OECD’s Base Erosion and Profit Shifting project (BEPS) originated in a few MNEs’ tax behaviour. The project aimed to tackle this aggressive tax planning to ensure business equality. The EU effort resulted in the implementation of the BEPS findings through the anti-tax avoidance directive (ATAD).

Taxation is initially a complex consequence of financial activity. Therefore, taxation is dependent on economic freedoms. ATAD automatically impacts taxpayers’ rights and obligations. Taxpayers’ rights were not considered for economic freedom in the legislation process.

Based on the legality principle taxes are governed by law. Constitutions implement the legality principle setting limits for the legislator. This steering creates the first national protective level for taxpayers’ fundamental rights. If the economic activity involves the EU’s internal market, EU law sets another constitutional level protection for taxpayers.

Taxpayers’ rights, and their protection, rely on fundamental rules and legal principles. Both the legislative process and tax assessments are directly or indirectly connected to constitutions and EU law. As these fundamental rules are not changed, BEPS and ATAD impacts should be measured against the fundamental rights to understand whether they restrict taxpayers’ economic rights too extensively, i.e. are they proportional to their objective.

The EU has no legislative power linked to taxation. The question of proportionality is important to understand the legitimation of EU’s tax directives. As the Member States are obligated to implement directives by tax laws, the legislative process is stressed. A directive doesn’t eliminate national interests. A directive connects tax automatically to EU law and makes it an issue of EU law.

Tax is a national measure even on transactions within the EU internal market. This means that harmonised rules are used separately in each EU Member State. Harmonisation of tax rules does not therefore guarantee the functioning of the EU internal market. The question of taxpayers’ rights and their protection is crucial.