Since July 2021, more than 130 member countries of the G20/OECD Inclusive Framework (IF) have committed themselves to pursuing a ‘common approach’ on an international effective minimum tax regime. This political agreement implies that member countries who wish to implement such a tax regime have to streamline its design by modelling it after the so-called Global Anti-Base Erosion Proposal (‘GloBE’) that the IF has developed as ‘Pillar 2’ of its work program on tax challenges arising from the digitalization of the economy. This article explores how individual EU Member States could implement this agreement in conformity with EU fundamental freedoms also absent – or ahead of – harmonizing EU legislation to this effect. It is demonstrated that design alternatives to the often proposed extension of the carve-out for ‘substance-based’ activities exist and should be pursued. In particular, EU Member States could extend the minimum top-up tax approach to domestic entities of in-scope multinational enterprises (MNEs). Alternatively, they could also convert GloBE into a form of unitary minimum taxation. minimum taxation, GloBE, Pillar 2, fundamental freedoms, de facto discrimination
{"title":"Non-harmonized Implementation of a GloBE Minimum Tax: How EU Member States Could Proceed","authors":"J. Englisch","doi":"10.54648/ecta2021022","DOIUrl":"https://doi.org/10.54648/ecta2021022","url":null,"abstract":"Since July 2021, more than 130 member countries of the G20/OECD Inclusive Framework (IF) have committed themselves to pursuing a ‘common approach’ on an international effective minimum tax regime. This political agreement implies that member countries who wish to implement such a tax regime have to streamline its design by modelling it after the so-called Global Anti-Base Erosion Proposal (‘GloBE’) that the IF has developed as ‘Pillar 2’ of its work program on tax challenges arising from the digitalization of the economy. This article explores how individual EU Member States could implement this agreement in conformity with EU fundamental freedoms also absent – or ahead of – harmonizing EU legislation to this effect. It is demonstrated that design alternatives to the often proposed extension of the carve-out for ‘substance-based’ activities exist and should be pursued. In particular, EU Member States could extend the minimum top-up tax approach to domestic entities of in-scope multinational enterprises (MNEs). Alternatively, they could also convert GloBE into a form of unitary minimum taxation.\u0000minimum taxation, GloBE, Pillar 2, fundamental freedoms, de facto discrimination","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48461142","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Assessment of the time at which newly introduced or amended legislation takes effect is difficult. This is due to the possibility that some legal rules apply to situations existing before their entry into force. These rules are in principle retroactively applicable. The CJEU evaluates retroactivity of (tax) legislation based on a distinction between procedural and substantive rules. Procedural rules are held to apply to proceedings pending at the time when they enter into force. Substantive rules are usually interpreted as not applying to situations existing before their entry into force. However, retroactive effect must be given to these rules in so far as it follows clearly from their terms, objectives or general scheme. This is to ensure observance of the principle of legal certainty and the protection of legitimate expectations. Violation of these principles is only allowed on legitimate grounds. This article compiles a framework constituting the general principles of Union law and Article 1 First Protocol European Court of Human Rights. This framework can be used to assess whether legal provisions are applicable before their entry into force. The framework is tested with a case study to the retroactive effect of Title III UCC provisions. Retroactive effect, Retroactivity, Legitimate expectations, Possessions, Customs law, Framework, Procedural, Substantive, Article 1 First Protocol, ECHR, CJEU, General principles of Union law, UCC, CCC, Entry into force
{"title":"With the Wisdom of Hindsight","authors":"J.L. van Verseveld","doi":"10.54648/ecta2021020","DOIUrl":"https://doi.org/10.54648/ecta2021020","url":null,"abstract":"Assessment of the time at which newly introduced or amended legislation takes effect is difficult. This is due to the possibility that some legal rules apply to situations existing before their entry into force. These rules are in principle retroactively applicable. The CJEU evaluates retroactivity of (tax) legislation based on a distinction between procedural and substantive rules. Procedural rules are held to apply to proceedings pending at the time when they enter into force. Substantive rules are usually interpreted as not applying to situations existing before their entry into force. However, retroactive effect must be given to these rules in so far as it follows clearly from their terms, objectives or general scheme. This is to ensure observance of the principle of legal certainty and the protection of legitimate expectations. Violation of these principles is only allowed on legitimate grounds. This article compiles a framework constituting the general principles of Union law and Article 1 First Protocol European Court of Human Rights. This framework can be used to assess whether legal provisions are applicable before their entry into force. The framework is tested with a case study to the retroactive effect of Title III UCC provisions.\u0000Retroactive effect, Retroactivity, Legitimate expectations, Possessions, Customs law, Framework, Procedural, Substantive, Article 1 First Protocol, ECHR, CJEU, General principles of Union law, UCC, CCC, Entry into force","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46152995","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"State Aid Prohibition: The New GAAR in Town","authors":"J. Englisch","doi":"10.54648/ecta2021016","DOIUrl":"https://doi.org/10.54648/ecta2021016","url":null,"abstract":"","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42783782","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The comparability analysis plays an important role in the Court of Justice of the European Union (CJEU)’s case law on the fundamental freedoms: if the situations examined are not objectively comparable, a violation of the fundamental freedoms is not possible. However, the CJEU does not follow a clear line in its decisions with regard to the comparability analysis, which makes it difficult to understand the decision-making process. Legal uncertainty is the result. In its last decision, Aures, in which the Court had to deal with a loss utilization rule, it exceptionally denied the comparability of the situations. Due to the increasing significance of losses in international tax law, the authors analyse the different methods of comparability analysis in cross-border loss utilization used by the CJEU and highlight the associated problematic areas. Comparability Analysis; Loss Utilization; Freedom of Establishment; Aures; Discrimination; Fundamental Freedoms; Double Tax Conventions; CJEU; Final Losses; Subject to tax
{"title":"The Comparability Analysis of the Court of Justice of the European Union in the Light of the Aures Case","authors":"Markus Mittendorfer, M. Riedl","doi":"10.54648/ecta2021018","DOIUrl":"https://doi.org/10.54648/ecta2021018","url":null,"abstract":"The comparability analysis plays an important role in the Court of Justice of the European Union (CJEU)’s case law on the fundamental freedoms: if the situations examined are not objectively comparable, a violation of the fundamental freedoms is not possible. However, the CJEU does not follow a clear line in its decisions with regard to the comparability analysis, which makes it difficult to understand the decision-making process. Legal uncertainty is the result. In its last decision, Aures, in which the Court had to deal with a loss utilization rule, it exceptionally denied the comparability of the situations. Due to the increasing significance of losses in international tax law, the authors analyse the different methods of comparability analysis in cross-border loss utilization used by the CJEU and highlight the associated problematic areas.\u0000Comparability Analysis; Loss Utilization; Freedom of Establishment; Aures; Discrimination; Fundamental Freedoms; Double Tax Conventions; CJEU; Final Losses; Subject to tax","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46181563","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Over the last two decades, the European Union (EU) and various European States have proposed or created several taxes aimed at increasing the overall tax burden to which the financial sector is currently subject. The interest in new taxable events and the need to regulate financial markets’ functioning are two powerful reasons that support the application of this type of tax. This article details both the European Commission’s Proposals for Directives on Financial Transaction Tax, and the related taxes currently in force in Europe. Evidence shows that the goal of harmonized taxation in this area is far from being achieved and that national decisions are based on two different models: a tax on the registration of certain transactions and a tax on financial transactions levied on the financial intermediaries involved in such transactions. This article focuses on the comparative experience of European States in the adoption of this type of tax. This review will highlight the differences and similarities between different national taxes, and ultimately the possibilities of the EU’s Financial Transaction Tax Proposal becoming effective. Transaction Tax, Stamp Duty, European Commission’s Proposals, Harmonization, Financial Transactions, High, frequency Operations, Taxation Trends
{"title":"Financial Transaction Tax in Europe","authors":"G. Rodríguez","doi":"10.54648/ecta2021017","DOIUrl":"https://doi.org/10.54648/ecta2021017","url":null,"abstract":"Over the last two decades, the European Union (EU) and various European States have proposed or created several taxes aimed at increasing the overall tax burden to which the financial sector is currently subject. The interest in new taxable events and the need to regulate financial markets’ functioning are two powerful reasons that support the application of this type of tax.\u0000 This article details both the European Commission’s Proposals for Directives on Financial Transaction Tax, and the related taxes currently in force in Europe. Evidence shows that the goal of harmonized taxation in this area is far from being achieved and that national decisions are based on two different models: a tax on the registration of certain transactions and a tax on financial transactions levied on the financial intermediaries involved in such transactions. \u0000This article focuses on the comparative experience of European States in the adoption of this type of tax. This review will highlight the differences and similarities between different national taxes, and ultimately the possibilities of the EU’s Financial Transaction Tax Proposal becoming effective.\u0000Transaction Tax, Stamp Duty, European Commission’s Proposals, Harmonization, Financial Transactions, High, frequency Operations, Taxation Trends","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41845657","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this article the authors focus on whether the Global Anti-Base Erosion (‘GloBE’) rules, as set out in an Organisation for Economic Co-Operation and Development (‘OECD’) Blueprint of October 2020, comply with the EU fundamental freedoms. This compatibility is tested in two distinct scenario’s. In the first scenario the assumption is taken that the GloBE-rules will be implemented directly by the Members States and in the second scenario the assumption is taken that the GloBE-rules will be implemented indirectly through an EU Directive. It is clear from the analysis of the first scenario that the GloBE-rules collide with the freedom of establishment. For the GloBE-rules to be fully in line with this freedom, it is recommended that they include a substance-based carve-out such like the one foreseen in Article 7(2) of the Anti-Tax Avoidance Directive (ATAD). The analysis of the second scenario, which focuses on the EU principles of subsidiarity and proportionality, shows that, even though the GloBE-rules might collide with the freedom of establishment, they could still be successfully implemented given the broad discretion that the Court of Justice of the European Union (CJEU) leaves to the Union legislature. Nonetheless, also here recommendations are made to reduce disproportionate frictions. Pillar II – GloBE – OECD – BEPS – Minimum taxation – Tax competition – European Law – Freedom of Establishment – Subsidiarity – Proportionality
{"title":"Are the OECD/G20 Pillar Two GloBE-Rules Compliant with the Fundamental Freedoms?","authors":"L. D. Broe, Mélanie Massant","doi":"10.54648/ecta2021011","DOIUrl":"https://doi.org/10.54648/ecta2021011","url":null,"abstract":"In this article the authors focus on whether the Global Anti-Base Erosion (‘GloBE’) rules, as set out in an Organisation for Economic Co-Operation and Development (‘OECD’) Blueprint of October 2020, comply with the EU fundamental freedoms. This compatibility is tested in two distinct scenario’s. In the first scenario the assumption is taken that the GloBE-rules will be implemented directly by the Members States and in the second scenario the assumption is taken that the GloBE-rules will be implemented indirectly through an EU Directive. It is clear from the analysis of the first scenario that the GloBE-rules collide with the freedom of establishment. For the GloBE-rules to be fully in line with this freedom, it is recommended that they include a substance-based carve-out such like the one foreseen in Article 7(2) of the Anti-Tax Avoidance Directive (ATAD). The analysis of the second scenario, which focuses on the EU principles of subsidiarity and proportionality, shows that, even though the GloBE-rules might collide with the freedom of establishment, they could still be successfully implemented given the broad discretion that the Court of Justice of the European Union (CJEU) leaves to the Union legislature. Nonetheless, also here recommendations are made to reduce disproportionate frictions.\u0000Pillar II – GloBE – OECD – BEPS – Minimum taxation – Tax competition – European Law – Freedom of Establishment – Subsidiarity – Proportionality","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43556428","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this article the authors address the proposal to transform the status of the VAT Committee into a ‘comitology committee’ tabled by the European Commission in December 2020. The proposal basically confers implementation powers to the Commission via comitology in the area of EU Value Added Tax (hereinafter: VAT). If adopted by the EU Member States, this would lead to a groundbreaking situation in which for the first time in the area of taxation the decision-making based on unanimity of EU Member States is dropped in an area that does directly affect the EU Member States’ national tax revenues. The authors take this opportunity to explain the function and the consequences of the comitology procedure. After describing the core of the proposal, the authors pay a visit to other legislative areas in taxation where the comitology procedures apply before they dive deep in the scope of the powers granted under the proposal and reach a conclusion. The authors doubt whether the proposal will be adopted and whether EU Member States are prepared to confer more powers to the European Commission. VAT (Value Added Tax), legislative process, VAT Committee, proposal, comitology, implementing powers, interpretation, QMV (Qualified Majority Voting)
{"title":"The Comitology Proposal: Shifting the Legislative Balances in EU VAT","authors":"Madeleine Merkx, J. Gruson","doi":"10.54648/ecta2021012","DOIUrl":"https://doi.org/10.54648/ecta2021012","url":null,"abstract":"In this article the authors address the proposal to transform the status of the VAT Committee into a ‘comitology committee’ tabled by the European Commission in December 2020. The proposal basically confers implementation powers to the Commission via comitology in the area of EU Value Added Tax (hereinafter: VAT). If adopted by the EU Member States, this would lead to a groundbreaking situation in which for the first time in the area of taxation the decision-making based on unanimity of EU Member States is dropped in an area that does directly affect the EU Member States’ national tax revenues. The authors take this opportunity to explain the function and the consequences of the comitology procedure. After describing the core of the proposal, the authors pay a visit to other legislative areas in taxation where the comitology procedures apply before they dive deep in the scope of the powers granted under the proposal and reach a conclusion. The authors doubt whether the proposal will be adopted and whether EU Member States are prepared to confer more powers to the European Commission.\u0000VAT (Value Added Tax), legislative process, VAT Committee, proposal, comitology, implementing powers, interpretation, QMV (Qualified Majority Voting)","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45665281","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This contribution discusses special sectoral taxes and analyses the CJEU judgments that have been made on their compatibility with the EU law. These taxes have aroused particular attention because they are levied on sales with progressive rates. As they mainly affect large businesses owned by non-domestic persons, the European Commission took action against suspected illegal state aid. The Commission has still failed to defend its position before the EU judicial authorities. The literature has extensively criticized the CJEU-judgments. To date, however, no author has argued that Member States’measures leading to covert state aid and indirect discrimination are a consequence of the populist state’s abuse of power and that abuses are closely linked to the decline of political democracy and the rule of law in these jurisdictions. As things stand today, the EU legal instruments have not sufficiently unveiled the type of abuse. The present paper seeks to explain how the Member States could commit abuses of taxation power when applying special sectoral taxes. progressive sales taxes, tax harmonization, distributive justice, selectivity, reference framework, covert state aid, indirect discrimination, abuse of power, cloaking Member State objectives, seemingly objective legal criteria
{"title":"Cloaking Member State Objectives Through Legislative Instruments","authors":"Dániel Deák","doi":"10.54648/ecta2021013","DOIUrl":"https://doi.org/10.54648/ecta2021013","url":null,"abstract":"This contribution discusses special sectoral taxes and analyses the CJEU judgments that have been made on their compatibility with the EU law. These taxes have aroused particular attention because they are levied on sales with progressive rates. As they mainly affect large businesses owned by non-domestic persons, the European Commission took action against suspected illegal state aid. The Commission has still failed to defend its position before the EU judicial authorities.\u0000The literature has extensively criticized the CJEU-judgments. To date, however, no author has argued that Member States’measures leading to covert state aid and indirect discrimination are a consequence of the populist state’s abuse of power and that abuses are closely linked to the decline of political democracy and the rule of law in these jurisdictions. As things stand today, the EU legal instruments have not sufficiently unveiled the type of abuse. The present paper seeks to explain how the Member States could commit abuses of taxation power when applying special sectoral taxes. \u0000progressive sales taxes, tax harmonization, distributive justice, selectivity, reference framework, covert state aid, indirect discrimination, abuse of power, cloaking Member State objectives, seemingly objective legal criteria","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48679407","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The article presents the current scope of harmonization of tax consolidation systems within European Union. On the grounds of the Court of Justice of the European Union (CJEU) judgements author identifies the issues of group taxation that are already actually harmonized despite the lack of formal directive or ordinance. The conducted analysis confirm that the Member States (MS) do not have currently the full discretion in construction of their domestic tax consolidation regimes. The country lawmaker will have to rethink once again such elements as the eligible entities, the types of tax integrations or the scope of tax advantages granted solely to the companies acting as a single tax entity. Corporate income tax, tax consolidation, single tax entity, horizontal tax integration, tax losses, tax avoidance, parent company, fiscal unity, freedom of establishment, common tax base
{"title":"Tax Consolidation Regime in European Union: Towards One Unified Approach Among All Member States?","authors":"J. Jankowski","doi":"10.54648/ecta2021014","DOIUrl":"https://doi.org/10.54648/ecta2021014","url":null,"abstract":"The article presents the current scope of harmonization of tax consolidation systems within European Union. On the grounds of the Court of Justice of the European Union (CJEU) judgements author identifies the issues of group taxation that are already actually harmonized despite the lack of formal directive or ordinance. The conducted analysis confirm that the Member States (MS) do not have currently the full discretion in construction of their domestic tax consolidation regimes. The country lawmaker will have to rethink once again such elements as the eligible entities, the types of tax integrations or the scope of tax advantages granted solely to the companies acting as a single tax entity.\u0000Corporate income tax, tax consolidation, single tax entity, horizontal tax integration, tax losses, tax avoidance, parent company, fiscal unity, freedom of establishment, common tax base","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44647342","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Towards Mandatory E-Invoicing for VAT and a Common Clearance System: Rich Pickings from Embracing Technology!","authors":"R. Ismer","doi":"10.54648/ecta2021010","DOIUrl":"https://doi.org/10.54648/ecta2021010","url":null,"abstract":"","PeriodicalId":43686,"journal":{"name":"EC Tax Review","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43840319","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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