European tax law

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"European tax law" without European taxes: the income from the only own tax of the European Union - the taxation of the income of its employees - does not even make up 1% of the EU budget:
  • traditional own resources
  • VAT own resources
  • GNI own resource
  • Other revenue

    • European tax law refers to the intersection between European law and tax law that has taxes as its subject or is related to taxes and has an impact on national legal systems.

    Basics of European tax law

    Government spending (financed with taxes) is the reason for the vital interest of the member states in their tax sovereignty.
    The figure shows the ratio of government expenditure (including social security expenditure) to GDP:
  • over 55%
  • 50-55%
  • 45-50%
  • 40-45%
  • 35-40%
  • 30-35%

    • Reservation of tax sovereignty on the part of the member states

    The tax authority is also in the context of increasing European integration remains largely in the hands of Member States. Out of concern about the loss of their state sovereignty, they have reserved exclusive competence in the area of ​​taxes. The European Union has only limited competences, which can only be exercised unanimously, i.e. with the consent of all member states in the Council of the European Union .

    The Union is not permitted to introduce a new tax, for example an "EU tax" to finance its expenses (to finance the Union → budget of the European Union ).

    As a result of this legal situation, European tax law has an impact on the tax laws of the member states, but these (for the most part) continue to enact and apply their national laws within this framework.

    European tax law as international tax law?

    Even if European tax law is formally considered to be international tax law , since it is based on cross-border issues, it only has an indirect reference to the problem of double taxation , the fundamental problem of international tax law. Double taxation issues are fundamentally to be resolved through intergovernmental agreements between member states outside the European Union. However, the harmonization regulations in the area of ​​indirect taxes are regularly designed in such a way that double taxation is avoided; therefore, they also have indirect effects on international tax law in the sense of the law of double taxation agreements. In the area of ​​direct taxes, individual questions of double taxation of companies are harmonized under European law.

    Differentiating systematics of European tax law

    Tax-relevant primary law and tax-relevant secondary law

    In general, a distinction can be made between primary and secondary law in European law. The primary law consists primarily of the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU), the secondary legislation of adopted by the institutions of the Union acts ( directives , regulations , and others).

    In European primary law there are only a few explicit tax law norms - due to the member states' tax sovereignty. Art. 110 ff. TFEU should be mentioned here in particular . However, the member states are also bound by the general provisions of Union law, in particular the four fundamental freedoms of the internal market, in areas in which they exercise their own competences, such as in tax law .

    Secondary tax law consists primarily of guidelines, and in some cases also of (implementing) ordinances.

    Positive and negative integration

    With the only limited transfer of powers, the Member States have aimed to prevent the Union from pursuing its own fiscal purposes; their tax powers are only used to support the implementation of other policies. The most important goal that European tax law serves to achieve is the creation of the EU internal market . In the area of ​​taxes, this goal is achieved primarily through the prohibition of discrimination (i.e. negative, in that the member states are prohibited from certain regulations) as well as through harmonization measures (i.e. positive, in that certain regulations are prescribed to the member states).

    Indirect and direct taxes

    An essential distinction within European tax law is that between direct and indirect taxes . While the Union has competences in the area of ​​indirect taxation, and even a mandate to harmonize to the extent necessary for the internal market , in the area of ​​direct taxation it is limited to selective measures.

    Harmonization of indirect taxes

    meaning

    According to Art. 113 TFEU, the European Union is empowered and required to harmonize the indirect taxes of the member states, provided that differences in tax systems affect the internal market , i.e. represent barriers to trade.

    The harmonization in the area of VAT is particularly extensive . The guidelines issued for this purpose are also of great practical legal relevance: the problems related to them are numerically a priority topic of the European Court of Justice.

    In addition, the Union has harmonized the excise duties for mineral oils, alcohol and tobacco.

    value added tax

    Value added tax was the first tax subject to be harmonized. The most important stages were the introduction of a common VAT system with input tax deduction in 1967, the standardization of the tax base in 1977, and the introduction of a minimum VAT rate of 15% in 1991.

    As of January 1, 2007, the numerous guidelines were combined in the so-called VAT system guidelines.

    Principles

    The first two directives should enforce the so-called country of destination principle . This principle provides that the tax for a cross-border delivery or service is only due in the destination country; the entrepreneur who paid taxes in the country of origin is reimbursed in the border adjustment procedure. This is to - as with the country of origin principle - avoid double taxation and at the same time ensure competitive neutrality, since goods or services imported into the target country and manufactured in the target country are subject to the same tax rate.

    In the meantime, the country of destination principle still largely applies, but with restrictions. The country of origin principle has been in force for private consumers since 1993.

    Problems and reform proposals

    The problems of the country of destination principle are seen primarily in the high administrative costs for the company and the susceptibility to fraud (→ sales tax carousel ).

    The country of origin principle is intended to avoid these problems. Its introduction does not seem very promising politically at the moment, but is one of the long-term goals of the European Commission.

    Plans to introduce a financial transaction tax

    The Commission is currently planning, with the approval of the European Council, to introduce a financial transaction tax , which will also serve to finance the European Union. The Commission wants to base this directive on Article 113 TFEU; the legality of such an approach is doubted in the scientific literature.

    Direct Tax Harmonization

    Non-harmonized corporate tax rates in the European Union (and Switzerland)

    meaning

    There is no separate legal basis, such as Art. 113 TFEU for the area of ​​indirect taxes , for the area of ​​direct taxes. There remains, therefore, only recourse to the general harmonization competence of Art. 115 TFEU. So far, only selective harmonization measures have been taken, which primarily concern "selected detailed questions of the taxation of cross-border corporations".

    Merger Directive

    The Merger Directive aims to standardize the taxation of cross-border changes of ownership and equity investments in companies organized as legal entities.

    Mother-Daughter Policy

    The Parent-Subsidiary Directive aims to avoid double taxation that can occur when the parent company and subsidiary of a company are located in different Member States.

    Savings Tax Directive

    This Directive provides that Member States ensure that interest paid to a consumer resident in another Member State within their jurisdiction is recorded centrally and passed on to the country of residence.

    Interest and Royalty Policy

    This directive also serves to avoid double taxation and the associated disadvantage of affiliated companies that are established in two different Member States compared to two affiliated companies that are established in the same Member State.

    Current developments

    The Commission plans to harmonize the corporate tax base.

    The importance of fundamental freedoms for national tax systems

    Scope of application of the fundamental freedoms

    The member states largely decide on their own tax system. However, if there is a cross-border situation, they are bound by the fundamental freedoms.

    Although the member states have exclusive competence to regulate their tax systems, they are bound by the fundamental freedoms when there is a cross-border situation. “Cross-border facts” mean all cases in which there is a business relationship with another Member State.

    For indirect taxes, the special tax law prohibition of discrimination of Art. 110 TFEU applies , according to which foreign goods may not be taxed more heavily than similar domestic goods. In the meantime, however, this provision has lost its importance in the face of extensive harmonization.

    There are no specific rules for direct taxes. However, in all cases with cross-border implications, the fundamental freedoms prohibit Member State regulations that directly or indirectly discriminate or otherwise restrict the free movement of goods, services, employees and capital on the basis of nationality or the place of business.

    This area is largely shaped by the case law of the European Court of Justice . In jurisprudence, after a phase of very “strict handling” of the fundamental freedoms by the Court of Justice, a more generous tendency in the case law has been established compared to national regulations.

    Prohibition of discrimination and restrictions

    The fundamental freedoms prohibit any discrimination based on nationality. Discrimination exists if one of two comparable constellations is treated worse because of nationality. This covers not only regulations that are directly linked to nationality (or, in the case of companies, to the registered office), but also indirect discrimination, i.e. those that typically affect nationals of another Member State. This applies, for example, to regulations that are linked to the place of residence and allow certain tax advantages only to residents in Germany; because such a regulation disadvantages EU foreigners who are regularly not resident in Germany.

    In tax law, however, the question often arises whether there are really comparable situations in this case of indirect discrimination because of the connection to the place of residence or business. The ECJ differentiates here between companies and private individuals: While the different treatment of companies domiciled abroad to those domiciled in Germany is intended to discriminate in principle, the place of residence in the case of private individuals is a starting point for comparability of residents in the area of ​​direct taxes and prohibit non-residents (and then not establish prohibited discrimination).

    The prohibition of restrictions contained in the fundamental freedoms is also subject to restrictions in the area of ​​tax law. According to the case law of the European Court of Justice, this basically prohibits all regulations that “can hinder the exercise of a fundamental freedom or make it less attractive”. In the area of ​​tax law, however, any regulation is suitable to make the exercise of a fundamental freedom less attractive. The view of the ECJ is not clear here because of a very case-related decision-making practice. In order to prevent a comprehensive review of Member State regulations by the ECJ, restraint is called for in the area of ​​tax law.

    Justifications

    The justification recognized in the case law includes the fight against tax evasion, tax evasion and abusive practices, effective tax supervision, the principle of territoriality, the balanced distribution of taxation powers, the prevention of double losses and the coherence of the tax system.

    State aid law and tax breaks

    Although the provisions on state aid control of the European Union ( Art. 107 ff. TFEU) are not specifically geared towards tax law measures, they cover all Member State tax privileges , for example reductions in tax bases (through special deduction options, increased depreciation, inclusion of reserves in the balance sheet and others), tax reduction or tax exemption as well as favorable payment agreements ( tax deferral , payment in installments). A communication from the European Commission contains more concrete details for the area of ​​direct taxes. As with other Member State aid, tax aid must be notified to the Commission and must not be granted before approval is granted. Otherwise they are to be reclaimed in principle.

    The so-called silent harmonization

    Silent harmonization is the term used to describe the (imaginary or real) process by which the member states voluntarily align their tax laws. The idea behind this is that the best system prevails in the competition of tax systems in the internal market and that forced standardization is superfluous.

    From the concept of silent harmonization it is deduced that no extensive harmonization measures are required. Proponents of such harmonization object that the competition of tax systems distorts the competitive conditions for companies and also forces states to only enact economically favorable tax regulations that do not serve the general public.

    In 1997 the Council of the European Union agreed on a (non-binding) code to avoid “harmful tax competition”.

    Web links

    literature

    Textbooks, manuals, edited volumes

    Magazines

    European business and tax law . Management consultant for Europe. , German specialist publisher, monthly

    European magazine for commercial law (EuZW), Verlag CH Beck, bi-weekly

    Internationale Wirtschaftsbriefe (IWB), nwb Verlag, bi-weekly

    Individual evidence

    1. ↑ Heinrich Weber-Grellet , European Tax Law, 2005, § 1, Rn. 1; in agreement with Florian Haase , International and European Tax Law, 2nd edition. 2009, § 1, Rn. 16; ibid., § 1, Rn. 14 with references to the term "European tax law".
    2. ^ Christian Waldhoff , in: Calliess / Ruffert (eds.), ÉUV / AEUV, 4th edition. 2011, Art. 110, Rn. 2; in detail Christian Seiler , in: Grabitz / Hilf / Nettesheim (ed.), The Law of the European Union, 45th supplementary delivery 2011, Art. 113 TFEU, Rn. 12.
    3. ^ Daniel Dürrschmidt , "European Tax Law" after Lisbon, NJW 2010, 2087, p. 2086 .; An insignificant exception to the inadmissibility of EU own taxes is the taxation of the income of EU employees, cf. Art. 12 of the Protocol on the privileges and immunities of the European Communities of April 8, 1965, Federal Law Gazette 1965 II 1482, implemented by Regulation (EEC / EAG / EGKS) No. 260/68 of the Council of February 29, 1968 establishing the Provisions of the procedure for collecting the tax in favor of the European Communities, OJ. 1968 L 56/8 ff.
    4. ↑ Florian Haase , International and European Tax Law, 2nd edition. 2009, § 1, Rn. 17th
    5. ↑ Florian Haase , International and European Tax Law, 2nd edition. 2009, § 1 Rn. 17th
    6. ↑ Florian Haase , International and European Tax Law, 2nd edition. 2009, § 1 Rn. 24 ff.
    7. ↑ a b Christian Seiler , in: Grabitz / Hilf / Nettesheim (ed.), The Law of the European Union, 45th supplementary delivery 2011, Art. 113 TFEU, Rn. 8th.
    8. ^ Christian Waldhoff , in: Calliess / Ruffert (eds.), ÉUV / AEUV, 4th edition. 2011, Art. 110, Rn. 4th
    9. ^ Daniel Dürrschmidt , "European Tax Law" according to Lisbon, NJW 2010, 2087, p. 2086.
    10. ↑ Juliane Kokott , Hartmut Ost: European fundamental freedoms and national tax law. EuZW 2011, p. 496 f .: The ECJ has already decided 450 cases on harmonized VAT.
    11. ↑ Directive 92/12 / EEC of the Council of February 25, 1992 on the general system, possession, transport and control of goods subject to excise duty (ABlEG No. L 76, p. 1).
    12. ↑ Comprehensive overview from Christian Waldhoff , in: Calliess / Ruffert (ed.), ÉUV / AEUV, 4th edition. 2011, Art. 113, Rn. 13.
    13. ↑ 1st Sales Tax Directive 67/227 / EEC of April 11, 1967 and the 2nd Sales Tax Directive 67/228 / EEC of April 11, 1967.
    14. ↑ 6. Sales tax directive 77/388 / EEC of May 17, 1977.
    15. ↑ Directive 91/680 / EEC of December 16, 1991.
    16. ↑ RL 2006/112 / EG of November 28, 2006.
    17. ↑ With the exception of the acquisition of new cars, Christian Seiler , in: Grabitz / Hilf / Nettesheim (ed.), The Law of the European Union, 45th supplementary delivery 2011, Art. 113 TFEU, Rn. 37.
    18. ^ Christian Waldhoff , in: Calliess / Ruffert (eds.), ÉUV / AEUV, 4th edition. 2011, Art. 113, Rn. 15th
    19. ↑ Christian Seiler , in: Grabitz / Hilf / Nettesheim (ed.), The Law of the European Union, 45th supplementary delivery 2011, Art. 113 TFEU, Rn. 37.
    20. ↑ Communication from the European Commission on tax policy in the European Union - priorities for the next few years, COM (2001) 260 final, OJ. 2001 No. C 284/6.
    21. ↑ COM (2011) 594 final; Proposal for a COUNCIL DIRECTIVE on the common system of financial transaction tax and amending Directive 2008/7 / EC
    22. ↑ Skeptical about an introduction without changing the primary law Franz C. Mayer / Christian Heidfeld , Europarechliche Zeiten eines Finanztransaktionssteuer, EuZW 2011, p. 373 ff.
    23. ^ Wolfgang Kahl , in Calliess / Ruffert (eds.), EUV / AEUV, 4th edition. 2011, Art. 115 Rn. 11 mwN
    24. ↑ Christian Seiler , in: Grabitz / Hilf / Nettesheim (ed.), The Law of the European Union, 45th supplementary delivery 2011, Art. 113 TFEU, Rn. 53.
    25. ↑ Communication from the Commission to the Council and the European Parliament - The contribution of tax and customs policy to the Lisbon Strategy v. October 25, 2005, COM / 2005/532 final, p. 5 f.
    26. ↑ Consistent case law of the ECJ since case C-279/93, Schumacker, Coll. 1995, p. I-225 para 21st
    27. ↑ Christian Seiler , in: Grabitz / Hilf / Nettesheim (ed.), The Law of the European Union, 45th supplementary delivery 2011, Art. 113 TFEU, Rn. 57 f.
    28. ↑ Juliane Kokott, Hartmut Ost: European fundamental freedoms and national tax law. EuZW 2011, p. 496 (497 f.).
    29. ↑ Albrecht Randelzhofer / Ulrich Forsthoff , in: Grabitz / Hilf, 40th supplementary delivery 2009, before Art. 39 ff., Rn. 215.
    30. ↑ Juliane Kokott, Hartmut Ost: European fundamental freedoms and national tax law. EuZW 2011, p. 496 (498)
    31. ↑ Attempt of a systematics with Albrecht Randelzhofer / Ulrich Forsthoff , in: Grabitz / Hilf, 40th supplementary delivery 2009, before Art. 39 ff., Rn. 216 ff.
    32. ↑ Juliane Kokott, Hartmut Ost: European fundamental freedoms and national tax law. EuZW 2011, p. 496 (498).
    33. ↑ Juliane Kokott, Hartmut Ost: European fundamental freedoms and national tax law. EuZW 2011, p. 496 (499) with additional references
    34. ^ Moris Lehner , in: Kessler / Kröner / Köhler, Corporate Tax Law, 2nd edition. 2008, § 6, Rn. 57; the examples are taken from the Commission communication on the application of State aid rules to measures in the field of direct business taxation, OJ. EG 98 / C 384/03.
    35. ↑ Communication from the Commission on the application of the state aid rules to measures in the field of direct business taxation, OJ. EG 98 / C 384/03.
    36. ^ Moris Lehner , in: Kessler / Kröner / Köhler, Corporate Tax Law, 2nd edition. 2008, § 6, Rn. 58.
    37. ↑ a b Reimer Voss , in: Grabitz / Hilf, The Law of the European Union, 40th supplementary delivery 2009, Before Art. 90 ff., Rn. 23.
    38. ↑ Conclusions of the Council of December 1, 1997 on tax policy, here ( Memento of the original of October 16, 2013 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 486 kB) online (accessed on January 16, 2012). @1@ 2Template: Webachiv / IABot / ec.europa.eu