The role of tax treaties in judgments of the European Court of Justice
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The role of tax treaties in judgments of the European Court of Justice. Prof. Dr. Rainer Prokisch, Maastricht University. Outline. Introduction General considerations Tax Treaties and EC Law Fundamental Freedoms as equal treatment clauses Tax Treaties as part of the facts

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Prof. Dr. Rainer Prokisch, Maastricht University

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Prof dr rainer prokisch maastricht university

The role of tax treaties in judgments of the European Court of Justice

Prof. Dr. Rainer Prokisch, Maastricht University


Outline

Outline

  • Introduction

  • General considerations

    • Tax Treaties and EC Law

    • Fundamental Freedoms as equal treatment clauses

  • Tax Treaties as part of the facts

  • The bilateral nature of Tax Treaties and its consequence for the interpretation of the basic freedoms

    • The frontier worker cases

    • The dividend withholding cases

  • Conclusions


Introduction

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


Tax treaties and ec law the case st gobain

Tax Treaties and EC Law – The Case ST. GOBAIN

France

F-CORP

PE

Germany

Participation

Dividends

US


Fundamental freedoms as equal treatment clauses

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


Tax treaties as part of the facts

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


The case renneberg

The Case „Renneberg“

Cross-border employment

Belgium

NL

R. works in NL (public service)

R. has income from

living is his own house

(negative) (Article 6

OECD Model)

R. has income from work for

a public organization (Article

19 OECD Model)


The frontier worker cases schumacker and others

The frontier worker cases – Schumacker and others

Belgium is state of

residence

S. works in Germany and earns all his income there

DTC: Belgium exempts foreign income


The dividend withholding cases the state of source denkavit

The dividend withholding cases – the state of source – Denkavit

France

NL

Dividends

Corp

Corp

WHT

Participation exemption


The dividend withholding cases the state of source denkavit1

The dividend withholding cases – the state of source – Denkavit

France

NL

Dividends

Corp

Corp

WHT

Participation exemption


The dividend withholding cases the state of residence kerckhart morres damseaux

The dividend withholding cases – the state of residence – Kerckhart/Morres, Damseaux

France

Belgium

Dividends

Corp

WHT

No Credit, uniform tax of

25%


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