1
Q
What is the overview of the topics?
A
- General introduction
- Indirect taxation: VAT
- Harmonized indirect taxation
- Unharmonized = case law
- Direct taxation = big chunck
- Overview fundamental freedoms
- Harmonization
- Procedural issues: only small part, very technical and dry.
2
Q
What is the positive and negative integration?
A
- Negative = impact of treaty rules
- Positive = harmonization in particular through directives: based on the Case law of the Court of Justice
3
Q
What is the EU budget?
A
- Budget of the EU as a supranational organization, so not the domestic budget: 2 parts:
- Revenues
- Expenditures
4
Q
What are the provisions concerning the EU budget?
A
- Article 6 TFEU: Part 6: “Institutional & Financial provisions”, title 2.
- Art. 310: “All items of revenue and expenditure of the Union shall be included in estimates to be drawn up for each financial year and shall be shown in the budget.”
- A financial year is to be clear a calendar year.
- “The Union’s annual budget shall be established by the European Parliament and the Council in accordance with Article 314.
- The revenue and expenditure shown in the budget shall be in balance.”
5
Q
What is the MFF?
A
- Multiannual Financial Framework: art. 312: what is the EU using its money for
- New 7 year MFF has been adopted: New Council regulation and it is the biggest one yet
6
Q
What are the typical types of EU expenditure?
A
- EU policy area:
- Program for certain programmes: can be purely EU, also incorporation with private organization or even outside of EU
- Areas: Single market, innovation, digital, cohesion, resilience, nature/environment, migration and borders, security and defence,…
- EU public administration
- Salary, health insurance and pensions of the EU public administration
7
Q
What is not in the budget?
A
- Covid-19 recovery instrument: NGEU = NextGenerationEU
- Council Presidency: EP & council: 750 billion: grants & loans
- Recovery and Resilience Facility:
- 90% to MS for short term investments: MS must show a plan how they are planning to support certain sectors or industries to rebuild the structures that were there before.
- Problematic because it is on top of the budget.
- Commission is going to borrow on the financial market and everything is reused with new resources: completely new and now this has been sent to the national parliaments so the 27 states have to agree = not been finalized yet.
8
Q
What is the legal basis of the EU revenue?
A
- Article 311:“The Union shall provide itself with the means necessary to attain its objectives and carry through its policies. Without prejudice to other revenue, the budget shall be financed wholly from own resources.”
- Between EU Institutions (Parliament, Council and Commission), but also between the MS.
- Eg. UK: net payer = paying too much that they are not receiving enough.
- Negotiated a UK rebate = from their net payments, there was always an amount cut off → but this leads to tension with other MS.
9
Q
What was the previous system until 2020 for the EU revenue?
A
- Laid down in the Council decision = 27 Ministers of Finance who are competent for the MFF: framework of 2007.
- Traditional own resources:
- Customes duties on 3rd country imports and agricultural/sugar levies. Eg. Zaventem Airport = customs duties → money goes to the EU budget.
- Fixed share of national value added tax base (VAT)
- Customs was not enough → not the VAT amount levied of every country but the amount of taxable transactions = the basis for the VAT for each member state.
- Also added: Fixed amount based on Grossed National Income (GNI): percentages are fixed for each member state
- The GNI has to be calculated and then a certain percentage of that is calculated as a contribution by that member state, that has to be paid to the EU.
10
Q
What is the new system for revenues under the new MFF 2021-2027
A
- Plastic tax: New Council decision: a new levy on on non-recycled plastic packaging ways. That supposed to be 8 cents per kilo. That is something that the member states have to calculate, domestically on their packaging waste. And then they will have to pay that to the EU budget.
- Does not exist yet, only has been decided = EU Plastic Tax, not a real tax but more a contribution by the MS to the EU Budget.
- EU Council: Commission has to make further proposals. New types of means of levying taxes, which than are supposed to go wholly of partly into the EU budget.
- FTT = Financial Transaction Tax
- CCCTB = Consolidated Corporate Tax Base
11
Q
What are the revenue numbers for the EU
A
- 158,6 billion in 2018 = revenue side so at the disposal of EU.
- Own resources: 142,4 billion (90%)
- Customs & duties: 12,7%
- Fixed share of national VAT base: 11%
- Fixed amount based on GNI: 66,1%
- Included: special rebated for certain MS.
- Other revenue: 15,7 billion (10%)
- Competition law fines
- Receipts of interest payments
- Repayments of unused financial assistance: programs which did not spend all their money. EU structural funds = legal instruments that have been set out by the EU to finance certain types of EU policies
- Various receipts: donations, contributions from non-EU countries, also Nobel Peace Prize.
- Tax salary of EU officials
- Small gap = carry over or carry forward: money not spend for future: 0,5 billion
12
Q
How are EU officials taxed?
A
- Very specific “closed” system: left pocket - right pocket.
- Expenditure side: they pay out the salary of the EU officials. Taxes = wage withholding tax, which forms part of EU expenditure
- Legal basis:
- Legal basis for specific tax on officials: different protocols “Privileges and Immunities (PPI’s) and Council Regulations from 1968.
- Humblet 1960: first tax case
- Only 2% of the overall budget, so only really small but this is the only real tax part that goes into the EU budget. And that’s where the EU until now differs completely from member states because member states finance their budget, their expenditure to a very large extend through taxes, where as the EU does not levied taxes, except for this small wage withholding tax until now.
13
Q
What is the conclusion on European taxation?
A
- Conclusion: There is no real EU tax yet.
- So currently: “European Taxation” = national tax systems of Eu Member States (MS) under the influence of Eu law = “Europeanisation of national laws”
- Intertwining of European law and domestic law, but the system of own resources might change the landscape, because the tax inflow into the EU is going to rise, but for the time being = no EU tax system.
- It’s domestic tax systems being influenced, changed, by EU law.
14
Q
What are the kinds of rules that we find on the supranational level of the EU?
A
- EU primary law
- TEU
- TFEU
- Secondary law
- Regulations
- Directives
- Decisions
- Non binding instruments
- Tertiary law
15
Q
What is EU primary law?
A
2 treaties: TEU and TFEU. Explicit rules and protocols annexed, with the accession of Croatia: some provisions have been altered:
- Eg. free movement of capital.
Also art. 6(1): links the TEU to the Charter of Fundamental Rights:
- Written guarantee of fundamental rights.
- Before: unwritten principles still further developing
16
Q
What are the unwritten principles?
A
Before the Charter, based on domestic law and based on the case law of Strasbourg
- Rule of reason in the area of justification of ingringements on fundamental freedoms
- Proportionality
- Art. 6(3) still recognizes existence of fundamental rights
17
Q
What are the secondary laws?
A
Article 288: instruments of secondary law: all legally binding
- Regulations and directives:
- Decisions: individual acts by European Institutions
- Individual administrative act in the form of a decision
- Example: Commission in anti-trust cases/laws: Google case, cartel, state aid (against a MS)
- Not legally binding instruments
18
Q
What are the instruments that are not legally binding?
A
Recommendations and opinions: can be used but they are not binding. Article 288 TFEU: a lot of instruments which are used informally:
- Example: Communications, resolutions, declarations, notices, reports, green books, white books, green papers,…
They are used to inform the public, to address the member states but not in themselves binding.
A lot of notices by the European Commission with regards to tax laws.
19
Q
What is tertiary law?
A
Third layer, after the Lisbon treaty -> based on secondary law.
Legal basis:
- Delegated acts = art. 290 TFEU
- Implementing acts = art. 291 TFEU
Usually attributed to the European Commission, exceptionally also the the Council, but very often then you will have Council Directives or Regulations as secondary law allowing the Commission to do something else. To pass for example a Regulation of Directive as a legislative act.
20
Q
Why would you use tertiary law?
A
- Implementing or delegated acts on the basis of secondary law: usually involved administrative details: eg. indirect taxes
- So substantive rules on the harmonization of taxes in secondary law, but when administrative documents have to be sent out → European Commission through delegated or implementing acts: model for all member states.
- Final details are left for the Commission on the basis of tertiary law.
- Most important part is the secondary law!
21
Q
What are the different categories of rules not at EU level?
A
Tax rules at the national level of the MS:
- Constitution: sometimes tax provisions in constitutions
- Domestic, federal, regional and local rules:
- Legislation, jurisprudence, administrative practice (may lead to factual rules).
- Concern general tax provisions, specific tax provisions
- Substantive & procedural rules: how are the taxes paid, how does the authority get the money?
International treaties and conventions:
- Contracts between MS (inter se), or MS and 3rd countries
- Bilateral or multilateral
- May be concluded before or after EU accession
- Substantive or procedural rules
22
Q
What is the relationship between EU law and international law?
A
2 approaches:
- Monist approach: Belgium:
- Multilateral conventions, when they are concluded = they are automatically part of the domestic Belgian order and the treaty rules take priority over the domestic rules.
- Dualistic approach
- Eg. Germany: International treaties and the purely domestic legal system are 2 different legal orders and international conventions only enter the legal sphere through a transformation act: copy&paste of the treaty into domestic law.
23
Q
What is possible in a dualistic country that is not possible in a monist?
A
In a dualistic country: you are able to install a treaty override because it enters into domestic law: if Germany is not happy, it can deviate from contents of the treaty = violation of the treaty but within the purely domestic legal order → possibility to override other types of legislation (not possible in other countries).
24
Q
What is art. 3 TEU?
A
Objectives and tasks of the union : inter alia → internal market: has been the core of the EU since the Treaty of Rome.
Economic and monetary union: introduction of the euro
25
What is article 3 TFEU?
The Union shall have exclusive competence in the following areas:
1. Customs union
2. The establishing of the competition rules necessary for the functioning of the internal market
1. State aid
2. Competition
26
What is art. 4 TFEU?
Shared competences:
* Shared competence with the MS: the EU can do something and the MS can also pass legislation and if both can act = clashes can happen → large part
27
Article 26 TFEU
1. The Union shall adopt measures with the aim of establishing or ensuring the functioning of the **internal market**, in accordance with the relevant provisions of the treaties
2. The internal market shall comprise an area without internal frontiers in which the **free movement of goods, persons, services and capita**l is ensured in accordance with the provisions of the treaties
Cross border movements have to be **facilitated** by the MS.
MS are also obliged **not to create further or additional hinderances** in their domestic legislation to **hamper/obstruct cross-border movement.** In principle, the idea is that you are entitled to move, that is the idea of this internal market, that you can bring the parties, the ones that request and offer on the market, that you can bring them together. Goods are supposed to move, persons, capital and services.
28
What is article 5 TEU?
Scope of power of the Union
Powers are conferred: the Union can only act where powers have been attributed to it.
Powers can be exercised by the EU only within the limits of subsidiarity and proportionality.
* Article 352 TFEU: When there is no explicit power, a sort of implied power = necessary for the EU to act → very rarely used. Typically we will look for a specific attribution of a competence to the EU in the treaties, in primary law.
29
What is article 288 TFEU?
Instruments mentioned in art. 288: it doesn't mean that just because there are instruments that are mentioned, that European institutions can use them in any way that they like → instruments are linked with the competence rule and the attributed powers.
30
What if the EU wants to regulate something?
Each subject that the EU wants to regulate, it has to identify a competence → limited attributed powers will show the EU which type of measure it can use.
Some provisions are limited to Directives and you cannot use regulations because the competence rules only allows directives = per se forbidden.
Eg. Tax harmonisation: art. 113 and art. 115: important difference for direct and indirect taxes.
31
What are the general obligations of the member states?
1. **Union loyalty**: art. 4(3): you are supposed to treat eachother with respect in the EU
1. Horizontal: Between the European institutions among each other
2. Vertical: MS are supposed to follow the EU legislation, transfer directives. Also effective utile = the best practical effect
2. **Non-discrimination**: art. 18(1)
* General principle of non discrimination on grounds of nationality
32
What is art. 21 TFEU?
Free movement of EU citizens
33
What is legal basis of the free movement of goods?
* Article 28-33 TFEU: Customs union
* Article 34-37 TFEU: Prohibition of quantitative restrictions and measures having an equivalent effect on imports and exports
34
What is art. 110-113?
* Tax provisions
* Rules on (indirect) taxes. Heading is quite misleading, because there is not much included here.
35
What is the customs union?
Article 28 TFEU: Comprises the concept of a full customs union of all 27 MS: products originating in MS + products from a 3rd country which are admitted to "free circulation" within EU: art. 29 TFEU
When goods are entered into the internal market = art. 28 → in order to be brought into free circulation, they have to pay entrance fee = customs fee.
2 dimensions:
1. Internal
2. External
36
What is the internal dimension of the customs union?
No customs duties between MS: art. 30 TFEU specific rule: prohibition of customs duties on import and export and of charges having equivalent effect = in relation between MS
They used to exist, but now no internal borders.
Important case: Van Gend & Loos: important case as a constitutional case on the direct applicability of treaty rules and case about customs duties.
37
What is the external dimension of the customs union?
Art. 31: obligation upon the EU to create a common customs tariff.
Common EU Customs Tariff for relations between MS and third countries.
* If it is the same good coming in, it should not matter if it comes into the EU in Greece, Belgium, France,... → they are supposed to levy at the border when they come in = levy the same amount of custom duties → otherwise all import would happen where it would be the cheapest. There has to be a neutral tariff.
38
What is the tariff classification?
Regulation with "Combined Nomenclature" = based on Harmonised System of Worlds Customs Organisation.
Long list with all types of codes = tries to cover all kinds of products in categories → find the right category for your product: CN code. Percentage that you have to pay for that specific product.
Annual updates.
39
What are the procedural rules concerning the customs union?
Also regulated by the EU. The first comprehensive rule: "Community Custums Code"
Updated by the "Modernised Customs Code": never applicable
Now: Union Customs Code (UCC): with stepwise application: 01/01/2021: the whole electronic system has been put in motion.
Action plan for the EU: "Taking the Customs Union to the Next level"
* Focus on risk management, e-commerce, compliance, cooperation
* High level of administration.
European Taxation
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