1
Q
What is art. 34?
A
- Article 34: contains a prohibition of all quantitative import restrictions and measures having equivalent effect as quantitative restrictions (MEEQR).
- Dassonville case: 1974
- Dassonville: Quantitative import restrictions = limits on the amount you can bring into a country.
- MEEQR: “all trading rules enacted by member states which are capable of hindering directly or indirectly, actually or potentially intra-community trade.”
- Some people say: any legislation falls under this, that all domestic rules have an impact on intra-community trade, if it is only indirectly or potentially.
2
Q
What was Keck & Mithouard?
A
- Very famous case where the Court changed its case law openly because the Dassonville formula was too broad.
3
Q
What does prohibition of quantitiative measures mean?
A
- Prohibition of quantitative restrictions meant that member states in their domestic legislations cannot install quantitative restrictions but the wider you define art. 34 (primary law) the wider the prohibition on the level of EU primary law becomes.
- Constitutional dimension because MS need to justify.
4
Q
What is art. 35?
A
- Prohibition of all all quantitative export restrictions and measures having equivalent effect. Art. 34 is the mirror image because it is about import and art. 35 is about export.
- Only x amount is allowed to exit the country = contingences again, quantitative export provisions.
5
Q
May a MS violate art. 34-35?
A
- 2 prohibitions for a certain behavior, to maintain certain types of domestic legislation. A MS may violate this, but they have to have a good reason to hinder the free movement.
- See art. 36: written justifications for MS to maintain certain rules:
- Art. 36: public morality, public policy, public security, protection of health (used now for the Covid-19 vaccines), life of animals,… = list of national interest that MS are entitled to pursue which can justify hinderance to free movement of goods.
- See art. 36: written justifications for MS to maintain certain rules:
6
Q
What is the case Cassis de Dijon?
A
- 1979: From this point on, further grounds of justification, even those that are not explicitly in art. 36 are allowed. Unwritten rule of reason has been recognized by the Court of Justice → even outside of art. 36, certain types of national interest can be protected and can justify hindrances to trade, to cross border movements.
7
Q
What is art. 45?
A
- Article 45 contains a prohibition of restrictions and discrimination based on nationality.
- Case Van Duyn: someone who wanted to move to the UK from the Netherlands to work for Scientology but the UK refused her.
- Case Bosman
8
Q
Case Bosman?
A
- Football player who wanted to move from Belgium to a French club: Issues
- Transfer fee had to be paid to the club he was leaving even though his contract was done
- Three-foreigners rule: only 3 foreigners allowed = contingent to enter foreigners → this rule fell for EU-players because this was a clear discrimination on grounds of nationality.
9
Q
What is art. 49 & 54?
A
- Article 49 & 54 TFEU: freedom of establishment for self-employed persons and companies:
- Also a prohibition of restrictions and discrimination on the basis of nationality.
- Case Reyners: Dutch national who studied in Belgium but he was not allowed to enroll at the Bar in Brussels because he did not have Belgian nationality.
- Clear-cut case of discrimination on the grounds of nationality → article 49: freedom of establishment = directly applicable so individuals could rely on that provision.
10
Q
Case Centros?
A
- Case Centros: Danish couple that wanted to set up a company and import and export wine but they did not want to invest that much money to set up a limited liability company.
- So, they wanted a UK company with a branch registered in Denmark, but the Danish authorities did not want to accept this.
- But they won and could rely on the freedom of establishment in the European internal markt!
11
Q
Art. 56-57: freedom of service
A
- Also concerns service providers, self-employed persons, as well as legal persons = telecommunications, insurance contracts,… → contents of the service is the product that is moved across the border.
- Case Van Binsbergen: Lawyer of Mr. Van Binsbergen had brought an action in his name before a Dutch court but he had moved to Belgium = not allowed to represent his client → attacked on the basis of freedom of establishment and was considered a violation of EU law.
12
Q
Case Cowan?
A
- Case Cowan: tourist from the UK who went on holidays to Paris, where he was robbed and had to go to the hospital.
- Question: can he rely on the fund in France where the culprit has not been found and thus unable to pay damages? = normally only open for French nationals.
- Discrimination on the grounds of nationality because he was a passive recipient of services to he was also protected by the free movement of services → goes really far!
13
Q
What is the convergence process?
A
- Convergence process: 3 provisions are all prohibitions of restrictions and discrimination of nationality but slightly different, the court has assimilated them.
- In the end the scope of protection against restrictive measures and discrimination, especially on grounds of nationality, is almost the same, almost identical under these three freedoms.
14
Q
Art. 63(1)? = free movement of capital?
A
- Article 63(1): Free movement of capital without restriction
- No restriction of capital movements between MS = within the internal market
- Also no restriction between EU MS and third states = erga omnes effect
- This is both for capital coming and and going out.
15
Q
Art. 65
A
- Article 65(1): without prejudice to the right of MS to…
- Based on what art. 65 prescribes, a restriction under art. 63 will be allowed. First of all, if member states apply tax provisions which distinguish between taxpayers who are not in the same situation as regard to residence or place of investment. So, if there’s a difference in situation. Tax provisions are explicitly addressed here.
- b also addresses taxation: MS are entitled to take measures to prevent infringements of national law and regulation, in particular in the field of taxation.
16
Q
What is the fear of MS with regard to the free movement of capital?
A
- There is a fear of MS that free movement of capital could have a heave impact on domestic tax legislation. Art. 65 = emergency break by the MS to stop the impact on domestic legislation.
17
Q
Article 64?
A
Old restrictions can remain, even though they infringe on art. 63, even if they are a hinderance to free movement of capital = can remain and even new ones can be introduced under certain conditions.
18
Q
Case Casati, Bordessa, Sanz
A
- Case Casati, Bordessa, Sanz,… = people who were caught at the border with hidden money = exporting cash.
- Question: is bringing money across the border a capital movement?
19
Q
Art. 21 = free movement of EU citizens?
A
- All the other provisions are written for economic activity, but this one does not necessarily mean that you are active in an economic way.
- Pensioners
- Students
- Rich people who do not have to work
- All these cases were regulated by directives (secondary law) but now they have a common base in art. 21.
- You need EU citizenship to move and reside freely in the territory of MS, there are some limitations and conditions.
- General rule: subsidiary or residual character → if there is an economic activity at hand = takes over.
20
Q
Case Zhu and Chen:
A
- Chen was a Chinese woman who lived in China at the time of the one-child policy → she booked a plane to Belfast and gave birth in Northern Ireland = if you are born there, you have Irish nationality (Ius solii).
- She then moved to Cardiff, where they told her she was a third country national who did not have residence permit so she had to leave.
- She tried to say that she was protected under EU law under art. 21 = both protected because a small child needs a parent to accompany them.
21
Q
Non-discrimination under EU law?
A
- Article 18: General principle of non-discrimination
- Concerns provisions that use nationality as a distinguishing criterion. This is, just as art. 21, a residual rule = explicitly stated that it only applies when there is not another provision that applies.
- This is not used often because the other freedoms are really widely interpreted.
22
Q
What is the prohibition on state aid?
A
- Prohibition of state aid: Apple case because there was state aid from Ireland. In Belgium = excess profit ruling system.
- Article 107(1) TFEU: prohibition of specific state aid to certain economic sectors which amounts to a distortion of competition = incompatible with the internal market as far as trade between member state is affected (which is always the case).
23
Q
What is distortion of competition?
A
- Distortion of competition: art. 107 is within the chapter on competition rules = applied to domestic law. State aid might consist of legislative tax reductions, specific cost deductions, but also possibly individual advantages through rulings by the tax authorities to companies (see Apple Case).
- Discussion: legislative scheme or individual measure? = advantage to a certain enterprise.
- Exceptions are allowed: social aid, consumer aid, aid to natural disasters → very limited exceptions and the Commission must grant an exception and it almost never applies.
24
Q
What are the may-exceptions?
A
- Article 107(3): may-exceptions:
- The Commission has a certain discretion: eg. regional aid to underdeveloped regions, facilitation of development of certain economic activities or areas.
- That’s a bit wider, that grants member states a bit more leeway to justify that a measure, a tax advantage or generally an advantage to certain enterprises, is covered by an exception and the Commission may accept that.
25
What is art. 108?
* Article 108: Really important because a new legislative measure that is introduced must be notified by the MS to the Commission before if can be applied in individual cases. MS is supposed to inform the Commission.
* If a MS does not do this, art.108(3) states that the MS is not allowed to apply this legislation → may lead to recovery procedures because the Commission will chase after the recipients and they will be asked to pay it back.
26
What is Title VII, Chapter 2?
* Title VII Chapter 2 TFEU: "Tax Provisions": sounds big but is rather limited.
* Article 110 TFEU: provides that there may be no internal tax on products from other MS that exceeds the tax on similar domestic products or that affords indirect protection to other domestic products.
* Non-discrimination rule.
27
Art. 111-112
* Article 111-112 TFEU: Prohibition of (certain) repayments of taxes and charges, not very problematic and hardly ever applied.
28
Art. 113?
* Article 113 TFEU: legal basis for harmonization of "turnover taxes, excise duties and other forms of indirect taxation": if it is necessary for the establishment of the internal market.
* 2 remarkable things:
1. **Unanimity** is required for the legislative procedure to prepare harmonization measures: all 27 MS must agree.
2. Also determines which **legislative tools** can be used: directives & regulations are mentioned: art. 288 TFEU = really broad.
29
Is there a chapter on direct taxation?
* But there is no chapter about direct taxation → you have to look somewhere in primary law to find a **legal competency rule** = this competence rule can be found in the next chapter in the TFEU. That is the chapter called approximation of laws and is about the general harmonization of domestic legislation of the MS, which includes inter alia taxation, direct taxation, but Is not focusing specifically on direct taxation.
30
Article 114?
* Article 114: general rule concerning the objectives set out in art. 26 = **internal market**: the EU can adopt measures for the approximation of the provisions laid down by law, regulation or administrative action in MS which have as their object the establishment and functioning of the internal market.
* Everything that is connected in domestic law with the internal market, can be approximated or harmonized on the basis of art. 114, paragraph 1.
* The good thing is: you can use the ordinary legislative procedure = 3 readings in the European Parliament, also a conciliation procedure.
* But art. 114, first paragraph is not applicable in fiscal provisions and indirect taxation is covered by art. 113, but they are also excluded here!
31
Art. 115: DEFINITION: "special legislative procedure"
* Article 115: provides for application of the special legislative procedure ↔ ordinary legislative procedure.
* Also concerns the internal market = shared competence but here you need unanimity, limited to directives. You cannot use regulations as a tool for harmonizing on the basis of art. 115.
* So unanimity of council (27 MS) is a major obstacle for tax harmonization. Problem is that both art. 113 and art. 115 both require unanimity.
* Council, represented by representatives of the 27 MS, they vote on directives and if only 1 MS opposes → proposal is blocked.
32
DEFINITION: "QMV"
* Majority voting: art. 16 TEU: Council shall act with a qualified majority, except where the treaties provide otherwise.
* QMV = Qualified Majority Voting is the standard: 80% of EU-legislation with a co-decision of the parliament.
* Simple majority is very rare.
* Unanimity voting is used for indirect and direct taxation.
33
How to calculate the QMV?
QMV calculation:
* 15/27 MS so 55%, which needs to represent 65% of EU population.
* Possibility of a blocking minority: at least 4 MS representing more than 35% of the population and they also need to continue negotiation.
34
Ways to avoid or circumvent the unanimity principle:
1. Enhanced cooperation
2. Communication by the Commission
3. Action plan for fair and simple taxation
35
Enhanced cooperation
* a subgroup (at least 9) must agree to start with something, a directive. They must be granted leave or must agreement from the other MS (the non-participating MS) in the project so that the participating MS can start with the directive for the limited circle.
* If the new system works solidly the other can opt in but nevertheless, the group there you still need unanimity, so you just exclude certain MS for a certain time period. You do not fully ignore unanimity in this procedure.
36
Communication by the Commission
only 2 years old: road map to move to QMV for measures necessary for the internal market. Proposal by the Commission but the MS do not seem to like this.
37
Action plan for fair and simple taxation
* Art. 116 TFEU: not been used. Commission here finds that there is too much distortion for the internal market because of the difference in provisions. Parliament and Council must act in accordance with the ordinary legislative procedure in the form of a directive, using QMV.
38
What is needed for art. 116 to be possible?
* Art. 116 would only be possible if the previous consultation between the commission and the MS has not been successful and the MS have not removed the provisions that distort the competition. This provision has never been used because there is a very high hurdle for proving a distortion of competition.
* But the Commission is considering it, because everything else is blocked wrt VAT.
39
What are the procedural ways to get to the CJEU?
1. Infringement procedure
2. Article 267: preliminary ruling procedue
40
"Infringement procedure"
* Art. 258 TFEU: recognize by Commission vs. MS.Commission accuses a MS of infringing EU law. Also art. 259 TFEU: MS against MS, very rare!
* Procedure: first the Commission has to find out, ex officio. On the website, people can complain to the European Commission, even anonymously. The commission will first try to informally speak to the MS = EU-pilot. This is not in the treaty but was introduced in practice and takes roughly 10 weeks where there is not an official procedure yet.
* First formal step if there is no satisfactory info: formal hearing of the MS = letter of formal notice.
* If the reaction is not sufficient or the MS shows a total reluctance to change their legislation → reasoned opinion to the MS where the Commission clearly states: your domestic legislation states A, EU law says B so your domestic legislation is clearly in violation with EU law = you have 2 months to remove it.
41
When does the case move to the CJEU in an infringement procedure?
* Then the case moves to the CJEU after the expiry of the deadline = saisine, usually the Court follows the Commission = quite loyal and then the MS has to adjust.
* Sometimes the MS does not adjust and the whole procedure moves back to the CJEU → financial penalties that goes into the EU budget = really rare!
* Com. v. Belgium concerning the cadastral income: 12th of November 2020.
42
Preliminary Ruling Procedure
* Art. 267: Individuals or enterprises against national authorities = Name vs. MS (tax authority).
* First: domestic court but they might be obliged to refer cases to CJEU if there is uncertainty concerning EU law.
* Case in Germany about VAT where he though he was exempt.
* CJEU: **harmonized and neutrality principle** = equal treatment so he was exempt and he had to be released from prison immediately. The domestic court has to freeze the domestic court procedure, sent a letter to the court in Luxemburg.
* Parties in this case can also go to Luxemburg: dialogue des juges.
* Once the CJEU has given an answer → falls back to the domestic court.
43
DEFINITION "Supremacy of EU Law"
* A lot of cases concerning this: is secondary law higher than the domestic constitution?
* Case: Costa v. ENEL: lex superior in favor of EU Law.
* Later: Simmenthal case: no lex posterior in favor of domestic law.
44
3 principles accepted on supremacy EU law?
1. When 2 provisions collide, one provision says A, the other B on the same set of facts → lex superior derogate legi inferiori = the higher ranking rule goes above the lower.
2. Lex posteriori derogati legi priori = the later rule usually overrules the previous one → does not apply according to the CJEU.
3. Lex specialis derogate legi generali: if you have a special rule, the special, tailor made rule takes priority.
45
What does the supremacy of EU law also imply?
* Supremacy of EU law also implies that international treaties have to respect EU law requirements between MS and MS and third parties. The third party is not bound by EU law, but as far as a MS becomes a party to a contract, with a third country, the MS has to comply with EU law.
46
How does EU law get integrated into domestic legal systems of 27 MS?
1. **Positive integration**: term used for harmonization or unification through EU law (especially secondary law) of national legal systems. National tax systems, but also other systems.
* Positive integration usually called this because in the directive, the commission has identified a problem in the internal market.
* Directives (secondary law): solve problems or distortions in the internal market → positive integration = EU comes up with legislation for the MS on how to solve the problem. You need **unanimity** for this!
2. **Negative integration:** provisions in EU primary law which contain prohibitions. See case Humblet
47
What do you do if there is a clash between domestic & EU law?
1. If the domestic legislation allows for that: interpret the domestic legislation in conformity with EU law to avoid conflict = **soft method**, same as the interpretation in conformity with constitutional law.
2. Hard method: nothing to interpret = clear clash → primacy superiority: the domestic provision cannot be applied = non-applicability of national law as far as it is in conflict with EU law.
48
European Taxation
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