The taxation implications of the mobility guarantees of the Agreement on the Free Movement of persons between Switzerland and the EU in the experience of the German taxation system

Abstract

Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules to combat tax avoidance practices having direct effects to the functioning of the internal market — OJ L 193, 19.7.2016, p.1 (Anti-Tax Avoidance Directive/ATAD), as amended by Article 1 of Council Directive (EU) 2017/952 of 29 May 2017 amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries (OJ L.144, 7.6.2017/ATAD II), requires EU Member States to adapt, in particular, their tax regimes on entrenchment and exit taxation (Article 5 ATAD); the additional taxation (Articles 7 and 8 ATAD) and the neutralisation of tax mismatches related to hybrid arrangements (Articles 9 and 9b of the ATAD) to the extent that they do not already comply with the minimum standard set by ATAD. Deviating from this, the present analysis confirms the applicability of the activity test in general vis-à-vis third countries against the background of the free movement of capital and specifically vis-à-vis Switzerland in view of the right of establishment enshrined in the Free Movement of Persons Agreement.