"The Three Shades of Tax Avoidance of Corporate Groups: Company Law, Ethics and the Multiplicity of Jurisdictions involved”.

In 2011 Apple’s Irish subsidiary had a profit of 16 billion Euros but only 50 million of them were charged as tax in Ireland. Apple ended up paying a tax rate of only 0.005% in 2014 on the profits of its Irish subsidiary down from an anyway low 1% in 2003. This is but one example of so-called “jurisdiction arbitrage” by which large companies avoid or evade liabilities. Company law provides the multinationals with the legal tools which enable tax avoidance. MNEs, which are a series of inter-linked companies formed in various national legal systems, incorporate subsidiaries in jurisdictions which provide them with legal yet unethical tax loopholes. Basic company law principles such as the principle of separate legal personality and limited liability have evolved into a veil which protects multinationals from external control on their tax affairs at multiple levels. Each member of the group is deemed as of independent from each other in most instances. Yet, taxing its profits within the jurisdiction where they were actually produced could prove impossible. The article argues that the principles of separate legal personality and limited liability in their current form are unfit for corporate groups when issues of taxation are at stake. They should be significantly reformed, so that each member of the group is viewed as established in the member state where it operates with its revenues shielded and – most importantly – taxed in that jurisdiction. When this proves to be too difficult or complicated, the corporate veil should be lifted altogether and the mother company of the group should be taxed for the entire set of profits made by all the members of the group in the EU.