1. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw1 RECENT TRENDS IN ECJ CASE LAW IN THE AREA OF THE FREEDOMS AND DIRECT TAXATION PROF. DR. DR. H.C. MICHAEL LANG IBDT JUNE 10, 2010

2. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw2 ECJ DEVELOPMENTS  1986 – 2005 VERSUS 2005 - …  SCOPE OF THE FREEDOMS  COMPARABILTY  JUSTIFICATIONS  PROPORTIONALITY

3. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw3 1986 – 2005: FIRST PERIOD  BEFORE 1986: PRACTICALLY NO TAX CASES  “LANDMARK DECISIONS“:  COMMISSION VERSUS FRANCE („AVOIR FISCAL“): 1986  BIEHL: 1990  BACHMANN: 1992  SCHUMACKER: 1995  SAINT-GOBAIN: 1999  BAARS AND VERKOOIJEN: 2000  GERRITSE: 2003  LASTERYIE DU SAILLANT: 2004

4. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw4 SCOPE OF THE FREEDOMS  SCOPE OF THE FREEDOMS WAS NOT IN THE FOCUS OF ECJ  EXAMPLE: LASTERYIE DU SAILLANT  EXCEPTION: WERNER

5. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw5 COMPARABILITY I  RESTRICTION VERSUS DISCRIMINATION?  HIDDEN (COVERT) DISCRIMINATION  BIEHL  PAIR OF COMPARISONS:  RESIDENT AND NON-RESIDENT TAXPAYERS  TWO RESIDENT TAXPAYERS, ONE IN INTERNAL SITUATION, THE OTHER IN CROSSBORDER SITUATION (BACHMANN)  TWO NON-RESIDENT TAXPAYERS IN DIFFERENT CROSS BORDER SITUATIONS (AVOIR FISCAL, SCHUMACKER)

6. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw6 COMPARABILITY II  LEGAL COMPARABILITY: QUICKLY ACCEPTED  AVOIR FISCAL  SAINT GOBAIN  FACTUAL COMPARABILITY:  SCHUMACKER: RESIDENTS AND NON-RESIDENTS ARE UNDER CERTAIN CIRCUMSTANCES COMPARABLE  IDENTICAL TREATMENT OF DIFFERENT SITUATIONS  FUTURA ?  LIP SERVICE

7. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw7 JUSTIFICATIONS: RESTRICTIVE APPROACH  LACK OF HARMONISATION  LOSS OF TAX REVENUES  RECIPROCITY  PREVENTION OF TAX EVASION (SLIGHT CHANGE ALREADY IN ICI [1998])  COMPENSATION OF DISADVANTAGE (TENSIONS TO BACHMANN [1992]: COHERENCE)  NEED FOR FISCAL SUPERVISION: MUTUAL ASSISTANCE DIRECTIVE

8. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw8 PROPORTIONALITY: LITTLE DISCUSSION  PREVENTION OF ABUSE AND EVASION:  WHOLLY ARTIFICIAL ARRANGEMENTS (ICI 1998)  NEED FOR FISCAL SUPERVISION  MUTUAL ASSISTANCE DIRECTIVE (FUTURA 1997)  TAXPAYER HAS TO CONTRIBUTE TO PROVIDE EVIDENCE (BENT VERSTERGAARD 1999)  COHERENCE  TAKEN AWAY BY OTHER RULES (WIELOCKX 1995)

9. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw9 2005 – … : SECOND PERIOD  “LANDMARK DECISIONS“:  D (2005)  SCHEMPP (2005)  MARKS & SPENCER (2005)  N (2006)  CADBURY SCHWEPPES (2006)  SCORPIO (2006)

10. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw10 2005 – …: SEC0ND PERIOD  “ LANDMARK DECISIONS“ – CONT.:  OY AA (2007)  AMURTA (2007)  Columbus Container (2007)  A (2007)  DEUTSCHE SHELL (2008)  LIDL (2008)  BLOCK (2009)

11. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw11 SCOPE OF THE FREEDOMS  N (2006): MORE EFFORT ON DETERMINING THE NECESSARY INTRA-UNION SITUATION (VERSUS LASTERYIE DU SAILLANT [2004])  FIDIUM FINANZ (2007): MORE EMPHASIS ON DRAWING THE BORDER LINE BETWEEN FREEDOMS – NARROWING THE SCOPE OF FREE MOVEMENT OF CAPITAL AND PAYMENTS  BURDA (2008) VERSUS GLAXO WELLCOME (2009): IS THE DOMESTIC RULE OR ARE THE FACTS RELEVANT?

12. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw12 COMPARABILITY I  JUSTIFICATION ARGUMENTS NOW USED AT COMPARABILITY LEVEL  COHESION (BLANCKAERT [2005]  RECIPROCITY (D [2005])  LEGAL SITUATION ABROAD (SCHEMPP [2005])  WITHOUT REAL ARGUMENTS (TRUCK CENTER [2008])  CHANGING CASE LAW WITHOUT ADMITTING  NO PROPORTIONALITY

13. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw13 COMPARABILITY II  TWO NON-RESIDENT TAXPAYERS IN DIFFERENT CROSS BORDER SITUATIONS  D (2005), CLT UFA (2006), CADBURY (2006), DENKAVIT INTERNATIONAL (2006), AMURTA (2007), A (2007), OESF (2008), COMMISSION VERSUS NETHERLANDS (2009)  BUT: COLUMBUS CONTAINER (2007)

14. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw14 COMPARABILITY III  EQUAL TREATMENT IN DIFFERENT SITUATIONS  VAN HILTEN (2006)  TRUCK CENTER (2008)  BUT: DEUTSCHE SHELL (2008)  LEGAL COMPARABILITY  ECKELKAMP (2008), ARENS-SIKKEN (2008)  FACTUAL COMPARABILITY  TURPEINEN (2006), LAKEBRINK (2007), RENNEBERG (2008)

15. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw15 JUSTIFICATIONS I  ALLOCATION OF TAXING POWERS  THREE JUSTIFICATIONS TAKEN TOGETHER (MARKS & SPENCER [2005]  TWO JUSTIFICATIONS TOGETHER (OY AA [2007], LIDL [2008])  SYMMETRY (LIDL [2008]; TENSIONS TO WIELOCKX [1995])

16. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw16 JUSTIFICATIONS II  PREVENTION OF DOUBLE UTILIZATION OF LOSSES  MARKS & SPENCER (2005), LIDL (2008)  CONSEQUENCE: LOOKING INTO SITUATION ABROAD AT LEVEL OF JUSTIFICATION  BUT: BLOCK (2009): DOUBLE TAXATION IS PERMITTED  COHESION  SYMMETRY (WANNSEE [2008])

17. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw17 PROPORTIONALITY I  MORE EMPHASIS ON THE OBLIGATION OF THE TAXPAYER TO CONTRIBUTE TO THE PROCEDURE (JAEGER [2008])  „HELPING“ THE TAXPAYER: REQUIRING TO DECLARE THE VALUE OF THE ASSETS AT THIME OF EXIT (N [2006])  RECAPTURE OF LOSSES NOT NECESSARY (MARKS & SPENCER [2005])  CASH FLOW DISADVANTAGES ACCEPTABLE (LIDL [2008], TRUCK CENTER [2008]; CONTRADICTING HOECHST [2001])

18. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw18 PROPORTIONALITY II  TAKING ACCOUNT SITUATION ABROAD (OY AA [2007])  DEVELOPING THE CONCEPT OF “WHOLLY ARTIFICIAL ARRANGEMENTS“ (CADBURY [2006])  DIFFERENT LEGAL CONTEXT IN RELATION TO THIRD COUNTRIES (A [2007])

19. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw19 CONCLUSIONS: CONTINUITY IN CASE LAW I  COMPARABILITY:  STILL DIFFERENT PAIRS OF COMPARISONS (IN PARTICULAR COMPARING TWO NON-RESIDENTS WITH EACH OTHER)  CONTINUED AMBIVALENCE IN RESPECT OF EQUAL TREATMENT OF DIFFERENT SITUATIONS  JUSTIFICATIONS:  STILL REJECTING MANY JUSTIFICATIONS

20. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw20 CONCLUSIONS: CONTINUITY IN CASE LAW II  PROPORTIONALITY:  DEVELOPING THE CONCEPT OF “WHOLLY ARTIFICIAL ARRANGEMENTS“  DEVELOPING STANDARDS FOR THIRD COUNTRY SITUATIONS (NO CASE LAW BEFORE)

21. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw21 CONCLUSIONS: CHANGES IN CASE LAW I  SCOPE OF FREEDOMS:  MORE EMPHASIS ON DRAWING THE BORDER LINE  NARROWING THE SCOPE OF FREE MOVEMENT OF CAPITAL AND PAYMENTS  COMPARABILITY  PREVIOUSLY REJECTED JUSTIFICATIONS NOW AT COMPARABILITY LEVEL ACCEPTED

22. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw22 CONCLUSIONS: CHANGES IN CASE LAW II  NEW JUSTIFICATIONS ACCEPTED  NEW STANDARDS OF PROPORTIONALITY  MORE GOVERNMENT-FRIENDLY  ECJ MAY CHANGE CASE LAW, HOWEVER, ECJ SHALL MAKE IT EXPLICITE

23. Institute for Austrian and International Tax Law www.wu.ac.at/taxlaw23 INSTITUTE FOR AUSTRIAN AND INTERNATIONAL TAX LAW Althanstr. 39–45, 1090 Vienna, Austria UNIV.PROF. DR. MICHAEL LANG T +43-1-313 36-4182 F +43-1-313 36-730 Michael.lang@wu.ac.at www.wu.ac.at/taxlaw