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IFA SEMINAR

IFA SEMINAR. The Relationship between Halifax and Cadbury Schweppes Melanie Hall QC 17 March 2011. Why is it that the European Court of Justice applies the Halifax doctrine to freedom of establishment cases such as Cadbury Schweppes and vice versa?. The source of the problem:

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IFA SEMINAR

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  1. IFA SEMINAR The Relationship between Halifax and Cadbury Schweppes Melanie Hall QC 17 March 2011

  2. Why is it that the European Court of Justice applies the Halifax doctrine to freedom of establishment cases such as Cadbury Schweppes and vice versa?

  3. The source of the problem: • The VAT Directives recognise a taxpayer’s right to organise his affairs so as to mitigate his tax liability. The Halifax doctrine as expanded upon by Weald Leasing identifies the limits of that right. • The Treaty recognises a taxpayer’s right to freedom of establishment. Cases such as Cadbury Schweppes identify the limits of that right. • The limitation in each case is superficially similar but fundamentally different.

  4. Halifax: An abusive practice exists if • (1) The transactions concerned, notwithstanding formal application of the conditions laid down by the relevant provisions of the Sixth Directive and the national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions. • (2) It must be apparent from a number of objective factors that the essential aim of the transactions concerned was to obtain a tax advantage.

  5. Cadbury Schweppes: The objective pursued by freedom of establishment is not achieved if: • The incorporation does not correspond with an actual establishment intended to carry on genuine economic activities • and • must not comprise a wholly artificial arrangement • Spot the difference

  6. The tendency of the European Court of Justice to randomly “copy and paste” • Weald Leasing and the concept of “normal commercial operations” is mentioned in C- 162/07Ampliscientifica but ignored in Case C- 425/06 Part Service Srl • Cadbury Schweppes and the concept of wholly artificial arrangements which do not reflect economic reality was cited in Ampliscientifica but ignored in Part Service Srl.

  7. A hidden agenda? • Read the Commissions’ observations in Emsland Starke paras 36-43 • Is a broad spectrum general principle of abuse the answer?

  8. Thank You

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