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International Tax Law


Combining different disciplines, Leiden University researchers work together to formulate innovative solutions to societal problems. Below is an example from the field of law.

Overview research dossiers


A better international tax system

Loopholes in international tax legislation contribute to the misuse of tax rules by multinationals. Leiden University legal experts investigate how the complex national and international tax rules can be made more consistent in order to create a better tax system.

Worldwide tax puzzle

Companies are increasingly operating worldwide, but tax systems are still primarily organised on a national level. For international companies this means on the one hand double taxation and an increased administrative burden, but on the other hand the opportunity to use differences between national tax rules in order to reduce their tax burden. In order to reverse this trend, States all over the world are considering to adapt their national tax rules and bilateral tax agreements. However, at the same time each State is trying to create a favourable tax climate for companies, to boost its own economy. Leiden University researchers are looking for solutions to this complex puzzle, which ultimately has an impact on every citizen, both financially and emotionally. The underlying concern is: how sustainable is the current situation, in which individuals feel that they are dutifully paying their taxes while international companies get away with paying almost nothing?

Letterbox companies

Every country has its own tax legislation. To facilitate cross-border business and avoid double taxation, countries need to coordinate their taxing rights. They do so by concluding bilateral tax treaties in which they agree which state is entitled to tax which income components. The large network of bilateral treaties is not fully able to prevent double taxation, but it also leaves considerable room for effective non-taxation. This allows multinationals to reduce the effective tax burdens on their profits, often to levels hardly exceeding zero. A common form of tax reduction is the use of letterbox companies. These companies only have postal addresses where few persons may actually work. They transfer money via the Netherlands to tax havens such as Cyprus or the Channel Islands, using the extensive Dutch network of tax treaties.

International rules

The Organisation for Economic Collaboration and Development (OECD) in Paris formulates international guidelines to increase the effectiveness of taxes on cross-border business. In addition, in 2014 the European Commission launched a number of State aid investigations into the use of tax planning structures by multinationals in Ireland, the Netherlands and Luxemburg. Leiden University takes part in this debate by organising seminars and symposiums, and through regular contact with persons working for OECD and the European Commission on international tax rules.

Deep-rooted knowledge

The International Tax Center and the Tax Law department of Leiden University have deep-rooted knowledge of these issues. Our researchers study national and international tax law from a variety of disciplines and perspectives, asking questions such as: Can the current national and international rules co-exist without leading to contradictions? How should institutions apply these rules? How should rules actually be formulated in accordance with the basic principles of the tax system? And how can organisations such as the OECD change tax rules?

More information:
International Tax Center Leiden
Department of Tax Law

Multinationals and taxes

In the past few years, an increasing number of multinationals have made the news for large-scale use of tax planning opportunities. The Organisation for Economic Collaboration and Development (OECD) and the European Commission are studying these cases closely and investigating whether the current concepts of international tax law can be maintained. To this end, Leiden researchers have developed assessment models and are advocating clearer rules.

European states and national tax sovereignty

In order to combat tax evasion by multinationals, European States have to adjust their tax policy. However, European Union Member States also have to adjust their national legislation to European regulations. This results in a complex legal puzzle. Research by the International Tax Center and the Tax Law Department has led to concrete insights into how national and international rules are related, and how rules can be adjusted so as to make them mutually compatible. This information is of great value to national governments and European bodies such as the OECD. For example, Sjoerd Douma, Professor of International and EU Tax Law, developed a model which makes it possible to assess how the contradictory principles of national fiscal

sovereignty and the free movement can be recon-ciled. This model can be applied to the measures proposed by the OECD for combatting tax avoidance by multinationals.

Dutch tax treaties

Multinationals establish letterbox companies in our country because of its favourable tax climate. They

Multinationals and taxes

use the Dutch tax treaties to gain tax advantages. To prevent this, researcher Jan Vleggeert is calling for the Netherlands to stop issuing so-called rulings to letterbox companies. These are agreements made between the government and multinationals or other taxpayers which clarify the application of tax rules in a specific case. As a result of these rulings, letterbox companies can be certain beforehand of the fiscal consequences of their proposed transactions, which may promote abuse.

Alleged state aid

Research on tax avoidance by multinationals also focuses on the question of whether the agreements made by the European Union Member States with multinationals reducing their effective tax rates can be interpreted as unlawful State aid. State aid offers companies unfair advantages and is illegal according to

Multinationals and taxes

European regulations, unless the European Commission specifically approves it. A potential example of State aid is when an international parent company in the Netherlands is exempted from paying tax on dividends (a distribution of profits to the company’s shareholders), where the payment of this dividend was tax-deductible in the hands of the subsidiary company abroad. Multinationals use these arrangements frequently; in practice they involve very substantial sums of money. The

European Union is aware of this problem, and a European directive has been adopted that intends to make this arrangement impossible in future. Whether the new directive will be really effective is an important topic of research.

Corporate social responsibility and ethics

It is debated more and more often how taxes should be embedded in a multinational’s policy on corporate social responsibility. Leiden researchers have done concrete suggestions in this area. They give advice and guidance to companies and to society as a whole on how to deal with the ethical aspects of tax planning.

A global tax treaty

Multinationals use loopholes in the tax treaties between different states. A possible solution would be to eliminate all these loopholes in one go by creating a central global treaty. Leiden researchers are investigating whether this kind of mega-treaty is feasible.

Loopholes in fiscal legislation

The original purpose of tax treaties between States was to avoid double taxation and to stimulate companies to develop their economic activities across borders. Until a few years ago, most of the studies of these treaties focused on potential overlap in legislation. However, there are also loopholes in the agreements between countries which multinationals exploit. An example of such a loophole is the case of hybrid entities. For instance, one State – in applying its own national rules – may not regard an entity as a corporate taxpayer. In such a case, it would leave taxation to another State, for instance where the shareholders or partners in that entity are based. If that other State would do the same, i.e. leave the taxation right to the other State, the company would not be taxed in either of the relevant States.

4,000 tax treaties worldwide

In order to eliminate these kinds of loopholes in tax legislation, treaties have to be adjusted. There are currently nearly 4,000 bilateral tax treaties worldwide. ‘To adjust them all to fit the current social norms and values, treaty mediators would have to travel around the world to conduct negotiations in all the partner countries. This is clearly not feasible,’ says researcher Dirk Broekhuijsen. The question is if and how all treaties can be adjusted in one single operation.


A promising solution is a multilateral treaty, also known as the ‘mega-treaty’. This is complicated by the fact that current international tax law is based on bilateral treaties. Such treaties offer most space for a

Members of the Organisation for Economic Collaboration and Development © Emuzesto, Wikimedia Commons

Members of the Organisation for Economic Collaboration and Development © Emuzesto, Wikimedia Commons

customised approach; a tax treaty between the Netherlands and Belgium will look different from a tax treaty with Ethiopia because very different interests are at stake in the two situations. According to the Leiden researchers, a mega-treaty is only feasible if the design of the treaty leaves space for countries to include bilateral agreements.

Political will

Research on this issue is particularly relevant because there is currently a strong political will worldwide to find a solution to this problem. The Organisation for Economic Collaboration and Development (OECD) has launched a project on this topic. Earlier this year, the G20 countries commissioned the OECD to formulate such a mega-tax treaty. Broekhuijsen: 'It is at present unclear whether the G20 countries will ultimately accept this mega-treaty. Nobody knows exactly what the treaty will contain, so there is still a long way to go.’

Basis for legislation

Globalisation leads to more contradictions between national and international tax norms. It therefore seems necessary to revise the fiscal legislation. This is not only due to the problem posed by multinationals, but also to changing norms regarding tax burden distribution. Fundamental research on the basis of legislation reveals the original purpose of certain rules and teaches us more about the relevance of current rules and laws.


Many of the current contradictions between national and international legislation are the result of growing globalisation. A hundred years ago, there were hardly any transnational situations, and states wrote their legislation on the basis of local situations,’ says Professor of Tax Law Henk Vording. He investigates how to ensure that national tax regulations are able to handle globalisation, for instance by developing a separate fiscal regime for multinationals, or by rethinking the differential tax treatment of equity and debt.

In addition, Vording has shown that the case law of the European Court of Justice in Luxemburg cannot lead to a stable tax environment for cross-border activities.

Fundamental questions

In the Netherlands, there is currently a discussion on whether we should modify the tax system to simplify the rules. Any tax reform must address

Basis for legislation

fundamental questions relating to the balance between aims of taxation and practical feasibility of reform. In the end, national and international tax rules are rooted in political philosophy – in our thinking on the distribution of rights and duties over the members of society. And, at a more practical level, it is about the rules of the tax policy game: how to include stakeholders, and how to balance competing interests? For example, corporation tax reform is very much an insider's game where technical legal language obscures the interests at stake. Information on the interests of corporations, such as the impact of changes in effective tax rates on corporate investment decisions, may not be fully available to the tax legislator. This implies that the legislative process, which includes the consultation of stakeholders such as corporations, must provide incentives to those stakeholders to disclose their true interests.

Legal principles

National and international tax rules are constantly changing. Companies respond to the tax rules that apply today and adjust their company structure accordingly. But what if the rules change next year or if new tax rules are introduced retroactively? Will the interests of the taxpayers not be jeopardized if we continuously change the rules on taxation? Is this not a breach of the principle of legal certainty? Or could corporate taxpayers be required to anticipate on changes in tax rules when making their business decisions? The legal tradition has always stressed that legal subjects should be able to rely on the law as it is. Economists, on the other hand, tend to argue that markets (i.e. private economic decisions) are the most effective way of dealing with changes, including changes in the law. Leiden experts in tax law contribute to bridging the gap between economic and legal traditions in this field.


Scientists working in this multidisciplinary research area

  • Prof. dr. Sjoerd Douma
  • Prof. dr. Tanja Bender
  • Dr. Arnaud Booij
  • Dirk Broekhuijsen LL.M.
  • Prof. dr. Frank Engelen
  • Prof. dr. Hans Gribnau
  • Anna Gunn MA, LL.M
  • Drs. Jan Kruithof
  • Prof. dr. Allard Lubbers
  • Mr. dr. Madeleine Merkx
  • Prof. dr. Kees van Raad
  • Mr. dr. Jan Vleggeert
  • Prof. dr. Henk Vording

Prof. dr. Sjoerd DoumaProfessor of International and EU Tax Law

Topics: international and EU tax law, taxation of multinationals, cross-border transactions, transfer pricing

+31 (0)71 527 8810

Prof. dr. Tanja BenderProfessor of International Tax Law

Topics: international tax law, treaty law, tax treaties, prevention methods

+31 (0)71 527 7869

Dr. Arnaud BooijAssistant Professor of Fiscal Administrative Law

Topics: tax procedures, liability for tax debts, corporate tax law, fiscal litigation, tax treaties

+31 (0)71 527 8809

Dirk Broekhuijsen LL.M.PhD-candidate International Tax Law

Topics: international tax law, treaty interpretation, global tax treaty

+31 (0)71 527 8806

Prof. dr. Frank EngelenProfessor of International Tax Law

Topics: international tax law, international public law, European community law

+31 (0)71 527 8925

Prof. dr. Hans GribnauProfessor of Quality of Tax Regulations

Topics: fiscal methodology, philosophy of tax law, formal tax law, legal principles

+31 (0)71 527 7451

Anna Gunn MA, LL.MResearcher Tax Law

Topics: tax law, fiscal State aid

+31 (0)71 527 7827

Drs. Jan KruithofResearcher Fiscal Politics

Topics: fiscal politics, income taxes

+31 (0)71 527 7453

Prof. dr. Allard LubbersProfessor of Tax Law

Topics: formal tax law, fiscal profit determination, good business practice, transitions in tax law

+31 (0)71 527 7830

Mr. dr. Madeleine MerkxAssistant Professor Fiscal law

Topics: turnover tax, VAT, corporate law, indirect taxation

+31 (0)71 527 7827

Prof. dr. Kees van RaadProfessor of International Tax Law

Topics: international tax law, tax treaties, European community law

+31 (0)71 527 8807

Mr. dr. Jan VleggeertAssistant Professor Tax Law

Topics: international and European tax law, corporation tax

+31 (0)71 527 5885

Prof. dr. Henk VordingProfessor of Tax Law

Topics: tax law, fiscal policy, economic aspects of taxation

+31 (0)71 527 7852


Students learn directly from researchers

The Leiden University International Tax Center (ITC) is one of the world’s most renowned educational centres in the field of international tax law. During their studies, students already take part in the research projects of the ITC, which greatly enriches their expertise and research skills. In addition, with the Master of Advanced Studies in International Tax Law and the Master of Advanced Studies in European Tax Law the University offers excellent students the opportunity to immerse themselves intensively in international and European tax law. The regular master’s programme in Tax Law also pays substantial attention to international law. In addition, the University has recently started offering a free Massive Online Open Course: Rethinking International Tax Law.

Outreach & News

Science at the heart of society

Our research reaches further than the academic world alone. Our experts are often invited to international conferences and discussion meetings that are open to the wider public. In addition they keep personal blogs about their field of expertise and share their knowledge in the form of online courses such as the MOOC on Rethinking International Tax Law. In this way, they bring science to the heart of society.