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On March 6, 2018 the OECD announced that Anguilla joined the Inclusive Framework on BEPS. Therewith the total number of jurisdictions that have joined the Inclusive Framework on BEPS comes to 113.
Read more: Anguilla has joined the Inclusive Framework on BEPS
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On March 7, 2018 the Court of Justice of the European Union (CJEU) judged in Case C-159/17, Întreprinderea Individuală Dobre M. Marius versus Ministerul Finanţelor Publice — A.N.A.F. — D.G.R.F.P. Galaţi — Serviciul Soluţionare Contestaţii, A.N.A.F — D.G.R.F.P. Galaţi — A.J.F.P. Constanţa — Serviciul Inspecţie Fiscală Persoane Fizice 2 Constanţa (ECLI:EU:C:2018:161).
This request for a preliminary ruling concerns the interpretation of Articles 167 to 169 and 179, Article 213(1), Article 214(1)(a) and Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended, as regards the rules on invoicing, by Council Directive 2010/45/EU of 13 July 2010 (OJ 2010 L 189, p. 1), (‘Directive 2006/112’).
The request has been made in proceedings between the Întreprinderea Individuală Dobre M. Marius (sole trader M. Marius Dobre, ‘Dobre’) and the Ministerul Finanțelor Publice — Agenția Națională de Administrare Fiscală — Direcția Generală Regională a Finanțelor Publice Galați — Serviciul Soluționare Contestații (Ministry of Public Finances — National Agency for Tax Administration — Directorate-General of Public Finance of Galați — Complaints Office) and the Agenția Națională de Administrare Fiscală — Direcția Generală Regională a Finanțelor Publice Galați — Administrația Județeană a Finanțelor Publice Constanța — Serviciul Inspecție Fiscală Persoane Fizice 2 Constanța (National Agency for Tax Administration — Directorate-General of Public Finance of Galați – Regional Public Finance Administration of Constanța — Department No 2 of the Constanţa Tax Office for Natural Persons) (together ‘the tax authorities’), concerning the right to deduct value added tax (VAT) relating to purchases made by Dobre during the period in which his identification for VAT purposes had been revoked.
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On March 7, 2018 the European Commission released an interesting Taxation Paper titled: “Aggressive tax planning indicators - Final Report” (Taxation Paper - WORKING PAPER No 71 – 2017). According to the prepares of the paper the aim of the study is to provide economic evidence of the relevance of aggressive tax planning (ATP) structures for all EU Member States.
Read more: The European Commission releases a taxation paper on aggressive tax planning
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On February 27, 2018 the European Commission opened a public consultation on exchange of data to combat VAT fraud in the e-commerce. The consultation period runs from February 27, 2018 until April 25, 2018. The European Commission has released an online questionnaire for this consultation.
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On March 1, 2018 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Kokott in the Case C-115/16, N Luxembourg 1 versus Skatteministeriet (ECLI:EU:C:2018:143) was published.
From introductory remarks made by the Advocate General
In these proceedings, and in three parallel sets of proceedings (Cases C‑118/16 (X Denmark), C‑119/16 (C Danmark I) (both joined with C‑115/16) and C‑299/16 (Z Denmark)), the Court of Justice is required to rule on the conditions under which the beneficial owner of interest under civil law also qualifies as beneficial owner within the meaning of the Interest and Royalties Directive. In order to do so, it will need to clarify whether EU law has also to be interpreted in light of the commentaries on the OECD Model Tax Convention, especially those revised after the adoption of the directive. The question also arises as to how the ban on abuse is defined in EU law and whether it is directly applicable.
These questions have been raised in connection with a tax dispute in Denmark; the tax administration’s view is that avoidance of Danish tax at source, via an interpolated ‘controlled’ company established outside the EU, constitutes abuse of the law, as it fundamentally precludes any final liability for tax at source within the corporate structure, even where the interest is ultimately channelled to a capital fund in a third country. If that third country then prevents information on interest payments to investors in the capital funds from reaching their countries of residence, it may be that no tax is ultimately assessed on investors’ income.
The above questions ultimately apply to the fundamental conflict between the taxable person’s freedom to arrange his affairs under civil law and the need to prevent arrangements that are valid under civil law but nonetheless abusive under certain circumstances. Even though this problem has existed since the invention of modern tax legislation, it is hard to draw a dividing line between admissible and inadmissible tax-reduction measures. A driver who sells his car following an increase in road tax obviously acts in order to avoid road tax. However, that cannot be construed as an abuse of law, even if his sole reason was to save tax.
In light of the angry political mood concerning the tax practices of certain multinational groups, drawing that dividing line is no easy task for the Court of Justice and not every action by an individual to reduce their tax should be open to a verdict of abuse.
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