Over Peter Wattel
Peter Wattel is advocaat-generaal bij de Hoge Raad der Nederlanden en hoogleraar Europees belastingrecht aan de Universiteit van Amsterdam.
Peter Wattel
Peter Wattel is advocaat-generaal bij de Hoge Raad der Nederlanden en hoogleraar Europees belastingrecht aan de Universiteit van Amsterdam.
Meer over de auteurs
Peter Wattel,
Otto Marres,
Hein Vermeulen
e.a.
Terra/Wattel European Tax Law - Volume 1: General Topics and Direct Taxation
(Student edition)
Paperback Engels 2018 7e druk 9789013133592Op voorraad
Voor 21:00 besteld, morgen in huis
Gratis verzonden
Samenvatting
This highly regarded textbook introduces students to the field of European tax law, shedding light on the implications of the EU Treaties and secondary EU law for national and bilateral tax law. It explores EU Court’s case law in direct tax matters and the Union’s direct tax rules in force.
European Tax Law provides a state of the art overview of the field of EU law and taxation. Catering towards both tax law students as well as EU law students, the seventh edition of the leading textbook systematically examines a broad range of topics.
The volume is unparalleled in its clarification and analysis of the implications of the EU Treaties and secondary EU law for national and bilateral tax law. The reader will gain a critical perspective on the tax implications of the EU Treaties and of EU tax harmonization and coordination policy. The authors put forward a discussion of the EU Court’s case law in direct tax matters, and a discussion of the Union’s direct tax rules in force.
IMPORTANT: for practitioners, tax administrators, academics, the judiciary, and tax law or Union law policy makers an unabridged hardcover edition twice this size is available.
The chapters introduce the reader to core concepts revolving around EU law and taxation. The first part addresses the foundations on which contemporary European tax law is built.
The second part will go in-depth on issues pertaining to the integration of direct taxation. The reader gains a deeper understanding of subjects such as the harmonization of corporate income taxation, the exchange of information and recovery assistance, and negative integration of direct taxation.
Volume II of this book, to be released in the near future, will cover harmonization of indirect taxation, energy taxation and capital duty, as well as administrative cooperation in the field of indirect taxation.
Specificaties
ISBN13:9789013133592
Taal:Engels
Bindwijze:paperback
Aantal pagina's:576
Uitgever:Wolters Kluwer
Druk:7
Verschijningsdatum:2-3-2018
Hoofdrubriek:Juridisch
Jongbloed:Belastingrecht - Europees belastingrecht
Serie:Fed Fiscale studieserie
Lezersrecensies
Wees de eerste die een lezersrecensie schrijft!
Over Otto Marres
Otto Marres is advocaat bij Linklaters in Amsterdam. Voort is hij verbonden aan de Universiteit van Amsterdam als universitair docent internationaal belastingrecht en Europees belastingrecht en is hij annotator van BNB.
Als hoogleraar internationaal belastingrecht en is hij annotator van BNB.
Andere boeken door Otto Marres
Over Hein Vermeulen
Mr. dr. H. (Hein) Vermeulen studeerde fiscaal recht aan de Universiteit van Amsterdam en is aldaar ook gepromoveerd. Hij is thans als universitair docent verbonden aan de leerstoelgroep belastingrecht van de Universiteit van Amsterdam en als onderzoeker aan het Amsterdam Centre for Tax Law (ACTL). Zijn onderzoek richt zich op de fiscale aspecten van beleggingsinstellingen en van vastgoed.
Hein Vermeulen is voorts secretaris van de Commissie beleggingsinstellingen van de Vereniging voor belastingwetenschap, werkzaam bij het PricewaterhouseCoopers, redacteur van Vastgoed Fiscaal & Civiel en auteur van de Cursus Belastingrecht.
Andere boeken door Hein Vermeulen
Inhoudsopgave
Preface / V
Overview / VII
List of abbreviations / XXIII
PART 1
General EU law and Taxation / 1
CHAPTER 1
Introduction / 3
Peter Wattel
CHAPTER 2
Constitutional Foundations: EU Tax Competences; Legal Basis for Tax Integration; Sources and Enactment of EU Tax Law / 9
Rita Szudoczky and Dennis Weber
2.1 Division of (Tax) Competences Between the Union and the Member States / 9
2.2 Sources of EU Tax Law / 11
2.2.1 Primary and Secondary EU Law / 11
2.2.2 Primary law / 12
2.2.2.1 Treaty Provisions Relevant for Taxation / 12
2.2.2.2 General Principles of EU law / 13
2.2.3 Secondary Law: Characteristics of Regulations, Directives and Decisions / 14
2.2.4 International Agreements Concluded by the Union / 15
2.2.5 Soft Law / 16
2.2.5.1 Recommendations, Opinions and Communications / 16
2.2.5.2 Codes of Conduct / 17
2.3 Enactment of EU Measures as Regards Taxation / 18
2.3.1 Different Legislative Procedures / 18
2.3.2 Treaty Bases for Tax Integration / 20
2.3.3 Escapes From the Unanimity Requirement: Enhanced Cooperation, Market Distortion Provisions / 21
CHAPTER 3
General EU Law Concepts and Tax Law / 23
Peter Wattel
3.1 Introduction / 23
3.1.1 An Internal Market / 23
3.1.2 Interaction of Positive and Negative Integration; Direct and Indirect Taxation; Limits to Negative Integration in Tax Matters / 24
3.1.3 Access to the Four Freedoms / 26
3.1.3.1 Treaty Standing; Cross-Border Element; Internal Situations; EU Citizenship / 26
3.1.3.2 Treaty Access in Direct Tax Cases / 27
3.1.3.3 Abuse of Right Does Not Bar Treaty Access (but May Justify a Restriction) / 30
3.1.4 The Rule of Law; Human Rights; General Principles of EU Law; Effective Legal Remedy / 31
3.2 The Four Freedoms / 35
3.2.1 ‘Discriminations’ and ‘Obstacles’; Market access and Market Equality; the Rule of Reason / 35
3.2.1.1 Discrimination and Restriction Concepts / 35
3.2.1.2 Permissible Restrictions on Free Movement; the Rule of Reason / 37
3.2.2 Rule of Reason Justifications for (Fiscal) Market Restrictions / 39
3.2.3 (Rare) Examples of Direct Tax Measures Affecting Free Trade in Goods; French Newspapers and Krantz / 43
3.2.4 Direct Taxation and the Freedom to Provide (and Purchase) Services / 43
3.2.5 The Free Movement of Persons and the Right of Residence / 44
3.2.6 Freedom of Capital and Payments; Extending to Third States / 48
3.2.7 Discriminations, Restrictions, Disparities and Dislocations / 50
3.2.7.1 Measures With and Without Distinction; From an Obstacle-Approach to a Discrimination- Approach; Exercise in Parallel of Taxing Power / 50
3.2.7.2 Disparities / 55
3.2.7.3 Dislocations (Tax Base Compartmentalization); Source Taxation and EU-Wide Taxation; National Tax Treatment of Nonresidents? / 56
3.3 Normal Conditions of Competition (a ‘Level Playing Field’) / 65
3.4 Sincere Cooperation and Effectiveness of EU Law / 66
3.5 Implications of the Principle of Effectiveness of EU Law in the National Legal Order / 69
3.5.1 Direct Effect and Primacy of EU Law; Consistent Interpretation; Effects of Directives / 69
Overview / VII
List of abbreviations / XXIII
PART 1
General EU law and Taxation / 1
CHAPTER 1
Introduction / 3
Peter Wattel
CHAPTER 2
Constitutional Foundations: EU Tax Competences; Legal Basis for Tax Integration; Sources and Enactment of EU Tax Law / 9
Rita Szudoczky and Dennis Weber
2.1 Division of (Tax) Competences Between the Union and the Member States / 9
2.2 Sources of EU Tax Law / 11
2.2.1 Primary and Secondary EU Law / 11
2.2.2 Primary law / 12
2.2.2.1 Treaty Provisions Relevant for Taxation / 12
2.2.2.2 General Principles of EU law / 13
2.2.3 Secondary Law: Characteristics of Regulations, Directives and Decisions / 14
2.2.4 International Agreements Concluded by the Union / 15
2.2.5 Soft Law / 16
2.2.5.1 Recommendations, Opinions and Communications / 16
2.2.5.2 Codes of Conduct / 17
2.3 Enactment of EU Measures as Regards Taxation / 18
2.3.1 Different Legislative Procedures / 18
2.3.2 Treaty Bases for Tax Integration / 20
2.3.3 Escapes From the Unanimity Requirement: Enhanced Cooperation, Market Distortion Provisions / 21
CHAPTER 3
General EU Law Concepts and Tax Law / 23
Peter Wattel
3.1 Introduction / 23
3.1.1 An Internal Market / 23
3.1.2 Interaction of Positive and Negative Integration; Direct and Indirect Taxation; Limits to Negative Integration in Tax Matters / 24
3.1.3 Access to the Four Freedoms / 26
3.1.3.1 Treaty Standing; Cross-Border Element; Internal Situations; EU Citizenship / 26
3.1.3.2 Treaty Access in Direct Tax Cases / 27
3.1.3.3 Abuse of Right Does Not Bar Treaty Access (but May Justify a Restriction) / 30
3.1.4 The Rule of Law; Human Rights; General Principles of EU Law; Effective Legal Remedy / 31
3.2 The Four Freedoms / 35
3.2.1 ‘Discriminations’ and ‘Obstacles’; Market access and Market Equality; the Rule of Reason / 35
3.2.1.1 Discrimination and Restriction Concepts / 35
3.2.1.2 Permissible Restrictions on Free Movement; the Rule of Reason / 37
3.2.2 Rule of Reason Justifications for (Fiscal) Market Restrictions / 39
3.2.3 (Rare) Examples of Direct Tax Measures Affecting Free Trade in Goods; French Newspapers and Krantz / 43
3.2.4 Direct Taxation and the Freedom to Provide (and Purchase) Services / 43
3.2.5 The Free Movement of Persons and the Right of Residence / 44
3.2.6 Freedom of Capital and Payments; Extending to Third States / 48
3.2.7 Discriminations, Restrictions, Disparities and Dislocations / 50
3.2.7.1 Measures With and Without Distinction; From an Obstacle-Approach to a Discrimination- Approach; Exercise in Parallel of Taxing Power / 50
3.2.7.2 Disparities / 55
3.2.7.3 Dislocations (Tax Base Compartmentalization); Source Taxation and EU-Wide Taxation; National Tax Treatment of Nonresidents? / 56
3.3 Normal Conditions of Competition (a ‘Level Playing Field’) / 65
3.4 Sincere Cooperation and Effectiveness of EU Law / 66
3.5 Implications of the Principle of Effectiveness of EU Law in the National Legal Order / 69
3.5.1 Direct Effect and Primacy of EU Law; Consistent Interpretation; Effects of Directives / 69
3.5.2 Enforcement of EU Law: Procedural Equivalence and Effectiveness / 72
3.5.2.1 National Procedural Autonomy on Two Conditions; Procedural Rule of Reason / 72
3.5.2.2 Illustration: Restrictions on Restitution of Overpaid Tax / 74
3.5.2.3 Application of EU Law ex officio; Public Policy Provisions / 76
3.5.3 National Time-Limits, Final Decisions and Res Iudicata / 78
3.5.3.1 The Length of National Time-Limits; Again Equivalence and Effectiveness / 78
3.5.3.2 (No) Revision of Final Administrative Decisions and Final Judgments / 80
3.5.4 State Liability for ‘Serious’ Breaches of EU Law / 85
3.5.4.1 Introduction; Conditions for Liability / 85
3.5.4.2 A ‘Sufficiently Serious’ Breach of EU Law / 86
3.5.4.3 Interaction with Direct Effect; Incidental Damages / 88
3.5.4.4 State Liability for Wrongful Supreme Court Judgments / 88
3.5.4.5 Penalty Payments for Breaches of EU Law / 90
CHAPTER 4
The EU Charter of Fundamental Rights, General Principles of EU Law and Taxation / 91
Pasquale Pistone
4.1 Legal status, classification and relation with EU law principles / 91
4.2 General provisions / 92
4.2.1 Scope and requirements for protection: in which cases does the Charter apply? / 92
4.2.1.1 “only when they are implementing Union law” / 92
4.2.1.2 The level of fundamental rights protection; interaction of the Charter, the European Convention and national constitutional law / 93
4.2.2 Limitations of Rights and the link with the Community and Union Treaties / 93
4.2.3 Interaction between the Charter and the European Convention / 94
4.3 Tax Aspects of EU fundamental rights / 95
4.3.1 Right to privacy and data protection / 95
4.3.2 Right to property / 96
4.3.3 Equality before the law and non-discrimination / 97
4.3.4 Freedom of movement and residence / 97
4.3.5 Right to an effective remedy and fair trial / 97
4.3.6 Presumption of innocence and right of defence / 99
4.3.7 Provisions geared solely at the EU institutions / 100
4.3.8 Principles of legality and proportionality of criminal offences and penalties / 101
4.3.9 Prohibition of double jeopardy / 101
CHAPTER 5
Third States and External Tax Relations / 103
Update and Elaboration by Ana Paula Dourado and Peter Wattel
5.1 Overview / 103
5.2 Third State Capital Movement / 103
5.2.1 Introduction; Differences Between Intra-EU and Third State Capital Movement / 103
5.2.2 In Principle the Same Substance as Intra-EU, but: ‘a Different Legal Context’ / 104
5.2.3 The Grandfather Clause (Article 64(1) TFEU) / 106
5.2.4 Mutual Exclusion or Overlap? How to Distinguish Capital Movement From Establishment and Service Provision? / 109
5.2.5 No Intra-EU Cherry-Picking From Tax Treaties With Third States, nor Vice Versa / 114
5.3 Member States’ Overseas, Associated and Dependent Territories: Member State, Third State, ‘Second’ State? / 115
5.4 The European Economic Area Agreement (EEAA) / 119
5.5 The EU Blacklist of Non-cooperative Third States / 119
PART 2
Integration of Direct Taxation / 121
Part 2A Harmonization of Corporate Income Taxation / 121
CHAPTER 6
The Parent-Subsidiary Directive / 123
Update by Otto Marres
6.1 Introduction / 123
6.2 Main Features / 124
6.3 Qualifying Companies (Arts. 2 and 3) / 124
6.3.1 ‘Company of a Member State’ and ‘Permanent Establishment’ (Art. 2) / 124
6.3.2 Parent and Subsidiary Status (Art. 3) / 129
6.3.3 No Other Requirements / 131
6.4 Inbound Dividends: Exemption or Indirect Credit (Art. 4) / 131
6.4.1 The General Rule: Choice of Exemption or Indirect Credit; Even Asymmetrical / 131
6.4.2 Linking Rule: No Exemption for Deductible Payments / 133
6.4.3 Respecting Both CIN and CEN / 134
6.4.4 Ordinary Credit; Excess Foreign Corporation Tax / 134
6.4.5 Multi-Tier Credit / 135
6.4.6 (Non-)Deductibility of Charges ‘Related’ to the Holding (Art. 4(3)); Bosal Holding and Argenta Spaarbank II / 136
6.5 ‘Distributions of Profits’; Constructive Dividends; Hybrid (Transparent) Entities; Liquidation Proceeds / 137
6.5.1 Distributions of Profits (Art. 1) / 137
6.5.2 Hybrid Entities (Art. 4(2)); Fiscal Transparency / 138
6.6 Outbound Dividends: Abolition of Withholding Tax (Art. 5) / 138
6.6.1 The General Rule / 138
6.6.2 Transitional and Deleted Derogations / 139
6.6.3 ‘Withholding Tax’ / 139
6.6.4 Article 6; (No) Précompte Mobilier / 139
6.6.5 Imputation Systems; Imputation Taxes; Outbound Payment of Imputation Credits (Art. 7) / 140
6.7 Anti-Abuse Reservation (Art. 1(2)-1(4)) / 141
6.7.1 In a Nutshell / 141
6.7.2 Main purpose or one of the main purposes of obtaining a tax advantage / 142
6.7.3 Defeating object or purpose / 142
6.7.4 Artificiality / 143
6.7.5 Refusing ‘the benefits of the Directive’ / 143
6.7.6 Article 1(4): Reservation of Competence (any Autonomy Left?) / 145
CHAPTER 7
The Tax Merger Directive / 151
Update by Frederik Boulogne
7.1 Introduction; Objective; History / 151
7.2 Ad Hoc Tax Problems of Mergers and Divisions / 153
7.3 Longer-Term Tax Problems of Restructuring Operations / 153
7.4 Operations Covered and Definitions (Art. 2) / 154
7.4.1 Operations Covered (Art. 2(a-e) and (k)) / 154
7.4.2 ‘Branch of Activity’ (Art. 2(j)); Independent Functioning / 155
7.4.3 Coverage after the SEVIC, Cartesio and VALE Cases, the Implementation of the Amendment, and the Company Law Directive on Cross-Border Mergers of Limited Liability Companies / 157
7.5 10% Additional Cash Pay-Out (Art. 2(a)-(c) and (e)) / 159
7.6 Gist and System of the Directive / 159
7.7 Qualifying Companies (Art. 3) / 161
7.8 Taxation of the Companies Involved / 162
7.8.1 Deferral of Capital Gains Tax and Carry-Over of Tax Values (Arts. 4, 9 and 11) / 162
7.8.2 Carry-Over of Losses Connected to the Remaining Branch (Arts. 6 and 13(2)) / 163
7.8.3 Carry-Over of Tax-free Provisions and Reserves (Arts. 5 and 13(1)) / 163
7.8.4 Branch Requirement (Arts. 4(2)(b) and 12(1)(b)) / 164
7.8.5 Valuation of Shares Received / 164
7.8.6 Hybrid (Transparent) Entities / 165
7.9 Cancellation of Shares (Art. 7) / 166
7.10 Taxation of the Shareholders Involved (Arts. 8, 11 and l4) / 167
7.11 Transfer or Incorporation of a Foreign Branch (Art. 10) / 168
7.12 Operations and Migrations Not Covered / 169
7.13 The Anti-Abuse Reservation (Art. 15) / 170
7.13.1 Evasion and Avoidance; Objective and Subjective Elements; Scope and National Implementation of the Anti-Abuse Provision / 170
7.13.2 The Leur-Bloem Case; Facts / 171
7.13.3 Admissibility: Domestic Situation, but National Law Refers to EU Law / 172
7.13.4 (not included in this student edition)
7.13.5 (not included in this student edition)
7.13.6 Purely Fiscal Advantages Are Not ‘Valid Commercial Reasons’ / 172
7.14 (not included in this student edition) / 173
7.15 Consequences / 173
CHAPTER 8
The Settlement of Cross-Border Tax Disputes in the European Union / 175
Pasquale Pistone
8.1 Cross-border tax disputes: from none to up to four types of legal instruments for their settlement / 175
8.2 Brief historical overview / 176
8.3 Legal basis / 177
8.4 The relations between the legal instruments / 178
8.5 Scope / 178
8.5.1 General issues / 178
8.5.2 Personal scope / 179
8.5.3 Substantive scope / 179
8.5.4 Objective scope / 180
8.5.5 Territorial scope / 180
8.6 The procedures / 180
8.6.1 The mutual agreement procedure / 180
8.6.1.1 General issues / 180
8.6.1.2 Access to the mutual agreement procedure / 181
8.6.1.3 The unilateral phase / 181
8.6.1.4 The consultation phase / 182
8.6.1.5 The final phase / 183
8.6.2 Arbitration / 184
8.6.2.1 Introductory remarks / 184
8.6.2.2 The appointment and composition of the panel / 185
8.6.2.3 The rules of functioning / 186
8.6.2.4 The modes of arbitration / 187
8.6.2.5 The involvement of the affected person(s) during the procedure / 188
8.6.2.6 Confidentiality of the proceedings / 189
8.6.2.7 The decision / 190
8.6.2.8 The derogations / 191
8.6.2.9 Cost of the proceedings / 192
8.7 The relations with domestic judicial procedures / 193
CHAPTER 9
Tax Aspects of the European Economic Interest Grouping (EEIG) and the European Company (SE) / 195
not included in this student edition
CHAPTER 10
The Interest and Royalty Directive / 197
Update by Axel Cordewener
10.1 Introduction: Background, History and Aim / 197
10.2 Scope of Application / 198
10.2.1 Objective (Substantive) Scope of Application / 198
10.2.1.1 Interest and Royalty Payments (Article 2) / 198
10.2.1.2 Potential Limitations through Exclusion of Certain Payments (Article 4) / 199
10.2.2 Subjective (Personal) Scope of Application / 200
10.2.2.1 ‘Company of a Member State’ (Article 3(a)) / 200
10.2.2.2 Association Requirement (Article 1(7) juncto Article 3(b)) / 201
10.2.2.3 ‘Permanent Establishment’ (Article 3(c)) / 202
10.2.2.4 Recipient as ‘Beneficial Owner’ (Article 1(4), (5)) / 203
10.2.3 Territorial Scope of Application / 203
10.2.4 Temporal Scope of Application / 204
10.3 Relief Rule: Tax Exemption in the Source State / 204
10.3.1 Exemption from ‘Any Taxes’ (Art. 1(1)) / 205
10.3.2 Relief Procedure / 206
10.3.2.1 Immediate Exemption from Withholding Tax (Article 1(11) – (14)) / 206
10.3.2.2 Right to Refund if Immediate Exemption Failed (Article 1(15) – (16)) / 206
10.4 Special Issues / 207
10.4.1 Anti-Tax Avoidance Provisions / 207
10.4.1.1 Minimum Association Period (Article 1(10)) / 207
10.4.1.2 Prevention of Fraud and Abuse (Article 5) / 208
10.4.2 Direct Effect of Beneficial Rules / 209
10.4.3 Relation to Relief Provisions under Domestic Law or Double Tax Treaties (Article 9) / 209
10.5 Some Comments on the Current Status of the Directive and Proposals for Further Amendments / 209
CHAPTER 11
A Common Consolidated Corporate Tax Base (C(C)CTB) / 213
Jan van de Streek
11.1 Introduction / 213
11.2 General Policy Objectives / 215
11.2.1 Stimulating Growth and Investment / 215
11.2.2 Enhancing the Fairness of Corporate Income Tax / 217
11.2.3 Legal Basis and Subsidiarity / 218
11.3 Personal and Material Scope of the CCTB/CCCTB proposals / 220
11.3.1 Mandatory Regime for Large Companies / 220
11.3.2 Optional Regime for SMEs / 222
11.3.3 Issues Subject to National Corporate Income Tax / 223
11.4 Main Features of the Common Tax Base / 225
11.4.1 A Few General Principles and No Link to IAS/IFRS / 225
11.4.2 Calculation of the Tax Base / 227
11.4.3 Foreign Income and Participation Exemption / 229
11.4.4 Loss Relief / 232
11.5 Consolidation and Formulary Apportionment / 234
11.5.1 Consolidation / 234
11.5.2 Sharing Formula / 237
11.5.3 Administrative Framework / 240
11.6 Outlook / 242
CHAPTER 12
The Anti-Tax-Avoidance Directive (ATAD) / 245
Daniël Smit
12.1 Introduction and Background: an Ambitious EU Agenda Beyond BEPS / 245
12.2 History, Objective, Scope and Main Features of the ATAD / 246
12.2.1 Adoption of the ATAD: Politically Controversial, but Eventually Feasible / 246
12.2.2 De Minimis-Standard and “Menu of Options”; Intra-EU Fragmentation Risk Not Solved / 247
12.2.4 Personal Scope; Corporate Tax Liability as The Gateway / 248
12.3 (not included in this student edition)
12.4 The Four Specific Anti-Tax Avoidance Rules (SAARs) / 249
12.4.1 The Earnings-Stripping Rule / 249
12.4.1.1 Introduction and Background / 249
12.4.1.2 Scope of the Rule: Exceeding Borrowing Costs minus 30% EBITDA = non-Deductible / 251
12.4.1.3 Exceptions to the Interest Limitation Rule / 253
12.4.2 The Exit Tax and Tax Base Step-Up Rule / 255
12.4.2.1 Introduction and Background / 255
12.4.2.2 Exit Tax and Tax Base Step-Up, but Mutual Recognition of Market Value Bridge too Far / 255
12.4.2.3 An Alarming Lack of Definitions and Over- and Under-Inclusiveness / 256
12.4.2.4 The Intra-EU/EEA Option for Stagged Recovery: a Curse in Disguise? / 257
12.4.2.5 Valuation Mismatches: the Real BEPS-Issue Left Unsolved / 258
12.4.3 The CFC-Rule(s) / 258
12.4.3.1 Introduction and Background / 258
12.4.3.2 Three Cumulative Proxies: CFC, Effectively Low-Taxed, Bad Income / 259
12.4.3.3 The Full-Fledged CFC-Rule and the Light (Quasi) CFC-Rule / 261
12.4.3.4 The “Substance”-Escape under the Full-Fledged CFC-Rule / 262
12.4.3.5 Income Attribution and Double Taxation Relief (Add-Back & Credit) / 263
12.4.4 The Hybrid Mismatch Rule / 264
12.4.4.1 Introduction and Background / 264
12.4.4.2 Deduction without Inclusion (D/NI) Mismatches / 264
12.4.4.3 Double Deduction (DD) Mismatches / 268
12.4.4.4 A Final Backstop against “Import of Mismatches” / 269
12.5 The Mandatory General Anti-Tax Avoidance Rule (GAAR) for Corporate Taxation / 270
12.5.1 Introduction and Background; a Single European Abuse of Law Concept / 270
12.5.2 (not included in this student edition)
12.5.3 The GAAR Tests / 270
12.5.3.1 Artificiality / 271
12.5.3.2 Motive / 272
12.5.3.3 Defeat of Object and Purpose of Corporate Tax Law / 273
12.5.3.4 Burden of Proof / 273
12.6 Entry into Force / 274
12.7 A Final Chord? / 275
Part 2B Exchange of Information and Recovery Assistance / 277
CHAPTER 13
Administrative Cooperation in the Assessment and Recovery of Direct Tax Claims / 279
Update by Sigrid Hemels
13.0 Background; History; Legal Basis / 279
13.0.1 The Need for Cross-Border Administrative Cooperation in Tax Matters / 279
13.0.2 OECD Initiatives before the Financial Crisis / 280
13.0.3 EU Mutual Assistance Initiatives before the Financial Crisis / 280
13.0.4 Poor Results, Failing the OECD Standard; Revised Directives on Recovery Assistance (2012) and Administrative Cooperation (2013) / 281
13.0.5 Influence of BEPS on the DAC / 282
13.0.6 Legal Basis: ‘Internal Market’ or ‘Fiscal’? / 282
13.1 The Directive on Administrative Cooperation 2011/16/EU (DAC) / 283
13.1.1 General Provisions; Minimum Standard; Language, Scope and Organisation / 283
13.1.1.1 Taxes Covered; Not Just Direct Taxes / 284
13.1.1.2 Personal Scope; Anyone or Anything Subject to Tax / 285
13.1.1.3 Objective Scope: ‘Foreseeably Relevant’ Information / 285
13.1.1.4 Channel of Exchange / 285
13.1.1.5 Temporal Scope / 286
13.1.2 Three Types of Exchange of Information / 286
13.1.2.1 Mandatory Exchange upon Request / 286
13.1.2.2 Mandatory Automatic Exchange / 287
13.1.2.3 Spontaneous Exchange / 295
13.1.3 Admission of Foreign Officials / 296
13.1.4 Simultaneous Controls / 297
13.1.5 Notification of Foreign Decisions and Instruments / 297
13.1.6 Access to Anti-Money-Laundering Information, Including Information on Ultimate Beneficial Owners / 297
13.1.7 Disclosure, Use and Forwarding of Information Obtained / 298
13.1.8 Grounds for Refusal of Cooperation / 299
13.1.8.1 Non-Exhaustion of Appropriate Domestic Means / 300
13.1.8.2 Lack of Domestic Legal Basis / 300
13.1.8.3 Lack of Reciprocity / 301
13.1.8.4 Protection of Commercial Secrets / 301
13.1.8.5 Protection of the Ordre Public / 301
13.1.9 Taxpayers’ Judicial Protection / 301
13.1.9.1 No Right to Be Involved / 302
13.1.9.2 Right to Legal Remedy in Case of Penalty / 303
13.1.9.3 Data Protection / 304
13.1.9.4 Confidentiality Obligation of the European Commission / 305
13.1.9.5 Direct Effect / 305
13.1.10 Information Overload? / 306
13.2 The Recovery Assistance Directive (RAD) / 306
13.3 Concurrence Rules / 307
13.3.1 DAC and RAD / 308
13.3.2 MCMAATM Convention and EU Rules / 308
13.3.3 Domestic Law, Bilateral or Multilateral (Tax) Treaties and EU Rules / 308
Part 2C Negative Integration of Direct Taxation / 311
CHAPTER 14
Conceptual Background of the CJEU Case Law in Direct Tax Matters / 313
Peter Wattel
14.1 The Basic Clash between (International) Tax Law and Internal Market Law / 313
14.1.1 Basics of International Tax Law; Residence and Source Taxation / 313
14.1.2 Opposing Points of Departure of International Tax Law and Internal Market Law / 315
14.2 The Court Accepts All Tax Connecting Factors and All Methods for Double Tax Relief / 316
14.3 Territoriality Taxation or EU-Wide Taxation / 317
14.4 Basic Notions in the Court’s Direct Tax Case Law / 320
14.4.1 ‘Discrimination’, not Mere ‘Restriction’: Nondiscriminatory ‘Obstacles’, ‘Parallel Exercise’ and Disparities are Outside Free Movement Scrutiny / 320
14.4.2 Comparability (Subject-to-Tax) and Justifiability (Tax Base Integrity); Assertion and Exercise of Taxing Power / 322
14.5 Departures from the Subject-to-Tax Approach or the One-Country Approach / 328
14.5.1 The ‘Always-Somewhere’ or ‘One-Market’ Approach / 328
14.5.2 The Mutual Recognition Approach / 331
14.5.3 The Overall Approach: ‘Neutralization’ in the Other Jurisdiction; De Groot, Denkavit France, Amurta, Miljoen / 334
CHAPTER 15
Free Movement and Tax Base Integrity / 339
Update by Cécile Brokelind and Peter Wattel
15.1 Overview of the Development of the CJEU's View on Tax Avoidance / 339
15.2 Correspondence Between (i) the Abuse of Rights Prohibition, (ii) the Anti-Abuse Reservations in Secondary EU Tax Law, and (iii) the ATAD and CCCTB Requirements Correspondence between Abuse of Rights, Anti-Abuse Reservations, and ATAD / 341
15.3 (not included in this student edition)
15.4 Abuse of Rights as a General Principle of EU Law; Objective and Subjective Element / 343
15.5 Exclusion of Categories of Cross-Border Cases; Fiscal Coherence; Balanced Allocation; Fiscal Supervision; Territoriality; Overlap of Justifications for Free Movement Restrictions
15.6 Procedural Issues; Division of the Onus of Proof / 351
15.7 Consequences of a Finding of Abuse: ‘Redefine so as to Re-Establish’ / 354
15.8 Allowing General Tax Base Protection / 354
15.8.1 Rise, Fall and Revival of Fiscal Cohesion / 354
15.8.2 The Fiscal Principle of Territoriality / 356
15.8.3 A Balanced Allocation of Taxing Power between Member States / 358
15.9 Conclusion – A Single Concept – Tax Base Integrity as the Fiscal Manifestation of the Court’s General Abuse of Rights Doctrine / 359
CHAPTER 16
Division of Tax Jurisdiction; Double Tax Relief Mechanisms; Tax Treaty Issues / 361
Update by Otto Marres
16.1 International Double Taxation (and why its Elimination is a Union Goal but not an Obligation for the Member States) / 361
16.1.1 Why is there International Double Taxation in the first Place? / 361
16.1.2 National Autonomy; no Obligation to Eliminate Double Taxation / 362
16.2 Capital Import Neutrality (CIN; Exemption) and Capital Export Neutrality (CEN; Credit) / 362
16.2.1 Source Taxation and Residence Taxation; Assumption and Exercise of Taxing Jurisdiction / 362
16.2.2 Capital Export Neutrality (CEN); the Credit Method / 363
16.2.3 Capital Import Neutrality (CIN); the Exemption Method / 363
16.2.4 Differences and Similarities; Deferral; CFC Legislation / 364
16.2.5 Acceptance of Both Credit and Exemption in Secondary EU Law; the Court Accepts All Methods for Double Tax Relief; Remaining Inconsistencies / 365
16.3 Tax Treaty Issues / 367
16.3.1 National Autonomy; Conclusion of Bilateral Tax treaties / 367
16.3.2 Treaties to be Regarded as National Law; the Overall Approach / 368
16.3.3 Tax Treaties and their Substantive Rules / 369
16.3.4 Treaty Overrides / 371
CHAPTER 17
Corporate Income Taxation / 373
Update by Hein Vermeulen
17.1 Introduction / 373
17.2 Host State: Equal Treatment of Branches and Subsidiaries / 373
17.3 Origin State: Are Parents of Foreign and Domestic Branches and Subsidiaries Comparable? / 375
17.4 Group Taxation Schemes / 377
17.4.1 Group Taxation Schemes of Domestic Entities / 378
17.4.2 Group Taxation Schemes of Domestic Entities and Non-Domestic Entities: current losses / 379
17.4.3 Group Taxation Schemes of Domestic Entities and Non-Domestic Entities: other advantages than current losses / 381
17.5 CFC Legislation / 382
17.6 Thin Capitalization, Profits Adjustments, and the Treaty Freedoms / 385
CHAPTER 18
Cross-border Loss Relief / 393
Update by Ana Paula Dourado
18.1 Introduction; the Issues; Overview; Distinction between Individuals and Companies / 393
18.2 Technical Background / 395
18.3 Negative Integration; Pre-Marks & Spencer II Case Law / 396
18.4 Nonresident Group Companies; Marks & Spencer II and Oy AA: Relief (only) for Definitive Losses; No Profit Carry-Over / 398
18.5 Foreign Branches; Lidl Belgium and Krankenheim Ruhesitz / 401
18.6 Risk of currency loss / 403
18.7 Double Branch Dip (Philips Electronics) and Cross-Border Loss Importation by Merger (A Oy) / 404
18.8 Individuals / 406
18.9 Proportionality and M&S III / 408
18.10 Reincorporation of PE Losses: Nordea Bank, Timac Agro and A/S Bevola / 409
CHAPTER 19
Cross-Border Dividend Taxation / 413
Update by Hein Vermeulen
19.1 Possible Unequal Treatment of Cross-Border Dividends / 413
19.2 The CJEU’s basic Notions; Juridical and Economic Double Taxation, and Exertion of Taxing Power / 414
19.3 Inbound Dividends (Residence Taxation): National Treatment, Exit Imputation Systems / 417
19.3.1 Economic Double Taxation of Inbound Dividends / 417
19.3.2 Juridical Double Taxation of Inbound Dividends / 420
19.3.3 Asymmetric Undoing of Economic Double Taxation of Inbound Dividends / 424
19.4 Outbound Dividends (Source Taxation): National Treatment of Non-Resident Shareholders and the gross/net Dilemma / 425
19.4.1 Economic Double Taxation / 425
19.4.2 Juridical Double Taxation or Denial of Exemption / 426
CHAPTER 20
Exit Taxes / 431
Servaas van Thiel
20.1 Exit Taxation on Accrued Income / 431
20.2 Exit taxes on accrued gains in the case of emigrating natural persons / 433
20.3 Exit taxes on accrued gains in the case of emigrating companies / 436
20.4 Towards a single approach for emigrating natural and legal persons? / 442
CHAPTER 21
Individual Income Taxation / 445
Update by Hein Vermeulen
21.1 Introduction / 445
21.2 Tax Scales; Correction of Overpaid Withholding Tax by Assessment / 446
21.3 Income-Related Deductions / 447
21.4 Personal Ability to Pay; the Schumacker Case Law / 449
21.4.1 Home state Responsibility; No National Treatment in the Source state / 449
21.4.2 But: Residents and Nonresidents Are Not in a Different Position / 452
21.4.3 Exacerbating Disparities; the Mechanics of Double Tax Relief; Rate Progression; Two Inconsistencies of International Tax Law / 455
21.4.4 Trying to Get It Right / 455
21.4.5 The De Groot Case: A Chance Missed / 457
21.4.6 Renneberg: Schumacker Applies Also to Home state Losses / 459
21.4.7 Imfeld: two situations in which the residence state is not obliged to take account of personal and family circumstances / 460
21.4.8 The Schumacker test applies to a full tax year / 460
21.4.9 Case C-283/15, X: proportional extension of personal deductions by multiple source states in the absence of home state income / 461
21.5 Option to Be Taxed as a Resident / 462
CHAPTER 22
State Aid and Direct Taxation / 467
Sjoerd Douma
22.1 Introduction / 467
22.2 The notion of State aid / 468
22.2.1 Introduction / 468
22.2.2 Undertaking / 468
22.2.3 State resources and imputability / 469
22.2.4 Advantage / 470
22.2.5 Selectivity / 473
22.2.6 Effect on trade and competition / 478
22.2.7 Selected topics / 479
22.3 Compatibility of State aid with the internal market / 484
22.3.1 The Commission’s State aid policy / 484
22.3.2 Limitations on the Commission’s discretion / 485
22.4 State aid procedure and enforcement / 485
22.4.1 Introduction / 485
22.4.2 Monitoring of existing aid / 485
22.4.3 Notification of new aid / 486
22.4.4 Recovery of unlawful aid / 486
22.4.5 Judicial appeal / 487
22.5 Concluding remarks / 488
CHAPTER 23
Tax Competition and the Code of Conduct for Business Taxation / 489
Martijn Nouwen and Peter Wattel
23.1 Introduction; the Soft Law Approach / 489
23.2 The (Half-Hearted) Fight Against Harmful Tax Competition / 491
23.2.1 Introduction / 491
23.2.2 The Code of Conduct Group for Business Taxation and its Working Method / 491
23.2.3 The Code Criteria for Assessing Harmfulness of Competitive National Tax Measures / 492
23.2.4 The Results of the Group’s Work (1): Quasi-Case Law; Interaction with State Aid Law / 494
23.2.5 The Results of the Group’s Work (2): Quasi-Legislation / 496
23.2.6 Third Country Issues; ‘Dialogue’ between the EU and Non-EU-Member States / 499
23.3 Conclusion / 500
Index / 503
Table of cases / 527
3.5.2.1 National Procedural Autonomy on Two Conditions; Procedural Rule of Reason / 72
3.5.2.2 Illustration: Restrictions on Restitution of Overpaid Tax / 74
3.5.2.3 Application of EU Law ex officio; Public Policy Provisions / 76
3.5.3 National Time-Limits, Final Decisions and Res Iudicata / 78
3.5.3.1 The Length of National Time-Limits; Again Equivalence and Effectiveness / 78
3.5.3.2 (No) Revision of Final Administrative Decisions and Final Judgments / 80
3.5.4 State Liability for ‘Serious’ Breaches of EU Law / 85
3.5.4.1 Introduction; Conditions for Liability / 85
3.5.4.2 A ‘Sufficiently Serious’ Breach of EU Law / 86
3.5.4.3 Interaction with Direct Effect; Incidental Damages / 88
3.5.4.4 State Liability for Wrongful Supreme Court Judgments / 88
3.5.4.5 Penalty Payments for Breaches of EU Law / 90
CHAPTER 4
The EU Charter of Fundamental Rights, General Principles of EU Law and Taxation / 91
Pasquale Pistone
4.1 Legal status, classification and relation with EU law principles / 91
4.2 General provisions / 92
4.2.1 Scope and requirements for protection: in which cases does the Charter apply? / 92
4.2.1.1 “only when they are implementing Union law” / 92
4.2.1.2 The level of fundamental rights protection; interaction of the Charter, the European Convention and national constitutional law / 93
4.2.2 Limitations of Rights and the link with the Community and Union Treaties / 93
4.2.3 Interaction between the Charter and the European Convention / 94
4.3 Tax Aspects of EU fundamental rights / 95
4.3.1 Right to privacy and data protection / 95
4.3.2 Right to property / 96
4.3.3 Equality before the law and non-discrimination / 97
4.3.4 Freedom of movement and residence / 97
4.3.5 Right to an effective remedy and fair trial / 97
4.3.6 Presumption of innocence and right of defence / 99
4.3.7 Provisions geared solely at the EU institutions / 100
4.3.8 Principles of legality and proportionality of criminal offences and penalties / 101
4.3.9 Prohibition of double jeopardy / 101
CHAPTER 5
Third States and External Tax Relations / 103
Update and Elaboration by Ana Paula Dourado and Peter Wattel
5.1 Overview / 103
5.2 Third State Capital Movement / 103
5.2.1 Introduction; Differences Between Intra-EU and Third State Capital Movement / 103
5.2.2 In Principle the Same Substance as Intra-EU, but: ‘a Different Legal Context’ / 104
5.2.3 The Grandfather Clause (Article 64(1) TFEU) / 106
5.2.4 Mutual Exclusion or Overlap? How to Distinguish Capital Movement From Establishment and Service Provision? / 109
5.2.5 No Intra-EU Cherry-Picking From Tax Treaties With Third States, nor Vice Versa / 114
5.3 Member States’ Overseas, Associated and Dependent Territories: Member State, Third State, ‘Second’ State? / 115
5.4 The European Economic Area Agreement (EEAA) / 119
5.5 The EU Blacklist of Non-cooperative Third States / 119
PART 2
Integration of Direct Taxation / 121
Part 2A Harmonization of Corporate Income Taxation / 121
CHAPTER 6
The Parent-Subsidiary Directive / 123
Update by Otto Marres
6.1 Introduction / 123
6.2 Main Features / 124
6.3 Qualifying Companies (Arts. 2 and 3) / 124
6.3.1 ‘Company of a Member State’ and ‘Permanent Establishment’ (Art. 2) / 124
6.3.2 Parent and Subsidiary Status (Art. 3) / 129
6.3.3 No Other Requirements / 131
6.4 Inbound Dividends: Exemption or Indirect Credit (Art. 4) / 131
6.4.1 The General Rule: Choice of Exemption or Indirect Credit; Even Asymmetrical / 131
6.4.2 Linking Rule: No Exemption for Deductible Payments / 133
6.4.3 Respecting Both CIN and CEN / 134
6.4.4 Ordinary Credit; Excess Foreign Corporation Tax / 134
6.4.5 Multi-Tier Credit / 135
6.4.6 (Non-)Deductibility of Charges ‘Related’ to the Holding (Art. 4(3)); Bosal Holding and Argenta Spaarbank II / 136
6.5 ‘Distributions of Profits’; Constructive Dividends; Hybrid (Transparent) Entities; Liquidation Proceeds / 137
6.5.1 Distributions of Profits (Art. 1) / 137
6.5.2 Hybrid Entities (Art. 4(2)); Fiscal Transparency / 138
6.6 Outbound Dividends: Abolition of Withholding Tax (Art. 5) / 138
6.6.1 The General Rule / 138
6.6.2 Transitional and Deleted Derogations / 139
6.6.3 ‘Withholding Tax’ / 139
6.6.4 Article 6; (No) Précompte Mobilier / 139
6.6.5 Imputation Systems; Imputation Taxes; Outbound Payment of Imputation Credits (Art. 7) / 140
6.7 Anti-Abuse Reservation (Art. 1(2)-1(4)) / 141
6.7.1 In a Nutshell / 141
6.7.2 Main purpose or one of the main purposes of obtaining a tax advantage / 142
6.7.3 Defeating object or purpose / 142
6.7.4 Artificiality / 143
6.7.5 Refusing ‘the benefits of the Directive’ / 143
6.7.6 Article 1(4): Reservation of Competence (any Autonomy Left?) / 145
CHAPTER 7
The Tax Merger Directive / 151
Update by Frederik Boulogne
7.1 Introduction; Objective; History / 151
7.2 Ad Hoc Tax Problems of Mergers and Divisions / 153
7.3 Longer-Term Tax Problems of Restructuring Operations / 153
7.4 Operations Covered and Definitions (Art. 2) / 154
7.4.1 Operations Covered (Art. 2(a-e) and (k)) / 154
7.4.2 ‘Branch of Activity’ (Art. 2(j)); Independent Functioning / 155
7.4.3 Coverage after the SEVIC, Cartesio and VALE Cases, the Implementation of the Amendment, and the Company Law Directive on Cross-Border Mergers of Limited Liability Companies / 157
7.5 10% Additional Cash Pay-Out (Art. 2(a)-(c) and (e)) / 159
7.6 Gist and System of the Directive / 159
7.7 Qualifying Companies (Art. 3) / 161
7.8 Taxation of the Companies Involved / 162
7.8.1 Deferral of Capital Gains Tax and Carry-Over of Tax Values (Arts. 4, 9 and 11) / 162
7.8.2 Carry-Over of Losses Connected to the Remaining Branch (Arts. 6 and 13(2)) / 163
7.8.3 Carry-Over of Tax-free Provisions and Reserves (Arts. 5 and 13(1)) / 163
7.8.4 Branch Requirement (Arts. 4(2)(b) and 12(1)(b)) / 164
7.8.5 Valuation of Shares Received / 164
7.8.6 Hybrid (Transparent) Entities / 165
7.9 Cancellation of Shares (Art. 7) / 166
7.10 Taxation of the Shareholders Involved (Arts. 8, 11 and l4) / 167
7.11 Transfer or Incorporation of a Foreign Branch (Art. 10) / 168
7.12 Operations and Migrations Not Covered / 169
7.13 The Anti-Abuse Reservation (Art. 15) / 170
7.13.1 Evasion and Avoidance; Objective and Subjective Elements; Scope and National Implementation of the Anti-Abuse Provision / 170
7.13.2 The Leur-Bloem Case; Facts / 171
7.13.3 Admissibility: Domestic Situation, but National Law Refers to EU Law / 172
7.13.4 (not included in this student edition)
7.13.5 (not included in this student edition)
7.13.6 Purely Fiscal Advantages Are Not ‘Valid Commercial Reasons’ / 172
7.14 (not included in this student edition) / 173
7.15 Consequences / 173
CHAPTER 8
The Settlement of Cross-Border Tax Disputes in the European Union / 175
Pasquale Pistone
8.1 Cross-border tax disputes: from none to up to four types of legal instruments for their settlement / 175
8.2 Brief historical overview / 176
8.3 Legal basis / 177
8.4 The relations between the legal instruments / 178
8.5 Scope / 178
8.5.1 General issues / 178
8.5.2 Personal scope / 179
8.5.3 Substantive scope / 179
8.5.4 Objective scope / 180
8.5.5 Territorial scope / 180
8.6 The procedures / 180
8.6.1 The mutual agreement procedure / 180
8.6.1.1 General issues / 180
8.6.1.2 Access to the mutual agreement procedure / 181
8.6.1.3 The unilateral phase / 181
8.6.1.4 The consultation phase / 182
8.6.1.5 The final phase / 183
8.6.2 Arbitration / 184
8.6.2.1 Introductory remarks / 184
8.6.2.2 The appointment and composition of the panel / 185
8.6.2.3 The rules of functioning / 186
8.6.2.4 The modes of arbitration / 187
8.6.2.5 The involvement of the affected person(s) during the procedure / 188
8.6.2.6 Confidentiality of the proceedings / 189
8.6.2.7 The decision / 190
8.6.2.8 The derogations / 191
8.6.2.9 Cost of the proceedings / 192
8.7 The relations with domestic judicial procedures / 193
CHAPTER 9
Tax Aspects of the European Economic Interest Grouping (EEIG) and the European Company (SE) / 195
not included in this student edition
CHAPTER 10
The Interest and Royalty Directive / 197
Update by Axel Cordewener
10.1 Introduction: Background, History and Aim / 197
10.2 Scope of Application / 198
10.2.1 Objective (Substantive) Scope of Application / 198
10.2.1.1 Interest and Royalty Payments (Article 2) / 198
10.2.1.2 Potential Limitations through Exclusion of Certain Payments (Article 4) / 199
10.2.2 Subjective (Personal) Scope of Application / 200
10.2.2.1 ‘Company of a Member State’ (Article 3(a)) / 200
10.2.2.2 Association Requirement (Article 1(7) juncto Article 3(b)) / 201
10.2.2.3 ‘Permanent Establishment’ (Article 3(c)) / 202
10.2.2.4 Recipient as ‘Beneficial Owner’ (Article 1(4), (5)) / 203
10.2.3 Territorial Scope of Application / 203
10.2.4 Temporal Scope of Application / 204
10.3 Relief Rule: Tax Exemption in the Source State / 204
10.3.1 Exemption from ‘Any Taxes’ (Art. 1(1)) / 205
10.3.2 Relief Procedure / 206
10.3.2.1 Immediate Exemption from Withholding Tax (Article 1(11) – (14)) / 206
10.3.2.2 Right to Refund if Immediate Exemption Failed (Article 1(15) – (16)) / 206
10.4 Special Issues / 207
10.4.1 Anti-Tax Avoidance Provisions / 207
10.4.1.1 Minimum Association Period (Article 1(10)) / 207
10.4.1.2 Prevention of Fraud and Abuse (Article 5) / 208
10.4.2 Direct Effect of Beneficial Rules / 209
10.4.3 Relation to Relief Provisions under Domestic Law or Double Tax Treaties (Article 9) / 209
10.5 Some Comments on the Current Status of the Directive and Proposals for Further Amendments / 209
CHAPTER 11
A Common Consolidated Corporate Tax Base (C(C)CTB) / 213
Jan van de Streek
11.1 Introduction / 213
11.2 General Policy Objectives / 215
11.2.1 Stimulating Growth and Investment / 215
11.2.2 Enhancing the Fairness of Corporate Income Tax / 217
11.2.3 Legal Basis and Subsidiarity / 218
11.3 Personal and Material Scope of the CCTB/CCCTB proposals / 220
11.3.1 Mandatory Regime for Large Companies / 220
11.3.2 Optional Regime for SMEs / 222
11.3.3 Issues Subject to National Corporate Income Tax / 223
11.4 Main Features of the Common Tax Base / 225
11.4.1 A Few General Principles and No Link to IAS/IFRS / 225
11.4.2 Calculation of the Tax Base / 227
11.4.3 Foreign Income and Participation Exemption / 229
11.4.4 Loss Relief / 232
11.5 Consolidation and Formulary Apportionment / 234
11.5.1 Consolidation / 234
11.5.2 Sharing Formula / 237
11.5.3 Administrative Framework / 240
11.6 Outlook / 242
CHAPTER 12
The Anti-Tax-Avoidance Directive (ATAD) / 245
Daniël Smit
12.1 Introduction and Background: an Ambitious EU Agenda Beyond BEPS / 245
12.2 History, Objective, Scope and Main Features of the ATAD / 246
12.2.1 Adoption of the ATAD: Politically Controversial, but Eventually Feasible / 246
12.2.2 De Minimis-Standard and “Menu of Options”; Intra-EU Fragmentation Risk Not Solved / 247
12.2.4 Personal Scope; Corporate Tax Liability as The Gateway / 248
12.3 (not included in this student edition)
12.4 The Four Specific Anti-Tax Avoidance Rules (SAARs) / 249
12.4.1 The Earnings-Stripping Rule / 249
12.4.1.1 Introduction and Background / 249
12.4.1.2 Scope of the Rule: Exceeding Borrowing Costs minus 30% EBITDA = non-Deductible / 251
12.4.1.3 Exceptions to the Interest Limitation Rule / 253
12.4.2 The Exit Tax and Tax Base Step-Up Rule / 255
12.4.2.1 Introduction and Background / 255
12.4.2.2 Exit Tax and Tax Base Step-Up, but Mutual Recognition of Market Value Bridge too Far / 255
12.4.2.3 An Alarming Lack of Definitions and Over- and Under-Inclusiveness / 256
12.4.2.4 The Intra-EU/EEA Option for Stagged Recovery: a Curse in Disguise? / 257
12.4.2.5 Valuation Mismatches: the Real BEPS-Issue Left Unsolved / 258
12.4.3 The CFC-Rule(s) / 258
12.4.3.1 Introduction and Background / 258
12.4.3.2 Three Cumulative Proxies: CFC, Effectively Low-Taxed, Bad Income / 259
12.4.3.3 The Full-Fledged CFC-Rule and the Light (Quasi) CFC-Rule / 261
12.4.3.4 The “Substance”-Escape under the Full-Fledged CFC-Rule / 262
12.4.3.5 Income Attribution and Double Taxation Relief (Add-Back & Credit) / 263
12.4.4 The Hybrid Mismatch Rule / 264
12.4.4.1 Introduction and Background / 264
12.4.4.2 Deduction without Inclusion (D/NI) Mismatches / 264
12.4.4.3 Double Deduction (DD) Mismatches / 268
12.4.4.4 A Final Backstop against “Import of Mismatches” / 269
12.5 The Mandatory General Anti-Tax Avoidance Rule (GAAR) for Corporate Taxation / 270
12.5.1 Introduction and Background; a Single European Abuse of Law Concept / 270
12.5.2 (not included in this student edition)
12.5.3 The GAAR Tests / 270
12.5.3.1 Artificiality / 271
12.5.3.2 Motive / 272
12.5.3.3 Defeat of Object and Purpose of Corporate Tax Law / 273
12.5.3.4 Burden of Proof / 273
12.6 Entry into Force / 274
12.7 A Final Chord? / 275
Part 2B Exchange of Information and Recovery Assistance / 277
CHAPTER 13
Administrative Cooperation in the Assessment and Recovery of Direct Tax Claims / 279
Update by Sigrid Hemels
13.0 Background; History; Legal Basis / 279
13.0.1 The Need for Cross-Border Administrative Cooperation in Tax Matters / 279
13.0.2 OECD Initiatives before the Financial Crisis / 280
13.0.3 EU Mutual Assistance Initiatives before the Financial Crisis / 280
13.0.4 Poor Results, Failing the OECD Standard; Revised Directives on Recovery Assistance (2012) and Administrative Cooperation (2013) / 281
13.0.5 Influence of BEPS on the DAC / 282
13.0.6 Legal Basis: ‘Internal Market’ or ‘Fiscal’? / 282
13.1 The Directive on Administrative Cooperation 2011/16/EU (DAC) / 283
13.1.1 General Provisions; Minimum Standard; Language, Scope and Organisation / 283
13.1.1.1 Taxes Covered; Not Just Direct Taxes / 284
13.1.1.2 Personal Scope; Anyone or Anything Subject to Tax / 285
13.1.1.3 Objective Scope: ‘Foreseeably Relevant’ Information / 285
13.1.1.4 Channel of Exchange / 285
13.1.1.5 Temporal Scope / 286
13.1.2 Three Types of Exchange of Information / 286
13.1.2.1 Mandatory Exchange upon Request / 286
13.1.2.2 Mandatory Automatic Exchange / 287
13.1.2.3 Spontaneous Exchange / 295
13.1.3 Admission of Foreign Officials / 296
13.1.4 Simultaneous Controls / 297
13.1.5 Notification of Foreign Decisions and Instruments / 297
13.1.6 Access to Anti-Money-Laundering Information, Including Information on Ultimate Beneficial Owners / 297
13.1.7 Disclosure, Use and Forwarding of Information Obtained / 298
13.1.8 Grounds for Refusal of Cooperation / 299
13.1.8.1 Non-Exhaustion of Appropriate Domestic Means / 300
13.1.8.2 Lack of Domestic Legal Basis / 300
13.1.8.3 Lack of Reciprocity / 301
13.1.8.4 Protection of Commercial Secrets / 301
13.1.8.5 Protection of the Ordre Public / 301
13.1.9 Taxpayers’ Judicial Protection / 301
13.1.9.1 No Right to Be Involved / 302
13.1.9.2 Right to Legal Remedy in Case of Penalty / 303
13.1.9.3 Data Protection / 304
13.1.9.4 Confidentiality Obligation of the European Commission / 305
13.1.9.5 Direct Effect / 305
13.1.10 Information Overload? / 306
13.2 The Recovery Assistance Directive (RAD) / 306
13.3 Concurrence Rules / 307
13.3.1 DAC and RAD / 308
13.3.2 MCMAATM Convention and EU Rules / 308
13.3.3 Domestic Law, Bilateral or Multilateral (Tax) Treaties and EU Rules / 308
Part 2C Negative Integration of Direct Taxation / 311
CHAPTER 14
Conceptual Background of the CJEU Case Law in Direct Tax Matters / 313
Peter Wattel
14.1 The Basic Clash between (International) Tax Law and Internal Market Law / 313
14.1.1 Basics of International Tax Law; Residence and Source Taxation / 313
14.1.2 Opposing Points of Departure of International Tax Law and Internal Market Law / 315
14.2 The Court Accepts All Tax Connecting Factors and All Methods for Double Tax Relief / 316
14.3 Territoriality Taxation or EU-Wide Taxation / 317
14.4 Basic Notions in the Court’s Direct Tax Case Law / 320
14.4.1 ‘Discrimination’, not Mere ‘Restriction’: Nondiscriminatory ‘Obstacles’, ‘Parallel Exercise’ and Disparities are Outside Free Movement Scrutiny / 320
14.4.2 Comparability (Subject-to-Tax) and Justifiability (Tax Base Integrity); Assertion and Exercise of Taxing Power / 322
14.5 Departures from the Subject-to-Tax Approach or the One-Country Approach / 328
14.5.1 The ‘Always-Somewhere’ or ‘One-Market’ Approach / 328
14.5.2 The Mutual Recognition Approach / 331
14.5.3 The Overall Approach: ‘Neutralization’ in the Other Jurisdiction; De Groot, Denkavit France, Amurta, Miljoen / 334
CHAPTER 15
Free Movement and Tax Base Integrity / 339
Update by Cécile Brokelind and Peter Wattel
15.1 Overview of the Development of the CJEU's View on Tax Avoidance / 339
15.2 Correspondence Between (i) the Abuse of Rights Prohibition, (ii) the Anti-Abuse Reservations in Secondary EU Tax Law, and (iii) the ATAD and CCCTB Requirements Correspondence between Abuse of Rights, Anti-Abuse Reservations, and ATAD / 341
15.3 (not included in this student edition)
15.4 Abuse of Rights as a General Principle of EU Law; Objective and Subjective Element / 343
15.5 Exclusion of Categories of Cross-Border Cases; Fiscal Coherence; Balanced Allocation; Fiscal Supervision; Territoriality; Overlap of Justifications for Free Movement Restrictions
15.6 Procedural Issues; Division of the Onus of Proof / 351
15.7 Consequences of a Finding of Abuse: ‘Redefine so as to Re-Establish’ / 354
15.8 Allowing General Tax Base Protection / 354
15.8.1 Rise, Fall and Revival of Fiscal Cohesion / 354
15.8.2 The Fiscal Principle of Territoriality / 356
15.8.3 A Balanced Allocation of Taxing Power between Member States / 358
15.9 Conclusion – A Single Concept – Tax Base Integrity as the Fiscal Manifestation of the Court’s General Abuse of Rights Doctrine / 359
CHAPTER 16
Division of Tax Jurisdiction; Double Tax Relief Mechanisms; Tax Treaty Issues / 361
Update by Otto Marres
16.1 International Double Taxation (and why its Elimination is a Union Goal but not an Obligation for the Member States) / 361
16.1.1 Why is there International Double Taxation in the first Place? / 361
16.1.2 National Autonomy; no Obligation to Eliminate Double Taxation / 362
16.2 Capital Import Neutrality (CIN; Exemption) and Capital Export Neutrality (CEN; Credit) / 362
16.2.1 Source Taxation and Residence Taxation; Assumption and Exercise of Taxing Jurisdiction / 362
16.2.2 Capital Export Neutrality (CEN); the Credit Method / 363
16.2.3 Capital Import Neutrality (CIN); the Exemption Method / 363
16.2.4 Differences and Similarities; Deferral; CFC Legislation / 364
16.2.5 Acceptance of Both Credit and Exemption in Secondary EU Law; the Court Accepts All Methods for Double Tax Relief; Remaining Inconsistencies / 365
16.3 Tax Treaty Issues / 367
16.3.1 National Autonomy; Conclusion of Bilateral Tax treaties / 367
16.3.2 Treaties to be Regarded as National Law; the Overall Approach / 368
16.3.3 Tax Treaties and their Substantive Rules / 369
16.3.4 Treaty Overrides / 371
CHAPTER 17
Corporate Income Taxation / 373
Update by Hein Vermeulen
17.1 Introduction / 373
17.2 Host State: Equal Treatment of Branches and Subsidiaries / 373
17.3 Origin State: Are Parents of Foreign and Domestic Branches and Subsidiaries Comparable? / 375
17.4 Group Taxation Schemes / 377
17.4.1 Group Taxation Schemes of Domestic Entities / 378
17.4.2 Group Taxation Schemes of Domestic Entities and Non-Domestic Entities: current losses / 379
17.4.3 Group Taxation Schemes of Domestic Entities and Non-Domestic Entities: other advantages than current losses / 381
17.5 CFC Legislation / 382
17.6 Thin Capitalization, Profits Adjustments, and the Treaty Freedoms / 385
CHAPTER 18
Cross-border Loss Relief / 393
Update by Ana Paula Dourado
18.1 Introduction; the Issues; Overview; Distinction between Individuals and Companies / 393
18.2 Technical Background / 395
18.3 Negative Integration; Pre-Marks & Spencer II Case Law / 396
18.4 Nonresident Group Companies; Marks & Spencer II and Oy AA: Relief (only) for Definitive Losses; No Profit Carry-Over / 398
18.5 Foreign Branches; Lidl Belgium and Krankenheim Ruhesitz / 401
18.6 Risk of currency loss / 403
18.7 Double Branch Dip (Philips Electronics) and Cross-Border Loss Importation by Merger (A Oy) / 404
18.8 Individuals / 406
18.9 Proportionality and M&S III / 408
18.10 Reincorporation of PE Losses: Nordea Bank, Timac Agro and A/S Bevola / 409
CHAPTER 19
Cross-Border Dividend Taxation / 413
Update by Hein Vermeulen
19.1 Possible Unequal Treatment of Cross-Border Dividends / 413
19.2 The CJEU’s basic Notions; Juridical and Economic Double Taxation, and Exertion of Taxing Power / 414
19.3 Inbound Dividends (Residence Taxation): National Treatment, Exit Imputation Systems / 417
19.3.1 Economic Double Taxation of Inbound Dividends / 417
19.3.2 Juridical Double Taxation of Inbound Dividends / 420
19.3.3 Asymmetric Undoing of Economic Double Taxation of Inbound Dividends / 424
19.4 Outbound Dividends (Source Taxation): National Treatment of Non-Resident Shareholders and the gross/net Dilemma / 425
19.4.1 Economic Double Taxation / 425
19.4.2 Juridical Double Taxation or Denial of Exemption / 426
CHAPTER 20
Exit Taxes / 431
Servaas van Thiel
20.1 Exit Taxation on Accrued Income / 431
20.2 Exit taxes on accrued gains in the case of emigrating natural persons / 433
20.3 Exit taxes on accrued gains in the case of emigrating companies / 436
20.4 Towards a single approach for emigrating natural and legal persons? / 442
CHAPTER 21
Individual Income Taxation / 445
Update by Hein Vermeulen
21.1 Introduction / 445
21.2 Tax Scales; Correction of Overpaid Withholding Tax by Assessment / 446
21.3 Income-Related Deductions / 447
21.4 Personal Ability to Pay; the Schumacker Case Law / 449
21.4.1 Home state Responsibility; No National Treatment in the Source state / 449
21.4.2 But: Residents and Nonresidents Are Not in a Different Position / 452
21.4.3 Exacerbating Disparities; the Mechanics of Double Tax Relief; Rate Progression; Two Inconsistencies of International Tax Law / 455
21.4.4 Trying to Get It Right / 455
21.4.5 The De Groot Case: A Chance Missed / 457
21.4.6 Renneberg: Schumacker Applies Also to Home state Losses / 459
21.4.7 Imfeld: two situations in which the residence state is not obliged to take account of personal and family circumstances / 460
21.4.8 The Schumacker test applies to a full tax year / 460
21.4.9 Case C-283/15, X: proportional extension of personal deductions by multiple source states in the absence of home state income / 461
21.5 Option to Be Taxed as a Resident / 462
CHAPTER 22
State Aid and Direct Taxation / 467
Sjoerd Douma
22.1 Introduction / 467
22.2 The notion of State aid / 468
22.2.1 Introduction / 468
22.2.2 Undertaking / 468
22.2.3 State resources and imputability / 469
22.2.4 Advantage / 470
22.2.5 Selectivity / 473
22.2.6 Effect on trade and competition / 478
22.2.7 Selected topics / 479
22.3 Compatibility of State aid with the internal market / 484
22.3.1 The Commission’s State aid policy / 484
22.3.2 Limitations on the Commission’s discretion / 485
22.4 State aid procedure and enforcement / 485
22.4.1 Introduction / 485
22.4.2 Monitoring of existing aid / 485
22.4.3 Notification of new aid / 486
22.4.4 Recovery of unlawful aid / 486
22.4.5 Judicial appeal / 487
22.5 Concluding remarks / 488
CHAPTER 23
Tax Competition and the Code of Conduct for Business Taxation / 489
Martijn Nouwen and Peter Wattel
23.1 Introduction; the Soft Law Approach / 489
23.2 The (Half-Hearted) Fight Against Harmful Tax Competition / 491
23.2.1 Introduction / 491
23.2.2 The Code of Conduct Group for Business Taxation and its Working Method / 491
23.2.3 The Code Criteria for Assessing Harmfulness of Competitive National Tax Measures / 492
23.2.4 The Results of the Group’s Work (1): Quasi-Case Law; Interaction with State Aid Law / 494
23.2.5 The Results of the Group’s Work (2): Quasi-Legislation / 496
23.2.6 Third Country Issues; ‘Dialogue’ between the EU and Non-EU-Member States / 499
23.3 Conclusion / 500
Index / 503
Table of cases / 527
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