Regardless of the BEPS initiative’s outcome, IP tax planning continues to receive an unprecedented amount of attention. Notable examples include the public hearings of several prominent high-tech companies in regards to their tax planning, such as Apple before the US Congress or Starbucks and Google before the UK Parliament.
Further, many countries are already ramping up the rules for IP taxation rights, with an increased focus on economic substance. This approach generally requires that economics or business must be the principal motivators – not just the tax benefits – for any changes in IP location.
Examples include the recent codification of the economic substance doctrine under US tax law, with one senator specifically mentioning a ‘gimmick’ of shifting IP rights to a shell company without personnel or operations.
The EU is also pushing for codification and standardisation of the General Anti-Abuse Rule so it can be applied on a more consistent and broader basis to ‘aggressive’ tax schemes lacking business or economic motivations.