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Prof. Dr. Rainer Prokisch, Maastricht University

The role of tax treaties in judgments of the European Court of Justice. Prof. Dr. Rainer Prokisch, Maastricht University. Outline. Introduction General considerations Tax Treaties and EC Law Fundamental Freedoms as equal treatment clauses Tax Treaties as part of the facts

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Prof. Dr. Rainer Prokisch, Maastricht University

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  1. The role of tax treaties in judgments of the European Court of Justice Prof. Dr. Rainer Prokisch, Maastricht University

  2. Outline • Introduction • General considerations • Tax Treaties and EC Law • Fundamental Freedoms as equal treatment clauses • Tax Treaties as part of the facts • The bilateral nature of Tax Treaties and its consequence for the interpretation of the basic freedoms • The frontier worker cases • The dividend withholding cases • Conclusions

  3. Introduction • EU has no competences in respect of direct taxation • EU has no power to conclude tax treaties with third states • DTCs are not part of the EU legal system • ECJ does not interpret tax treaties

  4. Tax Treaties and EC Law – The Case ST. GOBAIN France F-CORP PE Germany Participation Dividends US

  5. Fundamental Freedoms as equal treatment clauses • Restriction or Limitation of freedoms is not sufficient in direct tax cases • Freedoms are applied as equal treatment clauses, i.e. there must be a unequal treatment of comparable situations or an equal treatment of non-comparable cases • Example: Double taxation restricts the functioning of the common market, but is not a restriction of the fundamental freedoms as long as there is no unequal treatment either in the state of source or in the state of residence

  6. Tax Treaties as part of the facts • Tax treaties are considered to be domestic law • ECJ has to accept application and interpretation of domestic courts • However, ECJ is not consequent

  7. The Case „Renneberg“ Cross-border employment Belgium NL R. works in NL (public service) R. has income from living is his own house (negative) (Article 6 OECD Model) R. has income from work for a public organization (Article 19 OECD Model)

  8. The frontier worker cases – Schumacker and others Belgium is state of residence S. works in Germany and earns all his income there DTC: Belgium exempts foreign income

  9. The dividend withholding cases – the state of source – Denkavit France NL Dividends Corp Corp WHT Participation exemption

  10. The dividend withholding cases – the state of source – Denkavit France NL Dividends Corp Corp WHT Participation exemption

  11. The dividend withholding cases – the state of residence – Kerckhart/Morres, Damseaux France Belgium Dividends Corp WHT No Credit, uniform tax of 25%

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