Opinion Statement ECJ-TF 1/2023 on the ECJ Decision of 16 February 2023 in Gallaher Limited (Case C-707/20), on the Taxation of Capital Gains in Intra-Group Transfers

in European Taxation (2023), 63(8),

In this CFE Opinion Statement, submitted to the EU Institutions in June 2023, the CFE ECJ Task Force comments on the ECJ decision in Gallaher Limited (Case C-707/20), which provides further clarity on the ... [more ▼]

In this CFE Opinion Statement, submitted to the EU Institutions in June 2023, the CFE ECJ Task Force comments on the ECJ decision in Gallaher Limited (Case C-707/20), which provides further clarity on the scope of the fundamental freedoms, the correct comparator in establishing discrimination and the proportionality of discriminatory taxation of capital gains. Gallaher concerns the compatibility of the United Kingdom’s group transfer rules with EU law. Under those rules, sales of assets between resident group members are treated as tax neutral, whereas sales to non-resident group members are taxed immediately. Following Advocate General Rantos’ Opinion of 8 September 2022,[2] the ECJ found the UK group transfer rules to be in line with EU law. In essence, the Court held (i) that only the freedom of establishment, under article 49 TFEU (and not also the freedom of capital movement under article 63 TFEU) is relevant in respect of national legislation that applies only to groups of companies; (ii) that no relevant restriction of the parent company’s freedom of establishment exists where a transfer is taxed irrespective of the residence of the parent; and (iii) that the immediate taxation of a realized gain in respect of a cross-border sale within the EU is justified and proportionate, even if a comparable domestic sale is treated as tax neutral. [less ▲]

Opinion Statement ECJ-TF 3/2022 on the EFTA Court Decision of 1 June 2022 in PRA Group Europe (Case E-3/21), on the Discriminatory Interaction between the “Interest Barrier” and Group Contributions

in European Taxation (2023), 63(1), 27-34

This is an Opinion Statement prepared by the CFE ECJ Task Force on PRA Group Europe (Case E-3/21), in respect of which the EFTA Court delivered its decision on 1 June 2022. At issue in PRA Group Europe ... [more ▼]

This is an Opinion Statement prepared by the CFE ECJ Task Force on PRA Group Europe (Case E-3/21), in respect of which the EFTA Court delivered its decision on 1 June 2022. At issue in PRA Group Europe was the interaction between the Norwegian “interest barrier rule” (“interest limitation rule”), which generally limits the deductibility of interest payments to affiliated resident and non-resident entities to 30% of EBITDA, and the group contribution rules, which permit tax effective transfers between group members, but are limited to Norwegian entities. As group contributions also increase the EBITDA of the recipi- ent Norwegian entity (and decrease it at the level of the paying Norwegian entity), companies in the Norwegian tax group can achieve interest deductions under the inter- est barrier rules where profits (“tax EBITDA”) and interest expenses are distributed unevenly between the companies in the group, while a similar opportunity to escape (or lessen the impact of) the interest barrier rules is not available to cross-border groups. The EFTA Court took a combined perspective on the interaction of these rules and found them to constitute an unjustified restriction of the freedom of establishment under articles 31 and 34 of the European Economic Area Agreement (1992). The EFTA Court’s decision is particularly interesting from an EU law perspective, as the interest barrier rule of article 4 of the EU Anti-Tax Avoidance Directive (2016/1164) (ATAD) similarly foresees an option for Member States to introduce a domestically limited “interest barrier group” to permit a calculation of exceeding borrowing costs and the EBITDA at the local group level. [less ▲]

Opinion Statement ECJ-TF 1/2022 on the ECJ Decision of 25 November 2021 in État Luxembourgeois v. L (Case C-437/19) on the Conditions for Information Requests and Taxpayer Remedies

in European Taxation (2022), 62(4), 219-223

In the judgment commented on in this article, the Court of Justice clarified the conditions for the identification of a taxpayer in group requests under the DAC (Directive 2011/16) and confirmed that ... [more ▼]

In the judgment commented on in this article, the Court of Justice clarified the conditions for the identification of a taxpayer in group requests under the DAC (Directive 2011/16) and confirmed that article 47 of the Charter on Fundamental Rights requires the information holder to be given the necessary information to assess the request’s legality. [less ▲]

Opinion Statement ECJ-TF 2/2021 on the ECJ Decision of 25 February 2021 in Société Générale (Case C-403/19) on the Calculation of the Maximum Amount of a Foreign Direct Tax Credit

in European Taxation (2022)

The Court’s decision in Société Générale reinforces established case law that EU law neither prohibits juridical double taxation nor does it impose an obligation on the residence Member State to prevent ... [more ▼]

The Court’s decision in Société Générale reinforces established case law that EU law neither prohibits juridical double taxation nor does it impose an obligation on the residence Member State to prevent the disadvantages that could arise from the exercise of competence thus attributed by the two Member States. The parallel existence of taxing jurisdiction, however, must be distinguished from the exercise of such jurisdiction by each Member State. While Member States are free to determine the connecting factors for the allocation of taxing jurisdiction in tax treaties, in exercising the “power of taxation, so allocated by bilateral conventions for the avoidance of double taxation, the Member States must comply with EU rules and, more particularly, observe the principle of equal treatment”. It is generally accepted in the Court’s case law that both the ordinary credit and exemption (including exemption with progression) methods are permissible to avoid double taxation. In Société Générale, this position was confirmed, specifically as regards the “maximum deduction” under the ordinary credit method in tax treaties, even though this treatment can result in a disadvantage for cross-border income as compared with domestic income. As the disadvantage in Société Générale was due to the difference between gross-basis taxation of dividends in the source Member States (Italy, the Netherlands and the United Kingdom) and net-basis taxation of those foreign-sourced dividends in the residence state (France), it remains to be seen whether or not future cases will bring clarity in light of the Seabrokers decision of the EFTA Court, which examined how expenses can be lawfully allocated to foreign income from the perspective of the residence Member State. [less ▲]

Opinion Statement ECJ-TF 3/2020 on the General Court Decisions of 15 July 2020 in Ireland v. Commission and Apple v. Commission (Joined Cases T-778/16 and T-892/16) on State Aid Granted under Tax Rulings Fixing the Attribution of Profits to Permanent Establishments in Ireland

in European Taxation (2021), 61(2/3), 109-116

This CFE Opinion Statement, submitted to the EU Institutions on 2 December 2020, addresses the General Court decisions in Ireland v. Commission and Apple v. Commission (Joined Cases T-778/16 and T-892/16 ... [more ▼]

This CFE Opinion Statement, submitted to the EU Institutions on 2 December 2020, addresses the General Court decisions in Ireland v. Commission and Apple v. Commission (Joined Cases T-778/16 and T-892/16) on 15 July 2020. [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 ▲]

Opinion Statement ECJ-TF 3/2019 on the ECJ Decision of 22 November 2018 in Sofina (Case C-575/17) on Withholding Taxes, Losses, and Territoriality

in European Taxation (2020), 60(2/3), 91-97

This CFE Opinion Statement, submitted to the EU Institutions on 10 October 2019, comments on the Decision in Sofina (Case C-575/17), in respect of which the Fifth Chamber of the ECJ delivered its decision ... [more ▼]

This CFE Opinion Statement, submitted to the EU Institutions on 10 October 2019, comments on the Decision in Sofina (Case C-575/17), in respect of which the Fifth Chamber of the ECJ delivered its decision on 22 November 2018. The Court held that the imposition of French dividend withholding tax violated the freedom of capital movement in light of the non- resident’s overall loss situation. [less ▲]

Opinion Statement ECJ-TF 1/2019 on the ECJ Decision of 31 May 2018 in Hornbach-Baumarkt (Case C-382/16)

in European Taxation (2019), 59(9), 446-452

In this Opinion Statement, submitted in April 2019, the CFE discusses the ECJ decision in Hornbach-Baumarkt (Case C-382/16) concerning the application of transfer pricing rules to transactions between ... [more ▼]

In this Opinion Statement, submitted in April 2019, the CFE discusses the ECJ decision in Hornbach-Baumarkt (Case C-382/16) concerning the application of transfer pricing rules to transactions between resident and non-resident associated enterprises. [less ▲]

Turnover Taxes Under State Aid Spotlight

in European Taxation (2019), 59(2/3), 106-112

In response to the Commission’s increasingly broad interpretation of State aid rules with regard to national retail and advertising taxes, in the ANGED cases, the ECJ developed its Distribution Casino ... [more ▼]

In response to the Commission’s increasingly broad interpretation of State aid rules with regard to national retail and advertising taxes, in the ANGED cases, the ECJ developed its Distribution Casino France case law, applying a restrictive view of the qualification of these taxes as illegal State aid. This article provides an overview of the relevant legal questions raised in the ANGED cases, as well as in the Polish and Hungarian retail sales and advertisement tax cases. [less ▲]

Opinion Statement ECJ-TF 1/2018 on the Compatibility of Limitation-on-Benefits Clauses with the EU Fundamental Freedoms

in European Taxation (2018)

This Opinion Statement was prepared by the CFE ECJ Task Force and concerns the compatibility of limitation-on-benefits (LoB) clauses with the EU fundamental freedoms, based on decisions of the European ... [more ▼]

This Opinion Statement was prepared by the CFE ECJ Task Force and concerns the compatibility of limitation-on-benefits (LoB) clauses with the EU fundamental freedoms, based on decisions of the European Court of Justice (ECJ). The context of this statement is the Commission’s infringement procedure against the Netherlands with regard to the LoB clause in the Japan- Netherlands Income Tax Treaty (2010) and the inclusion of a simplified optional LoB clause in the BEPS Multilateral Instrument. [less ▲]