The purpose of this article is to analyse the interaction between EU primary law and intellectual property (IP) boxes designed according to the modified nexus approach included in the final report on BEPS Action 5. It does so by analysing the different elements of an IP box in the light of the freedom of establishment and the state aid rules. It is concluded that while an IP box system should be compatible with the freedom of establishment, it conflicts with the state aid rules. Therefore, IP boxes not yet in place but planned by the Member States should, in principle, fall under the prohibition on implementation and the notification requirement stipulated in Article 108(3) of the Treaty on the Functioning of the European Union (TFEU).
Intertax