Belgium – CJEU decision in the Argenta Spaarbank case C-350/10- Notional interest deduction
On July 4, 2013, the CJEU rendered its decision in the Argenta Spaarbank case (C-350/11). The Court concluded that the Belgian notional interest deduction regime is contrary to the EU freedom of establishment. According to the CJEU, the disputed Belgian rules discourage a Belgian company from carrying out its activity through a PE resident in another Member State and, consequently, are in breach of the EU freedom of establishment. As a result of the CJEU judgment, Belgian companies with tax exempt PEs that have been precluded from utilizing the notional interest deduction calculated on the net assets of these PEs, can now reclaim the excess tax that has been paid in the past five years by means of an ex officio waiver request.
Denmark – CJEU decision in the Commission v. Denmark case C-261/11 – Exit taxation
On July 18, 2013, the CJEU rendered its decision in the Commission v. Denmark case (C-261/11). The case concerned Danish provisions that impose an exit tax on company transfers of operating equipment to another Member State. Denmark did not contest that the regulations constituted a restriction. However, Denmark argued that the restriction was justified. In examining the justifications put forward by Denmark, the Court dismissed the argument that only immediate taxation would preserve Denmark’s taxation rights on the unrealized capital gains recognized upon the operating equiptments transfer to another Member State, should the latter not be sold afterwards.
UK – AG Opinion in the Test Claimants in the FII GLO (III) C-362/12 - Limitation period for instituting proceedings with retroactive effect and without advance notice
On September 5, 2013, Advocate General (AG) Wathelet of the CJEU issued his Opinion on the preliminary ruling request made by the UK Supreme Court under case C-362/12. The case focuses on the causes of action available to taxpayers for the recovery of sums paid, but not due, in connection with taxes declared incompatible with the fundamental freedoms entrenched in the Treaty and, in particular, on the issue of the retroactive amendment, which would effectively limit the claim recovery period. In this respect, AG Wathelet proposes that the introduction of a law that retrospectively and without notice cancels a taxpayer’s ability to claim a tax recovery breaches the principles of effectiveness, legal certainty and legitimate expectation. The final judgment of the CJEU is pending and even though the AG’s Opinion is not binding, the CJEU usually follows the proposals made by the AG in the case.
OECD – Report on Base Erosion and Profit Shifting
On July 19, 2013, the OECD published its Action Plan on Base Erosion and Profit Shifting (BEPS), which was developed in co-operation with governments and the business community and provides concrete strategies for countries concerned about BEPS. The report is a result of increasing concerns that current profit allocation rules and guidelines allow for taxable profits to be allocated to jurisdictions other than where the actual taxable business activity is carried out. For corresponding EU developments, see Euro Tax Flash 214 (PDF 56 KB).