Buletin Informativ - nr. 29/2018: Top 5 noutati din domeniul fiscalitatii internationale
BRUSSELS I 30 JULY 2018
1.OECD Invites Input on Dispute Resolution Peer Reviews
As a follow-up of BEPS Action 14, the OECD invites taxpayers’ input to inform and improve the tax treaty dispute resolution process, as a priority of the BEPS project. The OECD is gathering contributions from taxpayers on specific issues relating to access to MAP, clarity and availability of MAP guidance and the timely implementation of MAP agreements using the taxpayer input questionnaire. This particular stage concerns the following jurisdictions: Argentina, Chile, Colombia, Croatia, India, Latvia, Lithuania and South Africa. OECD encourages taxpayers as key benefiters from the MAP process to fill in the questionnaire and submit it to firstname.lastname@example.org (in Word format) by 24 August 2018 at the latest.
2ECJ Judgment on Irrecoverable Default Interest Related to Cross-Border Withholding Tax in Case C-553/16
The Seventh Chamber of the Court of Justice delivered a judgment on 25 July 2018 in the case C-553/16 TTL, which concerns a restriction of the freedom to provide services by the Bulgarian tax legislation concerning the tax treatment of irrecoverable default interest related to cross-border withholding tax which is ultimately not due.
Restriction to the Freedom to Provide Services
The dispute in the main proceedings concerns interpretation of the Bulgarian corporate income tax legislation and Tax Procedural Code that stipulates that a resident company which pays out income to a non-resident one must pay default interest in the event of non-payment of withholding tax. Such an irrecoverable default interest payment, which may ultimately not be due, due to applicability of a Double Tax Treaty, is applicable only in the event of cross-border transactions. In such a situation, it is contrary to the freedom to provide service to treat a cross-border situation less favourably than a national one, effectively discouraging resident companies from using services of companies established in other member states.
The Court established that the applicable Bulgarian tax legislation amounts to a restriction to the freedom of provision of services, which is capable of being justified by effective fiscal supervision and the effective collection of tax. The imposition of penalties such as irrecoverable interest however was found to be disproportionate and therefore a hindrance to the cross-border provision of services.
In spite of such a restriction being capable of justification under the effectiveness of fiscal supervision and the need to ensure effective collection of taxes, the measure were found to be disproportionate.
The Court held that the imposition of penalties, including criminal penalties, may be considered to be necessary in order to ensure compliance with national rules, subject, however, to the condition that the nature and amount of the penalty imposed is in each individual case proportionate to the gravity of the infringement which it is designed to penalise (NN International, C‑48/15, paragraph 59 and the case-law cited).
3.ECJ Judgment in Spanish Tax Lease State Aid Case C-128/16P Commission v Spain
The Second Chamber of the Court of Justice set aside on 25 July a General Court judgment that had annulled a Commission decision that had originally assessed the Spanish tax lease system as incompatible State aid.
The Spanish scheme was a structure organised by a bank, which acted as an intermediary between a shipping company (buyer) and a shipyard (seller), interposing a leasing company and an economic interest company (EIG) set up by the bank. The aim of the arrangement was to generate tax advantages for the investors in the EIG and to transfer part of those advantages to the shipping company in the form of a rebate on the price of the vessel, with the investors retaining the other advantages as a return on their investment. The Commission established that three of the five fiscal measures under examination constituted illegal State aid to the EIGs and their investors and had been unlawfully implemented by Spain since 1 January 2002.
Effects of a Tax Measure v Regulatory Technique
The ECJ found that the General Court incorrectly applied Article 107(1) TFEU on what constitutes State aid. The General Court concluded that the EIGs could not be the beneficiaries of State aid solely on basis of the tax transparency of those groupings. The General Court, in holding that the EIGs could not be the beneficiaries of State aid solely because of their legal form, erred by not taking into account settled case-law that the classification of a measure as State aid depends on the effects of the measure, which takes precedence over the legal status of the undertaking or the regulatory techniques used.
Selectivity– Error in Law by the General Court
As a consequence of this error of law, the General court incorrectly assessed the criterion of ‘selectively’ by reference to the investors rather than the EIG as a beneficiary of the aid, which is a crucial element of the State aid analysis in accordance with EU law. In relation to selectivity, the Court of Justice decided that the General Court incorrectly relied on its judgments in World Duty Free and Autogrill Espana, which have subsequently been annulled by the Court of Justice.
4.IMF Working Paper on International Tax Avoidance
The International Monetary Fund (IMF) has published on 23 July a working paper that reviews the channels, scope and blind spots of international corporate tax avoidance. It is based on a survey of empirical literature on international tax avoidance, that is defined as profit shifting by a multinational company in response to disparities among tax jurisdictions in order to minimise their taxation burden.
The working paper assesses the overall magnitude of profit shifting and includes transfer pricing, strategic location of intellectual property (IP), international debt shifting, and treaty shopping. It also discusses tax avoidance devices that are unique to worldwide taxation systems, such as corporate inversions, headquarter relocation, and tax deferral.
5.Save the Date - 11th European Tax Advisers Professional Affairs Conference, 23 November Madrid
CFE Tax Advisers Europe and the Asociación Española de Asesores Fiscales (AEDAF) are pleased to invite you to the 11th European Conference on Tax Advisers’ Professional Affairs, to be held in Madrid, Spain, on Friday 23 November 2018 from 9am to 3pm on the topic of “Transparency Trends in Taxation: How to Implement New EU & OECD Mandatory Disclosure Rules”. More details are available on the CFE Tax Advisers Europe website.
Register now to secure your place at the Conference!