capital gains.
4.3. For the purposes of point 4.2 an arrangement means any
transaction, scheme, action, operation, agreement, grant,
3. Limitation
to
the
application
of
rules
intended
to
avoid
understanding, promise, undertaking or event. An
double taxation
arrangement may comprise more than one step or part.
3.1. Where Member States, in double taxation conventions
which they have concluded among themselves or with
4.4. For the purposes of point 4.2 an arrangement or a series
third countries, have committed not to tax a given item
of arrangements is artificial where it lacks commercial
of income, Member States should ensure that such
substance. In determining whether the arrangement or
commitment only applies where the item is subject to
series of arrangements is artificial, national authorities are
tax in the other party to that convention.
invited to consider whether they involve one or more of
the following situations:
3.2. To give effect to point 3.1, Member States are encouraged
to include an appropriate clause in their double taxation
(a) the legal characterisation of the individual steps which
conventions. Such clause could read as follows:
an arrangement consists of is inconsistent with the
legal substance of the arrangement as a whole;
‘Where this Convention provides that an item of income
shall be taxable only in one of the contracting States or
(b) the arrangement or series of arrangements is carried
that it may be taxed in one of the contracting States, the
out in a manner which would not ordinarily be
other contracting State shall be precluded from taxing such
employed in what is expected to be a reasonable
item only if this item is subject to tax in the first
business conduct;
contracting State’.
(c) the arrangement or series of arrangements includes
In case of multilateral conventions, the reference to the
elements which have the effect of offsetting or
‘other contracting State’ should be replaced by a
cancelling each other;
reference to the ‘other contracting States’.
(d) transactions concluded are circular in nature;
3.3. Where, with a view to avoid double taxation through
unilateral national rules, Member States provide for a tax
exemption in regard to a given item of income sourced in
(e) the arrangement or series of arrangements results in a
another jurisdiction, in which this item is not subject to
significant tax benefit but this is not reflected in the
tax, Member States are encouraged to ensure that the item
business risks undertaken by the taxpayer or its cash
is taxed.
flows;
3.4. For the purposes of points 3.1, 3.2 and 3.3 an item of
(f) the expected pre-tax profit is insignificant in
income should be considered to be subject to tax where it
comparison to the amount of the expected tax benefit.

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EN
12.12.2012 Official
Journal
of
the
European
Union L
338/43
4.5. For the purposes of point 4.2, the purpose of an
(d) no withholding tax is due;
arrangement or series of arrangements consists in
avoiding taxation where, regardless of any subjective
intentions of the taxpayer, it defeats the object, spirit and
(e) foreign tax is offset.
purpose of the tax provisions that would otherwise apply.
5. Follow-up
4.6. For the purposes of point 4.2, a given purpose is to be
considered essential where any other purpose that is or
Member States should inform the Commission on the
could be attributed to the arrangement or series of
measures taken in order to comply with the present
arrangements appears at most negligible, in view of all
Recommendation, as well as on any changes made to
the circumstances of the case.
such measures.
4.7. In determining whether an arrangement or series of
The Commission will publish a report on the application
arrangements has led to a tax benefit as referred to in
of this Recommendation within three years after its
point 4.2, national authorities are invited to compare the
adoption.
amount of tax due by a taxpayer, having regard to those
arrangement(s), with the amount that the same taxpayer
would owe under the same circumstances in the absence
6. Addressees
of the arrangement(s). In that context, it is useful to
This Recommendation is addressed to the Member States.
consider whether one or more of the following situations
occur:
Done at Brussels, 6 December 2012.
(a) an amount is not included in the tax base;
(b) the taxpayer benefits from a deduction;
For the Commission
Algirdas EMETA
(c) a loss for tax purposes is incurred;
Member of the Commission

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