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17.08 - Painel 3 - Rainer ProkischEC Law and Tax Treaties

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17.08 - Painel 3 - Rainer ProkischEC Law and Tax Treaties Powered By Docstoc
					The role of tax treaties in judgments of the
         European Court of Justice

    Prof. Dr. Rainer Prokisch, Maastricht University
Outline

I.     Introduction
II.    General considerations
      1.   Tax Treaties and EC Law
      2.   Fundamental Freedoms as equal treatment clauses
III. Tax Treaties as part of the facts
IV. The bilateral nature of Tax Treaties and its consequence for
     the interpretation of the basic freedoms
      1.   The frontier worker cases
      2.   The dividend withholding cases
V.     Conclusions



Faculty of Law – Department of Tax Law
Introduction

• EU has no competences in respect of
  direct taxation
• EU has no power to conclude tax
  treaties with third states
• DTCs are not part of the EU legal
  system
• ECJ does not interpret tax treaties

Faculty of Law – Department of Tax Law
Tax Treaties and EC Law – The Case
ST. GOBAIN

     France


            F-CORP                                           Germany
                                                     PE
                                         Participation

                                                          Dividends


                                                    US
Faculty of Law – Department of Tax Law
Fundamental Freedoms as equal
treatment clauses
• Restriction or Limitation of freedoms is not sufficient
  in direct tax cases
• Freedoms are applied as equal treatment clauses,
  i.e. there must be a unequal treatment of
  comparable situations or an equal treatment of non-
  comparable cases
• Example: Double taxation restricts the functioning
  of the common market, but is not a restriction of
  the fundamental freedoms as long as there is no
  unequal treatment either in the state of source or in
  the state of residence
Faculty of Law – Department of Tax Law
Tax Treaties as part of the facts

• Tax treaties are considered to be
  domestic law
• ECJ has to accept application and
  interpretation of domestic courts
• However, ECJ is not consequent



Faculty of Law – Department of Tax Law
The Case „Renneberg“

                 Cross-border employment


     Belgium
                                                                NL
                                             R. works in NL
                                             (public service)



    R. has income from                   R. has income from work for
    living is his own house              a public organization (Article
    (negative) (Article 6                19 OECD Model)
    OECD Model)


Faculty of Law – Department of Tax Law
The frontier worker cases –
Schumacker and others
        Belgium is state of
        residence




                              DTC: Belgium     S. works in
                              exempts          Germany and
                              foreign income   earns all his
                                               income there




Faculty of Law – Department of Tax Law
The dividend withholding cases – the
state of source – Denkavit


       France                                                NL

                                  Dividends

                Corp                                 Corp



                        WHT               Participation exemption



Faculty of Law – Department of Tax Law
The dividend withholding cases – the
state of source – Denkavit


       France                                                NL

                                  Dividends

                Corp                                 Corp



                        WHT               Participation exemption



Faculty of Law – Department of Tax Law
The dividend withholding cases – the state of
residence – Kerckhart/Morres, Damseaux




       France                                                 Belgium

                                  Dividends

                Corp



                        WHT                   No Credit, uniform tax of
                                              25%

Faculty of Law – Department of Tax Law

				
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posted:4/28/2011
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