How can the implementation of the anti-tax avoidance directive of 12 July 2016, laying down rules against tax avoidance practices, impact corporations based in Luxembourg?

Abstract

This thesis explores the impact of the Anti-Tax Avoidance Directive (ATAD) on Luxembourg-based companies. In response to the global financial crisis of 2008-2009 and financial scandals such as the Panama Papers and LuxLeaks, measures have been taken to strengthen tax transparency at the international level, notably by the OECD and the European Union. The ATAD establishes rules against tax avoidance. The thesis employs a mixed-method approach, combining qualitative and quantitative analyses to evaluate the ATAD's effects on Luxembourg-based companies. The findings of the qualitative study indicate that the ATAD has not only increased companies' tax and administrative burdens but also shifted their relationship with tax authorities, marking the end of a permissive era. Despite this, the directive does not seem to have threatened companies' financial stability. Contrastingly, the quantitative analysis did not identify a significant impact of the ATAD on the Effective Tax Rate (ETR) of these companies. Several factors could contribute to this, including the recent implementation of the directive, the influence of the COVID-19 pandemic, the sample size, multicollinearity issues, and the decision to exclude certain companies from the study.