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Taxation and Customs Union

Workshop on 'EC Law and Tax Treaties'


Impact of European law on double taxation conventions concluded between Member States and with third states. Meeting of a group of experts in Brussels on 5 July 2005

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Brussels, 5 th July 2005

Welcome and introduction

Mr. Aujean, Mr. Mors and Mr. Roccatagliata from the European Commission opened the floor and introduced the documents and the objectives of the workshop.

Working Document "EC Law and Tax Treaties "

Annex A

Annex B

EU Presentation

In order to animate the debates that took place after each panel and to receive input for future work, the working document raises questions regarding views on possible conflicts and their possible avoidance.

1st PANEL (Tax Treaties between Member States)

Chaired by:

Prof. Frans Vanistendael , KU Leuven University

Other speakers:

Prof. Marjaana Helminen , University of Helsinki
[Tax Treaties between Member States ]

Mr. Paul Farmer, Pump Court Tax Chambers, London

Mr. Arnaud de Graaf , Ministry of Finance, The Netherlands
[Presentation and Slides Impact EC Law on Tax Treaties between Member States]

The first panel examined possible conflicts between EC Law and tax treaties concluded among Member States. Such problems may result from court decisions of the European court of Justice that repeatedly said, despite the absence of harmonising measures and although "direct taxation does not as such fall within the purview of the Community, the powers retained by the Member States must nevertheless be exercised consistently with Community law". In this respect, some of the recent judgements of the Court have highlighted cases of discrimination in the treatment of Community citizens and businesses or of violation of the fundamental freedoms rules. Moreover, t he EC Study on Company Taxation identified a number of issues not covered within the scope of existing tax treaties. Primarily, these are issues for intra-Member States treaties. These issues include, for example, triangular situations, deduction of pension contributions, treatment of stock options, the relationship with anti-deferral and anti-abuse provisions, cross-border loss compensation. Finally, some pending ECJ cases inspired the debate.

2 nd PANEL (Tax Treaties between Member States and Third Countries)

Chaired by:

Prof. Klaus Vogel , Ludwig-Maximilian University , Munich

Other speakers:

Prof. Hugh J. Ault , Boston College

Prof. Daniel Gutmann , University of Paris (I-Panthéon)
[Tax Treaties between Member States and third Countries , Intervention by D. Gutmann]

Mestre Ana Paula Dourado , Ministry of Finance, Portugal
[Tax treaties between Member States and Third Countries ]

The second panel debated problems with EC Law related to tax treaties signed by individual Member States with third countries. The Commission suggested to examine this issue of tax treaties between individual Member States and third countries as a separate topic because of its peculiarity nature. Certainly - as already underlined in the Study on Company Taxation - it is true that anti-abuse clauses in tax treaties concluded by Member States with third countries should not discriminate against taxpayers in other Member States and that "limitation-on-benefits" clauses concluded by some Member States with the United States should be examined in the light of EC Law.

OECD Presentation

Mr. Mike Waters, Chair of WP1 (OECD-CFA); Ministry of Finance , United Kingdom

The European Commission offered the opportunity to the OECD, Centre of Tax Policy and Administration, to present to the tax experts and Member States representatives in charge of EC law, the work of groups and sub-groups of the Committee of Fiscal Affairs on tax treaties.

OECD-CFA website

FINAL PANEL (Possible Solutions)

Chaired by:

Prof. Peter Wattel , General-Advocate, High Court, The Hague

Other speakers:

Prof. Michael Lang , University of Vienna
[EC Law and tax treaties: possible solutions ]

Prof. Pasquale Pistone , University of Salerno
[Workshop on Tax Treaties and European Law European Commission, Brussels 5.7.2005 slides and text ]

Ms. Helen Pahapill , Ministry of Finance , Estonia

The concluding panel discussed possible solutions and the role that the European Commission could play in this context. Some experts also suggested opposite solutions (e.g. a multilateral tax treaty versus an EC tax model). Nevertheless, the debate was not limited to this main hypothesis. The existing tax treaties seem to need - at the very least - to be amended to conform to the developing rules of EC tax law as elaborated by the ECJ jurisprudence, by legislation and by soft-law in this area.

Contributions by participants:

- Prof. Daniel Deák, Corvinus University Budapest
[Consumption-oriented company taxation: a central European perspective ]

- Prof. Albert Rädler, Universität Hamburg
[Contribution to the workshop ]