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Tax Law

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Abstract

This chapter reviews the case-law of the EFTA Court relating to issues of indirect and direct taxation. While there is little express reference to taxation in the EEA Agreement, tax has a significant influence on the choices made by economic operators and therefore plays an important role in the operation of the single market. The express provisions on tax in the Agreement are only part of the relevant legal framework: the taxation of business activities and of individuals is affected also by the more general economic freedoms laid down in the Agreement, under which national provisions may not impede cross-border movement of persons, goods, services and capital. The Court’s case-law is increasingly rich and varied.

Any opinions expressed are the author’s own and should not be attributed to anyone else, least of all his employer.

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Notes

  1. 1.

    See Case E-1/03 ESA v. Iceland [2003] EFTA Ct. Rep. 143, paragraph 26. Cf the corresponding consistent case-law of the Court of Justice: for example, Case C-279/93 Finanzamt Köln-Altstadt v. Schumacker [1995] ECR I-225, paragraph 21.

  2. 2.

    OJ 2011 L 141, p. 1; incorporated in the EEA Agreement by JCD 52/2012, OJ 2012 L 207, p. 32. Formerly Regulation 1612/68 (OJ 1968 L 257, p. 2), which was included in Annex V to the EEA.

  3. 3.

    Both Iceland and Norway have ratified the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters, as amended in 2010. They are also parties to the multilateral Nordic Tax Treaty and have extensive networks of bilateral double tax conventions. Liechtenstein has recently begun to conclude double tax conventions and has signed but not yet ratified the OECD/Council of Europe Convention.

  4. 4.

    Joined Cases 2 and 3/62 Commission v. Luxembourg and Commission v. Belgium [1962] ECR 425.

  5. 5.

    For example, Case 222/82 Apple and Pear Development Council [1983] ECR 4083.

  6. 6.

    Case 20/76 Schöttle [1977] ECR 247; Case C-90/94 Haahr Petroleum [1997] ECR I-4085.

  7. 7.

    Case 142/77 Larsen [1978] ECR 1543.

  8. 8.

    Case C-166/98 Socridis [1999] ECR I-3791.

  9. 9.

    Case C-167/05 Commission v. Sweden [2008] ECR I-2127.

  10. 10.

    For example, Case C-421/97 Tarantik [1999] ECR I-3633.

  11. 11.

    Case 45/64 Commission v. Italy [1965] ECR 857; second judgment [1969] ECR 433.

  12. 12.

    See for example Case C-402/09 Tatu [2011] ECR I-2711, and Case C-263/10 Nisipeanu.

  13. 13.

    For example, Case 106/84 Commission v. Denmark [1986] ECR 833.

  14. 14.

    Case 120/78 Rewe-Zentral v. Bundesmonopol für Branntwein [1979] ECR 649.

  15. 15.

    In the version then in force; see now Article 4(2) TEU.

  16. 16.

    Now, Article 167(4) TFEU.

  17. 17.

    Case E-6/07 HOB vín ehf. v. Faxaflóahafnir sf. [2008] EFTA Ct. Rep. 128.

  18. 18.

    [1969] ECR 193.

  19. 19.

    [1997] ECR I-4085.

  20. 20.

    Point 52 of the Opinion.

  21. 21.

    Point 63 of the Opinion.

  22. 22.

    [2003] EFTA Ct. Rep. 143. While the application of freedom to provide services in the transport sector is subject to specific rules (see Article 38 EEA), the relevant legislation, including Council Regulation (EEC) No 2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes, OJ 1992 L 240/8, is to be read in the light of Article 36 EEA—see paragraph 28 of the judgment.

  23. 23.

    [2001] ECR I-4845.

  24. 24.

    Citing Case 205/84 Commission v. Germany [1986] ECR 3755.

  25. 25.

    [2003] ECR I-1291.

  26. 26.

    For a similar case seen from the perspective of State aid, see Commission Decision 2013/199/EU of 25 July 2012 on State aid case SA.29064 (11/C, ex 11/NN)—Differentiated air travel tax rates implemented by Ireland, OJ 2013 L 119/30.

  27. 27.

    [1994] ECR I-5145.

  28. 28.

    Judgment of 24 September 2014, not yet reported.

  29. 29.

    See in particular Case 112/84 Humblot [1985] ECR 1367, Case 433/85 Feldain [1987] ECR 3521 and Case C-421/97 Tarantik [1999] ECR I-3633.

  30. 30.

    See in particular Case C-101/00 Tulliasiamies and Siilin [2002] ECR I-7487, Joined Cases C-290/05 and C-333/05 Nádasdi and Németh [2006] ECR I-10115 and Case C-402/09 Tatu [2011] ECR I-2711.

  31. 31.

    Starting with Case C-451/99 Cura Anlagen [2002] ECR 1-3193.

  32. 32.

    For example, Case C-242/05 Van de Coevering [2006] ECR 1-5843 and Case C-91/10 VAV [2010] ECR 1-116 (decided on the basis of the freedom to provide services).

  33. 33.

    For example, Case C-464/02 Commission v. Denmark [2005] ECR I-7929 (decided on the basis of the free movement of workers).

  34. 34.

    Joined Cases C-578/10 to C-580/10 Van Putten (decided on the basis of the free movement of capital, considered applicable to the loan of a vehicle free of charge).

  35. 35.

    [1986] ECR 273.

  36. 36.

    Joined Cases C-397/98 and C-410/98 Metallgesellschaft and Hoechst [2001] ECR I-1727, paragraph 37. In the EFTA Court, cf Case E-6/98 Norway v. ESA, paragraph 34; Case E-1/01 Einarsson [2002] EFTA Ct. Rep. 1, paragraph 17.

  37. 37.

    Case C-311/97 Royal Bank of Scotland [1999] ECR I-2651, paragraph 26.

  38. 38.

    C-35/98 Verkooijen [2000] ECR I-4071.

  39. 39.

    See paragraph 18 of the judgment; the ECJ frequently repeats this observation.

  40. 40.

    C-279/93 Schumacker, cited above, footnote 1.

  41. 41.

    C-311/97 Royal Bank of Scotland: higher tax rate on profits of non-resident banks.

  42. 42.

    Cited above, footnote 38.

  43. 43.

    Case C-446/03 Marks & Spencer [2005] ECR I-10837, paragraphs 43–51.

  44. 44.

    Case C-347/04 Rewe Zentralfinanz [2007] ECR I-2647, point 42; Case E-15/11 Arcade Drilling [2012] EFTA Ct. Rep. 676, paragraphs 85–86.

  45. 45.

    Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty, OJ 1988 L178/5.

  46. 46.

    Cf Case C-222/97 Trummer and Mayer [1999] ECR I-1661, point 7; Case E-1/00 State Debt Management Agency v. Islandsbanki [2000–2001] EFTA Ct. Rep. 8, paragraph 19.

  47. 47.

    See paragraphs 31–37.

  48. 48.

    [2006] ECR I-11949.

  49. 49.

    [2007] ECR I-9569.

  50. 50.

    Particularly since those obligations are not enforceable as a matter of EU law: see Cases C-513/04 Kerckhaert [2006] ECR I-10967 and C-128/08 Damseaux [2009] ECR I-6823.

  51. 51.

    The earliest example is Case C-204/90 Bachmann [1992] ECR I-249, paragraph 18; see also Case C-279/93 Schumacker [1995] ECR I-225, paragraph 45.

  52. 52.

    See Case C-72/09 Rimbaud [2010] ECR I-10659, paragraphs 41–43.

  53. 53.

    For example Case C-190/12 Emerging Markets Series of DFA Investment Trust, paragraphs 85–87. The double tax convention between Poland and the United States of America included a provision similar to Article 26 of the OECD model.

  54. 54.

    [2004] ECR I-2409.

  55. 55.

    [2006] ECR I-7409.

  56. 56.

    [2011] ECR I-12273.

  57. 57.

    [1988] ECR 5483.

  58. 58.

    [2008] ECR I-9641; see in particular paragraphs 110–113.

  59. 59.

    Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures, OJ 2010 L 84/1.

  60. 60.

    Prop. 1 LS, Skatter, avgifter og toll 2015. It may be noted that similar measures are being put in place in some EU Member States.

  61. 61.

    Paragraph 18 of the judgment.

  62. 62.

    Case C-107/94 Asscher [1996] ECR I-3089; Case C-234/01 Gerritse [2003] ECR I-5933; in relation to company tax see Case C-311/97 Royal Bank of Scotland, cited above, footnote 37.

  63. 63.

    Again, Case C-234/01 Gerritse.

  64. 64.

    Case C-175/88 Biehl [1990] ECR I-1779.

  65. 65.

    Cited above, footnote 1.

  66. 66.

    The total income of a couple is split between them, so that each can claim the basic tax-free amount and pays a lower marginal tax rate than would apply if the whole amount were taxed in the hands of one of them.

  67. 67.

    [1995] ECR I-2493.

  68. 68.

    [1999] ECR I-5451.

  69. 69.

    [2006] ECR I-10685.

  70. 70.

    Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC, OJ L 158/77.

  71. 71.

    Council Directive 90/365/EEC of 28 June 1990 on the right of residence for employees and self-employed persons who have ceased their occupational activity, OJ L 180/28.

  72. 72.

    Directive 90/365 is listed in Annex VIII to the EEA; Directive 2004/38 was incorporated by JCD 158/2007, OJ 2008 L 124/20.

  73. 73.

    Already in Case 81/87 Daily Mail [1988] ECR 5483 the ECJ stated that the freedom of establishment would be meaningless if the State of origin could prevent persons from leaving (see paragraph 16 of the judgment).

  74. 74.

    Paragraph 82 of the judgment.

  75. 75.

    [1993] ECR I-429; see paragraph 16 of the judgment.

  76. 76.

    [2006] ECR I-1711; the circumstances of the case arose in 1987, well before the entry into force of the Maastricht Treaty.

  77. 77.

    Paragraphs 31 and 33 of the judgment.

  78. 78.

    Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons, signed at Luxembourg on 21 June 1999, OJ 2002 L 114/6.

  79. 79.

    See paragraph 39 of the judgment.

  80. 80.

    Cases C-513/04 Kerckhaert and C-128/08 Damseaux, cited above, footnote 50.

  81. 81.

    Cited above, footnote 43.

  82. 82.

    See for example Case C-418/07 Papillon [2008] ECR I-8947; Case C-80/12 Felixstowe Dock and Railway Company.

  83. 83.

    [2006] ECR I-7955.

  84. 84.

    Case C-264/96 ICI [1998] ECR I-4695.

  85. 85.

    [2009] ECR I-5145, at points 50–55.

  86. 86.

    Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States, OJ 2009 L 310/34.

  87. 87.

    See for example Case C-387/05 Amurta, point 24; and in particular Case C-48/11 A, point 28, where the ECJ rejected the argument that the application of Article 31 EEA amounted in practice to the extension to EEA/EFTA States of Directive 2009/133.

    Cf Case C-168/01 Bosal [2003] ECR I-9409, paragraphs 25 and 26, where the ECJ noted that compliance with a provision of secondary law did not justify a national measure contrary to the Treaty freedoms.

  88. 88.

    Paragraph 28 of the judgment.

  89. 89.

    See, most recently, Case C-190/12 Emerging Markets Series of DFA Investment Trust Company, points 25–28. That case-law of the ECJ has also been followed by the Court: see Joined Cases E-3/13 and E-20/13 Fred Olsen [2014] EFTA Ct. Rep, paragraphs 113 and 114.

  90. 90.

    [2003] ECR I-13519; The most recent ECJ judgment on the matter is that of 22 October 2014 in Joined Cases C-344/13 and C-367/13 Blanco and Fabretti, on taxation of casino winnings.

  91. 91.

    In principle, when the Court interprets the EEA Agreement, its interpretation applies ex tunc: it states the law as it has existed since the entry into force of the Agreement. It is well established that unlawfully charged taxes must be repaid to the taxpayer (in EU law, see Case 199/82 San Giorgio [1983] ECR 3595; most recently, Case C-331/13 Nicula, judgment of 15 October 2014, point 27).

  92. 92.

    [2009] ECR I-359.

  93. 93.

    C-345/05 Commission v. Portugal [2006] ECR I-10633; and, Case C-104/06 Commission v. Sweden [2007] ECR I-671.

  94. 94.

    [2003] ECR I-6817; see also Case C-150/04 Commission v. Denmark [2007] ECR I-1163; and, Case C-522/04 Commission v. Belgium [2007] ECR I-5701.

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  1. Legal Service, European Commission, Brussels, Belgium

    Richard Lyal

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  1. EFTA Court, Luxembourg, Luxembourg

    Carl Baudenbacher

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Lyal, R. (2016). Tax Law. In: Baudenbacher, C. (eds) The Handbook of EEA Law. Springer, Cham. https://doi.org/10.1007/978-3-319-24343-6_33

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