Case Comment on CJEU C-405/18 AURES Holdings

in Highlights and Insights on European Taxation (2020)

This is a brief case comment on a judgment by the Court of Justice. The taxpayer in this case sought a deduction for losses incurred in the Netherlands prior to its change of residence to the Czech ... [more ▼]

This is a brief case comment on a judgment by the Court of Justice. The taxpayer in this case sought a deduction for losses incurred in the Netherlands prior to its change of residence to the Czech Republic, relying on the freedom of establishment to claim that denying the loss deduction would restrict it right to move without facing discrimination. Following its Advocate General, the Court dismissed this argument, holding that the situation of a company that had incurred losses at a time when it was outside of the tax jurisdiction of a Member State was not comparable to the situation of a company that incurred losses while being subject to that Member State's jurisdiction. The decision does not hold particular surprises, but is an important piece in search for a unified theory of two separate lines of jurisprudence: that concerning foreign loss relief and that concerning exit taxation. [less ▲]

Luxembourg: Conflict of Qualification and partnership income: autonomous and common interpretation

in Lang, Michael; Rust, Alexander; Owens, Jeffrey (Eds.) et al Tax Treaty Case Law Around the Globe 2019 (2020)

The dispute giving rise to the judgment discussed in this chapter concerns treaty interpretation in the presence of deviating national definitions of business income and thus touches upon a number of long ... [more ▼]

The dispute giving rise to the judgment discussed in this chapter concerns treaty interpretation in the presence of deviating national definitions of business income and thus touches upon a number of long-standing questions surrounding the meaning of article 3(2) of the OECD Model, the importance of common interpretation, and the resolution of qualification conflicts. The issue concerned arose from a different qualification, under domestic law, of the income earned by limited partnerships engaged in private asset management activity: while the income in question was treated as interest and capital gains from a German perspective, Luxembourg’s domestic law applied a legal fiction which resulted in it being treated as business income. In the case, Luxembourg’s highest administrative court (Cour administrative, hereinafter the “Court”) took advantage of Luxembourg and German case law, scholarship and the common legislative heritage of both countries in order to resolve the different income classification under each country’s domestic law. The court did not, however, make use of the Commentary on the OECD Model in this instance. [less ▲]

The Apple State Aid Case

in Lang, Michael; Pistone, Pasquale; Rust, Alexander (Eds.) et al CJEU - Recent Developments in Direct Taxation 2019 (2020)

The Apple Case raises a number of questions concerning the application of State aid review to the taxation of multinational entities. The case’s prominence stems primarily from the taxpayer’s brand ... [more ▼]

The Apple Case raises a number of questions concerning the application of State aid review to the taxation of multinational entities. The case’s prominence stems primarily from the taxpayer’s brand recognition and the amount of taxes at stake; the legal questions raised, however, are interesting in their own right: the case differs in several respects from the previously decided Fiat and Starbucks cases, leaving the outcome quite open. First, while it has been held by the General Court in those previous cases that the arm’s length principle can be used as a yardstick to assess transfer prices accepted by a Member State’s administration, it is not inevitable that this implies the similar applicability of the AOA to branches of non-resident companies. Second, the application of the AOA appears only to be leading to a decisive win for the Commission if the Court agrees that the US head offices do not exercise important functions related to Apple’s IP. As the Commission both accepted the claim that the subsidiaries’ effective management and control was exercised there and did not challenge the CSA (and – by implication – accepted the reality of ownership of IP by those subsidiaries), this may turn out to be difficult to prove. A third doubt arises from the apparent acceptance by the Commission that the aid granted by Ireland could be reduced to the extent that other countries would make valid claims to tax the same profits that the Commission considers attributable to the Irish branches, especially in light of the fact that it appears the entirety of the relevant profits can be included in US taxation following the reforms introduced with the 2017 Tax Cuts and Jobs Act with respect to global intangible low-taxed income. That being said, the Commission is surely on stronger ground in claiming that the Irish tax system as applied in practice may have left too much discretion to tax authorities in any given case. It will be interesting to see how much weight the Court will give to the paucity of available documentation from the time of the tax rulings, and how it will consider the transfer-pricing reports produced ex post facto to justify the outcome when the Commission investigated them. [less ▲]

Tax Procedures in Luxembourg

in Tax Procedures (2020)

This contribution provides an overview of Luxembourg tax procedures and answers a number of questions regarding the administrative law principles governing the collection of taxation, audit, and appeals ... [more ▼]

This contribution provides an overview of Luxembourg tax procedures and answers a number of questions regarding the administrative law principles governing the collection of taxation, audit, and appeals procedures. It was prepared as a contribution to the 2019 Annual Congress of the European Association of Tax Law Professors, which was devoted to tax procedures. [less ▲]

Opinion Statement ECJ-TF 1/2020 on the General Court Decisions of 24 September 2019 in "Starbucks" and "Fiat" on State Aid Granted by Transfer Pricing Rulings

in European Taxation (2020), 60(5), 222-230

This CFE Opinion Statement, submitted to the EU Institutions on 28 January 2020, discusses the General Court decisions of 24 September 2019 in The Netherlands v. Commission (Starbucks) (Joined Cases C-760 ... [more ▼]

This CFE Opinion Statement, submitted to the EU Institutions on 28 January 2020, discusses the General Court decisions of 24 September 2019 in The Netherlands v. Commission (Starbucks) (Joined Cases C-760/15 and T-636/16) and Luxembourg v. Commission (Fiat Finance and Trade) (Joined Cases T-755/15 and T-759/15), on State aid granted by transfer pricing rulings. [less ▲]

A Multilateral Interpretation of the Multilateral Instrument (and Covered Tax Agreements)?

in Bulletin for International Taxation (2020), 74(4/5),

The analysis of the multilateral nature of the interpretation processes created by the MLI shows that very little “true multilateralism” arises from its adoption. At its core, the international tax system ... [more ▼]

The analysis of the multilateral nature of the interpretation processes created by the MLI shows that very little “true multilateralism” arises from its adoption. At its core, the international tax system remains fragmented and built on bilateral agreements, with only a thin overlay of multilateral agreement on selected issues. The MLI does not set up a multilateral dispute resolution mechanism. The Conference of the Parties as the only true multilateral body created by the MLI plays a very small – if any – role in the interpretation and application of tax treaty rules. Neither has the MLI produced a system where national courts would have a stronger basis to enforce the harmonious interpretation of treaty terms in both contracting states (let alone among all Parties to the MLI) beyond the general appeal of such approach that already exists prior to – and outside the scope of – the MLI. If a coherent interpretation of CTAs with a view to achieve something like the elusive “single tax principle” was indeed a goal behind the project as a whole, the rules on interpretation applicable following the MLI’s adoption do not amount to a codification of that ideal, although the MLI can, in specific circumstances, have an interpretative effect on tax treaties even where it does not result in a modification of the norms in that treaty. Decision harmony among courts in different countries, therefore, remains an ideal that cannot be based in substance on the existence of the MLI. [less ▲]

Research Handbook on European Union Taxation Law

Book published by Edward Elgar (2020)

Offering a comprehensive exploration of EU taxation law, this engaging Research Handbook investigates the relevant legal principles in the context of both direct and indirect taxation. The important ... [more ▼]

Offering a comprehensive exploration of EU taxation law, this engaging Research Handbook investigates the relevant legal principles in the context of both direct and indirect taxation. The important issues and debates arising from these general principles are expertly analysed, with leading scholars examining the status quo as well as setting out an agenda for future research. [less ▲]

The ATAD and the CCTB

in Bizioli, Gianluigi; Grandinetti, Mario; Parada, Leopoldo (Eds.) et al Corporate Taxation, Group Debt Funding and Base Erosion - New Perspectives on the EU Anti-Tax Avoidance Directive (2020)

This short chapter analyses the relationship between the interest limitation rules laid down in the Anti-Tax Avoidance Directive (ATAD) and the Proposed Directive on a Common Corporate Tax Base (CCTB ... [more ▼]

This short chapter analyses the relationship between the interest limitation rules laid down in the Anti-Tax Avoidance Directive (ATAD) and the Proposed Directive on a Common Corporate Tax Base (CCTB). Both are substantially congruent with very few differences in their content. Nevertheless, there are several aspects of the relationship between the two directives that raise fundamental questions as to their respective impacts on national law. Accordingly, this contribution aims to highlight, first, the general relationship between European Union (EU) directives, second, the specific relationship between the ATAD and the CCTB – if and when it is adopted – and, third, comments on the few variations in their respective provisions on interest limitation. [less ▲]

Opinion Statement ECJ-TF 2/2019 on the ECJ Decisions of 26 February 2019 inN Luxembourg I et al.(Joined Cases C-115/16, C-118/16, C-119/16 and C-299/16) andT Danmark et al.(Joined Cases C-116/16 and C-117/17)

in European Taxation (2019), 59(10), 487502

The article acknowledges that the “Danish beneficial ownership cases” address a number of important and timely issues, especially with regard to the concept of abuse in EU law. These include (i) the ... [more ▼]

The article acknowledges that the “Danish beneficial ownership cases” address a number of important and timely issues, especially with regard to the concept of abuse in EU law. These include (i) the expansion of the general anti-abuse principle enshrined in EU law to areas of tax law that are subject to minimal harmonization, (ii) the use of the OECD materials to define the beneficial ownership concept, (iii) the conflation of the beneficial ownership concept with the general anti-abuse principle and the Court’s attempt to give the notion of “abuse” workable contours, and (iv) the reading of an effective subject-to-tax clause with regard to interest income into the definition of a “company” laid down in the IRD. The article also, however, predicts that domestic courts will struggle to translate the abstract guidance of the “Danish beneficial ownership cases” into concrete decisions, that practitioners and academics alike will have to discuss building blocks and nuances of the Grand Chamber’s decisions for some time to come, and that consideration needs to be given to the impact these cases will have on current tax structures. [less ▲]

Tax and the Digital Economy: Challenges and Proposals for Reform

Book published by Wolters Kluwer (2019)