The OECD/G20 Base Erosion and Profit Shifting (BEPS) project, the final output of which was delivered in October 2015, represents the most important development of the last decades in international taxation. The BEPS project made several recommendations for changes to tax treaties in order to make them less susceptible to the use in aggressive tax planning structures shifting profits from high tax to low tax jurisdictions and eroding the tax base of countries where actual profit-generating activities take place. The lecture examines to what extent and in which form these recommendations have been implemented in the existing treaty network. It aims at providing an understanding of the rationale and mechanism of the rules implemented in treaties as a result of BEPS. In addition, it discusses what scope is left for tax planning using tax treaties in the post-BEPS era by assessing the effectiveness of the BEPS-related treaty changes and the room inadvertently or purposefully left open for tax competition.

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) is a new phenomenon in international taxation which has been developed to swiftly change, by way of a single instrument, the existing tax treaties in order to include in them measures recommended by the BEPS project aimed at preventing tax treaty abuse. The MLI has been described in every ways from a game-changer in international taxation that “makes tax treaty history” to a conservative instrument which preserves the inherent bilateral nature of tax treaties. The lecture examines the actual effect that the MLI has on tax treaties focusing on its flexible nature which offers many possibilities to the parties for reservations, opt-ins and alternatives making it fit for various bilateral relations. We will also discuss the mechanism through which the MLI modifies existing tax treaties, all with the aim of understanding how the MLI changes the application of tax treaties as we currently know it.