EC Law Aspects of Hybrid Entities

Transcription

1 EC Law Aspects of Hybrid Entities Table of Contents Preface List of abbreviations Part I Introduction Chapter I: Introduction 1. Background 2. Scope and structure 3. Outline of the research Part II Classification methods under Member States international private law Chapter II: How are conflicts of laws solved under private international law in the internal market? 2. Conflict laws under private international law 2.1. The EEC Convention on the Mutual Recognition of Companies of The Hague draft Convention concerning recognition of the legal personality of foreign Sociétés, Associations, and Foundations 3. The two basic principles used in private international law 3.1. The concepts of domicile and real seat 3.2. The incorporation doctrine The Netherlands The UK 3.3 The real seat doctrine France Germany Application of the real seat doctrine under the Statute for the Societas Europae 4. Consistency of the real seat doctrine with the EC Treaty 4.1. Leading cases 4.2. Evaluation 5. Conclusions Part III Autonomous tax classification methods in the internal market

2 Chapter III: The Community principle of mutual recognition 2. Mutual recognition as an integration principle 2.1. From harmonisation to mutual recognition 2.2. The principle of mutual recognition as a means of stimulating competition among Member States 2.3. Mutual recognition compared to the integration principle of most favoured nation treatment 3. The ECJ s holdings on the principle of mutual recognition in non-tax law cases 3.1 Free movement of goods Leading cases The Dassonville case The Cassis de Dijon case The Herbert Gilli case The Keck case Comments 3.2. Freedom of establishment Leading cases The Segers case The Futura Participations SA case The Centros case The Überseering case The Inspire Art case Comments 3.3. Freedom to provide services Leading cases The Thieffry case The Vlassopolou case The Kraus case The Gebhard case Comments 4. Regulations on the principle of mutual recognition 4.1. The European Commission s reaction in 1980 on the Cassis de Dijon case 4.2. The European Commission s 1985 White Paper: not harmonization but mutual recognition 4.3. The European Commission s 1999 communication "Mutual recognition in the context of the follow-up of the action plan for the single market" 4.4. The 1999 Council Resolution regarding the improvement of the application of the principle of mutual recognition 4.5. The Commission s Internal Market Strategy Priorities The European Commission s mutual recognition clause Article 1.8 of the Dutch Income Tax Act The boundaries of the principle of mutual recognition 5.1. Measures without distinction and disparities in non-tax case law

3 The requirements set by the ECJ to disparities Disparities due to interaction between Member States legal systems What are objective differences? Mutual recognition under the different treaty freedoms 6. Conclusions Chapter IV: Why the principle of mutual recognition does not apply to tax classification methods 2. No recognition of entities for tax purposes in the EC Treaty 2.1. The scope of the term companies under Article 293 of the EC Treaty 2.2. The term companies under Article 48 of the EC Treaty 2.3. Evaluation 3. General remarks on EC law and fiscal neutrality 3.1. The principle of territoriality under EC law Which nexus permits taxation under the principle of territoriality? 3.2. EC law and the principles of source and residence 3.3. Tax neutrality and the avoidance of international double taxation Capital import neutrality and capital export neutrality 3.4. Evaluation 4. EC law and the disregarding of the personality granted by another Member State s tax law 4.1. Classification conflicts in the light of the EC Treaty The concepts of classification and allocation from an EC law perspective Impediments caused by autonomous classification methods The Community principle of solidarity and good faith Classification conflicts in the light of the fundamental freedoms Freedom of establishment v. free movement of capital 4.2 Piercing the fiscal veil and the freedom of establishment The thin borderline between measures without distinction and disparities in tax case law The principle of mutual recognition applied by the host state Are the distinctions between the classification methods due to objective differences? Tax autonomy recognized by the ECJ Does Überseering force Member States to recognize another State s civil law classification for purposes of their domestic tax classification? The Columbus Container Services case Facts of the case Dispute in the case The ruling of the ECJ Analysis

4 Tax autonomy recognized under secondary EC law 5. Conclusions Part IV Do tax treaties provide for solutions in the internal market? Chapter V: How tax treaties concluded between Member States interfere 2. Tax treaties within the EC law framework 3. Differences in the personal and substantive scope of the EC Treaty and the OECD Model 4. The application of tax treaties to hybrid entities 4.1. Autonomous income allocation for tax treaty purposes The principle of good faith 4.2. The OECD approach to classification conflicts Characterization conflicts The OECD approach to characterization conflicts Income allocation in the case of classification conflicts Stricter requirements for treaty application for participants in hybrid entities? Does the context require the source state to deviate from its own income allocation rules in these tax treaty situations? The reservations to the OECD s approach 4.3. The approach to hybrid entities in the US Model Article 4, paragraph 1, subpart d, of the US Model Paragraph 1 of Section 894(c) of the Internal Revenue Code The savings clause 5. Tax treaty provisions relating to hybrid entities 5.1. No uniformity in hybrid entity approaches within the common market Most-Favoured Nation treatment The D case Hybrid entity provisions: a benefit separable from the remainder of the tax treaty, not being an integral part contributing to its overall balance? The reservations of Member States to the OECD Commentary 5.2 The 2003 Belgium-Netherlands tax treaty The partnership approach in the Belgium-Netherlands 1970 tax treaty Article 2, Protocol I The Protocol provision The example given by the joint Explanatory Notes Comparison with the OECD approach Article 4, subpart b, Protocol I The Protocol provision

5 The example given by the joint Explanatory Notes Analysis Comparison with the OECD approach Relationship between the two Protocol provisions The limited partnership provision Evaluation 5.3. The 2004 United Kingdom - France tax treaty Allocation of profits or gains to partnerships under Article Example Analysis What is a partnership for tax treaty purposes? Tax treaty residence of French partnerships Why French partnerships qualify as tax treaty residents Differences in the concept of partnership in France and the UK Example Evaluation Interrelation between Article 30, paragraph 1, and Article Comparison with the OECD approach Evaluation 5.4. A multilateralization of hybrid entity tax treaty provisions? The incompatibility of the reservations of Member States to the OECD Commentary with EC law 6. Conclusions Part V Blueprint for a new Community Directive Chapter VI: Proposal for a new Community Directive on the mutual recognition of entities in the internal market for tax purposes 2. Is there need for a Community Directive establishing the mutual recognition of entities for tax purposes? 3. The current level of mutual recognition of entities for tax purposes under Community law Mutual recognition of entities for tax purposes under secondary EC law The term company of a Member State in the Parent Subsidiary, the Merger and the Interest and Royalty Directive Application of the Parent-Subsidiary Directive to hybrid entities Application of the Parent-Subsidiary Directive to hybrid entities in inbound situations Application of the Parent-Subsidiary Directive to hybrid entities in outbound situations Recognition of entities under the Merger Directive

6 The opt-out provision with respect to hybrid entities in the Merger Directive 3.3. Evaluation 4. Alternative solutions to a new Directive 4.1. Extending the scope of the existing Directives 4.2. Existing unilateral or bilateral rules for the avoidance of double taxation 4.3. A Common Consolidated Corporate Tax Base in the internal market 4.4. Evaluation 5. Proposal for a new Community Directive on the mutual recognition of entities established under the laws of Member States for tax purposes 5.1. Interrelation of the new Directive with existing Directives 5.2. Scope of the new Directive The taxes referred to in Article 1 of the new Directive The entities referred to in Article 2 of the Directive Dynamic approach regarding new corporate forms The term entities instead of companies as referred to in the existing Directives 5.3. The liable to tax concept Different concepts of tax liability used by Member States Application of the new Directive to hybrid entities in outbound situations Application of the new Directive to hybrid entities in inbound situations Should the entity be fully subject to tax? The liable to tax requirement with respect to dual residents Evaluation 5.4. Application of Article 4 of the new Directive to transparent entities 5.5. Exchange of information 5.6. Situations of fraud and abuse 6. Interrelation of the new Directive with non-discrimination principles 6.1. Interrelation of the new Directive with the non-discrimination principle under primary EC law Are the two concerning entities comparable from an EC law perspective? Comparable situations according to the ECJ The Columbus Container Services case Evaluation 6.2. Interrelation of the new Directive with the non-discrimination principle in bilateral tax treaties 7. Conclusions Part VI Summary and conclusions Chapter VII: Summary and conclusions

7 2. How conflicts of laws are solved under private international law in the internal market 3. The impact of the EC Treaty on the different autonomous tax classification methods applied by Member States 4. The impact of the EC Treaty on the different approaches to hybrid entities in tax treaties concluded between Member States 5. How classification conflicts should be solved in the internal market References Bibliography Case law Official Documents and Publications