BEPS........fools rush in where a wise man fears to go!

The whole BEPS project has been launched by the OECD with a lot of publicity. Not only did they publish a lot of reports, they also organised webcasts where everyone can find out what the BEPS team is doing. The impact this whole circus has on companies is clear, everyone is worried about the possible impact. Probably exactly that impact is what the OECD wants. Or should I say, what tax authorities want, because do not forget that the OECD is a group of civil servants mainly out there to please tax authorities. It really needs to been seen what the ultimate impact of the BEPS project will be. A lot of countries have really nothing to gain by implementing these proposals. And I am not only talking about the little tax friendly countries like Switzerland, Luxembourg, the Netherlands and Ireland to name a couple of obvious examples. What about the UK? The current government is turning the UK into a tax haven, with already a lot of succes. So there is not really a broad consensus about all of the BEPS propsals. The big questions is: what should companies do?

Fools rush in where a wise man fears to go. You should indeed look into your current business model. Not because of BEPS, but simply because the overall tax climate changed. Any tax efficient model should be revisited every couple of years anyway. The biggest mistake companies made over the last couple of decades is implementing structures without aligning the model to the business. Everyone agrees that business model planning with only tax planning as the prime objective, is short sighted and dumb. An example: when you set up a principal model with commissionairs or LRDs, you should fully align the business with the model. So when you set up a principal you should set up a real principal. This means that the key decision makers should be relocated to the principal. A principal should have real serious substance, because a principal really is an HQ. 

Multinationals...take my advise. Look critically at your current business model and make it up-to-date. Do not change your whole business model only unless you want to do this for business reasons. If you have a principal with commissionairs or LRDs, don't worry. If properly set up, it will hold for many years to come. Even if everyone embraces the BEPS proposals (very unlikely), before all of these proposals are converted to tax treaty law and national tax law.....I am pretty sure I am retired by then.