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Tax Aspects of Bilateral Investment Treaties of Central and Eastern European Member States of the European Union - FESTO

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This research project focuses on the tax related investment disputes which emerged in the Central and Eastern European Member States of the European Union (CEEMS). Recent years have seen a rise in the number of tax related investment disputes in the Central and Eastern Europe (CEE) region. It is expected that tax aspects of bilateral investment treaties concluded by CEEMS will continue to raise significant particularities. In order to determine the extent and scope of such particularities, this project analyzes the tax coverage of BITs signed by CEEMS. It demonstrates to what extent the foreign investors investing in the CEEMS have protections from tax measures that constitute breaches of bilateral investment treaties. Furthermore, it aims to serve as a tool to anticipate the potential cases where disputes might arise. For this aim, the study examines certain key concepts in the tax related foreign investment context from the perspective of these jurisdictions.

The research project also focuses on the tension in the CEE region with regards to investment treaties and dispute resolution. The EU has gained exclusive competence on foreign direct investment and the EU has enacted a regulation which provides legal security to the existing BITs between the Member States and third countries until they are replaced by EU-wide investment agreements. However, some uncertainty exists for BITs signed between member states. A number of CEEMS have argued that with their accession into the EU, the BITs signed with other member states have become incompatible with the EU law. These developments are expected to have a huge impact on the future practices in the international investment law and this research project examines the scope of the expected EU regulations and actions in this area from a tax perspective. 

Overall, the research project aims to provide a better understanding on the effects of the related tax related investment disputes and the implications of developments in the European Union on tax revenues and tax culture in the CEE region. This project will be carried out by Prof. Dr. Alexander Rust, LL.M. who has been awarded FESTO Fellowship.