Article (Scientific journals)
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
Kofler, Georg; Garcia Prats, Alfredo; Haslehner, Werner et al.
2023In European Taxation, 63 (1), p. 27-34
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Abstract :
[en] 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.
Disciplines :
European & international law
Tax law
Author, co-author :
Kofler, Georg
Garcia Prats, Alfredo
Haslehner, Werner  ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Law (DL)
Heydt, Volker
Kemmeren, Eric
Lang, Michael
Nogueira, Joao
Panayi
Raventos-Calvo, Stella
Richelle, Isabelle
Rust, Alexander
Shiers, Rupert
External co-authors :
yes
Language :
English
Title :
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
Publication date :
January 2023
Journal title :
European Taxation
ISSN :
2352-9199
Publisher :
International Bureau of Fiscal Documentation, Amsterdam, Netherlands
Volume :
63
Issue :
1
Pages :
27-34
Peer reviewed :
Peer Reviewed verified by ORBi
Focus Area :
Law / European Law
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since 08 August 2023

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