February/March 2019  
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Issue No. 2/3 - 2019 of the European Taxation is now available online.

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Number 2/3 - 2019 contains the following:
European Union

The ATAD 2 Anti-Hybrid Rules versus EU Member State Tax Treaties with Third States: Is Override Possible?

Konstantin Karaianov

This article analyses the anti-hybrid mismatch rules applicable in respect of third countries contained in the amended EU Anti-Avoidance Directive (2016/1164) (ATAD 2). The author concludes that, in general, the Council designed ATAD 2 so as to ensure that Member States could avoid possible treaty override and preserve their obligations with third countries although, in a limited number of scenarios, treaty override could still arise.

European Union

The ATAD’s Interest Limitation Rule – A Step Backwards?

João Carmona Lobita

This article addresses the shortcomings of the interest limitation rule in the EU Anti-Tax Avoidance Directive (2016/1164).


Germany’s Anti-Treaty-Shopping Rule under ECJ Pressure

Martin Weiss and Manuel Brühl

This article describes recent events surrounding the German anti-treaty-shopping rule enshrined in section 50d(3) of the German Income Tax Act. Designed to counteract tax planning strategies aimed at benefiting from lower withholding taxes under tax treaties or European directives, its future has been cast into grave doubt. These doubts arise both from domestic developments around possible planning strategies not within the scope of the rule and pressure from ECJ decisions. It is doubtful whether or not the rule will survive in its current form.

European Union

The Changing Landscape of the EU VAT: Digital VAT Package and Definitive VAT System

Aleksandra Bal

This article describes and evaluates the measures proposed by the Digital VAT Package and the Definitive VAT System.

International/European Union

International and EU Measures for the Protection of Cultural Heritage: Towards Broader Use of Tax Breaks to Stimulate Private Engagement

Pietro Mastellone

This article discusses international and EU regimes providing incentives to finance cultural undertakings. It attempts to identify the scope of the concept of “cultural heritage”, which today embraces a wide range of expressions of human creativity and produces significant turnover. The author demonstrates that the current forms of public funding are insufficient to ensure adequate protection of cultural heritage and, due to inputs coming from EU institutions, the need to adopt tax breaks to stimulate funding from the private sector has become critical in recent years.

Denmark/European Union

ECJ Decision in Bevola (Case C-650/16): A Missing Piece in the Marks & Spencer (Case C-446/03) Puzzle

Hein Vermeulen and Vassilis Dafnomilis

In this article, the authors discuss and comment on A/S Bevola and Jens W. Trock ApS v. Skatteministeriet (Case C-650/16). The article also provides an analysis of how a comparability analysis between a domestic and a foreign PE should be performed in cases involving final PE losses. Finally, the article provides an overview of the current status of the Marks & Spencer (Case C-446/03) exception as interpreted by ECJ case law.


The New Wave of Cooperative Compliance Programmes and the Impact of New Technology

Katarzyna Bronżewska and Alicja Majdańska

An increasing number of (inter)national tax regulations (like the ATAD, iterations of CFC rules and interest deductibility limitations) are impacting taxpayers at the same time that their scrutiny by tax authorities is intensifying. Against this background, cooperative compliance programmes are on the rise. This article addresses the latest developments with regard to cooperative compliance programmes in Austria, Belgium and Poland, and also looks into the potential of new technologies to further foster the relationship between taxpayers and tax administrations.

European Union/Spain
Turnover Taxes under State Aid Spotlight
Julia Sinnig

In response to the Commission’s increasingly broad interpretation of State aid rules with regard to national retail and advertising taxes, in the ANGED cases, the ECJ developed its Distribution Casino France case law, applying a restrictive view of the qualification of these taxes as illegal State aid. This article provides an overview of the relevant legal questions raised in the ANGED cases, as well as in the Polish and Hungarian retail sales and advertisement tax cases.

EU Update
Mery Alvarado
Mery Alvarado
Mery Alvarado
CFE News

Opinion Statement ECJ-TF 3/2018 on the ECJ Decision of 12 June 2018 in Bevola (Case C-650/16), Concerning the Utilization of “Definitive Losses” Attributable to a Foreign Permanent Establishment

CFE ECJ Task Force

This CFE Opinion Statement, submitted to the European Institutions in November 2018, discusses the ECJ’s decision in Bevola (Case C-650/16), which reaffirms that the concept of “definitive losses” first established in Marks & Spencer (Case C-446/03) and refined, inter alia, in Commission v. United Kingdom (Case C-172/13) is still applicable to permanent establishments and that the standard for testing comparability continues to be related to the aim pursued by the national provision at issue. Further, the CFE invites the EU to consider harmonizing measures that will introduce immediate loss utilization with a recapture mechanism.

European Union

An Overview of ATAD Implementation in EU Member States

Oana Popa

This note provides an overview of implementation trends in the Member States of the five anti-tax avoidance measures in the ATAD (2016/1164), based on information included in the new product launched by the IBFD, the ATAD implementation tables.


Commission v. France (Case C-416/17): How a Tax Dispute Gave the ECJ the Opportunity to Add a New Piece to Its Cilfit (Case 283/81) Puzzle

Flora Sicard

In the context of a longstanding dispute over the tax treatment of dividends in France (the “précompte mobilier” dispute), the ECJ ruled, for the first time, that a Member State had failed to fulfil its obligations under EU law because its Supreme Court did not make a reference for a preliminary ruling to the ECJ. This note comments on the decision in Commission v. France (Case C-416/17), first providing background and then assessing its impact on future case law developments.


Critical Insights into the Tax Regime Applicable to a Transfer of a Business by an “Italian Permanent Establishment” in Exchange for Shares of the Transferee

Alberto Fuccio and Raffaele Villa

In this note, the authors provide some critical insights on Ruling No. 63/E of 9 August 2018, which clarifies the Italian tax treatment of a transfer by a foreign tax resident transferor of an Italian business in exchange for shares of an Italian tax resident transferee. They also set out the relevant legal reasoning and logic based on which full tax neutrality should also be granted when the transferee is non-resident.


Permanent Establishment, “Building Sites” and “Observations” on the Commentary: Some Comments in Light of the Recent Supreme Court Decision in Case No. 28059

Stefano Guarino

The relationship between the general PE definition in article 5(1) of the OECD Model (2017) and the examples set out in the “positive list” in article 5(2) has been a longstanding issue. This topic was the subject of an “observation”, the legal effect and scope of which are uncertain. The recent decision of the Italian Supreme Court in Case No. 28059 (24 November 2017) has shed some light on these matters and is the focus of this note.


Recent Turkish Decision Finds that a Website Can Constitute a Permanent Establishment

Selçuk Özgenç

This note discusses a recent case of the Turkish Supreme Administrative Court wherein it was held that a website can be considered a permanent establishment. The author takes the position that the decision is contrary to the OECD approach, as well as the prevailing opinion in the tax literature.


Recent Developments in the Area of Permanent Establishment

Sergiy Melnyk

This note discusses the implications of recent developments in the area of permanent establishment in Ukraine.

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