Friday, April 29, 2005

“How to” and “when to” submit a question to the ECJ

This is one of the perks of working in IBFD, yesterday Philippe Martin (Conseiller d’Etat, France) made a very interesting presentation on the IBFD about two recent cases submitted to the European Court of Justice (ECJ) by the Conseil d’Etat.

The first case discussed was Monsieur Hughes de Lasteyrie du Saillant v Ministry of the Economy, Finance and Industry (C-9/02) which relates to the compatibility of the French residential exit tax – due by an individual transferring his tax residence out of France to Belgium – with the European Community (EC) freedom of establishment principle in the EC treaty. The ECJ held on March 2004 that the French residential exit tax was in breach of the freedom of establishment provisions of the EC treaty. The French as a response to the Judgment decided to repeal the system as of 1 January 2005.

The second case discussed, which contrary to the previous was only very recently submitted to the ECJ, deals with the compatibility of French withholding tax on outbound dividends with the freedom of establishment. This case is raising the atention of tax practitioners and scholars, because of its potential impact on the tax systems of member countries. Nevertheless, the Advocate General has still to issue an advisory opinion in this case called Denkavit II (name of the Dutch parent company). Therefore, still a lot of “water” will pass below the bridge in terms of discussion by practitioners and scholars.

One of the most interesting issues of the presentation was to hear a first-hand view of a Supreme Court Judge on “how to” and “when to” submit a question to the ECJ. The readers are aware that EC Law is not an appellate system. No individual has a right to appeal to the ECJ. It is for the national court to make the decision to refer. The ECJ rules on the issue framed by the national court and refers back the issue to the national court, which then applies the EC Law to the issue in question. Judge Philippe Martin explained the process that judges pass before submitting a question to the ECJ. We all know that answers depend much on the questions. Therefore, submitting the right questions is essential in the process of interpretation of EC Law. With regards to tax cases, it would be an interesting exercise to analyze the difference in styles between national courts on the completeness of the questions submitted to the ECJ. I am sure the results would be supprising!


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