Taxation at the Crossroads of Fundamental Rights and Fundamental Freedoms in the EU

in Haslehner, Werner; Kofler, Georg; Rust, Alexander (Eds.) EU Tax Law and Policy in the 21st Century (2017)

After nearly thirty years of dormancy with respect to direct taxation matters, the EU fundamental freedoms have been gradually accepted as a major determinant of the Member States’ freedom to impose to ... [more ▼]

After nearly thirty years of dormancy with respect to direct taxation matters, the EU fundamental freedoms have been gradually accepted as a major determinant of the Member States’ freedom to impose to taxes. Today, the power of the freedoms to limit the Member States’ competence in this area of law is accepted without question. At the same time, EU fundamental rights have, to date, played almost no role at all with respect to tax matters, let alone direct tax matters, although they were already recognized as constituent elements of primary EU law by the Court of Justice of the European Union (the Court or the CJEU) in the 1960s. This dichotomy is remarkable, not least because it is difficult to neatly disentangle fundamental freedoms from fundamental rights, as the former may well be seen as a subset of the latter. This contribution explores the doctrinal underpinnings of their existing similarities and differences as well as the interaction of both, in order to offer an explanation for the seemingly contradictory perception of both fundamental bases of primary EU law. In so doing, it will address the following questions: What is the relationship between fundamental rights and fundamental freedoms? To what extent do they limit or reinforce each other? Why has the CJEU not brought EU fundamental rights to bear in its jurisprudence on direct taxation thus far? Can or should the CJEU be more active in this respect? Thus, this contribution, first, briefly recounts the development of EU fundamental rights and fundamental freedoms and the doctrinal underpinnings of this development as a basis to analyse the scope of both components of primary law and their relationship to one another. Second, it analyses the similarities and relevant differences between fundamental rights and fundamental freedoms and suggests an answer to the question of the extent to which the fundamental freedoms can or should be considered to be fundamental rights. Finally, it assesses the application of fundamental rights in direct tax cases by looking at the clues the CJEU has left in the very little case law available with implications for this question. [less ▲]

Cross-border Exchange of Tax Information and Fundamental Rights

in Haslehner, Werner; Kofler, Georg; Rust, Alexander (Eds.) EU Tax Law and Policy in the 21st Century (2017)

Very few areas of law have been subject to as much scrutiny and political pressure as tax law over the past years. In a very short period of time, we went from almost no exchange to the implementation of ... [more ▼]

Very few areas of law have been subject to as much scrutiny and political pressure as tax law over the past years. In a very short period of time, we went from almost no exchange to the implementation of automatic exchange of information for specific categories of income. Since 2009, an unprecedented interventionism has been best illustrated by the amendments and enlargements of various mutual assistance instruments, both at OECD and EU levels. This widening of scope undoubtedly involves implications for taxpayers who are directly or indirectly concerned by the exchange of information. The unremitting efforts to achieve efficient exchanges among national tax authorities has, so far, resided in the promptness with which the information gathered is transferred and thereby encouraging requested States to limit taxpayers’ notification and participation rights. Addressing fundamental rights implications in cross-border exchanges of information entails, first, an overview of the recent developments in exchange of information procedures and an overview of the scope of fundamental rights at both EU and national levels . Along the same lines, a review of the CJEU decision in Sabou appears relevant in this context as it features in concreto implications of mutual assistance mechanisms on taxpayers’ procedural rights. Considering that the request for preliminary ruling addressed to the CJEU in Sabou mainly raised concerns with respect to the application of the right of the defence, it is appropriate to identify further taxpayers’ rights that may come into play in mutual assistance proceedings. This ‘inventory’ exercise is a prerequisite for a just assessment of the current exchange of information legal framework and allows the formulation of open questions for identified unresolved issues. [less ▲]

Opinion Statement ECJ-TF 1/2017 on the Decision of the Court of Justice of the European Union in SECIL (Case C-464/14) Concerning the Free Movement of Capital in Third Countries

in European Taxation (2017)

The Confédération Fiscale Européenne welcomes the precise and instructive decision in SECIL. The decision clarifies the application of article 63 of the TFEU on the free movement of capital to tax ... [more ▼]

The Confédération Fiscale Européenne welcomes the precise and instructive decision in SECIL. The decision clarifies the application of article 63 of the TFEU on the free movement of capital to tax legislation that denies tax benefits to dividends originating in non-EU Member States and demonstrates that Member States may not rely on article 64(1) of the TFEU, i.e. the “grandfathering clause”, if the logic of their tax legislation changed after 31 December 1993, which change can also be brought about through the conclusion of directly applicable international agreements (for example, Euro-Mediterranean Agreements). The Confédération Fiscale Européenne appreciates the further clarification that provisions with direct effect in EU international agreements with third countries, such as the Euro-Mediterranean Agreements, can create economic rights that can be relied upon by taxpayers. [less ▲]

Luxembourg: Applying Article 16 to a “Collège des Commissaires”

in Kemmeren, Eric; Smit, Daniel; Essers, Peter (Eds.) et al Tax Treaty Case Law around the Globe 2016 (2017)

This case note examines a decision by the Cour administrative of Luxembourg concerning the qualification of the fees earned by a commissaire of a partnership limited by shares under the Luxembourg-South ... [more ▼]

This case note examines a decision by the Cour administrative of Luxembourg concerning the qualification of the fees earned by a commissaire of a partnership limited by shares under the Luxembourg-South Africa tax treaty. It concludes that, while the result of the judgment is unobjectionable, it failed to explore the boundaries of the meaning of the term "director" in ways that could give clearer indications for other cases. [less ▲]

Lohnsteuervollzug im Europäischen Rechtsvergleich

in Drüen, Klaus-Dieter (Ed.) Besteuerung von Arbeitnehmern (2017)

The form and method of taxation of employees follows a distincitve pattern with many similarities across Europe. However, a number of significant differences and exceptions remain. This contribution uses ... [more ▼]

The form and method of taxation of employees follows a distincitve pattern with many similarities across Europe. However, a number of significant differences and exceptions remain. This contribution uses a functional comparative law perspective to highlight and analyse some of those differences and how they relate to the main objectives of the strucure of employee taxation: individualisation, synchronisation, complexity, and security. [less ▲]

"LuxLeaks IV": Das Belgische Excess Profit Exemption Regime als steuerliche Beihilfe

in Jaeger, Thomas; Haslinger, Birgit (Eds.) Beihilferecht Jahrbuch 2017 (2017)

The case under consideration in this contribution concerns the Belgian Excess Profit Exemption Regime, ruled to be illegal state aid by the Commission in 2016. Two questions arise from the case: First ... [more ▼]

The case under consideration in this contribution concerns the Belgian Excess Profit Exemption Regime, ruled to be illegal state aid by the Commission in 2016. Two questions arise from the case: First, what relevance the arm's length principle has under EU state aid law; second, whether the existence of "double non-taxation" (or so-called "white income") has any implications for a finding of state aid. The Commission takes the position that the arm's length principle is a necessary element of any Member State's corporate tax system as a consequence of the general equality principle underlying Article 107 TFEU. On the second question, the Commission's analysis is somewhat less unambiguous, but seems to clearly assign some relevance to the existence of double non-taxation. Both positions are reviewed critically in this contribution. [less ▲]

Double Taxation Relief, Transfer Pricing Adjustments and State Aid Law

in Richelle, Isabelle; Schön, Wolfgang; Traversa, Edoardo (Eds.) State Aid Law and Business Taxation (2016)

This contribution explores the influence of state aid law on tax measures for the provision of relief from double taxation and the consequences of its application to transfer pricing adjustments. In ... [more ▼]

This contribution explores the influence of state aid law on tax measures for the provision of relief from double taxation and the consequences of its application to transfer pricing adjustments. In particular, it analyses the compatibility of measures that prevent merely virtual double taxation and transfer pricing adjustments that might result in “white income”. It also reviews the merits of the Commission’s claim that Member States have to apply the arm’s length standard to transfer pricing adjustments as a matter of State aid law. [less ▲]

Opinion Statement ECJ-TF 1/2016 on the Decision of the European Court of Justice in Joined Cases Miljoen (Case C-10/14), X (Case C-14/14) and Société Générale (Case C-17/14) on the Netherlands Dividend Withholding Tax

in European Taxation (2016)

The Confédération Fiscale Européenne welcomes the ECJ’s decision in the case, which strongly affirms the right of non-resident taxpayers not to be taxed at a higher overall level than resident ... [more ▼]

The Confédération Fiscale Européenne welcomes the ECJ’s decision in the case, which strongly affirms the right of non-resident taxpayers not to be taxed at a higher overall level than resident taxpayers, even where the systems of taxation differ between both types of taxpayers in other respects. This will lead to significant improvement of the situation for cross-border portfolio investors, who continue to suffer from withholding taxes imposed by several Member States. The Confédération Fiscale Européenne further welcomes the various clarifications in this respect, particularly concerning the meaning of the Truck Center decision, the definition of personal allowances within the scope of the Schumacker decision and its case law on the possible neu- tralization of disadvantages by way of bilateral tax treaties. The Confédération Fiscale Européenne notes that, despite these clarifications, uncertainty continues to persist with regard to the significance of a credit carry-forward granted by a residence state for a possible neutralization of disadvantages, which the ECJ did not directly address, and with respect to the need for reimbursement of withhold- ing taxes where (only) a partial offset in the residence state is available. The Confédération Fiscale Européenne wishes to take the opportunity to urge the Member States and the European Institutions to continue to work on improving procedures with regard to relief from withholding taxation in the source state under tax treaties and EU law. [less ▲]

Opinion Statement ECJ-TF 4/2015 on the Decision of the European Court of Justice in Groupe Steria SCA (Case C-386/14) on the French Intégration Fiscale

in European Taxation (2016)

The Confédération Fiscale Européenne welcomes the Court’s clarification that cross-border company structures may not automatically be excluded from all the benefits of group taxation regimes but that ... [more ▼]

The Confédération Fiscale Européenne welcomes the Court’s clarification that cross-border company structures may not automatically be excluded from all the benefits of group taxation regimes but that rather, in general, a case-by-case assessment has to be made. This resolves concerns arising from the X Holding case, which, it is now clear, only addresses cross-border loss relief and perhaps tax-neutral intra-group transactions. [less ▲]

The Effect of a Tax Treaty Tie-breaker for Dual Residents

in Lang, Michael; Owens, Jeffrey; Pistone, Pasquale (Eds.) et al Tax Treaty Case Law around the Globe 2015 (2016)

Case 33872C, which was decided by Luxembourg’s Cour administrative on 18 December 2014, concerned two questions of tax treaty law: first, whether the taxpayer in question was a resident of Luxembourg or ... [more ▼]

Case 33872C, which was decided by Luxembourg’s Cour administrative on 18 December 2014, concerned two questions of tax treaty law: first, whether the taxpayer in question was a resident of Luxembourg or Germany during the tax period concerned in accordance with the tie-breaker rule of the applicable double taxation convention (DTC); and second, what was the effect of that qualification for the application of domestic tax law provisions in Luxembourg that do not affect Germany’s taxing right as guaranteed in the DTC. Does the tie-breaker rule in Article 4(1) of the OECD Model determine how a dual-resident taxpayer is to be treated under domestic law or does it merely serve to allocate the role of residence country and source country, respectively? The court answered this question in the negative, holding that the taxpayer was a resident of Germany under the tax treaty tie-breaker rule, but that the tax treaty did not prevent Luxembourg from treating him (a non-resident under the terms of the tax treaty) as a resident to the extent that doing so did not violate Germany’s primary taxing right, which resulted in (progressive) joint taxation with his spouse in Luxembourg. The court's reasoning is sound based on general principles of the relationship between domestic law and tax treaties, but did not address more intricate arguments that arise from the concrete wording of the treaty. This contribution explores these in addition to analysing the court's decision. [less ▲]