Tuesday, October 10, 2006

Index on European tax law research (revised version)

European tax law has immense research opportunities. As Professor Pistone said recently “European tax law is picking up” and therefore keeping up to date with this new promising tax area is a challenge even for the so-called EU specialist. This overview is designed to be a short index on EC Tax Law information available through various websites of the European Union's institutions and specialized agencies in Europe and provide you a useful tool to navigate in the cyberspace in a time effective manner.

Brief Historical background (with links)

Although there is no explicit provision in the EC Treaty for the harmonisation of direct taxes, EU actions on the filed of tax have been generally based on Art. 94, which authorises "directives for the approximation of such laws, regulations or administrative provisions of Member States as directly affect the establishment or functioning of the common market".

The concrete proposals for harmonisation of corporation tax started off with the Neumark Report of 1962 and the van den Tempel Report of 1970. In 1975, an unsuccessful draft Directive proposed an alignment of rates between 45% and 55% and by 1980 a Report on the Scope for Convergence of Tax Systems by Commission was already arguing that a different approach.

The 1990 Commission report Guidelines for Company Taxation explained how the Commission decided to focus on rather targeted measures essential for completing the Single Market. As such three proposals received the approval, namely the merger directive, the parent-subsidiary directive and the arbitration procedure Convention. In a special issue of the Official Journal, the commission published the report “Removal of Tax Obstacles to the Cross-frontier Activities of Companies” (Scrivener Report), were the Commission explained the measures and presented two additional proposals regarding: losses of permanent establishments and subsidiaries situated in other Member States and a common system for interest and royalty payments.

In 1992, the Ruding Committee reported on the Community aspects of company taxation and concluded that, although there has been some degree of fiscal convergence, wide differences, remain, which could affect or distort the single market. The Committee proposed a minimum degree of harmonization and gave 21 recommendations covering three categories: elimination of double taxation of cross-border income flows, harmonization of corporation taxes, and greater transparency between Member States on other issues. The Commission reacted by not agreeing with most off the proposals (namely the corporate tax harmonization) and focus again its attention on enlarging the scope of the merger and parent/subsidiaries Directives and bringing into light the interest & royalty Directive.

A 1996 paper on "Taxation in the European Union" outlined the main challenges for taxation policy in the Union and on 1997, the Ecofin Council reached agreement on a package of proposals designed to tackle harmful tax competition. In 1999, the Code of Conduct group on business taxation (established further to the ECOFIN conclusions of 1997) submitted its final assessment report, made public in 2000. In 2003, the interest and royalty directive went ahead. The savings Directive (ensuring a minimum of effective taxation of savings income in the form of interest payments) also was finalised. another major development was the 2004 EU Savings agreement between the European Union and Switzerland, which provides for the application of the Interest and Royalties Directive and the Parent-Subsidiary Directive in the relation between the European Union and Switzerland.

As a result, of the 2001 Commission Study, Company Taxation in the Internal Market and accompanying Communication, a long term strategy was mentioned for providing companies with a consolidated corporate tax base for their EU-wide activities. This project is advancing and several reports have been in the meantime made available. Another recent development was based on the work of the EU Joint Transfer Pricing Forum, which resulted Code of Conduct on transfer pricing documentation for associated enterprises in the European Union and the Code of Conduct for the effective implementation of the Arbitration Convention

It should be noted that although network of bilateral tax treaties still lie outside the framework of Community law, the Commission is considering the possible conflicts between the EC Treaty and the bilateral double taxation treaties that Member States have concluded with each other and with third countries.

In addition to the policy and legislative developments highlighted above, the development of European tax law has a very important judicial component since the European Court of Justice has been archiving harmonisation through the application of the non-discriminatory principles of the four fundamental freedoms. This effect is evident in the Court Cases in the field of Direct Taxation since the Avoir Fiscal (1986) to the more recent N case (2006).

General Information Links

EU Legislation on Taxation (as of 1.9.2005)
- This very useful document links you to all the legislation in force in the European union in the area of taxation

Direct Taxation Directives
- This document links you to the Direct Taxation Directives: namely the Merger, Parent-subsidiary, Interest and Royalties and Savings Directives.

Indirect Taxation Directives
- This document links you to the several Indirect Taxation Directives, with a particular reference to the Sixth Directive on VAT.

Company Law Directives
- This document links you to the several Company Law Directives currently in place

Treaty establishing the European Community
- This document contains the consolidated version of the Treaty of Rome.

Other Treaties or basic legal texts of the European Union
- This document contains links to remaining treaty texts.

Specific Links of Interest

Taxation and Customs Website

Commission Staff Working Paper - Company Taxation in the Internal Market - SEC(2001) 1681 An Internal Market without company tax obstacles: achievements, ongoing initiatives and remaining challenges - COM (2003) 726

Dividend taxation of individuals in the Internal Market - COM (2003) 810

Code of Conduct on Business Taxation (Primarolo report)

OECD Harmful Tax Practices report (1998) and the 2004 Progress Report DG Competition website (in-charge for State Aid procedure)

Report on the application of the state aid rules to measures relating to direct business taxation (2004)

State Aid Register - Commission Decisions

Court Cases in the field of Direct Taxation (updated as September 2005)

Search form for Judgments, Opinions and orders of the European Court of Justice

Case-law by numerical access from (i) 1953 to 1988 and (ii) since 1989

Daily Official Journal of the European Union

ECOFIN - Economic and Financial Affairs

Latest press releases from EU EU Member States Links

Keeping up to date with the news

Financial Times - Brussels briefing

PwC EU direct tax newsalerts

E&Y EU Tax Library

KPMG European Tax Centre

Loyens & Loeff EU tax alert

Baker & McKenzie European Tax Newsletter

Reference Books (Recent publications)

§ Ben Terra & Peter Wattel, European Tax Law; 4rd edition 2004, Kluwer Law international
§ Paul Farmer and Richard Lyal, EC Tax Law, 2nd edition, Oxford, To be Published: April 2006
§ Carlo Pinto, Tax Competition and EU Law (Eucotax), Kluwer Law International, 2003
§ Pasquale Pistone, The Impact of Community Law on Tax Treaties: Issues and Solutions (Eucotax Series), (Eucotax), Kluwer Law International, 2002
§ Servaas van Thiel, Free Movement of Persons and Income Tax Law: The European Court in Search of Principles, IBFD Doctoral Series, 2002

Relevant Tax Journals

European Taxation & VAT Monitor (IBFD)
Intertax & EC Tax Review (Kluwer)
Tax Planning International European Union Focus (BNA)
EC Tax Journal (Key Haven Publications)
British Tax Review (Sweet & Maxwell)



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