The Tax-Transparent Entity in the International Conflict of Laws

Abstract

The OECD BEPS (Base Erosion/Price Shifting) reform proposals in the Tax-Transparent Entities sector do not aim for uniform law through treaty or other harmonization channels, but focus on domestic legal rules to prevent “dual deduction” and “no tax” avoidance strategies. As a result, principles of the international conflict of laws remain important, especially in the context of entity characterization. This contribution to a Memorial Volume in Memory of Alan Bromberg briefly reviews these principles, using the differences between the functional and case-specific approach of the Federal Republic of Germany and the categorical approach of the United States as they bear on participants who are the subjects of one legal regime in entities formed under the laws of the other.

Keywords: taxation, conflict of laws

JEL Classification: E62, H2, K33