2. Opinion of A.G. Maduro C-255/02 HALIFAX
Par. 2. Two questions for the ECJ: 1) transaction with the
sole purpose of enabling input vat deduction are
“economic activity”; 2) possible applicability of “abuse
of rights”
The facts of the main proceedings
• Halifax is a banking Company.
• Less than 5% of imput VAT deductible.
• £ 7.000.000,00 VAT
2
3. Opinion of A.G. Maduro C-255/02 HALIFAX
Par. 45. [...] the principle of fiscal neutrality precludes a
generalised differentiation between lawful and unlawful
activities.
Par. 64. [...] In C-212/97 Centros the Court stated that
“Community law cannot be relied on for abusive or fraudulent
ends”.
Par. 66. In C-110/99 Emsland-Stärke about customs
compensations forbidden in the case of “abuse”.
IV. A.G. CONCLUSION
1) the supply is made with the sole intention of obtaining a tax
advantage is immaterial;
2) not conferring on a taxable person the right to deduct or
recover input VAT [...] prohibiting the abuse of Community law
3
4. Judgment of the Court C-255/02 HALIFAX
The Court (Grand Chamber) is concerned in
par. 72 and 73 about the legal certainty
and freedom to minimise the tax burden
Ruling:
1. Supply of goods and service are objective in nature;
2. The VI Directive must be interpreted as precluding any
right […] to deduct input VAT where the transactions
from which that right derives constitute an abusive
practice [...];
3. In the case of abuse re-estabilish the situation
4
5. After Halifax???
C-321/05 KOFOED: general principle it is forbidden to
abuse the EU law (art. 11 Directive 90/434).
Halifax is still a leading case about abuse of law in VAT mattes
(for example see the recent C-277/09 HMRC v. RBS
Deutshland)
Some authors suggest that EU law provides two different
abuse concept: one for harmonised law (VAT) and one for
fundamental freedoms
5
6. Abuse of law approach by domestic EU Courts
• Italian Supreme Court Corte di Cassazione, basing
its interpretation on Halifax, affirmed the existence
in the Italian Tax System of an anti-abuse clause
directly from EU. not harmonized sector???
Breaking Italian news: to enforce abuse of law
concept in the Italian Tax Code???…
• German Court Bundesverfassungsgericht tries to
protect German sovereignty and place certain
boundaries to its erosion from EU law
6
7. Paper submitted by the Confédération Fiscale
Européenne to the European Commission and
Parliament in 2007
Halifax represents a significant landmark in tax matters and in
particular in VAT area.
It is important that this principle is not converted into the
ultimate but systematic weapon to be used against the
taxpayers.
New interpretation principle?
However it cannot be used to violate constitutional principles of
strict legality and prohibition of analogy.
7
Joint procedures Halifax plc, BUPA, University of Huddersfield Vs Commissioners of Customs and excise Procedure type: preliminary ruling , Advocate General: Maduro, Legal basis: XI VAT directive, authentic language: English. 7million GBP VAT in a single day for the agreement of a 4 call centers with no independent business purpose)
Emsland-Stake case about export refund; the company was exporting agricultural goods (potatoes base products) to Switzerland obtaining export refund form German Custom and than it re imported again the same good in EU (Germany and Italy) with the same mean of transport. The company was paying half custom duties. ECJ ruled that the right to refund is forbidden in the case of abuse
2. i.e. carried out without in the context of not normal commercial operation but solely with the purpose of obtaining advantages provided by EU law The national Courts make take into account this formal application
KOEFED (AG Ms. Kokot) about restructuring Court: if a dividend paiment in linked connection with an exchange of shere realized just before. Ci si chiede, infatti, se una siffatta distribuzione di utili possa essere considerata dall’amministrazione fiscale competente come parte del corrispettivo e, quindi, come saldo in contanti pagato dalla società acquirente a fronte delle quote sociali conferite nel suo patrimonio, ciò che comporterebbe conseguenze fiscali negative per i soggetti passivi interessati. CONCL Per contro, non sono ammissibili né un’applicazione diretta a danno del singolo né il richiamo diretto ad un divieto generale di abuso del diritto sancito da norme comunitarie. COURT However, Danish state that the exchange of shares was not carried out for any commercial reason whatsoever but solely for the purpose of achieving tax savings, it is still appropriate to consider the application of possible abuse of rights Article 8(1) of Directive 90/434 precludes, in principle, the taxation of such an exchange of shares, unless national rules on abuse of rights, tax evasion or tax avoidance may be interpreted in accordance with Article 11(1)(a) of Directive 90/434 and thus justify the taxation of that exchange
In 2010 Congress enacted in Internal Revenues Code the “ economic substance ” policy Germany in 2009 ratification of the Lisbon treaty. Italian cases demerger, split off of a particular business and the the sell of shares abusive it should be a sale of partcular business register tax, to sell 10% of one house to meet the requirement of the first house regime --- >abusive.
In 2010 Congress enacted in Internal Revenues Code the “ economic substance ” policy Par. 76 Halifax metter of National authorities to verify in accordance with the rules of evidence of national law.
