Double taxation in EU

Definitions an occurrence where the income from the same source is taxed twice before translating into net income; the imposition of similar taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical purposes. the levying of tax by two or more jurisdictions on the same declared income asset or financial transaction.

Cross-border double taxation Cross-border double taxation occurs when two different countries subject the same item of income or property to tax for the same period and in the hands of the same taxpayer.

Double taxation in the EU There is no general EU measure to eliminate double taxation. Most EU countries have bilateral tax treaties in place with each other to relieve double taxation when it occurs.

CJEU ruling The Court of Justice of the EU has ruled that, in the absence of an EU-wide measure to eliminate double taxation, EU countries retain the power to define by double taxation treaty, or unilaterally, the criteria for allocating their power of taxation between them, particularly with a view to eliminating double taxation. Furthermore, EU countries are not obliged under EU law or international law to conclude tax treaties with each other.

Causes of double taxation Causes are mainly set in the differences in the national approaches to taxation. Residence-source conflict: some states claim full or unlimited tax jurisdiction with respect to all or certain types of income, and they claim to tax on the basis of the residence or nationality of the taxpayer over all the taxpayer’s income wherever arising (i.e. residence or worldwide). On the other hand, some states claim a limited jurisdiction taxing only income arising within its territory (source-based jurisdiction).

Read the text and answer the following questions: What is double taxation? What can create serious obstacles to doing business across borders? What can cause economic distortions and have a negative impact on cross-border investment? What does the draft directive require dispute resolution mechanisms to be like? Who can initiate ‘mutual agreement procedure’? When is an arbitration procedure to be launched?

Complete the text with the words provided below: business, investment, income, burden, distortions Situations where different member states tax the same _________ or capital twice can create serious obstacles to doing ___________ across borders. They create an excessive tax ____________, can cause economic _______________ and have a negative impact on cross-border _______________.

Translate the paragraph: Situations where different member states tax the same income or capital twice can create serious obstacles to doing business across borders. They create an excessive tax burden, can cause economic distortions and have a negative impact on cross-border investment.

Slučajevi u kojima različite države članice dvaput oporezuju isti dohodak ili kapital mogu stvoriti velike prepreke za prekogranično poslovanje. Mogu stvoriti prekomjerno porezno opterećenje, uzrokovati gospodarske poremećaje i negativno utjecati na prekogranična ulaganja.

Match the collocations: 1.double a.environment 2. dispute b.states 3.business c.taxation 4.tax d.panel 5.time e.distortion 6.arbitration f.investment 7.advisory g.resolution 8.economic h.limit 9.cross-border i.burden 10.member j.procedure

Translate the collocations: double taxation dispute resolution business environment tax burden time limit arbitration procedure advisory panel economic distortion cross-border investment member states

Translate into Croatian: The draft directive requires dispute resolution mechanisms to be mandatory and binding, with clear time limits and an obligation to reach results. It thereby sets out to secure a tax environment where compliance costs for businesses are reduced to a minimum.

U nacrtu direktive zahtijeva se da mehanizmi rješavanja sporova budu obvezni i obvezujući, da imaju jasno utvrđene rokove i obvezu postizanja rezultata. Time se želi stvoriti porezno okružje u kojem su troškovi usklađivanja za poduzeća svedeni na najmanju razinu.

Translate into English: Dvostruko oporezivanje nastaje kada se na isto oporezivo dobro više puta plati porez, a može biti pravno ili ekonomsko. Dvostruko oporezivanje je pravno ako je ista osoba oporezovana dva puta za isti dohodak u najmanje dvije države. Ekonomsko dvostruko oporezivanje nastaje kad je propisano da poduzeće treba platiti porez na svoju dobit, a i njegovi dioničari dodatno trebaju platiti porez na dividendu isplaćenu iz te oporezovane dobiti.

Double taxation occurs when tax is paid more than once on the same taxable income or asset, and it can be legal or economic. Double taxation is legal if the same person is taxed twice on the same income in at least two states. Economic double taxation arises when firstly corporate income tax is levied, and then the shareholders of the enterprise are required to pay tax on the dividends distributed out of the profit after taxes have been paid.

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