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March 2013 - edition 115EU Tax Alert
The EU Tax Alert is an e-mail newsletter to inform you of recent developments in the EU that are of interest for tax professionals. It includes recent case law of the European Court of Justice, (proposed) direct tax and VAT legislation, customs, state aid, developments in the Netherlands, Belgium and Luxembourg and more.
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Highlights in this editionCommission issues proposed Directive on Financial Transactions Tax to be implemented under enhanced cooperationOn 14 February 2013, the Commission published a proposal for a Directive on a common system of a Financial Transaction Tax (‘FTT’). This Directive, which mirrors the scope and objectives of the original FTT proposal put forward by the Commission in September 2011, would be introduced by 11 Member States (Germany, France, Austria, Belgium, Greece, Italy, Portugal, Slovakia, Slovenia, Spain and Estonia) under the ‘enhanced cooperation’ mechanism.
CJ rules that the ne bis in idem principle of the EU Charter of Fundamental Rights does not preclude the imposition of combined tax penalties and criminal penalties for non-compliance with VAT obligations (Åkerberg) On 26 February 2013, the CJ issued its judgment in the case Åkerberg (C-617/10) concerning the interpretation of the principle of ne bis in idem set out in the EU Charter of Fundamental Rights (‘Charter’) with regard to Swedish legislation pursuant to which the same act of non-compliance with tax obligations may entail both tax penalties and criminal penalties.The CJ considered that such Swedish legislation constituted ‘implementation of Union law’ within the meaning of Article 51(1) of the Charter and therefore, it had jurisdiction to interpret the fundamental right at issue.
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ContentsTop News• Commission issues proposed Directive on Financial
Transactions Tax to be implemented under
enhanced cooperation
• CJ rules that the ne bis in idem principle of the EU
Charter of Fundamental Rights does not preclude
the imposition of combined tax penalties and
criminal penalties for non-compliance with VAT
obligations (Åkerberg)
State Aid• ‘Compulsory voluntary levy’ does not amount to
State aid according to Advocate General (Doux
Élevage SNC)
Direct taxation• Finnish rules on deductibility of losses upon merger
of companies of different Member States in breach
of the freedom of establishment (A Oy)
• CJ holds that insurance premium tax is to be paid
in the Member State where the policyholder resides
at the time of the payment of the premium (RVS
Levensverzekeringen)
• CJ holds that the refusal of the German ‘splitting
method’ to frontier workers violates the EC-
Switzerland Agreement on the free movement of
persons (Ettwein)
• CJ rules that the method used by Germany for
calculating foreign tax credit is contrary to the free
movement of capital (Beker and Beker)
• Commission asks Belgium to change its taxation of
paid interest
• Commission requests Belgium to amend tax
reductions in the Flemish region
• Commission refers Belgium to the CJ over
discriminatory tax reduction for Walloon tax
residents
• Commission requests Romania to review its taxation
of foreign businesses
• Commission asks Spain to amend inheritance and
gift tax rules in the Historical Territories of Alava and
Bizkaia
• Public consultations on EU Taxpayer’s Code and EU
Tax Identification Number
• Developments in Belgium: Constitutional Court rules
that EU competition fines are not tax deductible
VAT• CJ rules on deduction of VAT (improperly) entered
on invoices (Stroy Trans and LVK – 56)
• CJ rules that granting access to aquatic park may
constitute services closely linked to sports (Město
Žamberk)
• CJ rules that VAT on legal costs for criminal
proceedings brought against managing directors
in their personal capacity is not deductible by the
company (Wolfram Becker)
• Advocate General opines on place of supply of
storage services (RR Donnelley)
• Proposal for derogating measure allowing Latvia to
restrict the right to deduct VAT on cars
• Commission refers France and Luxembourg to CJ
over VAT rates on e-books
• Commission refers UK to CJ for its reduced VAT rate
on supply and installation of energy-saving materials
• Commission requests Poland to amend its
legislation on reduced VAT rates
Customs Duties, Excises and other Indirect Taxes• Commission refers Hungary to the CJ over tax
exemption of pálinka
• Anti-dumping duty on imports of bio-ethanol of US
origin
4 5
agreements. According to the proposal, some
transactions will be excluded, such as primary market
transactions for raising capital through the issuance of
shares or bonds, spot currency transactions and the
issuing of government bonds. Consumer transactions
would also be excluded, such as the granting of
mortgage loans, consumer credits, entering into
insurance contracts etc.
The proposed minimum tax rate is 0.1% for all financial
transactions other than those concerning derivatives.
The taxable amount consists of the (arm’s length)
consideration paid or owed in return for the financial
instrument. For derivatives, the minimum proposed tax
rate is 0.01%. For transactions concerning derivatives,
the taxable amount is the notional amount of the
agreement at the time it is concluded. The notional
amount is the underlying nominal amount that is used to
calculate the payments to be made.
According to the proposal, each financial institution
that is party to the transaction or which is involved
in the transaction is liable to FTT. A single financial
transaction is thus, in principle, taxed twice under
the proposed FTT (i.e. with both contracting parties).
Financial institutions which are not resident in one
of the participating Member States may nonetheless
come under the scope of FTT, given that under certain
conditions, such a financial institution which is party to
a financial transaction with a counterparty established
in the territory of a participating Member State, shall be
deemed to be resident in that Member State. The same
may apply to financial institutions not established in the
territory of participating Member States if they trade a
financial instrument issued by an entity that is resident in
the participating territory.
The Netherlands government expressed its intention to
accede to the enhance cooperation procedure subject to
the following conditions:
• Netherlands pension funds will be exempt from FTT;
• The FTT should not coincide disproportionately with
the current Netherlands banking tax; and
• The FTT collected contributes to the budget of the
Member States.
Top News
Commission issues proposed Directive on Financial Transactions Tax to be implemented under enhanced cooperationOn 14 February 2013, the Commission published a
proposal for a Directive on a common system of a
Financial Transaction Tax (‘FTT’). This Directive would
be introduced by 11 Member States (Germany, France,
Austria, Belgium, Greece, Italy, Portugal, Slovakia,
Slovenia, Spain and Estonia) under the ‘enhanced
cooperation’ mechanism. The proposed Directive
mirrors the scope and objectives of the original FTT
proposal put forward by the Commission in September
2011 (see EU Tax Alert edition no. 97, October 2011).
According to the proposed Directive, the FTT will apply
to all financial transactions on the condition that at least
one party to the transaction is a ‘financial institution’
established in one of the participating Member States.
This financial institution should either act for its own
account, for the account of another person or act in
the name of a party to the transaction. The definition of
financial institution in the proposal is broad, including
banks, investment firms, organised markets, credit
institutions, insurance and reinsurance undertakings,
collective investment undertakings and their managers,
pension funds and their managers as well as other
undertakings where financial transactions constitute
a significant part of their activities. Furthermore,
certain intra-group transactions may be liable to FTT.
In addition, FTT will also be due if the traded financial
instrument is issued in one of the participating Member
States.
For the definition of the financial transactions, a
reference is made to other EU directives. It is intended
to cover the purchase and sale of financial instruments
such as company shares, bonds, money-market
instruments, units of undertakings for collective
investment (UCITs) and alternative investment funds
(AIFs), structured products and derivatives as well
as the conclusion or modification of derivatives
5
bis in idem principle, as one of the fundamental
rights laid down in the Charter, having regard to the
scope of application of those fundamental rights. In
particular, Article 51(1) of the Charter provides that the
fundamental rights contained therein bind the Member
States ‘only when they are implementing Union law’.
According to the CJ, this provision confirms the case
law which states that the fundamental rights guaranteed
in the EU’s legal order are applicable to the acts of the
Member States when the latter fall within the scope
of EU law. The explanations relating to Article 51 of
the Charter reinforce such interpretation. Thus, the
CJ examined whether the imposition of tax penalties
and the initiation of criminal proceedings against Mr
Åkerberg could be regarded as implementing EU
law in the above sense. In this regard, it referred to
the fact that such actions by the Swedish authorities
were the consequence of the breach by Mr Åkerberg,
inter alia, of his obligations to declare VAT. From
the provisions of the VAT Directive, it follows that
every Member State is under an obligation to take all
legislative and administrative measures appropriate
for ensuring collection of all the VAT due on its territory
and for preventing evasion. In addition, Article 325
TFEU obliges the Member States to counter illegal
activities affecting the financial interests of the EU
through effective deterrent measures. The EU’s own
resources include revenue from VAT collected by the
Member State. The CJ considered that there is a direct
link between the collection of VAT revenue and the
availability to the EU budget of the corresponding VAT
resources. Hence, the Court held that the tax penalties
and criminal proceedings to which Mr Åkerberg was
subject constituted implementation of Articles 2, 250(1)
and 273 of the VAT Directive and of Article 325 TFEU,
and thus, EU law. Therefore, contrary to what the
Advocate General proposed (see EU Tax Alert edition
no. 107, July 2012), the CJ considered that the condition
under Article 51(1) of the Charter was fulfilled and it thus
had jurisdiction to answer the questions referred by the
District Court.
As regards the substantive question, the CJ pointed out
that the ne bis in idem principle would only preclude a
prosecution for tax evasion subsequent to administrative
proceedings concerning the same act if the tax penalties
CJ rules that the ne bis in idem principle of the EU Charter of Fundamental Rights does not preclude the imposition of combined tax penalties and criminal penalties for non-compliance with VAT obligations (Åkerberg) On 26 February 2013, the CJ issued its judgment in the
case Åkerberg (C-617/10) concerning the interpretation
of the principle of ne bis in idem set out in the EU
Charter of Fundamental Rights (‘Charter’) with regard to
Swedish legislation pursuant to which the same act of
non-compliance with tax obligations may entail both tax
penalties and criminal penalties.
Article 50 of the Charter lays down the ne bis in idem
principle: ‘No one shall be liable to be tried or punished
again in criminal proceedings for an offence for which he
or she has already been finally
acquitted or convicted within the Union in accordance
with the law’.
Mr Åkerberg, a self-employed fisherman residing and
working in Sweden, provided false information in his
tax returns for the fiscal years 2004 and 2005 which
resulted in a loss of tax revenue, including VAT, for the
Swedish treasury. In 2007, the Tax Board (Skatteverket)
imposed tax penalties on the taxpayer a part of which
related to the evasion of VAT. No proceedings were
brought to challenge these penalties which, thus,
became final. In 2009, the Public Prosecutor initiated
criminal proceedings against the taxpayer before the
Haparanda District Court based on the same act of
providing false information as had been the basis of the
decision imposing tax penalties. The question arose
before the District Court whether the ne bis in idem
principle set out in Article 50 of the Charter as well as in
Article 4 of Protocol No 7 of the European Convention
on Human Rights (‘ECHR’) is to be interpreted in a way
that it requires the criminal charges to be dismissed on
the ground that the taxpayer has already been punished
for the same act in administrative proceedings. The
District Court stayed the proceedings and referred
several questions to the CJ for a preliminary ruling.
First, the CJ addressed the question whether it had
jurisdiction to interpret in the case at issue the ne
6 7
A Oy is a Finnish resident company which holds all the
shares in the Swedish company B AB. This subsidiary
company had ceased its trading activities and incurred
losses for the period from 2001 to 2007. The Finnish
company planned a merger with its Swedish subsidiary,
which would result in the dissolution of such subsidiary
and the acquisition of all its assets by the Finnish parent
company.
Under Finnish legislation, upon a merger of companies,
the receiving company shall have the right to deduct
from its taxable income any loss made by the merged
entity, provided certain conditions are met. Such
possibility is excluded, however, with regard to losses
from business activity which is not subject to Finnish
taxation (foreign accumulated losses).
The first question dealt with by the CJ was whether the
abovementioned limitation in cross-border situations
constituted a breach of the freedom of establishment.
The CJ considered that the possibility granted by
Finnish law to a resident parent company of taking into
account a resident subsidiary’s losses when it merges
with that subsidiary constitutes a tax advantage for the
parent company. The fact that is not possible to take
over the losses of a foreign subsidiary makes it less
attractive to set up subsidiaries in another Member
State. The CJ considered that, looking to the aim
pursued by the national provisions at stake – allow
the parent company to benefit from a tax advantage
consisting of being able to deduct from tax the losses
incurred by the subsidiary – makes domestic and cross-
border situations objectively comparable. The difference
in treatment by the Finnish tax legislation constitutes a
restriction to the freedom of establishment.
Turning to the analysis of the possible justifications,
the CJ confirmed that such restriction was, in principle,
justified based on three justifications taken together:
balanced allocation of the powers to tax, prevent the
double use of losses, and tax avoidance. However, the
Court continued by examining whether the legislation
at stake goes beyond what is necessary to attain
those objectives. In that regard, the CJ recalled that
it is previous case law which held that legislation is
which had been imposed on the defendant in the
administrative proceedings by means of a final decision
are of a criminal nature. Whether the tax penalties at
issue are criminal in nature needs to be determined by
the referring court in the light of three criteria namely
(i) the legal classification of the offence under national
law, (ii) the very nature of the offence, and (iii) the nature
and degree of severity of the penalty that the person
concerned is liable to incur.
State Aid‘Compulsory voluntary levy’ does not amount to State aid according to Advocate General (Doux Élevage SNC) On 31 January 2013, Advocate General Wathelet
rendered his Opinion in the case Doux Élevage SNC
(C-677/11). A number of companies had filed an appeal
at the French Counseil d’État arguing that a levy
imposed on them on behalf of a sectoral organisation
was meant to finance unlawfully granted aid, given that
the levy outweighed the benefits they receive from the
activities of that organisation. The Advocate General
proposed to the Court to hold that the intervention of
a national authority to impose a voluntary levy by a
sectoral organisation on all companies within a sector to
avoid free riders does not to amount to State aid, as it
does not lead to the use of State resources but of funds
from economic subjects. He does point out, however,
that such levy can run afoul of other primary EU law, an
issue not addressed by the referring court.
Direct TaxationFinnish rules on deductibility of losses upon merger of companies of different Member States in breach of the freedom of establishment (A Oy) On 21 February 2013, the CJ delivered its judgment
in the case A Oy (C-123/11). The case deals with the
compatibility of Finnish rules on the deductibility of
losses upon a cross-border merger with the freedom of
establishment set out under Articles 49 and 54 TFEU.
7
Belgian tax law imposes an annual tax on insurance
transactions, if the insured risk is located in Belgium.
That is deemed the case if the policyholder has his
or her habitual residence in Belgium. In the case
at issue, a Netherlands insurance company, RVS
Levensverzekeringen, entered into life assurance
contracts with Netherlands residents who have
since moved to Belgium. Having paid to the Belgian
State the tax on insurance transactions which was
due during the Belgian residency of its clients, RVS
Levensverzekeringen sought a refund of the tax.
Belgian law mirrors the wording of the Life Assurance
Directive concerning the allocation of taxation rights over
life assurance contracts. The Directive provides, under
Article 50(1), that every assurance contract shall be
subject exclusively to the indirect taxes and parafiscal
charges on assurance premiums in the Member State
of the commitment. The ’Member State of commitment’
is defined in Article 1(1)(g) of the Directive as the
State in which the policyholder has his or her habitual
residence. According to RVS Levensverzekeringen, the
Directive must be interpreted as giving taxation rights
to the Member State of which the policyholder is a
resident at the time of the conclusion of the assurance
contract. Belgium, on the other hand, applies a dynamic
interpretation of the provision to the effect that the
attribution of taxation rights may vary over time if the
policyholder changes his or her residence during the
term of the contract.
First, the CJ noted that the Life Assurance Directive
was adopted having regard to the need to complete
the internal market in direct life assurance, from the
point of view both of the right of establishment and of
the freedom to provide services, to make it easier for
assurance undertakings with head offices in the EU
to cover commitments situated within the EU. Indirect
taxation of life assurance transactions has not been
harmonised at EU level. Some Member States do
not subject assurance transactions to any form of
indirect taxation while others apply special taxes and
other forms of contribution, the structure and rate of
which vary considerably. The EU legislature sought to
prevent existing differences from leading to distortions
not considered proportional in case the non-resident
subsidiary has exhausted the possibilities available in
its State of residence of having the losses taken into
account. In that event, it is for the parent company to
demonstrate that the subsidiary has exhausted all the
possibilities of taking account of the losses which it had
incurred in Sweden. Therefore, the Court concluded
that the Finnish legislation is incompatible with EU law
to the extent that it does not allow the parent company
the possibility of showing that its non-resident subsidiary
has exhausted the possibilities of taking those losses
into account and that there is no possibility of their being
taken into account in its State of residence in respect of
future years, either by itself or by a third party.
The other question dealt with by CJ concerned the
calculation of the loss and whether it should be
calculated in accordance with the rules of the State
of residence of the parent company or that of the
subsidiary. According to the Court, in the present state
of EU Law, the freedom of establishment in principle
does not imply the application of a particular law to the
calculation of the losses. Nevertheless, the CJ stated
that the applied method must not lead to unequal
treatment compared with the calculation which would
have been made in a similar case for the taking over of
the losses of a resident subsidiary.
CJ holds that insurance premium tax is to be paid in the Member State where the policyholder resides at the time of the payment of the premium (RVS Levensverzekeringen)On 21 February 2013, the CJ rendered its judgment
in the case of RVS Levensverzekeringen (C-243/11)
regarding the interpretation of Directive 2002/83/EC
(‘Life Assurance Directive’) – in the meantime repealed
by Directive 2009/138/EC with effect from 1 November
2012 – as regards the question where the assurance
premium tax is to be paid in the case of change of
residence of the policyholder after the conclusion of
a life assurance contract. The CJ did not follow the
interpretation proposed by Advocate General Kokott
in her Opinion of 6 September 2012 (see EU Tax Alert
edition no. 109, October 2012).
8 9
interpretation of the Directive incompatible with the
freedom to provide services.
CJ holds that the refusal of the German ‘splitting method’ to frontier workers violates the EC-Switzerland Agreement on the free movement of persons (Ettwein) On 28 February 2013, the CJ rendered its judgment
in the case Ettwein (C-425/11) regarding the free
movement of (self-employed) persons under the
Agreement concluded between the European
Community and its Member States, on the one hand,
and Switzerland, on the other (‘EC-Switzerland
Agreement’).
The underlying case concerns Mrs Ettwein and her
husband, both of whom are German nationals and
pursue a self-employed professional activity in Germany.
Mrs and Mr Ettwein moved their place of residence
to Switzerland on 1 August 2007. They continued to
pursue their professional activity in Germany earning
almost all their income in Germany. In their 2008
personal income tax return, they applied, as they had
done in the previous years, for joint taxation under the
splitting method.
The German tax authorities rejected this on the ground
that the splitting method was not applicable to Mrs and
Mr Ettwein, as their residence was neither in Germany,
nor in one of the Member States of the European
Union, nor in a State which is a party to the European
Economic Area (‘EEA’). Mrs and Mr Ettwein challenged
the rejection before the Finance Court of Baden
Württemberg which referred a question for a preliminary
ruling to the CJ on the interpretation of the relevant
provisions of the EC-Switzerland Agreement.
Advocate General Jääskinen delivered his Opinion in
this case on 18 October 2012, concluding that Mrs and
Mr Ettwein, as they pursue a self-employed activity in
the Member State of which they are nationals, do not
derive rights from the provisions of the EC-Switzerland
Agreement (for details see EU Tax Alert edition no. 110,
November 2012).
of competition in assurance services between Member
States by designating the ‘Member State of commitment’
as the Member State which has the right to tax
assurance contracts.
The CJ found that an interpretation based on the
wording of the relevant provisions of the Directive
permits both the static and the dynamic approaches.
Therefore, it had regard to the objectives pursued by
both Article 50(1) and the Directive as a whole. First,
Article 50(1) of the Directive aims at eliminating double
taxation as regards indirect taxation of life assurance
premiums. The CJ found that the criterion chosen by the
EU legislature entailed that a connection should exist
between the territory of the Member State competent
to levy the tax and the policyholder. As the chargeable
event is the payment of the premiums and not the
conclusion of the contract, it follows that the Member
State competent to levy the indirect tax should be
the Member State with which the policyholder has a
connection at the time of the payment of the premium.
Second, the Directive aims to prevent distortion of
competition between assurance undertakings by linking
the competence over taxation of assurance premiums to
the habitual residence of the policyholder. The CJ found
that only the dynamic interpretation can ensure that the
same tax treatment will be applied to existing and new
contracts. Indeed, if the Directive allowed a policyholder
to retain, after a change in his habitual residence, the
more favourable tax treatment of the Member State in
which the contract was concluded, this would deter the
policyholder from changing assurance undertaking.
Therefore, the objective pursued by Article 50(1) of
the Directive calls for the dynamic interpretation. Then
the CJ examined whether such an interpretation is
compatible with the general objective of the Directive,
namely, the completion of the internal market in direct
life assurance, in particular, from the point of view of the
freedom to provide services. The CJ considered that,
although assurance undertakings may face an additional
administrative burden due to the change of the tax
rules applicable to the assurance contract upon the
policyholder’s change of residence or the need to follow-
up the habitual residence of the policyholder throughout
the term of the contract, this does not make the dynamic
9
parties from distinguishing, when applying the relevant
provisions of their fiscal legislation, between taxpayers
whose situations are not comparable, especially as
regards their place of residence. The CJ emphasised
that this provision allows a different treatment of
residents and non-residents only in the case when they
are not comparable. The CJ ruled that based on the
Schumacker case (C-279/93) and the Asscher case
(C-107/94), the situation of Mrs and Mr Ettwein was
comparable to the situation of a German resident person
pursuing a self-employed activity in Germany, as they
both earned almost all their income in Germany and had
elected for unlimited tax liability in Germany while their
personal and family circumstances could not be taken
into account in their State of residence, as they did not
receive income there.
Consequently, the CJ ruled that the EC-Switzerland
Agreement precludes legislation of a Member State
which refuses the benefit of joint taxation with the use
of the ‘splitting’ method to spouses who are nationals
of that State and subject to income tax in that State
on their entire taxable income, on the sole ground that
their residence is situated in the territory of the Swiss
Confederation.
CJ rules that the method used by Germany for calculating foreign tax credit is contrary to the free movement of capital (Beker and Beker) On 28 February 2013, the CJ rendered its judgment in
the case Beker and Beker (C-168/11) concerning the
compatibility of German rules on the computation of
the maximum tax credit granted to resident taxpayers
deriving income from abroad with EU law. In particular,
the question raised in this case is in which way the
Member State of residence has to take into account
the allowances that it grants with respect to the
taxpayer’s personal and family circumstances (‘personal
allowances’) when calculating the amount of tax paid in
another State which can be credited against the tax due
in that State.
In Germany, the maximum tax credit for natural persons
is calculated as follows. First, the amount of tax which
The CJ did not follow the Opinion of the Advocate
General insofar as it concluded that the situation of
Mrs and Mr Ettwein does fall within the scope of the
EC-Switzerland Agreement. It rejected the argument of
the German Government and the Commission that the
EC-Switzerland Agreement applies solely where there
is discrimination on grounds of nationality, that is, where
nationals of one contracting party are treated unequally
in the territory of the other contracting party compared to
its own nationals. The CJ referred to the Bergström case
(C-257/10), in which it was clarified that under certain
circumstances and in accordance with the provisions
applicable, nationals of a contracting party may also
claim rights under the EC-Switzerland Agreement
against their own country.
Thereafter, the CJ stated that Mrs and Mr Ettwein qualify
as ‘self-employed frontier workers’ under the terms of
the EC-Switzerland Agreement. It pointed out that the
concept of ‘self-employed frontier worker’ differs from
the concept of ‘self-employed person’ and therefore,
the condition under the latter concept according to
which a national of a contracting party should establish
himself in the territory of the other contracting party in
order to pursue self-employed activity there does not
apply to self-employed frontier workers. The difference
is reinforced by the fact that self-employed frontier
workers, unlike self-employed persons, are not required
to obtain a residence permit in order to pursue a self-
employed activity. Further, it is of relevance that the
Agreement grants the right of residence regardless
of the pursuit of an economic activity. According to
the CJ, it is frontier workers who in particular must be
able to benefit fully from that right of residence, while
maintaining their economic activity in their country of
origin.
As self-employed frontier workers, Mrs and Mr Ettwein
are entitled, according to the provisions of the EC-
Switzerland Agreement, to equal treatment in the host
country, i.e. Germany, also as regards tax concessions.
The CJ then ruled on whether such conclusion was
affected by Article 21(2) of the Agreement. The latter
provides that no provision of the Agreement may be
interpreted in such a way as to prevent the contracting
10 11
influence over the company paying the dividends such
rules must be assessed under the provisions of the
free movement of capital. Thus, the CJ held that the
contested rules had to be considered exclusively in the
light of the free movement of capital.
In examining whether the calculation by Germany of
the maximum tax credit restricts the free movement of
capital, the CJ pointed out that such calculation has
the result that the State of residence grants personal
allowances to taxpayers who earn foreign income only
in proportion to their domestic income. A proportion
of those allowances is thus not taken into account by
Germany in calculating those taxpayers’ income tax.
According to the De Groot case (C-385/00), it is a matter
for the State of residence, in principle, to grant the
taxpayer all the tax allowances relating to his personal
and family circumstances. The Member State in which
the income originated is required to take into account
personal and family circumstances only where the
taxpayer receives almost all or all of his taxable income
in that State and where he has no significant income
in his State of residence, so that the latter is not in a
position to grant him the related advantages. The CJ
ruled that these principles are fully transposable to the
present case, despite the fact that the De Groot case
concerned the free movement of workers instead of
capital and its facts differed from those of the present
case. It is also not relevant in this respect that De Groot
concerned the tax exemption method given that the
calculation under the version of the exemption method
applied by the Netherlands in that case is substantially
similar to the calculation under the credit method at
issue in the present case.
Thus, due to the calculation of the maximum credit by
Germany, taxpayers who earn some of their income
abroad are disadvantaged compared with taxpayers
who earn all of their income in the State of residence.
This difference in treatment constitutes a restriction on
the free movement of capital.
This restriction cannot be justified, according to the
CJ, by the preservation of the allocation of the power
would have been due if all the income were generated
in Germany is calculated by taking into account the
aggregate income of the taxpayer reduced by the
personal allowances due. Then, the amount of tax
credit is calculated. The income from the foreign State
is divided by the total income of the taxpayer without
taking into account the personal allowances of the
taxpayer. Subsequently, this fraction is multiplied by the
amount of the German tax which would have been due
if all the income were generated in Germany. This is the
maximum amount of foreign tax which can be credited
against the German tax due.
The taxpayers in this case, Mr Beker and Mrs Beker, are
liable to unlimited taxation in Germany. They earn the
greater part of their income in Germany, but have some
small investments in the form of shares in companies
resident in other Member States and third States. Upon
these shares, dividend was distributed and dividend
withholding tax was withheld in the source States. In
the main proceedings, the taxpayers argued that the
calculation by Germany of the maximum tax credit
granted with regard to the foreign dividend withholding
tax is in conflict with the free movement of capital as laid
down in Article 63 TFEU.
As regards the question of which freedom is applicable
to the case, the CJ ruled, making reference to the Test
Claimants in the FII Group Litigation case (C-35/11),
that the purpose of the legislation concerned must be
taken into consideration. The German rules at issue
apply regardless of the amount of shareholding in a
company. Insofar as those rules relate to dividends
which originate in a Member State, it cannot, having
regard to the purpose of the rule, be determined if the
rules fall under the freedom of capital or the freedom of
establishment. Therefore, the CJ took into account the
facts of the underlying case. The shareholdings held by
the Beker couple amount to less than 10% of the capital
in the companies. Consequently, they do not have a
definite influence within the meaning of the case law,
therefore, the free movement of capital is applicable.
As regards the dividends from third country companies,
when the national rules at issue do not apply exclusively
to situations in which the shareholder exercises decisive
11
discriminatory, having regard to the fact that the same
interest paid to Belgian investment companies or
relating to securities deposited or credited to financial
bodies established in Belgium is exempt from property
tax.
According to the Commission, the above provisions
create unjustified restrictions on the freedom to provide
services and the free movement of capital. If Belgium
does not comply with the reasoned opinion within two
months, the Commission may refer the case to the CJ.
Commission requests Belgium to amend tax reductions in the Flemish regionOn 21 February 2013, the Commission sent Belgium
a reasoned opinion requesting it to amend its tax rules
on the so-called ‘Win-win-loan’ (‘Winwinlening’: ‘Prêt
gagnant-gagnant’) venture capital scheme.
Under Belgian legislation, more specifically Flemish
regional legislation, a tax reduction is granted for loans
from residents of the Flemish region to businesses
established in that region, while the same reduction is
not available for non-residents receiving their income in
Belgium.
According to the Commission, the above rules are not
compatible with the free movement of workers and the
freedom of establishment set out under Articles 45 and
of the 49 TFEU. If Belgium does not comply with the
request within two months, the Commission may refer
the case to the CJ.
Commission refers Belgium to the CJ over discriminatory tax reduction for Walloon tax residents On 21 February 2013, the Commission announced that
it had referred Belgium to the CJ, as the last step in an
infringement procedure, on account of a discriminatory
tax reduction provided by the Walloon Region.
The Walloon Region provides to its residents that invest
in the public company, ‘Caisse d’Investissement de
Wallonie’ (Investment Fund of Wallonia) a tax reduction
to impose tax between Member States. The German
government argued that for the purposes of crediting
foreign withholding tax, that principle implies that it is
possible to deduct expenses or costs only when they
are directly linked to the tax revenue coming under a
Member State’s power to impose taxes and thus, the
State of residence is not obliged to compensate for
disadvantages linked to the failure to take into account
the taxpayers’ personal circumstances by the State
of source of the income. The CJ, however, held that
such justification cannot be invoked by a taxpayer’s
State of residence in order to evade its responsibility in
principle to grant to the taxpayer the personal and family
allowances to which he is entitled, unless, of their own
accord or as a consequence of specific international
agreements, the States in which one part of the
income is received grant such allowances. Moreover,
if Germany fully grants the benefit of the personal
allowances to the taxpayers it will not forgo part of its
tax jurisdiction to other Member States. According to the
CJ, the income received in Germany by the taxpayers
is not taxed less than if it constituted the only income
received by the persons concerned and the latter had
not received foreign income.
Finally, the CJ stated that the fact that German
law grants an option to the taxpayer to choose the
deduction of the foreign tax from the tax base as an
expense instead of a foreign tax credit does not rectify
the infringement of EU law entailed by the German
mechanism of applying the credit method.
Commission asks Belgium to change its taxation of paid interestOn 21 February 2013, the Commission requested
Belgium to amend its legislation on taxation of paid
interest. The request takes the form of a reasoned
opinion (second stage of the infringement procedure
under Article 258 TFEU).
The Commission considers that the property tax
imposed on the interest paid to foreign investment
companies and the taxation of interest relating to
securities deposited or credited to the accounts of
financial institutions established outside Belgium is
12 13
Commission asks Spain to amend inheritance and gift tax rules in the Historical Territories of Alava and Bizkaia On 21 February 2013, the Commission requested Spain
to amend the provisions of the inheritance and gift
tax legislation of the Historical Territories of Alava and
Bizkaia, which the Commission considers to be contrary
to the free movement of capital. The Commission’s
request takes the form of a reasoned opinion.
Under these tax provisions, public debt issued by the
local administrations benefits from a preferential tax
treatment. This means that titles of public debt from
these administrations are taxed less than other similar
titles after inheritance. This tax treatment discriminates
against investments in public debt issued by other EU
Member States or EEA States.
If the legislation is not brought into compliance with EU
law within two months, the Commission may refer the
matter to the CJ.
Public consultations on EU Taxpayer’s Code and EU Tax Identification Number On 25 February 2013, the Commission launched two
public consultations on specific measures which could
improve tax collection and ensure better tax compliance
across the EU.
The first consultation is on the development of a
European Taxpayer’s Code, which would clarify the
rights and obligations of both taxpayers and tax
authorities. Most Member States have established
taxpayer’s codes, which, however, vary considerably
from one Member State to another. This makes it
difficult for citizens and companies to understand their
rights in different Member States and comply with their
tax obligations in cross-border situations.
The second consultation is on a European Tax
Identification Number (EU TIN), which would facilitate
the proper identification of taxpayers in the EU. Given
the increased mobility of people and more cross-border
nature of economic activity, Member States also find it
for personal income tax purposes. The Commission
considers that excluding non-residents who earn their
income in the Walloon Region from this reduction
is discriminatory and restricts the free movement of
workers.
Regions in Belgium have a limited fiscal autonomy
to impose or reduce personal income tax. They may
provide for tax reductions but the federal law limits
their competence to residents of their Region. Thus,
inherently, the law providing for the fiscal autonomy
leads to conflict with EU law. It must be noted that
since the regional fiscal autonomy has been instated in
Belgium four tax measures have been questioned by
the Commission in infringement procedures (inheritance
tax in the Walloon Region, the aforementioned
“winwinlening” of the Flemish region and the property
transfer tax in the Brussels Region).
Commission requests Romania to review its taxation of foreign businesses On 21 February 2013, the Commission requested
Romania to amend its discriminatory tax treatment of
foreign companies. The Commission’s request takes the
form of a reasoned opinion.
Under Romanian tax law, a foreign business with
several establishments in Romania is subject to
corporate taxation on each of the establishments
individually, despite the fact that these do not have
separate legal personality. The impossibility for a
foreign taxpayer to consolidate the results of all its
establishments in Romania amounts to a cash-flow
disadvantage or higher taxation for the foreign legal
entity. According to the Commission, such restriction
is contrary to the freedom of establishment set out in
Article 49 TFEU.
If the legislation is not brought into compliance with EU
law within two months, the Commission may refer the
matter to the CJ.
13
mainly concerned a different issue, it can be inferred
from it that according to the CJ, the tax deductibility of a
part of a fine imposed by the Commission can affect the
effectiveness of the fine. Reference was also made to a
similar case brought before the General Court in which
the General Court considered that the EU Commission,
in determining the fine, takes into account the fact that
the fine is to be paid from the profits after taxation as
otherwise, the Member State would have to bear part of
the fine (Case T-10/89 Hoechst AG).
Taking into account the aforementioned positions of
the CJ and the General Court, the Constitutional Court,
referring to the principle of loyal cooperation (Article
4(3) TEU), concluded that Belgian tax law must be thus
interpreted in such way that EU competition fines qualify
as non-deductible expenses.
VAT CJ rules on deduction of VAT (improperly) entered on invoices (Stroy Trans and LVK – 56) On 31 January 2013, the CJ delivered its judgments
in the Stroy Trans and LVK – 56 cases (C-642/11 and
C-643/11). These cases, which were not joined in the
proceedings, both revolved around the question whether
VAT (improperly) entered on an invoice was deductible
by the recipient of the invoice.
Case C-642/11 concerned the Bulgarian company,
Stroy Trans EOOD (‘Stroy Trans’), whose activities
consisted of road freight transport and the provision
of mechanized services with special equipment. Stroy
Trans purchased diesel fuel and deducted the VAT
entered on the invoices issued for those purchases.
Following an audit of the suppliers of the diesel fuel, the
Bulgarian tax authorities denied the deduction of the
VAT on the grounds that it could not be established how
the suppliers had purchased the diesel fuel and that
there were no actual supplies of the diesel fuel to Stroy
Trans.
increasingly difficult to identify taxpayers properly. This
can undermine national efforts to collect taxes properly,
lead to situations of double non-taxation, and even
facilitate tax fraud and evasion.
The Commission indicated that the aim of the public
consultations is to gather examples of best practices
in the Member States on collecting data on taxpayers’
identities as well as taxpayer compliance and
transparency. The consultations run until 17 May 2013.
The results of the consultations will be used to identify
and develop the appropriate policy responses by the
end of 2013.
Both the Taxpayer’s Code and the EU TIN were
among the measures proposed by the Commission in
December 2012 in its Action Plan to tackle tax fraud and
evasion (see EU Tax Alert edition no. 111, December
2012).
Developments in Belgium: Constitutional Court rules that EU competition fines are not tax deductible On 20 December 2012, the Belgian Constitutional
Court delivered a judgment in which it held that EU
competition fines are not tax deductible under Belgian
tax law, as such tax deduction would be an infringement
of Belgium’s obligation to refrain from any measures that
could jeopardize the realization of the goals of the EU.
The tax deductibility of EU competition fines has
been disputed for several years in Belgian tax law.
Since the issuance of an administrative Circular in
2008, the tax administration has considered that the
general prohibition to deduct fines is to be interpreted
as to include not only criminal sanctions but also
administrative fines and thus, also EU competition fines.
A case finally ended up before the Constitutional
Court in which both the tax administration and the
EU Commission asked the Constitutional Court to
submit a preliminary ruling request to the CJ. However,
the Constitutional Court considered such request
unnecessary, as the CJ has already taken position on
this issue in case X BV (C-29/07). Although this case
14 15
to the CJ, the mere fact that the tax authorities did not
correct the output VAT declared by the issuer of an
invoice does not imply that they acknowledged that the
invoice corresponded to actual taxable transactions.
However, the CJ also ruled that EU VAT law does not
preclude the competent authority from checking whether
actual taxable transactions have taken place and
rectifying, where necessary, the output VAT declared.
According to the CJ, the outcome of such a check is
a factor to be taken into account by the national court
in order to determine whether a taxable transaction
conferring the right to deduct input VAT by the recipient
of an invoice exists.
Finally, the CJ ruled that the principles of fiscal
neutrality, proportionality and the protection of legitimate
expectations do not preclude the recipient of an invoice
from being refused the right to deduct input VAT on
the grounds that there is no taxable transaction, even
if the VAT declared by the issuer of the invoice was
not adjusted in a tax adjustment notice. However, if
the transaction is considered to have been carried out
in the light of VAT fraud or irregularities committed by
the issuer of the invoice or upstream of the transaction
relied on for deduction, the CJ ruled that it should be
established by the referring court whether, based on
objective factors and without requiring the recipient of
the invoice of checks which are not his responsibility,
that the recipient knew or should have known that that
transaction was connected with VAT fraud.
CJ rules that granting access to aquatic park may constitute services closely linked to sports (Město Žamberk)On 21 February 2013, the CJ delivered its judgment in
the case Město Žamberk (C-18/12). Město Žamberk
runs a municipal aquatic park in the Czech Republic. In
return for an entrance fee, the visitors can make use of a
swimming pool divided into several lanes and equipped
with diving boards, a paddling pool for children, water
slides, a massage pool, a natural river for swimming, a
beach-volleyball court, areas for table tennis and sports
equipment for hire. The referring court noted that, to its
knowledge, no sports club or organization carries out its
In case C-643/11, the Bulgarian company LVK – 56
EOOD (‘LVK’), an agricultural producer, purchased
goods from suppliers. LVK deducted the VAT on the
invoices. The Bulgarian tax authorities did a crosscheck
on the two suppliers during which they required the
submission of a number of documents. The suppliers did
not reply within the prescribed time limit. Moreover, LVK
was requested to provide evidence that the supplies
had actually been carried out, but the provided evidence
contained errors. Consequently, the tax authorities took
the view that no supplies had actually been carried out
and that VAT had, therefore, improperly been entered on
the invoices. In this regard, they refused LVK to deduct
the VAT.
Stroy Trans and LVK both maintained that there were
actual supplies and that there was as such no basis
for refusing the right to deduction. In this regard, both
taxpayers referred to tax adjustment notices issued
to their suppliers. In these tax adjustment notices, the
output VAT declared by the suppliers on the sales, as
entered on the invoices issued to Stroy Trans and LVK
respectively, was not adjusted. According to Stroy Trans
and LVK, the fact that the output VAT was not adjusted,
proved that the supplies by the suppliers to Stroy Trans
and LVK respectively had actually taken place.
Eventually the cases ended up before the
Administrativen Court of Varna, which decided to refer
preliminary questions to the CJ in both proceedings in
order to find out, based on Article 203 of the EU VAT
Directive, what the significance is of the tax adjustment
notices addressed to Stroy Trans’ and LVK’s suppliers
and whether it is possible to infer from them that the
tax authorities acknowledged that the invoices at issue
corresponded to taxable transactions which were
actually carried out.
Based on settled case law, the CJ pointed out that
the issuer of an invoice can, under certain conditions,
correct improperly invoiced VAT. If such correction has
not taken place, the CJ ruled that the tax authorities are
not obliged in the context of a tax audit to determine
whether the VAT invoiced and declared corresponded
to taxable transactions actually carried out. According
15
the facilities constitutes, according to the CJ, a strong
indication of the existence of a single supply.
If the referring court established that there is a single
supply for VAT purposes, the CJ ruled that the referring
court should subsequently establish which element
of that supply is predominant from the point of view
of the typical customer. In this regard, according to
the CJ, it is necessary to take account of the design
and characteristics of the aquatic park and as regards
the aquatic areas, in particular, whether those areas
lend themselves to swimming of a sporting nature or
whether they are arranged so that they lend themselves
essentially to recreational use. Should the sporting
activities form the predominant element of the supply
from the point of view of the customer, the access to
the aquatic park, which offers visitors not only facilities
for engaging in sporting activities but also other types
of amusement or rest, constitutes a supply of services
closely linked to sport within the meaning of the VAT
exemption of Article 132(1)(m) of the EU VAT Directive.
CJ rules that VAT on legal costs for criminal proceedings brought against managing directors in their personal capacity is not deductible by the company (Wolfram Becker)On 21 February 2013, the CJ delivered its judgment
in the Wolfram Becker case (C-104/12). Mr Becker
was the majority shareholder in the German company
A-GmbH, which carried out construction works. A-GmbH
had three managing directors amongst which Mr Becker
and P, the authorized representative of A-GmbH. Mr
Becker and A-GmbH formed a VAT fiscal unity in which
Mr Becker, as the controlling entity, took responsibility
for the fiscal obligations of the VAT fiscal unity.
After A-GmbH had won and performed a construction
contract, criminal proceedings were brought against
Mr Becker and P, because A-GmbH was suspected of
having won the construction contract due to bribery.
However, the criminal proceedings against Mr Becker
and P were discontinued after payments of amounts
pursuant to the German Code of Criminal Procedure.
activities on the site and no school or other body used
the site for physical education.
In its VAT return, Město Žamberk requested a VAT
refund. The tax authorities considered, however, that
the services supplied by the municipal aquatic park of
Město Žamberk constituted exempt services without
a right to deduct VAT and, therefore, only granted a
partial VAT refund. Eventually, the case came before
the Supreme Administrative Court, which referred
preliminary questions to the CJ asking whether non-
organized and unsystematic sporting activities may be
categorized as ‘taking part in sport’ within the meaning
of the VAT exemption of Article 132(1)(m) of the EU
VAT Directive. In this regard, it also raised the question
whether the fact that an aquatic park such that at issue
in the main proceedings offers its visitors not only the
opportunity to take part in certain sporting activities
but also amusement or rest, and whether the fact that
the intention of all visitors is not necessarily to take
part in sporting activities, may have an effect on the
applicability of Article 132(1)(m) of the EU VAT Directive.
According to the CJ, the provision of Article 132(1)(m) of
the EU VAT Directive has the objective of encouraging
certain activities in the public interest. As regards
sporting activities, it would be counter to that object,
according to the CJ, to limit the scope of the application
of the exemption to sporting activities which are
engaged in an organized or systematic manner or aimed
at participation in sports competitions. Consequently, the
CJ ruled that non-organized and unsystematic sporting
activities which are not aimed at participation in sports
competitions may be categorized as taking part in sport
within the meaning of Article 132(1)(m) of the EU VAT
Directive.
In the case of an aquatic park that offers visitors not
only facilities for engaging in sporting activities but also
other types of amusement or rest, the CJ ruled that the
referring court should first establish whether a single
supply for VAT purposes has to be taken into account
or multiple supplies each with their own VAT treatment.
The fact that there is only one type of entrance ticket
offered for the aquatic park that gives access to all of
16 17
Advocate General opines on place of supply of storage services (RR Donnelley)On 31 January 2013, Advocate General Kokott delivered
her Opinion in the RR Donnelley case (C-155/12).
RR Donnelley Global Turnkey Solutions Poland Sp.
Z o.o. (‘RR Donnelley’), a Polish company, provided
storage services to companies in other EU Member
States and to companies in non-Member States. Those
services included admitting the goods to the warehouse,
placing the goods on storage shelves, storing the goods,
packaging the goods, issuing the goods, unloading and
loading. The services could also include repackaging
materials supplied in collective packaging into individual
sets.
RR Donnelley applied to the Polish tax authorities for
an interpretation of Polish VAT law in respect of these
activities. In particular, RR Donnelley inquired whether
the services were taxable in Poland. According to the
Polish Minister for Finance, the services qualified as
services connected with immovable property within
the meaning of Article 47 of the EU VAT Directive and,
as such, were taxable in Poland if the warehouse
was situated in Poland. RR Donnelley took the view,
however, that the services were taxable in the country of
the recipient of the service under the main rule of Article
44 of the EU VAT Directive. Eventually the matter ended
up before the Supreme Administrative Court, which
decided to refer preliminary questions to the CJ.
According to the Advocate General, the referring court
should first establish whether the various elements of
the services rendered should be taken into account as
a single service from a VAT point of view or as multiple
separate services. The Advocate General assumed, in
particular based on the preliminary questions referred,
that a single service has to be taken into account
consisting of the storage of goods.
Moreover, the Advocate General considered that Article
47 of the EU VAT Directive requires a sufficiently direct
connection between the service and the immovable
property. According to the Advocate General, this
sufficiently direct connection exists if the service has the
In the context of the criminal investigation proceedings,
Mr Becker and P were each represented by their
respective lawyers. The agreements with the lawyers
were signed by A-GmbH, represented by Mr Becker and
P. The invoices for the services were sent to A-GmbH.
Mr Becker, as controlling entity in the VAT fiscal unity,
deducted the VAT charged on the invoices. The Federal
Finance Court had doubts as to whether the VAT on
the services was deductible by A-GmbH and decided to
refer preliminary questions to the CJ.
The CJ ruled that the services by the lawyers sought
directly and immediately to protect the private interests
of the two accused managing directors, who were
charged with offences relating to their personal
behaviour. In this regard, the CJ took into account that
the criminal proceedings had been brought against them
in their personal capacity and not against A-GmbH,
although proceedings against A-GmbH would have
also been legally possible. As such, the costs relating
to those services could not, according to the CJ, be
considered as having been incurred for the purposes of
the economic activities of A-GmbH as a whole.
Moreover, the CJ acknowledged that the services by
the lawyers would not have been performed if A-GmbH
had not exercised the VAT taxable construction activities
and that, therefore, there was a causal link between the
two. However, according to the CJ, it did not concern a
direct and immediate link. Consequently, the CJ ruled
that the services by the lawyers were not used for the
purposes of taxable transactions within the meaning
of Article 17(2)(a) of the Sixth EU VAT Directive and
the VAT on the costs incurred was, therefore, not
deductible by A-GmbH. In this regard, the fact that
domestic civil law obliged a company to incur the costs
relating to criminal proceedings of its representative’s
interests was, according to the CJ, irrelevant as only the
objective relationship between the services performed
and the taxable economic activity was decisive for VAT
purposes.
17
detriment of traders in other EU Member States. The
Commission decided to refer the matter to the CJ,
because France and Luxembourg did not bring their
legislation into line following the Commission’s reasoned
opinion of 24 October 2012.
Commission refers UK to CJ for its reduced VAT rate on supply and installation of energy-saving materials On 21 February 2013, the Commission referred the
United Kingdom to the CJ for its reduced VAT rate on
the supply and installation of energy-saving materials.
According to the Commission, Member States may
apply reduced VAT rates to the supply of goods and
services used in the housing sector, as long as this
is part of social policy. However, the Commission
indicates that there is no provision in the VAT Directive
to allow a reduced VAT rate on ‘energy saving materials’
specifically, and that the universal application of a
reduced rate for energy saving materials is therefore not
allowed.
Commission requests Poland to amend its legislation on reduced VAT ratesPoland applies a reduced VAT rate to fire protection
goods. According to the Commission, this is not
allowed based on the EU VAT Directive. Therefore, the
Commission has sent a reasoned opinion to Poland
in which it requests Poland to bring its legislation
in compliance with EU VAT law. The Commission
may refer the matter to the CJ if the legislation is not
amended within two months.
Customs Duties, Excises and other Indirect TaxesCommission refers Hungary to the CJ over tax exemption of pálinka On 21 February 2013, the Commission decided to
refer Hungary to the CJ for granting an exemption from
excise duty to the production of fruit distillates (pálinka).
use of, work on, or assessment of specific immovable
property as its subject-matter or is explicitly listed
in Article 47 of the EU VAT Directive. In this regard,
the Advocate General stated as regards the storage
services, that it is of relevance whether the customer
obtains a right of use of a specific storage area or
whether he is merely to receive the goods back in the
same condition. Consequently, the Advocate General
concluded that services consisting of the storage of
goods are, based on Article 47 of the EU VAT Directive,
taxable in the Member State where the immovable
property is located, if the storage of the goods is the
principal supply of a single service and if that service
is connected with a right to use specific immovable
property or a specific part of such property.
Proposal for derogating measure allowing Latvia to restrict the right to deduct VAT on cars Articles 168 and 168a of the EU VAT Directive
provide that a taxable person is entitled to deduct VAT
charged on purchases made for the purposes of taxed
transactions. In the case of private use, Article 26(1)(a)
provides that a correction should be made of the VAT
initially deducted. As the split in private and business
use is difficult to apply to passenger cars, Latvia has
requested for a derogating measure allowing it to limit
to 80% the right to deduct VAT on expenditure on
passenger cars not wholly used for business purposes.
On 12 February 2013, the Commission published a
proposal for a Council Decision with respect to this
derogating measure.
Commission refers France and Luxembourg to CJ over VAT rates on e-books On 21 February 2013, the Commission announced
that it had decided to refer France and Luxembourg to
the CJ for applying reduced rates of VAT to e-books.
According to the Commission, the provision of e-books
is an electronically provided service and as such, cannot
benefit from a reduced rate based on EU VAT law. The
Commission indicates that application of the reduced
VAT rate on e-books by France and Luxembourg has
resulted in serious distortions of competition to the
18
Hungary exempts pálinka from excise duty when it is
produced by households or distilleries for personal use,
up to a maximum of 50 litres a year. However, Directive
92/83/EEC allows Hungary to grant, under such
conditions, only a 50% reduction of the normal excise
rate on pálinka. Since Hungary failed to withdraw the
contested measures as requested by the Commission’s
reasoned opinion (see EU Tax Alert edition no. 107, July
2012), the Commission has now decided to refer the
case to the CJ.
Anti-dumping duty on imports of bio-ethanol of US origin On 23 February 2013, Council implementing Regulation
No 157/2013 came into force. On the basis of this
Regulation, a definitive anti-dumping duty will be
imposed on imports of bio-ethanol, denatured or
undenatured, of US origin that will be used as a fuel.
The rate of the definitive anti-dumping duty shall be
EUR 62.30 per ton net.
An exemption applies to bio-ethanol if it is for other uses
than as use for fuel. The exemption shall be subject
to the conditions laid down in the relevant provisions
of the European Union with a view to customs control
of the use of such goods (see Articles 291 to 300 of
Commission Regulation (EEC) No 2454/93).
19
Correspondents● Peter Adriaansen (Loyens & Loeff Luxembourg)
● Séverine Baranger (Loyens & Loeff Paris)
● Gerard Blokland (Loyens & Loeff Amsterdam)
● Alexander Bosman (Loyens & Loeff Rotterdam)
● Kees Bouwmeester (Loyens & Loeff Amsterdam)
● Almut Breuer (Loyens & Loeff Amsterdam)
● Mark van den Honert (Loyens & Loeff Amsterdam)
● Leen Ketels (Loyens & Loeff Brussel)
● Sarah Van Leynseele (Loyens & Loeff Brussel)
● Raymond Luja (Loyens & Loeff Amsterdam;
Maastricht University)
● Arjan Oosterheert (Loyens & Loeff Amsterdam)
● Lodewijk Reijs (Loyens & Loeff Eindhoven)
● Bruno da Silva (Loyens & Loeff Amsterdam)
● Rita Szudoczky (Loyens & Loeff Amsterdam)
● Patrick Vettenburg (Loyens & Loeff Eindhoven)
● Ruben van der Wilt (Loyens & Loeff Amsterdam)
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Editorial boardFor contact, mail: [email protected]:
● René van der Paardt (Loyens & Loeff Rotterdam)
● Thies Sanders (Loyens & Loeff Amsterdam)
● Dennis Weber (Loyens & Loeff Amsterdam;
University of Amsterdam)
Editors● Patricia van Zwet
● Rita Szudoczky
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