Advance Tax Rulings And Principles Of Law
Towards a European Advance Tax Rulings System. Doctoral S. 4
A study of the legal instruments of the advance tax ruling - being the advice, information or statement provided by the tax authorities to a specific taxpayer concerning his tax situation in respect of future transactions, and on which that taxpayer is (to a certain extent) entitled to rely.
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Introduction (Excerpt). Apart from cross references to several advance tax rulings systems around the world, this study analyses in depth the advance tax rulings systems in the United States, the Netherlands and Italy. The choice for investigating the US letter rulings system is motivated by the fact that the United States presents one of the most developed tax rulings system in the world with a wide variety of legal instruments of guidance to taxpayers. In the United States, the letter rulings system originated in order to manage the complexity and technicality of the very extensive US tax legislation and became a commonly used feature by taxpayers in the fulfilment of their tax obligations. In the Netherlands, the reasons for the introduction of advance rulings are clearly related to international commerce. Dutch rulings originated as instruments to give certainty to foreign taxpayersinvesting in the Netherlands, especially in the situation of uncertainty generated by the Second World War. Over the years, the main purpose of advance rulings the provision of certainty to taxpayers was distorted and rulings became an instrument to attract foreign business to the Netherlands. In Italy, the reasons for the introduction of advance rulings appear to be mainly related to the increased need for the simplification of the tax system and as an attempt to establish new forms of active participation by taxpayers, especially in the grey areas of the tax systems (i.e. antiavoidance legislation). The first forms of rulings introduced in Italy are limited to antiavoidance legislation. The analysis of the differences in the origin, development, structure and functioning of each of these advance tax rulings systems revealed itself to be particularly useful in ascertaining the positive and negative features of the systems in question. Though starting from a comparative analysis on the main substantive andprocedural aspects of advance tax rulings such as the persons who should be entitled to request rulings, the topics for which they might be asked, the disclosure of the rulings issued and the related administrative costs the investigation also looks at advance tax rulings from a cross border perspective and, in particular, from a EC law standpoint. By pointing out the main similarities and divergences in advance tax rulings systems in EU Member States, and their relative positive features, it is argued that the different set of rules governing the various advance tax rulings systems in each EU Member State (or the absence of rules) might constitute an obstacle to the development of crossborder investment in the European Union. The harmonization of domestic advance tax rulings procedures and the institution of a notification procedure to a central EU body represent a step forward in the achievements of the institutional and political objectives of the European Union. The study consists of four parts: Part I identifies some rudiments of tax rulings in the first contacts between a taxadministration and citizens in Roman law and primarily deals with the origin and the historical development of the tax rulings systems in the United States, the Netherlands and Italy. These historical annotations, tracing the roots of the present advance tax rulings systems, were useful in gaining a better understanding of the developing trends of this legal institution. Part II is divided into Chapters 2 and 3. Chapter 2 defines advance tax rulings and contains an analysis of their legal nature within the respective US, Dutch and Italian legal systems. The analysis is aimed at identifying sharply delineated borders for a common definition of advance tax rulings. The aim of Chapter 3 is to distinguish advance tax rulings from other forms of guidance provided by the tax administration to taxpayers in order to help them fulfil their tax obligations. Part III consists of Chapters 4 and 5. Chapter 4 investigates the main procedural and substantive elements of