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
Institute for Austrian and International Tax Law

www.wu.ac.at/taxlaw
1
ECJ DEVELOPMENTS
 1986 – 2005 VERSUS 2005 - …
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SCOPE OF THE FREEDOMS
COMPARABILTY
JUSTIFICATIONS
PROPORTIONALITY
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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
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SCOPE OF THE FREEDOMS
 SCOPE OF THE FREEDOMS WAS NOT IN THE
FOCUS OF ECJ
 EXAMPLE: LASTERYIE DU SAILLANT
 EXCEPTION: WERNER
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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)
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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
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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
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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)
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2005 – … : SECOND PERIOD
 “LANDMARK DECISIONS“:
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D (2005)
SCHEMPP (2005)
MARKS & SPENCER (2005)
N (2006)
CADBURY SCHWEPPES (2006)
SCORPIO (2006)
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2005 – …: SEC0ND PERIOD
 “ LANDMARK DECISIONS“ – CONT.:
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OY AA (2007)
AMURTA (2007)
Columbus Container (2007)
A (2007)
DEUTSCHE SHELL (2008)
LIDL (2008)
BLOCK (2009)
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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?
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COMPARABILITY I
 JUSTIFICATION ARGUMENTS NOW USED AT
COMPARABILITY LEVEL
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COHESION (BLANCKAERT [2005]
RECIPROCITY (D [2005])
LEGAL SITUATION ABROAD (SCHEMPP [2005])
WITHOUT REAL ARGUMENTS (TRUCK CENTER [2008])
CHANGING CASE LAW WITHOUT ADMITTING
NO PROPORTIONALITY
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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)
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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)
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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])
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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])
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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])
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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])
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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
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CONCLUSIONS: CONTINUITY
IN CASE LAW II
 PROPORTIONALITY:
 DEVELOPING THE CONCEPT OF “WHOLLY ARTIFICIAL
ARRANGEMENTS“
 DEVELOPING STANDARDS FOR THIRD COUNTRY
SITUATIONS (NO CASE LAW BEFORE)
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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
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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
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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
[email protected]
www.wu.ac.at/taxlaw
Institute for Austrian and International Tax Law

www.wu.ac.at/taxlaw
23