JONES DAY PRESENTS®: Managing Multijurisdictional Tax Disputes in Europe

Lou Berger:

It's a very interesting time to advise clients, but indeed, it is challenging as well. Because the rules are changing, there's a lot on the agenda in terms of politics. Things are changing in Europe. We see different governments in Europe taking very different approaches. We still have a rule of unanimity in the European Union, but they're not aligned. That makes it very complex, and I do not envy our clients that need to deal with that. We're dealing with new international tax standards that are being adopted by the US, by the European Union, and they are not aligned. Clients want to do the right thing, but it's not easy to do the right thing because the rules are complex and they are supposed to be coordinated, but in practice, tax authorities take their own perspective. They have different interpretations.

Nicolas André:

Tax disputes tend to be more and more international. Usually, a routine audit starting in one jurisdiction can quickly span over several jurisdictions or at least trigger questions and investigations in other jurisdictions. From a European and French perspective, the sector which are currently dealing with global tax disputes are clearly the energy, life science, and technology sectors. These are the most active ones, and the tax issues are the usual suspects. So current establishments, VAT consistency, and also transfer pricing readjustments. Our integrated culture allows us to help clients not only with the tax and procedure aspects, but also with many additional items which end up having a significant impact on the outcome of a dispute. Exchange of information between authorities, also attorney-client privilege in certain jurisdictions, down rates and seizures, and also in respect of several jurisdictions in Europe, criminal exposure and prosecution of both entities and individuals.

When it comes to multijurisdictional disputes in Europe, mainly three items are key. The first one is anticipation. It's really important for the clients to have audit-ready documentation to also maintain and coordinate consistency in respect of their practices, and also to align globally. The second point would be leveraging these mitigation tools such as advanced pricing agreements and mutual agreement procedures. I think they really help to settle cases. And the third one would be to be prepared to litigate if needed. That's usually not the number one priority early on, but you have to be prepared to bring action before courts depending on the merits of the case. Our view is to help our clients engage as much as possible proactively, constructively with tax authorities. We're very good at pulling teams that work well together that know where to find the best lawyers and the best expertise for all of these matters so that in the end, the tax dispute itself is resolved quickly.