1 Introduction and Context
Gunnar Baldvinsson’s doctoral thesis, On the Boundary Between Abuse and Economic Reality, represents a comprehensive and rigorous contribution to the study of the prohibition of abuse of rights and statutory General Anti-Avoidance Rules (GAARs) in EU tax law. Under the supervision of Professor Katia Cejie, Baldvinsson delves into one of the most complex and debated areas of tax law: the legal boundaries between legitimate tax planning and abusive arrangements that undermine the purpose of the law.
Over the past decade, the fight against abusive tax planning has been at the centre of international tax policy. The OECD’s BEPS Project spurred the proliferation of statutory GAARs in tax treaties, EU directives, and domestic law. This development reflects a political and legal shift towards codifying anti-abuse principles, particularly in response to aggressive tax avoidance strategies facilitated by cross-border corporate structures. These measures, however, inherently generate tensions between the imperative to safeguard tax revenues on the one hand, and the fundamental principle of legal certainty, legal tax optimisation strategies, and taxpayer rights on the other. Courts inevitably have to navigate these tensions, as the Court of Justice of the European Union notably did in the landmark Danish cases. Against this backdrop, Baldvinsson’s research is both timely and necessary.
I had the pleasure and honour of serving as the opponent during his public defence at Uppsala University on 28 February 2025, which provided a valuable opportunity to engage directly with his arguments and methodology. In this review, I offer an overview of his research along with some critical reflections.
2 Research Aim, Structure and Methodology (Part I – Chapters 1 to 3)
Baldvinsson’s central aim is to determine how it is assessed whether an activity constitutes abuse in EU tax law and to what extent the conditions of abuse differ across various areas of EU tax law. To address this, he adopts a three-step approach. First, he distinguishes between the material (i.e. what constitutes abuse) and the formal conditions of abuse (i.e. how abuse should be assessed in practice), and establishes the research framework (Part I – Chapters 1 to 3). Second, he analyses:
The general prohibition of abuse of rights as developed by the Court of Justice of the European Union (CJEU).
Abuse under the VAT Directive.
Statutory GAARs in the Merger Directive, Parent-Subsidiary Directive, Interest-Royalty Directive, and Anti-Tax Avoidance Directive.
This part forms the core of the research (Part II – Chapters 4 to 9). Third, he conducts a comparative analysis of the findings from Part II and formulates final conclusions (Part III – Chapters 10 to 12).
The thesis applies a legal dogmatic method, systematically analysing EU legal sources including EU directives, preparatory works, and CJEU case law. A comparative dimension is integrated by examining and contrasting different statutory GAARs across the various EU tax directives and the general principle of prohibition of abuse of EU law as developed in the case law of the CJEU. Baldvinsson’s analysis is complemented by an in-depth historical study of how the CJEU has developed and applied the concept of abuse over time, relying on both textual and teleological interpretative methods.
3 The Core of the Research: Analysis of the Abuse Concept and the Statutory GAARs in the Tax Directives (Part II – Chapters 4 to 9)
Part II of Baldvinsson’s thesis presents a very impressive and comprehensive analysis of the CJEU’s case law on abuse across the different areas of EU tax law, encompassing both primary EU law (i.e. the fundamental freedoms) and secondary EU law in the form of the VAT Directive and the various tax directives containing statutory GAARs. The work strikes a fine balance between comprehensiveness and analytical depth, reflecting the author’s deep engagement with a sophisticated and developing legal landscape.
One of the notable strengths of this part is the author’s analytical skill in dissecting the case law in a highly structured and consistent manner. Each chapter follows the same internal organisation: an introduction, a presentation of the relevant legal framework, a detailed examination of the material conditions of abuse, a thorough treatment of the formal conditions, and a set of interim conclusions. This methodological discipline not only greatly enhances the readability of the work and allows the reader to navigate a complex field with relative ease, but also makes it easy to return to earlier chapters and compare specific elements across the different sections. As a result, the thesis is not only an impressive piece of academic research but also a valuable reference work for practitioners and scholars seeking to consult it on particular points of law.
The chapters in Part II proceed as follows:
Chapter 4 examines the prevention of tax avoidance as a justification ground within the context of the freedoms of movement under primary EU law, analysing the development and application of the general principle of the prohibition of abuse of rights in this domain.
Chapter 5 focuses on the VAT Directive, exploring the CJEU’s application of the general prohibition of abuse in indirect taxation and its interaction with the directive’s specific framework.
Chapter 6 addresses the statutory GAAR in Article 15(1)(a) of the Merger Directive, considering both its legislative history and the case law interpreting it.
Chapter 7 analyses Articles 1(2) and 1(4) of the Parent-Subsidiary Directive, along with the general principle’s application to this directive.
Chapter 8 studies Articles 5(1) and 5(2) of the Interest-Royalty Directive, again in conjunction with the general principle.
Chapter 9 examines Article 6 of the Anti-Tax Avoidance Directive, situating it in the broader context of EU anti-abuse measures.
The interim conclusions at the end of each chapter are particularly valuable. They do not merely summarise the preceding discussion but distil the key findings, highlight interpretative trends, and identify areas of doctrinal uncertainty or inconsistency. These concise syntheses offer the reader both orientation and insight, providing clear stepping stones for the comparative analysis undertaken in Part III.
Baldvinsson’s analysis of the general principle of the prohibition of abuse of rights and its development in the CJEU’s jurisprudence is thorough. He traces the evolution of the principle from its emergence in early case law to its current status as a general principle of EU law applicable in both direct and indirect taxation. Equally thorough is the analysis of the statutory GAARs in the direct tax directives. Baldvinsson examines their legislative development, the variations in their wording, and the extent to which they align with or diverge from the general principle as interpreted by the CJEU. The author’s analysis of case law for each directive is both detailed and methodical, always linking specific judgments to the overarching doctrinal structure. This dual focus, on both the legislative text and its judicial interpretation, ensures a balanced and comprehensive research outcome.
Overall, Part II stands out as a clear, comprehensive, and well-organised examination of complex case law, providing a coherent framework that will serve as a reliable point of reference for future research and practice in EU tax law.
4 The Research Outcome: Comparative Analysis and Conclusions (Part III – Chapters 10 to 12)
Part III presents the overall research outcome and consists of three chapters: Chapters 10, 11, and 12. Chapter 10 compares the material conditions identified in Part II and draws conclusions. Chapter 11 undertakes a similar comparison for the formal conditions identified in Part II. Chapter 12 sets out the final conclusions and forward‑looking observations. This section follows the same structure.
A. Material Conditions of Abuse: What Constitutes Abuse (Chapter 10)
Baldvinsson identifies two prevailing tests applied by the CJEU to determine the existence of abuse: the abuse test and the wholly artificial arrangement test. He highlights that both rely on textual elements which, when interpreted in isolation, are insufficient to establish consistent material conditions. Through a comparative analysis of case law in both direct and indirect taxation, he distils three key conditions for establishing abuse:
Deviation from economic reality (objective element): Five forms of deviation are identified: lack of physical presence or activity; artificial links between entities; deviations from the arm’s length principle; transactions that do not materialise as they should; and temporal anomalies.
Lack of commercial reasons (narrow subjective element): The absence of genuine economic motives beyond tax considerations.
Link to tax benefit: Abuse exists where the principal aim, or one of the main aims, is to obtain an undue tax advantage.
Importantly, Baldvinsson finds that textual differences between the statutory GAARs and the general prohibition as formulated in CJEU case law have limited practical significance. He concludes that a unitary concept of abuse operates in EU tax law, thereby countering pluralist claims of fragmentation.
B. Formal Conditions of Abuse: How Should Abuse be Assessed in Practice
The thesis identifies three core formal conditions that govern the assessment of abuse in EU tax law. First, Member States must ensure that abuse determinations are made on a case‑by‑case basis; statutory definitions that leave no room for judicial assessment are incompatible with EU law. Second, while the allocation of the burden of proof remains largely within national procedural autonomy, EU law requires that a shift of the burden to the taxpayer can occur only where the tax authorities have established sufficient factual grounds to suspect abuse. However, questions remain as to what constitutes “sufficient factual grounds,” and this area continues to pose interpretative challenges given the limited guidance of the CJEU in its case law. Third, when evaluating whether an arrangement is abusive, Member States are required to consider only evidence that can be independently verified, for example through third‑party confirmation.
The research shows that, across the various legal instruments examined, the CJEU has provided relatively limited direct guidance on the formal conditions of abuse. Hence, these formal conditions are subject to debate and uncertainties remain, in particular the threshold for shifting the burden of proof.
C. Summary and a Way Forward
Chapter 12 brings together the core findings of the thesis and situates them within the broader discussion on the prohibition of abuse of rights and statutory GAARs in EU tax law. In the summary of main conclusions, Baldvinsson reiterates that, despite textual variations between the general principle and the statutory GAARs in the directives, the CJEU’s case law reveals a unitary concept of abuse applicable across both direct and indirect taxation.
In the way forward section, he addresses future challenges and opportunities. He recommends that the CJEU maintain its current trajectory, with the expectation that further case law will bring greater clarity as to why certain arrangements constitute a deviation from economic reality or lack sufficient commercial justification. He advises against amending the statutory GAARs in the EU tax directives, noting that such changes are more likely to create confusion than clarity. Regarding the formal conditions, he highlights the need for further research and suggests that his findings provide a solid foundation for such future work.
5 Assessment and Contribution
The thesis addresses a subject of considerable importance and one that has long been at the centre of academic and policy debate. It makes a meaningful contribution to this field by combining an extensive examination of the CJEU’s case law with a careful study of the legislative frameworks in the EU tax directives. The combination of topical relevance and depth of analysis ensures that the work will be of interest to academics, policymakers, and practitioners alike.
Although the thesis presents a thorough and well‑structured analysis, certain aspects could have benefited from additional clarification or elaboration. From a methodological perspective, it would have been helpful if the study had more explicitly mapped the existing academic literature in this area, identified the specific research gap it aimed to address, and clarified how its approach aligns with or diverges from prior work. Such contextualisation would have better positioned the research within the broader academic landscape and more clearly highlighted its originality.
Legal interpretation plays a central role in the research methodology, and the thesis rightly questions an over‑reliance on textual interpretation. In this regard, the inclusion of a concise overview of the interaction between the different schools of interpretation, particularly the boundaries of a teleological approach, would have offered a valuable conceptual framework to underpin the interpretative choices made in the analysis.
Part II, which contains the core of the research, stands out for its systematic and detailed examination of abuse in EU tax law, making it a valuable reference point for anyone engaging with the topic. One area that could have further enriched the discussion is the concept of beneficial ownership. While not a statutory GAAR, it is closely related to the abuse analysis under the GAARs in the Interest-Royalty Directive and Parent-Subsidiary Directive as illustrated in the Danish Beneficial Ownership cases, and its inclusion could have provided additional nuance.
The conclusions in Part III offer a fresh and at times provocative perspective. While not all readers, including the present reviewer, will agree with every point, the work succeeds in stimulating critical debate in a field that has become increasingly complex. Its warning against an excessive reliance on purely textual interpretation is particularly well taken. That said, it remains to be seen how the CJEU will address the clear textual differences between certain statutory GAARs in the tax directives and the general principle of the prohibition of abuse of rights as articulated in its case law. This is precisely where a more detailed articulation of the author’s views on the limits of a teleological approach would have been especially valuable.
Overall, this thesis is a welcome addition to the research on a complex and evolving topic. It will be of lasting value both as a reference tool for targeted research and as a stimulus for deeper reflection on the principles and methods for determining and assessing abuse in EU tax law.
Jean-Philippe Van West is a professor in Tax Law at the Vrije Universiteit Brussel.