Institute for Austrian and International Tax Law RECENT TRENDS IN ECJ CASE LAW IN THE AREA OF THE FREEDOMS AND DIRECT TAXATION PROF.

Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw 1

RECENT TRENDS IN ECJ CASE LAW IN THE AREA OF THE FREEDOMS AND

DIRECT TAXATION

PROF. DR. DR. H.C. MICHAEL LANGIBDT

JUNE 10, 2010


ECJ DEVELOPMENTS

1986 – 2005 VERSUS 2005 - …

SCOPE OF THE FREEDOMS COMPARABILTY JUSTIFICATIONS PROPORTIONALITY


1986 – 2005: FIRST PERIOD

BEFORE 1986: PRACTICALLY NO TAX CASES “LANDMARK DECISIONS“:

COMMISSION VERSUS FRANCE („AVOIR FISCAL“): 1986 BIEHL: 1990 BACHMANN: 1992 SCHUMACKER: 1995 SAINT-GOBAIN: 1999 BAARS AND VERKOOIJEN: 2000 GERRITSE: 2003 LASTERYIE DU SAILLANT: 2004


SCOPE OF THE FREEDOMS

SCOPE OF THE FREEDOMS WAS NOT IN THE FOCUS OF ECJ

EXAMPLE: LASTERYIE DU SAILLANT EXCEPTION: WERNER


COMPARABILITY I

RESTRICTION VERSUS DISCRIMINATION?

HIDDEN (COVERT) DISCRIMINATION BIEHL

PAIR OF COMPARISONS: RESIDENT AND NON-RESIDENT TAXPAYERS TWO RESIDENT TAXPAYERS, ONE IN INTERNAL SITUATION,

THE OTHER IN CROSSBORDER SITUATION (BACHMANN) TWO NON-RESIDENT TAXPAYERS IN DIFFERENT CROSS

BORDER SITUATIONS (AVOIR FISCAL, SCHUMACKER)


COMPARABILITY II

LEGAL COMPARABILITY: QUICKLY ACCEPTED AVOIR FISCAL SAINT GOBAIN

FACTUAL COMPARABILITY: SCHUMACKER: RESIDENTS AND NON-RESIDENTS ARE

UNDER CERTAIN CIRCUMSTANCES COMPARABLE

IDENTICAL TREATMENT OF DIFFERENT SITUATIONS FUTURA? LIP SERVICE


JUSTIFICATIONS: RESTRICTIVE APPROACH

LACK OF HARMONISATION LOSS OF TAX REVENUES RECIPROCITY PREVENTION OF TAX EVASION (SLIGHT CHANGE

ALREADY IN ICI [1998]) COMPENSATION OF DISADVANTAGE (TENSIONS

TO BACHMANN [1992]: COHERENCE) NEED FOR FISCAL SUPERVISION: MUTUAL

ASSISTANCE DIRECTIVE


PROPORTIONALITY: LITTLE DISCUSSION

PREVENTION OF ABUSE AND EVASION: WHOLLY ARTIFICIAL ARRANGEMENTS (ICI 1998)

NEED FOR FISCAL SUPERVISION MUTUAL ASSISTANCE DIRECTIVE (FUTURA 1997) TAXPAYER HAS TO CONTRIBUTE TO PROVIDE EVIDENCE

(BENT VERSTERGAARD 1999)

COHERENCE TAKEN AWAY BY OTHER RULES (WIELOCKX 1995)


2005 – … : SECOND PERIOD

“LANDMARK DECISIONS“: D (2005) SCHEMPP (2005) MARKS & SPENCER (2005) N (2006) CADBURY SCHWEPPES (2006) SCORPIO (2006)


2005 – …: SEC0ND PERIOD

“ LANDMARK DECISIONS“ – CONT.: OY AA (2007) AMURTA (2007) Columbus Container (2007) A (2007) DEUTSCHE SHELL (2008) LIDL (2008) BLOCK (2009)


SCOPE OF THE FREEDOMS

N (2006): MORE EFFORT ON DETERMINING THE NECESSARY INTRA-UNION SITUATION (VERSUS LASTERYIE DU SAILLANT [2004])

FIDIUM FINANZ (2007): MORE EMPHASIS ON DRAWING THE BORDER LINE BETWEEN FREEDOMS – NARROWING THE SCOPE OF FREE MOVEMENT OF CAPITAL AND PAYMENTS

BURDA (2008) VERSUS GLAXO WELLCOME (2009): IS THE DOMESTIC RULE OR ARE THE FACTS RELEVANT?


COMPARABILITY I

JUSTIFICATION ARGUMENTS NOW USED AT COMPARABILITY LEVEL COHESION (BLANCKAERT [2005] RECIPROCITY (D [2005]) LEGAL SITUATION ABROAD (SCHEMPP [2005]) WITHOUT REAL ARGUMENTS (TRUCK CENTER [2008]) CHANGING CASE LAW WITHOUT ADMITTING NO PROPORTIONALITY


COMPARABILITY II

TWO NON-RESIDENT TAXPAYERS IN DIFFERENT CROSS BORDER SITUATIONS D (2005), CLT UFA (2006), CADBURY (2006), DENKAVIT

INTERNATIONAL (2006), AMURTA (2007), A (2007), OESF (2008), COMMISSION VERSUS NETHERLANDS (2009)

BUT: COLUMBUS CONTAINER (2007)


COMPARABILITY III

EQUAL TREATMENT IN DIFFERENT SITUATIONS VAN HILTEN (2006) TRUCK CENTER (2008) BUT: DEUTSCHE SHELL (2008)

LEGAL COMPARABILITY ECKELKAMP (2008), ARENS-SIKKEN (2008)

FACTUAL COMPARABILITY TURPEINEN (2006), LAKEBRINK (2007), RENNEBERG

(2008)


JUSTIFICATIONS I

ALLOCATION OF TAXING POWERS THREE JUSTIFICATIONS TAKEN TOGETHER (MARKS &

SPENCER [2005] TWO JUSTIFICATIONS TOGETHER (OY AA [2007], LIDL

[2008]) SYMMETRY (LIDL [2008]; TENSIONS TO WIELOCKX

[1995])


JUSTIFICATIONS II

PREVENTION OF DOUBLE UTILIZATION OF LOSSES MARKS & SPENCER (2005), LIDL (2008) CONSEQUENCE: LOOKING INTO SITUATION ABROAD AT

LEVEL OF JUSTIFICATION BUT: BLOCK (2009): DOUBLE TAXATION IS PERMITTED

COHESION SYMMETRY (WANNSEE [2008])


PROPORTIONALITY I

MORE EMPHASIS ON THE OBLIGATION OF THE TAXPAYER TO CONTRIBUTE TO THE PROCEDURE (JAEGER [2008])

„HELPING“ THE TAXPAYER: REQUIRING TO DECLARE THE VALUE OF THE ASSETS AT THIME OF EXIT (N [2006])

RECAPTURE OF LOSSES NOT NECESSARY (MARKS & SPENCER [2005])

CASH FLOW DISADVANTAGES ACCEPTABLE (LIDL [2008], TRUCK CENTER [2008]; CONTRADICTING HOECHST [2001])


PROPORTIONALITY II

TAKING ACCOUNT SITUATION ABROAD (OY AA [2007])

DEVELOPING THE CONCEPT OF “WHOLLY ARTIFICIAL ARRANGEMENTS“ (CADBURY [2006])

DIFFERENT LEGAL CONTEXT IN RELATION TO THIRD COUNTRIES (A [2007])


CONCLUSIONS: CONTINUITY IN CASE LAW I

COMPARABILITY: STILL DIFFERENT PAIRS OF COMPARISONS (IN

PARTICULAR COMPARING TWO NON-RESIDENTS WITH EACH OTHER)

CONTINUED AMBIVALENCE IN RESPECT OF EQUAL TREATMENT OF DIFFERENT SITUATIONS

JUSTIFICATIONS: STILL REJECTING MANY JUSTIFICATIONS


CONCLUSIONS: CONTINUITY IN CASE LAW II

PROPORTIONALITY: DEVELOPING THE CONCEPT OF “WHOLLY ARTIFICIAL

ARRANGEMENTS“ DEVELOPING STANDARDS FOR THIRD COUNTRY

SITUATIONS (NO CASE LAW BEFORE)


CONCLUSIONS: CHANGES IN CASE LAW I

SCOPE OF FREEDOMS: MORE EMPHASIS ON DRAWING THE BORDER LINE NARROWING THE SCOPE OF FREE MOVEMENT OF

CAPITAL AND PAYMENTS

COMPARABILITY PREVIOUSLY REJECTED JUSTIFICATIONS NOW AT

COMPARABILITY LEVEL ACCEPTED


CONCLUSIONS: CHANGES IN CASE LAW II

NEW JUSTIFICATIONS ACCEPTED NEW STANDARDS OF PROPORTIONALITY

MORE GOVERNMENT-FRIENDLY

ECJ MAY CHANGE CASE LAW, HOWEVER, ECJ SHALL MAKE IT EXPLICITE


INSTITUTE FOR AUSTRIAN AND INTERNATIONAL TAX LAWAlthanstr. 39–45, 1090 Vienna, Austria

UNIV.PROF. DR. MICHAEL LANG

T +43-1-313 36-4182F +43-1-313 [email protected]/taxlaw

Institute for Austrian and International Tax Law RECENT TRENDS IN ECJ CASE LAW IN THE AREA OF THE FREEDOMS AND DIRECT TAXATION PROF.

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