PhD Ceremony Mees Vergouwen – solutions for conflicting tax regulations
That the tax authorities are allowed to impose taxes is widely known. What is less well known is when the tax authorities must impose taxes. And what to do when one set of regulations requires the tax authorities to impose taxes while other regulations prevent them from doing exactly that? Vergouwen’s PhD research addresses the interplay of conflicting tax regulations and provides solutions to break the resulting deadlock.
Status quo: The Netherlands must impose taxes but is unable to do so
Approximately ten years ago, there was a shift in the approach on tax regulations within the European Union. Up until then, the EU had only taken a stance to prevent ‘double taxation’, which means: imposing taxes on the same income multiple times, for instance taxes on profits and dividends. In accordance with that approach, Member States were forced to impose less taxes in some cases.
This all changed in 2014 and the attention shifted to the prevention of tax evasion. Policy makers wanted to prevent taxpayers from getting away with dodging taxes. In short, the EU Member States were encouraged to impose taxes.
As a result, the EU Member States agreed to adjust the European tax legislation accordingly. The only problem: the EU Member States were then required to transpose that agreement into national law. Which proved to be difficult for a few Member States including the Netherlands. The result? ‘The Netherlands is unable to impose taxes on certain income, even though they are obligated to do so under European law.’
‘Because of this peculiar situation, taxpayers are still not obliged to pay taxes,’ says Vergouwen. ‘EU members have agreed to an outcome – imposing taxes – even though some of them should have foreseen that they would not be able to adhere to that agreement based on their national legislation.’
Content thesis
In his thesis, Vergouwen shows how European tax legislation (directives), and tax treaties relate to one and other. He concludes that European tax legislation could take precedence over tax treaties (under international public law) with as final outcome that EU Member States are allowed to impose taxes despite tax treaties preventing them from doing so.
But, according to Vergouwen, even then situations can still arise in which tax treaties stand in the way of the outcome that has been agreed upon within the EU (impose taxes). He also offers solutions to be able to break those deadlocks.
Impact research
Vergouwen would be delighted if his research led to legal experts making a clearer distinction between international public law and EU law in the discussion on the effects of directives on tax treaties. ‘At the moment, the lines between the two are not very clear. The added value of my research is being able to separate these perspectives and the puzzle that comes with it.’
Although Vergouwen can only draw accurate conclusions about that situation in the Netherlands – he is trained in Dutch Law – his research might be applied more widely because certain other Member States might run into the same problems.
The PhD Track
Having to work methodically gave Vergouwen the most satisfaction during his PhD track: ‘I most enjoyed having to dive deeper and deeper into the various regulations and trying to work out how they are related.’
Vergouwen acknowledges that conducting PhD research can be quite challenging. Fortunately he had a colleague to help him put things into perspective: ‘a thesis shouldn’t be your magnus opus, at some point it simply has to be finished’.
The future: the combination of academia and working in the field
Once his PhD ceremony is over, Vergouwen will continue to work at Leiden University. He will combine his work as assistant professor with his job as a tax advisor at law firm Brauw Blackstone Westbroek. The perfect combination: at the university, he will be able to continue to write about what interests him, including theoretical cases as well as being able to continue teaching. ‘The dynamic at the law firm appeals to me, and it is a plus to be able to keep in touch with what is going on in the field while conducting research such as this.’
PhD Ceremony 6 April
Vergouwen will defend his thesis ‘De invloed van richtlijnen op het gebied van directe belastingen op de interpretatie en toepassing van belastingverdragen’ (The influence of directives in the field of direct taxes on the interpretation and application of tax treaties) on 6 April at 15.00 at the Academy Building. His supervisors are Jan Vleggeert, Professor in Tax Law at Leiden University, and Frank Engelen, former Professor in International Tax Law at Leiden University.
You can read a short summary of his thesis or, for the interested reader, a longer summary (NL) has also been made available.
The thesis will be published later this year by Kluwer International Law in the Series on International Taxation.