Tilburg University
Freedom of investment between EU and non-EU member states and its impact on
corporate income tax systems within the European Union
Smit, D.S.
Publication date:
2011
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Publisher's PDF, also known as Version of record
Link to publication in Tilburg University Research Portal
Citation for published version (APA):
Smit, D. S. (2011). Freedom of investment between EU and non-EU member states and its impact on corporate income tax systems within the European Union. CentER, Center for Economic Research.
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D
aniëlS
mitFreedom of Investment between EU
and Non-EU Member States and its
Freedom of Investment between EU
and Non-EU Member States and its
Impact on Corporate Income Tax
Systems within the European Union
P
roefSchriftter verkrijging van de graad van doctor aan Tilburg University, op gezag van de rector magnificus, prof. dr. Ph. Eijlander, in het openbaar te verdedigen ten overstaan van een door het college voor promoties aangewezen commissie in de aula van de Universiteit
op vrijdag 2 december 2011 om 14.15 uur door
Promotor: prof. dr. E.C.C.M. Kemmeren
Overige leden: prof. dr. P.H.J. Essers
prof. dr. I.L. Hancher prof. dr. P. Pistone prof. mr. P.J. Wattel
ISBN 978 90 5668 303 0
© 2011 Daniël Smit
Ce qu’on n’a jamais mis en question n’a point été prouvé
Diderot, Pensées philosophiques (1746)
Preface
This book is the result of seven years’ study on the impact of freedom of investment between EU and non-EU Member States on corporate income tax systems within the European Union. When I started the study in 2004 this topic was virtually unexplored. At that time, I expected to be able to identify and examine the relevant issues in a relatively quite area of European law. Since then, however, the topic has started developing dramatically and unpredictably. Under these circumstances, the biggest challenge has been to successfully finalize this research. I nonetheless feel privileged that I have been able to explore one of the most controversial areas in the development of European law and I hope the results of this research will contribute to future developments in the field.
my friends and family. In particular, I want to thank Denis for helping me to keep placing the thesis in perspective, Ramon for being the person who was at the basis of my academic career, Ruud for keeping me sharp, Graziella for always being there as a friend, and Sanne for giving relief from work during all nice visits to our favourite Italian restaurant.
I want to thank my brothers and sisters and my parents as well. Writing this thesis meant we have not seen each other as much as we would have liked to. Now that the work is done, I hope we can make up for this in the near future.
As final word of gratitude must go to Margaret Nettinga, who took care of the linguistic editing, and Renate Siebes, who has worked on the lay-out of the manuscript. Their indispensible help has significantly contributed to the quality of this work.
Daniël Smit
PREFACE i
CONTENTS iii
LIST OF ABBREVIATIONS xxv
PART ONE
METHODOLOGICAL FRAMEWORK AND BENCHMARK
1
CHAPTER I: SCOPE AND METHODOLOGY 3
1 Research question, scope of the study and acknowledgments 3
1.1 Introduction 3
1.2 The research question 9 1.3 Scope of the study and acknowledgments 16 1.4 The selected corporate income tax measures 19
1.4.1 Limitation on the deduction of interest expenses paid on inter-company or
third-party loans 20
1.4.2 Withholding taxes on dividend, interest and royalty payments 22
1.4.3 Measures providing for relief for double taxation of income received from
foreign investments 23
1.4.4 CFC legislation 24
1.4.5 Measures denying the deduction of foreign losses from the domestic taxable
base 25
1.4.6 Corporate income taxation of realized or deemed capital gains upon the
transnational transfer of business assets 26
1.5 Methodology 27
1.6 Structure 29
CHAPTER II: THE BENCHMARK OF INTERNATIONAL TAX NEUTRALITY AND THE REQUIREMENT OF A GENUINE ECONOMIC LINK UNDER FREEDOM OF INVESTMENT: DEFINITION AND RELATIONSHIP
35
1 Introduction 35
2 Freedom of investment: the concepts of admission, establishment,
capital and (financial) services under the Treaty 36
2.1 International economic integration and its relationship to liberalization of international investment 36 2.2 International economic integration and the European Union 39 2.3 Freedom of investment: concepts of admission, establishment, capital
and (financial) services under the Treaty 41
2.3.1 Introduction 41
2.3.2 The different approaches to the concept of foreign investment under economic
integration investment agreements 41
2.3.3 Concept of admission: general considerations 43
2.3.4 Concept of establishment: general considerations 43
2.3.5 Concept of establishment under the Treaty 44
2.3.5.1 Actual pursuit of an economic activity 46
2.3.5.2 Fixed establishment 50
2.3.5.3 The benchmark of “definite influence” 53
2.3.5.4 Synthesis 57
2.3.6 Concept of capital: general considerations 58
2.3.7 Concept of capital under the Treaty 63
2.3.7.1 Concept of direct investment under the Treaty 67
2.3.7.2 Concept of portfolio investment under the Treaty 71
2.3.7.3 Does the free movement of capital involve the pursuit of an economic
activity? 73
2.3.8 Concept of (financial) services: general considerations 75
2.3.9 Concept of (financial) services under the Treaty 76 2.4 Synthesis: genuine economic link as the fundamental prerequisite under
EU freedom of investment 78
3 The benchmark of international tax neutrality 80
Contents
3.2 Four major causes of international tax distortions 82 3.3 The benchmark of international tax neutrality 85
3.3.1 Introduction 85
3.3.2 Capital export neutrality 85
3.3.3 Capital import neutrality 87
3.3.4 Capital ownership neutrality 88
3.3.5 International tax neutrality as a requirement of equal tax treatment 89
3.3.6 Inter-nations neutrality 90
3.3.7 Evaluation 92
3.4 The relationship between the “genuine economic link” and the benchmark of international tax neutrality 98 3.5 Operation of the benchmark of international tax neutrality in the field of
corporate income taxation 100 3.6 Equity considerations 102
4 Conclusions 104
PART TWO
THE INTRA-UNION CONTEXT: SKETCHING THE RELEVANT
DEGREE OF LEGAL INTEGRATION BETWEEN MEMBER STATES IN
THE FIELD OF CORPORATE INCOME TAXATION
107
CHAPTER III: THE NOTION OF “THIRD COUNTRIES” UNDER
FREEDOM OF INVESTMENT 109
1 Introduction 109
2 The personal and territorial scope of the freedom of establishment, the
free movement of capital and the free movement of services 113
2.1 Geographical application of the Treaty 113 2.2 Personal scope of the freedom of establishment, the free movement of
capital and the free movement of services 115 2.3 Territorial scope of the freedom of establishment, the free movement of
capital and the free movement of services 117 2.4 Questions to be examined further 119
3 The position of the Member States’ associated and dependent territories under the freedom of establishment, the free movement of capital and the free movement of services in the field of corporate income taxation
120
3.1 Introduction 120
3.2 Classification of the Member States’ associated and dependent territories
3.3 The relevant ECJ case law on Member States’ associated and dependent territories: (parts of a) Member State, third countries or “second countries”?
126
3.4 The approach followed by the Netherlands Supreme Court and opinions in the academic literature 132 3.5 Synthesis and evaluation 137
4 Conclusions and practical implications 142
CHAPTER IV: RELEVANT POSITIVE INTEGRATION BETWEEN MEMBER STATES AND BETWEEN MEMBER STATES AND THIRD COUNTRIES
147
1 Introduction 147
2 Relevant degree of positive legal integration under EU law between
Member States in the field of corporate income taxation 150
2.1 Introduction 150
2.2 The Parent-Subsidiary Directive 151
2.2.1 Withholding taxes on dividend payments 153
2.2.2 Limitation on the deduction of interest expenses 154
2.2.3 Measures providing for relief for double taxation 154
2.2.4 CFC legislation 156
2.2.5 Corporate income taxation of realized or deemed capital gains upon the transnational transfer of business assets 156 2.2.6 The position of the Member States’ associated and dependent territories under
the Parent-Subsidiary Directive 157
2.3 The Interest & Royalty Directive 163
2.3.1 Withholding taxes under the Interest & Royalty Directive 164
2.3.2 Limitation on the deduction of interest expenses 165
2.3.3 Measures providing for relief for double taxation 166
2.3.4 The position of the Member States’ associated and dependent territories under
the Interest & Royalty Directive 166
2.4 The Merger Directive 166
2.4.1 Corporate income taxation of realized or deemed capital gains upon the transnational transfer of business assets 167 2.4.2 The position of the Member States’ associated and dependent territories under
the Merger Directive 168
2.5 The Mutual Assistance Directive 169
2.5.1 The position of the Member States’ associated and dependent territories under
the Mutual Assistance Directive 172
Contents
2.6.1 The position of the Member States’ associated and dependent territories under
the Recovery Directive 176
2.7 The Arbitration Convention 177
2.7.1 Measures providing for relief for double taxation and corporate income taxation of realized or deemed capital gains upon the transnational transfer of business assets
177
2.7.2 The position of the Member States’ associated and dependent territories under
the Arbitration Convention 179
2.8 The Code of Conduct for Business Taxation 181
2.8.1 The position of the Member States’ associated and dependent territories under the Code of Conduct for Business Taxation 184
2.9 Synthesis 184
3 Relevant degree of positive legal integration under EU law between Member States and third countries in the field of corporate income taxation
185
3.1 Introduction 185
3.2 Agreement between the Community and Switzerland providing for measures equivalent to those laid down in the Savings Directive (and the Parent-Subsidiary and Interest & Royalty Directives)
186
3.2.1 Withholding taxes under the Agreement 186
3.3 Mutual Assistance Directive 187 3.4 Code of Conduct for Business Taxation and the promotion of good
governance in tax matters 188
4 Relevant degree of positive legal integration under international tax law in the relations between the Member States and between Member States and third countries
190
4.1 Introduction 190
4.2 Double tax treaties 190
4.2.1 Limitation on the deduction of interest expenses 191
4.2.2 Withholding taxes under tax treaties 191
4.2.3 Measures providing for relief for double taxation 192
4.2.4 CFC legislation 193
4.2.5 Measures denying the deduction of foreign losses from the domestic taxable
base 193
4.2.6 Corporate income taxation of realized or deemed capital gains upon the transnational transfer of business assets 194
4.3 Combating harmful tax competition and tax havens: the OECD Report on Harmful Tax Competition and the tax standard on transparency and exchange of information
195
4.5 Exchange of information and mutual assistance in the recovery of tax claims on the basis of tax treaties 200 4.6 Tax Information Exchange Agreements 201
4.7 Synthesis 202
5 Conclusions 205
CHAPTER V: RELEVANT NEGATIVE INTEGRATION BETWEEN
MEMBER STATES 207
1 Introduction 207
2 Relevant degree of negative legal integration under EU law between
Member States in the field of corporate income taxation 208
2.1 The impact of the prohibition of state aid in the field of corporate income
taxation 208
2.2 The impact of the Treaty freedoms in the field of corporate income
taxation 214
2.3 The doctrine of direct effect and the primacy of the Treaty freedoms 214 2.4 The question of access to the Treaty freedoms in the field of corporate
income taxation 215
2.4.1 Introduction 215
2.4.2 Access to the Treaty freedoms in the case of tax evasion or tax avoidance 216
2.4.3 The link between corporate income tax measures and the Treaty freedoms: the
principle of causality 218
2.5 The concept of restrictions under the Treaty freedoms in the field of corporate income taxation 227
2.5.1 Introduction 227
2.5.2 Discrimination under the Treaty freedoms 229
2.5.2.1 Comparability 236
2.5.3 Most-favoured-nation treatment under the Treaty freedoms 243
2.5.4 Non-discriminatory restrictions under the Treaty freedoms 246 2.6 The concept of justification grounds under the Treaty freedoms in the
field of corporate income taxation 252
Contents
2.6.3.4 The need to combat tax avoidance 263
2.6.3.5 The need for effective fiscal supervision 268
2.6.3.6 The need for effective collection of tax 270
2.6.3.7 The need to safeguard the (balanced) allocation of taxation powers 272
2.6.3.8 Promotion of (national) research and development and
competitiveness 276
2.6.3.9 Lack of compensatory taxation and counteracting harmful tax
competition 276
2.6.3.10 Lack of and presence of harmonization 281
2.6.3.11 Lack of reciprocity 283
2.6.3.12 Loss of income 284
2.6.3.13 Administrative difficulties 284
2.7 Synthesis: practical impact of the Treaty freedoms on the central six corporate income tax themes 285
2.7.1 Limitation on the deduction of interest expenses paid on inter-company or
third-party loans 285
2.7.2 Withholding taxes on dividend, interest and royalty payments 291
2.7.3 Measures providing for relief for double taxation of income received from
foreign investments 296
2.7.4 CFC legislation 303
2.7.5 Measures denying the deduction of foreign losses from the domestic taxable
base 305
2.7.6 Corporate income taxation of realized or unrealized capital gains upon the transnational transfer of business assets 308
3 Negative legal integration under international tax law between Member States and between Member States and third countries in the field of corporate income taxation
317
3.1 Introduction 317
3.2 Double tax treaties 319
3.2.1 Introduction 319
3.2.2 Article 24(1) OECD MC: Discrimination based on nationality 319
3.2.3 Article 24(3) OECD MC: Discrimination based on the place of residence in
the case of a permanent establishment 320
3.2.4 Article 24(4) OECD MC: Discrimination based on the place of residence
of the recipient of payments 322
3.2.5 Article 24(5) OECD MC: Discrimination based on the place of residence of
the shareholder of a domestic company 322
3.3 OECD Code of Liberalisation of Capital Movements 324
3.3.1 Effect on corporate income taxation 326
3.4.1 Effect on corporate income taxation 328 3.5 General Agreement on Trade in Services 329
3.5.1 Effect on corporate income taxation 330
3.6 Bilateral investment treaties 331
3.6.1 Effect on corporate income taxation 333
3.7 Synthesis 334
4 Conclusions and summary 336
PART THREE
THE THIRD-COUNTRY CONTEXT: THE IMPACT OF FREEDOM
OF INVESTMENT BETWEEN THE MEMBER STATES AND THIRD
COUNTRIES IN THE FIELD OF CORPORATE INCOME TAXATION
341
CHAPTER VI: FREEDOM OF INVESTMENT BETWEEN THE
MEMBER STATES AND THIRD COUNTRIES: ACCESS 343
1 Introduction 343
2 Categorization of economic integration agreements between the Union
and third countries 345
2.1 Agreement on the European Economic Area 345
2.1.1 Primacy and direct effect of the EEA Agreement 346
2.1.2 Interpretation of the EEA Agreement 347
2.2 Association, Partnership and Cooperation Agreements 349
2.2.1 Europe Agreements 350
2.2.2 Stabilisation and Association Agreements 352
2.2.3 Partnership and Cooperation Agreements 353
2.2.4 Euro-Mediterranean Association Agreements 355
2.2.5 Partnership Agreement with the African, Caribbean and Pacific group of
states (Cotonou Agreement) 357
2.2.6 Association Agreements with other third countries or groups of third countries 359
2.2.7 Cooperation Agreements with third countries or groups of countries 361
2.2.8 Other third countries 362
2.2.9 Primacy and direct effect of the Association, Partnership and Cooperation
Agreements 362
2.2.10 Interpretation of the Association, Partnership and Cooperation Agreements 367 2.3 Agreement between the Community and Switzerland on the free
movement of persons 369
2.3.1 Primacy and direct effect of the Agreement 370
2.3.2 Interpretation of the Agreement 370
Contents
3 The impact of the freedom of establishment on Member States’ corporate
income tax systems in situations involving third-country investments 373
3.1 Introduction 373
3.2 The freedom of establishment under Articles 49 and 54 TFEU in the field of corporate income taxation 374
3.2.1 Access and interpretation in situations involving third-country investments 374 3.3 National treatment requirement under Article 55 TFEU in the field of
corporate income taxation 375
3.3.1 Access and interpretation in situations involving third-country investments 375 3.4 Freedom of establishment under Article 31 EEA Agreement in the field
of corporate income taxation 377
3.4.1 Access and interpretation 377
3.4.2 Relationship with Article 124 EEA Agreement in the field of corporate
income taxation 378
3.5 The freedom of establishment under Association, Partnership and Cooperation Agreements in the field of corporate income taxation 378
3.5.1 Introduction 378
3.5.2 Europe Agreements 379
3.5.2.1 Access and interpretation 379
3.5.3 Stabilisation and Association Agreements 383
3.5.3.1 Access and interpretation 383
3.5.4 Partnership and Cooperation Agreements 384
3.5.4.1 Access and interpretation 384
3.5.5 Euro-Mediterranean Association Agreements 385
3.5.5.1 Access and interpretation 385
3.5.6 Cotonou Agreement 387
3.5.6.1 Access and interpretation 387
3.5.7 Association Agreements concluded with other third countries or groups of third
countries 389
3.5.7.1 Access and interpretation 389
3.5.8 Cooperation Agreements concluded with other third countries or groups of
third countries 391
3.5.8.1 Access and interpretation 391
3.5.9 Direct effect of the freedom of establishment under the Association, Partnership
and Cooperation Agreements 392
3.5.10 Conclusions 394
3.6 Agreement between the Community and Switzerland on the free movement of persons 395
3.6.1 Access to the freedom of establishment and interpretation; establishment by
3.7 The position of the Member States’ associated and dependent territories 396
3.7.1 Access to and interpretation of the freedom of establishment under Article
49 TFEU 396
3.7.2 Access to and interpretation of the freedom of establishment under Article 199 TFEU and Article 45(2)(a) of the OCT Decision 2001 397
4 The impact of the free movement of capital on Member States’ corporate
income tax systems in situations involving third-country investments 399
4.1 Introduction 399
4.2 The free movement of capital under Article 63(1) TFEU in the field of corporate income taxation 400
4.2.1 Background of the liberalization erga omnes under Article 63(1) TFEU 400
4.2.2 Access and interpretation in situations involving third-country investment in
the field of corporate income taxation 403
4.2.3 Direct effect of the free movement of capital under Article 63(1) TFEU 406 4.3 The free movement of capital under Article 40 EEA Agreement in the
field of corporate income taxation 408
4.3.1 Access and interpretation 408
4.4 The free movement of capital under Association, Partnership and Cooperation Agreements in the field of corporate income taxation 410
4.4.1 Introduction 410
4.4.2 Europe Agreements 410
4.4.2.1 Access and interpretation 410
4.4.2.1.1 Transactions on the capital account of balance of
payments 413
4.4.2.1.2 Impact on corporate income taxation 415
4.4.3 Stabilisation and Association Agreements 419
4.4.3.1 Access and interpretation 419
4.4.4 Partnership and Cooperation Agreements 421
4.4.4.1 Access and interpretation 421
4.4.5 Euro-Mediterranean Association Agreements 422
4.4.5.1 Access and interpretation 422
4.4.6 Cotonou Agreement 423
4.4.6.1 Access and interpretation 423
4.4.7 Association Agreements concluded with other third countries or groups of third
countries 424
4.4.7.1 Access and interpretation 424
4.4.8 Cooperation Agreements with third countries or groups of third countries 425
4.4.8.1 Access and interpretation 425
4.4.9 Direct effect of the free movement of capital under the Association, Partnership
Contents
4.4.10 Conclusion 426
4.5 Agreement between the Community and Switzerland on the free movement of persons 428 4.6 The position of the Member States’ associated and dependent territories 428
4.6.1 Access to and interpretation of the free movement of capital under Article 63(1) TFEU in the field of corporate income taxation 428 4.6.2 Access and interpretation of the free movement of capital under Article 47(1)
(b) of the OCT Decision 2001 in the field of corporate income taxation 429
5 The impact of the free movement of services on Member States’ corporate
income tax systems in situations involving third-country investments 430
5.1 Introduction 430
5.2 The free movement of services under Article 56 TFEU in the field of corporate income taxation 431
5.2.1 Access and interpretation 431
5.3 The free movement of services under Article 36 EEA Agreement in the field of corporate income taxation 432
5.3.1 Access and interpretation 432
5.4 The free movement of services under Association, Partnership and Cooperation Agreements in the field of corporate income taxation 433
5.4.1 Access and interpretation 433
5.5 Agreement between the Community and Switzerland on the free movement of persons 438
5.5.1 Access and interpretation 438
5.6 The position of the Member States’ associated and dependent territories 441
5.6.1 Access and interpretation of the free movement of services under Article 44
of the OCT Decision 2001 441
6 The significance of the free movement of payments on Member States’ corporate income tax systems in situations involving third-country investments
442
6.1 Introduction 442
6.2 The free movement of payments under Article 63(2) TFEU in the field of corporate income taxation 442
6.2.1 Definition and purport of the free movement of payments 442
6.2.2 An autonomous, fifth freedom or annexed to and conditional upon the other
Treaty freedoms? 445
6.2.3 Relationship to the free movement of capital under Article 63(1) TFEU 447
6.2.4 Impact of the free movement of payments in the field of corporate income
taxation 448
6.3 The free movement of payments under the EEA Agreement and the Association, Partnership and Cooperation Agreements in the field of corporate income taxation
6.4 The position of the Member States’ associated and dependent territories 451
7 The autonomous impact of the general principle of non-discrimination on Member States’ corporate income tax systems in situations involving third-country investments
452
7.1 Introduction 452
7.2 The general non-discrimination clause under Article 18 TFEU 453
7.2.1 Access and interpretation 453
7.3 The general non-discrimination clause under Article 4 EEA Agreement 455
7.3.1 Access and interpretation 455
7.4 The general non-discrimination clause under the Association, Partnership and Cooperation Agreements 456
7.4.1 Access and interpretation 456
7.5 The non-discrimination clause under the Agreement between the Community and Switzerland on the free movement of persons 457
7.5.1 Access and interpretation 457
7.6 The position of the Member States’ associated and dependent territories 458
7.6.1 Access and interpretation of the general non-discrimination clause under the
OCT Decision 2001 458
7.6.2 The non-discrimination clause under Article 4 of Protocol No 3 vis-à-vis the
Channel Islands and the Isle of Man 460
8 Concurrence of the fundamental freedoms under EU law in the field of corporate income taxation in situations involving third-country investments
461
8.1 Introduction 461
8.2 Concurrence of free movement of capital and freedom of establishment under the Treaty in the field of corporate income taxation 463
8.2.1 Is the substantive scope of the freedom of establishment restricted by the free
movement of capital or vice versa? 463
8.2.2 Is the substantive scope of the freedom of establishment or the free movement of capital restricted by means of the collision rules under Article 49 and Article 65(2) TFEU?
464
8.2.3 Is the territorial or personal scope of the free movement of capital restricted by the provisions on the freedom of establishment? 469 8.2.4 Provisional conclusion and synthesis: a question of causality 470
8.2.5 Approach followed by the ECJ; The benchmark of “definite influence” 474
8.2.5.1 Introduction 474
8.2.5.2 Exclusivity of the freedom of establishment where the contested corporate income tax measure is targeted only at investments involving definite influence
476
Contents
8.2.5.4 Exclusivity of the free movement of capital where the contested corporate income tax measure is of a generic nature and affects, as a factual matter, investments which do not involve definite influence?
481
8.2.5.5 Exclusivity of the freedom of establishment where the contested corporate income tax measure is of a generic nature and affects, as a factual matter, investments involving definite influence
482
8.2.5.6 Exclusivity of the freedom of establishment where the contested corporate income tax measure affects both investments involving definite influence and capital transactions?
491
8.2.6 Synthesis and evaluation 493
8.3 Concurrence between the freedom of establishment and the free movement of capital under the EEA Agreement, the APC Agreements and the OCT Decision 2001 in the field of corporate income taxation
498
8.4 Concurrence between the free movement of capital and free movement of services under the Treaty in the field of corporate income taxation 500
8.4.1 Is the substantive scope of the free movement of capital per se restricted by the
free movement of services or vice versa? 500
8.4.2 Is the substantive scope of the free movement of capital or free movement of services restricted by means of a specific collision rule? 504 8.4.3 Is the territorial or personal scope of the free movement of capital restricted by
the provisions on the freedom of services or vice versa? 506 8.4.4 Provisional conclusion and synthesis: a question of causality 507
8.4.5 Approach followed by the ECJ: causality 509
8.4.6 Synthesis and evaluation 513
8.4.7 Concurrence between the free movement of capital and the free movement of services under the EEA Agreement, the APC Agreements, the Agreement between the Community and Switzerland on the free movement of persons and the OCT Decision 2001 in the field of corporate income taxation
514
8.5 Relation between the freedom of establishment and the free movement of services under the Treaty in the field of corporate income taxation 514
8.5.1 Is the substantive scope of the free movement of services per se restricted by the
freedom of establishment or vice versa? 514
8.5.2 Is the substantive scope of the free movement of services or the freedom of establishment restricted by means of a specific collision rule? 515 8.5.3 Provisional conclusion and synthesis: a question of causality 515
8.5.4 Approach followed by the ECJ 517
8.5.4.1 Exclusivity of the freedom of establishment where the contested corporate income tax measure is targeted only at investments involving definite influence
517
8.5.4.2 Exclusivity of the freedom of establishment where the contested corporate income tax measure affects both investments involving definite influence and the provision of services?
8.5.5 Synthesis and evaluation 518
8.5.6 Concurrence between the free movement of capital and the free movement of services under the EEA Agreement, the APC Agreements, the Agreement between the Community and Switzerland on the free movement of persons and the OCT Decision 2001 in the field of corporate income taxation
519
8.6 Concurrence between different or comparable free movement provisions included in the Treaty on the one hand and another Agreement or international arrangement on the other
519
9 Conclusions 521
CHAPTER VII: FREEDOM OF INVESTMENT BETWEEN THE
MEMBER STATES AND THIRD COUNTRIES: DISCRIMINATION
AND JUSTIFICATION GROUNDS
525
1 Introduction 525
2 Restriction of the free movement of capital under Article 63(1) TFEU in
situations involving third-country investments 527
2.1 Interpretation of the concept of discrimination under Article 63(1) TFEU in situations involving third-country investments 527
2.1.1 Comparability in situations involving third-country investments 530
2.1.2 Most-favoured-nation treatment in situations involving third-country
investments 535
2.2 Non-discriminatory restrictions under Article 63(1) TFEU in situations involving third-country investments 538
2.3 Conclusion 539
3 Restriction of the free movement provisions under the EEA Agreement
in situations involving third-country investments 540
4 Restriction of the free movement provisions under the Association, Partnership and Cooperation Agreements in situations involving third-country investments
541
4.1 Introduction 541
4.2 Discrimination under the freedom of establishment under the Association, Partnership and Cooperation Agreements in the field of corporate income taxation
541
4.2.1 Europe Agreements 541
4.2.1.1 National treatment in the fi eld of corporate income taxation 542
4.2.1.1.1 Differential treatment of a resident corporate taxpayer based on the place ofresidence of its shareholder(s) 544 4.2.1.1.2 Differential treatment based on the place of residence
Contents
4.2.1.1.3 Differential treatment based on the place where the corporate taxpayer’s capital is invested 548
4.2.1.2 Comparability 553
4.2.1.3 Most-favoured-nation treatment under the freedom of establishment in the field of corporate income taxation 553 4.2.2 Stabilisation and Association Agreements 556
4.2.3 Partnership and Cooperation Agreements 556
4.2.4 Euro-Mediterranean Association Agreements 558
4.2.5 Cotonou Agreement 560
4.2.6 Association Agreements concluded with other third countries or groups of third
countries 562
4.2.7 Conclusion 564
4.3 Discrimination under the free movement of capital under the Association, Partnership and Cooperation Agreements in the field of corporate income taxation
566
4.4 Discrimination under the free movement of services under the Association, Partnership and Cooperation Agreements in the field of corporate income taxation
569
4.5 The position of the Member States’ associated and dependent territories 572
4.5.1 Discrimination under the freedom of establishment under Article 49 TFEU in the field of corporate income taxation 572 4.5.2 The freedom of establishment under the OCT Decision 2001 572
4.5.3 Discrimination under the free movement of capital under Article 63 TFEU in the field of corporate income taxation 573 4.5.4 The free movement of capital under the Overseas Countries and Territories
under the OCT Decision 2001 574
4.5.5 Interpretation of the concept of discrimination under the free movement of services under Article 56 TFEU in the field of corporate income taxation 575 4.5.6 The non-discrimination clause under Article 4 of Protocol No 3 vis-à-vis the
Channel Islands and the Isle of Man 576
5 Justifications under freedom of investment in the field of corporate
income taxation 577
5.1 Introduction 577
5.2 Concept of justifications under the free movement of capital under Article 63(1) TFEU in the field of corporate income taxation 578
5.2.1 The tax carve-out under Article 65(1)(a) and Article 65(3) TFEU and the
significance of Declaration No. 7 578
5.2.2 The impact of the “rule of reason” under Article 63(1) TFEU in situations involving third countries in the field of corporate income taxation 581
5.2.2.1 Territoriality 581
5.2.2.3 The need to combat tax avoidance 586
5.2.2.4 The need for effective fiscal supervision 587
5.2.2.5 The need for effective collection of tax 597
5.2.2.6 The need to safeguard the (balanced) allocation of taxation powers 598
5.2.2.7 Promotion of research and development 602
5.2.2.8 Lack of compensatory taxation 603
5.2.2.9 The need to counteract harmful tax competition 606
5.2.2.10 Lack of and existence of harmonization 609
5.2.2.11 Lack of reciprocity 614
5.2.2.12 Loss of income 617
5.2.2.13 Administrative difficulties 620
5.3 Justifications under the free movement provisions included in the EEA Agreement in the field of corporate income taxation 621 5.4 Justifications under the free movement provisions included in the
Association, Partnership and Cooperation Agreements in the field of corporate income taxation
622
5.5 The position of the Member States’ associated and dependent territories 626 5.6 Practical impact of freedom of investment under EU law on the central
six corporate income tax themes in situations involving third-country investments
627
5.6.1 Introduction 627
5.6.2 Limitation on the deduction of interest expenses paid on inter-company or
third party loans 629
5.6.3 Withholding taxes on dividend, interest and royalty payments 633
5.6.4 Measures providing for relief for double taxation of income received from
foreign investments 637
5.6.5 CFC legislation 642
5.6.6 Measures denying the deduction of foreign losses from the domestic taxable
base 646
5.6.7 Corporate income taxation of realized or deemed capital gains upon the transnational transfer of business assets 650
5.7 Consequences of the incompatibility of a restrictive corporate income tax measure with EU law in situations involving third-country investments 654 5.8 Limitations on the temporal effects of the ECJ’s case law in situations
involving third-country investments 658
Contents
CHAPTER VIII: FREEDOM OF INVESTMENT BETWEEN THE
MEMBER STATES AND THIRD COUNTRIES: THE TEMPORAL
SCOPE
665
1 Introduction 665
2 Standstill clauses and the free movement of capital 667
2.1 The impact of the standstill clause under Article 64(1) TFEU in the field of corporate income taxation 667
2.1.1 Background and purpose of the standstill provision under Article 64(1)
TFEU 668
2.1.2 The concept of “restriction” under Article 64(1) TFEU 672
2.1.3 Categories of capital movement governed by the standstill clause under Article
64(1) TFEU 675
2.1.4 Causality between the restrictive company tax measure and the capital
movements covered 675
2.1.5 To which extent does Article 64(1) TFEU cover both inward and outward
investments? 679
2.1.6 Posterior amendments in national company tax legislation 682
2.1.7 The adoption of secondary EU law after 31 December 1993 689
2.1.8 Article 64(1) TFEU is not concerned with restrictions on the personal scope
of the free movement of capital 691
2.1.9 Relationship with the free movement of payments 691
2.1.10 Relationship with the repealed grandfather clause under Article 73e EC (old) 693
2.1.11 Consequences of incompatibility with the standstill clause under Article 64(1)
TFEU 693
2.1.12 Synthesis and conclusions 694
2.2 No general standstill clause relating to the free movement of capital under
the EEA Agreement 696
2.3 Standstill clauses and the free movement of capital under the Association, Partnership and Cooperation Agreements and their impact in the field of corporate income taxation
697
2.3.1 Introduction 697
2.3.2 Europe Agreements 697
2.3.3 Stabilisation and Association Agreements 701
2.3.4 Partnership and Cooperation Agreements 701
2.3.5 Euro-Mediterranean Association Agreements 702
2.3.6 Cotonou Agreement, Association Agreements concluded with other third countries or groups of third countries and Cooperation Agreements with third countries or groups of third countries
703
2.3.7 Conclusion 704
3 Standstill clauses and the freedom of establishment 705
3.1 No general standstill clause relating to the freedom of establishment
under the Treaty 705
3.2 No general standstill clause relating to the freedom of establishment under the EEA Agreement 705 3.3 Standstill clauses and the freedom of establishment under the Association,
Partnership and Cooperation Agreements 706
3.3.1 Introduction 706
3.3.2 Europe Agreements 706
3.3.3 Stabilisation and Association Agreements 706
3.3.4 Partnership and Cooperation Agreements 709
3.3.5 Euro-Mediterranean Association Agreements 709
3.3.6 Cotonou Agreement, Association Agreements concluded with other third countries or regions and Cooperation Agreements with third countries or groups of third countries
710
3.3.7 Conclusion 712
3.4 The position of the Member States’ associated and dependent territories 713
4 Standstill clauses and the free movement of services 714
4.1 No general standstill clause relating to the free movement of services
under the Treaty 714
4.2 No general standstill clause relating to the free movement of services under the EEA Agreement 714 4.3 Standstill clauses and the freedom of establishment under the Association,
Partnership and Cooperation Agreements 714
4.3.1 Europe Agreements 714
4.3.2 Stabilisation and Association Agreements 717
4.3.3 Partnership and Cooperation Agreements 717
4.3.4 Euro-Mediterranean Association Agreements 718
4.3.5 Cotonou Agreement, Association Agreements concluded with other third countries or regions and Cooperation Agreements with third countries or groups of third countries
718
4.3.6 Conclusion 719
4.4 The position of the Member States’ associated and dependent territories 719
5 Collision between a liberalization requirement and a standstill clause
included in different Treaties: which one prevails? 720
6 The significance of the new procedure of approval under Article 65(4) TFEU in the field of corporate income taxation: a (slight?) shift of competence from the ECJ back to the Member States
721 7 Temporal transition issues relating to the accession of the twelve new
EU Member States 726
Contents
7.2 Scope ratione temporis of the Treaty freedoms upon accession 727 7.3 Scope ratione temporis of the Treaty state aid rules upon accession 732 7.4 Scope ratione temporis of secondary EU law in the field of corporate income
taxation upon accession 733
7.4.1 Parent-Subsidiary Directive 733
7.4.2 Interest & Royalty Directive 737
7.4.3 Merger Directive 740
7.4.4 Mutual Assistance Directive and Recovery Directive 741
7.4.5 Arbitration Convention 742
7.4.6 Code of Conduct for Business Taxation 744
7.5 Conclusions 744
8 Conclusions 746
PART FOUR
THE “MIXED” CONTEXT: THE IMPACT OF FREEDOM OF
INVESTMENT ON INDIRECTLY HELD THIRD-COUNTRY
INVESTMENTS IN THE FIELD OF CORPORATE INCOME TAXATION
749
CHAPTER IX: THE IMPACT OF FREEDOM OF INVESTMENT ON INDIRECTLY HELD THIRD-COUNTRY INVESTMENTS IN THE FIELD OF CORPORATE INCOME TAXATION
751
1 Introduction 751
2 Indirect third-country investments under the Treaty freedoms 754
2.1 Indirectly held inward third-country investments 754
2.1.1 Access and discrimination 754
2.1.1.1 The position of the intermediate company EUCo1 in Member
State B as the state of source 755
2.1.1.2 The position of company EUCo2 in Member State B as the state
of source 759
2.1.1.3 The position of the intermediate company EUCo1 in Member
State A 762
2.1.2 Justification grounds 762
2.2 Indirectly held outward third-country investments 764
2.2.1 Access and discrimination 764
2.2.2 Justification grounds 767
2.3 Outward dual resident companies 768
2.3.1 Access and discrimination 768
2.3.2 Justification grounds 772
2.5 Commonly held inward third-country investments 774
2.6 Conclusions 776
3 Indirect third-country investments under the Parent-Subsidiary Directive 777
3.1 Indirectly held inward third-country investments 777 3.2 Indirectly held outward third-country investments 784 3.3 Dual resident companies involving third countries 787
3.3.1 Outward dual resident companies 787
3.3.2 Inward dual resident companies 789
3.4 Conclusion 790
4 Indirect third-country investments under the Interest & Royalty Directive 791
4.1 Indirectly held inward third-country investments 791 4.2 Dual resident companies involving third countries 797
4.2.1 Outward dual resident companies 797
4.2.2 Inward dual resident companies 798
4.3 Commonly held inward third-country investments 798
4.4 Conclusion 799
5 Indirect third-country investments under the Merger Directive 801
5.1 Indirectly held third-country investments 801 5.2 Dual resident companies involving third countries 802
6 Indirect third-country investments under the Arbitration Convention 803
6.1 Indirectly held inward third-country investments 803 6.2 Dual resident companies involving third countries 804
6.2.1 Outward dual resident companies 804
6.2.2 Inward dual resident companies 805
7 Code of Conduct for Business Taxation 805
8 Conclusions 806
PART FIVE
RECOMMENDATIONS FOR LEGISLATIVE ACTION, SUMMARY
AND CONCLUSIONS
809
CHAPTER X: RECOMMENDATIONS FOR CONCERTED
LEGISLATIVE ACTION TOWARDS THIRD COUNTRIES IN THE FIELD OF CORPORATE INCOME TAXATION
811
1 Introduction 811
2 Is the Union competent to adopt unification measures involving
corporate taxation of income derived from third-country investments? 812
2.1 The principle of conferral and the principles of subsidiarity and
Contents
2.1.1 The principle of conferral 812
2.1.2 The principles of subsidiarity and proportionality 815 2.2 External competence in the field of corporate income taxation in situations
involving third-country investments 816
2.2.1 Introduction 816
2.2.2 Specific conferred powers 816
2.2.3 General conferred powers 820
2.2.4 Evaluation 823
2.2.4.1 Is the Union competent to adopt unification measures in the field of corporate income taxation vis-à-vis third countries? 823 2.2.4.2 Is the Union competence also exclusive? 825
2.2.4.3 The role of the principles of subsidiarity and proportionality 827
3 Recommendations for concerted legislative action at the Union level
vis-à-vis third countries in the field of corporate income taxation 828
3.1 Introduction 828
3.2 Withholding taxes on dividend payments, measures providing for relief for double taxation of income received from foreign investments and CFC legislation
830
3.3 Withholding taxes on interest and royalty payments and limitation on the deduction of interest expenses paid on intercompany or third-party loans 836 3.4 Measures denying the deduction of foreign losses from the domestic
taxable base 839
3.5 Corporate income taxation of realized or deemed capital gains upon the transnational transfer of business assets 840
CHAPTER XI: SUMMARY AND CONCLUSIONS 843
1 Summary and conclusions 843
1.1 The research question 843 1.2 The benchmark of international tax neutrality and its relationship with the
requirement of a “genuine economic link” under freedom of investment 845 1.3 The dividing line between Member States and third countries 848 1.4 Sketching the relevant degree of positive and negative integration between
Member States in the field of corporate income taxation: a substantial degree of legal integration
850
1.5 Freedom of investment between Member States and non-Member States in the field of corporate income taxation: on balance a less substantial degree of legal integration
854
1.5.2 Discrimination and justification grounds under freedom of investment: more leeway for Member States to distinguish between intra-Union and third country investments
856
1.5.3 Practical impact on the six central corporate income tax measures 858
1.5.4 The temporal scope of freedom of investment: additional limitations under the Treaty, additional protection under the Association, Partnership and Cooperation Agreements
859
1.6 Indirectly held third-country investments: substantial intra-Union
protection? 862
1.7 Recommendations: a call for uniformity vis-à-vis third countries in the field of corporate income taxation 863 1.8 Final conclusions 864
BIBLIOGRAPHY 869
TABLE OF CASE LAWS AND OPINIONS 901
List of abbreviations
AA Association Agreement
ACP African, Caribbean and Pacific Group of States APC Agreement Association, Partnership and Cooperation Agreement ASEAN Association of Southeast Asian Nations
BITs Bilateral Investment Treaties CARIFORUM Caribbean Forum
CFI Court of First Instance CIT Corporate Income Tax
CJEU Court of Justice of the European Union EA Europe Agreement
ECJ European Court of Justice ECR European Court Reports EEA European Economic Area EFTA European Free Trade Association EIAs Economic Integration Agreements
EIIAs Economic Integration Investment Agreements EU European Union
GATS General Agreement on Trade in Services GC General Court
IMF International Monetary Fund MERCOSUR Mercado Común del Sur MFN Most-Favoured-Nation
OCTs Overseas Countries and Territories
OECD Organisation for Economic Co-operation and Development OECD MC OECD Model Tax Convention
OJ Official Journal
PCA Partnership and Cooperation Agreement SAS Stabilisation and Association Agreement
TFEU Treaty on the Functioning of the European Union TIEA Tax Information Exchange Agreement
VCLT Vienna Convention on the Law of Treaties
PART ONE
1 Research question, scope of the study and
acknowledgments
1.1 Introduction
Today’s world economy is characterized by a high degree of international economic integration. This is not only evidenced by the existence of a large global network of international economic integration agreements that exists1
, but also by daily practice in which transnational trade and investment are widespread. In order to give an indication of its ultimate implications, the idea of international economic integration can be described as an arrangement among sovereign states aimed at securing the same distribution of resources in the light of the total consumer and investment demand as might take place if the several states were combined into one political and economic unit.2
The main purpose of international economic integration is to promote international trade and investment by removing obstacles to international flows of goods, services, persons and capital which, for its part, contributes to economic growth and, consequently, to an increase in global welfare.3
1 See for a comprehensive overview: UNCTAD, ‘Investment Provisions in Economic Integration Agreements’
(New York and Geneva: United Nations, 2006a). The large global network of international economic integration agreements is occasionally also characterized as “the spaghetti bowl” (ibid., 10). By doing so, the diverse but also complex nature of this global network is emphasized.
2 R.F. Mikesell, ‘Economic Integration of Sovereign States: Some Fundamental Problems’, in Money, Trade, and
Economic Growth (New York: The Macmillan Company, 1951), 77.
3 See, inter alia, H.O. Lundström, Capital Movements and Economic Integration (Leiden: A.W. Sythoff, 1961),
SCOPE AND METHODOLOGY
Obstacles to transnational4
trade and investment, which for their part may result in distortions in free competition, can be removed in two different ways: by means of integration of national markets and by integration of national policies of the states concerned.5
The main feature of market integration, also referred to as “negative integration”, is that it contains a prohibition for states to apply discriminatory or restrictive measures to transnational economic activity. Integration of national policies, also referred to as “positive integration”, by contrast, is characterized by the removal of discriminatory or non-discriminatory, restrictive measures to transnational economic activity through legislative action by means of coordination, harmonization and/or unification of the laws of the states concerned.6
The effects of both methods of integration are therefore complementary and mutually dependent.7
Eventually, the ideal of full international economic integration can not be achieved through positive or negative integration alone.8
It is generally recognized that international flows of trade and investment may adversely be affected by taxation measures as well.9
Not only discriminatory taxes or other internal charges directly imposed on the importation of goods, but also certain kinds of subsidies or special income tax regimes which, by offering certain tax advantages to traders, aim at stimulating import and export of goods, may have an adverse effect on international trade.10
Similarly, discriminatory tax regimes that tax income from transnational investments
38; UNCTAD, ‘Series on issues in international investment agreements, Admission and Establishment’ (New York and Geneva: United Nations, 2002), 11.
4 For purposes of this study, the term “transnational investment” is preferred over the term “international
investment”. The latter term suggests that investment literally takes place between (interlocking) national economies, which is closely connected with the idea of economic nationalism rather than with the idea of international economic integration. The term “transnational investment”, by contrast, implies that (interlocking) national economies no longer exist and that investment simply exceeds national borders, which is the core of the idea of international economic integration. See in more detail: Chapter II.2.1. 5 See, inter alia, R. Barents & L.J. Brinkhorst, Grondlijnen van Europees Recht (Deventer: Kluwer, 2003),
272; A.C.G.A.C. de Graaf, De invloed van het EG-recht op het internationaal belastingrecht: beleids- en
marktintegratie (Deventer: Kluwer, 2004), 15 et seq.; B.J.M. Terra & P.J. Wattel, European Tax Law, 5th ed.
(Deventer: Kluwer, 2008), 1.
6 In the same sense regarding both types of integration: Barents & Brinkhorst, 272; De Graaf, 15 et seq.; Terra
& Wattel, 1 et seq.
7 Barents & Brinkhorst, 272-273.
8 For instance, a fully liberalized market of cars within a given economic and/or political union (market
integration) would hardly serve any purpose in case each of the participating States were still allowed to impose its own requirements as regards the maximum emission by cars of CO² (absence of integration of national policies), even where these requirements are not, by themselves, imposed in a discriminatory fashion. Conversely, the effects of a complete harmonization of company laws within a given economic and/ or political union (integration of national policy) would remain illusory if each participating State were still allowed to simply restrict or make less attractive the access of a foreign company to its market by imposing discriminatory requirements, for instance in the field of corporate income taxation (absence of liberalization).
9 This is demonstrated in more detail in Chapter II.
10 Reference can, inter alia, be made in this respect to the former US Domestic International Sales Corporations
Chapter I 1.1 Introduction
more heavily than income from comparable domestic investments, or that provide for specific tax advantages in order to stimulate certain kinds of transnational investment, may adversely restrict or impact transnational flows of investment and, consequently, distort free competition. In addition, disparities between the income tax systems of two different states and international double taxation of investment income which may arise from the parallel exercise by two states of their taxation powers, may adversely affect patterns of transnational investment as well and consequently distort free competition.11
Finally, evasion or avoidance of taxes on investment income may also distort free competition as it artificially creates inequalities in tax burden between investors which do, and investors which do not pay their fair share. This, for its part, infringes the principle of taxpayer equity.12
Here too, the distortions in competition that accordingly arise may be removed by means of positive and negative economic integration.
It is observed that international economic integration has not been uniform either in the rate, nature or extent of coalescence.13
The degree of international economic integration may, moreover, vary in time and geographical scope. One example of international economic integration, which constitutes the very basis for this study, is the European Union14
, until the entry into force of the Lisbon Treaty on 1 December 2009 known as the European Community.15
The former European Community was established by the conclusion of the Treaty of Rome on 25 March 1957, currently consists of 27 Member States and is nowadays formally known as the European Union under the current Treaty on the Functioning of the European Union (for the purposes of this study referred to as “the Treaty”). One of the objectives of the European Union is to create an internal market that is characterized by the abolition, as between Member States, of obstacles to the free movement of goods, persons, services and capital.16
Here too, these obstacles can be removed by means of positive and negative integration. History reveals that this has been realized to date to a greater or lesser extent within the Union, depending on the policy
derived with the export of goods, subject to certain requirements, amongst which the exempt profits to be reinvested for the purpose of export. Another example is the US Foreign Sales Corporation regime. In more detail on both regimes: R.H.C. Luja, Assessment and Recovery of Tax Incentives in the EC and the WTO; A
View on State Aids, Trade Subsidies and Direct Taxation (Antwerpen: Intersentia, 2003), 148 et seq.
11 See, inter alia, S.C.W. Douma, ‘The Three Ds of Direct Tax Jurisdiction: Disparity, Discrimination and Double
Taxation’, European Taxation 11 (2006): 522-533.
12 Taxpayer equity requires equal treatment of taxpayers who are in comparable circumstances regarding fiscal aspects. The principle of taxpayer equity is discussed in more detail in Chapter II.3.4.
13 R.J. Jeffery, The Impact of State Sovereignty on Global Trade and International Taxation (London: Kluwer Law
International, 1999), 19.
14 For purposes of this study, the terms Union and European Union will be used interchangeably.
15 Article 1 TEU.
area concerned. As far as the area of taxation is concerned, it can be observed that in the field of indirect taxes which, generally speaking, primarily affect international trade, a substantial degree of positive integration within the European Union has been realized, which is particularly evidenced by the harmonization of the legislation concerning turnover taxes17
, customs18
and excise duties.19
With respect to direct taxes which, again speaking in general terms, primarily affect international investment, the degree of positive integration has been less substantial, although not fully absent. A certain degree of harmonization in the area of corporate income taxation within the Union has been established through the implementation of the Parent-Subsidiary Directive20
, the Merger Directive21
, the Interest & Royalty Directive22
and, regarding the taxation of individuals, by means of the Savings Directive.23
Moreover, a certain degree of international coordination exists in the field of
17 Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States
relating to turnover taxes - Common system of value added tax: uniform basis of assessment, OJ 1977 L 145, 1 as recast by Council Directive 2006/98/EC of 20 November 2006, OJ 2006 L 363, 129.
18 Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community Customs Code, OJ
1992, L 302, 1 et seq. as lastly amended by Council Regulation (EC) No. 1791/2006 of 20 November 2006, OJ 2006, L 363, 1 et seq.
19 Cf., notably, Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products
subject to excise duty and on the holding, movement and monitoring of such products, OJ 1992 L 76, 1 as repealed by Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty, OJ 2009 L 9, 12-30.
20 Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of
parent companies and subsidiaries of different Member States, OJ 1990 L 225, 6 as amended by Council Directive 2003/123/EC of 22 December 2003, OJ 2004 L 7, 41 and Council Directive 2006/98/EC of 20 November 2006, OJ 2006 L 363, 129. A proposal for a codified version of the Parent-Subsidiary Directive has been submitted by the European Commission to the Council on 6 November 2008, COM(2008) 691 final. This proposal does not contain any substantive changes. In addition, on 4 January 2011 the Commission submitted to the Council a Proposal for a Council Directive on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (Recast), COM(2010) 784 final. 21 Council Directive 90/434/EEC of 23 July 1990 on a common system of taxation applicable to mergers, divisions, transfer of assets and exchanges of shares concerning companies of different Member States, OJ 1990 L 225, 1 as amended by Council Directive 2005/19/EC of 17 February 2005, OJ 2005 L 58, 19, Council Directive 2006/98/EC of 20 November 2006, OJ 2006 L 363, 129 and as repealed, following a proposal by the European Commission for a codified version, by Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States, OJ 2009 L 310, 2009, 34-46.
22 Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and
royalty payments made between associated companies of different Member States, OJ 2003 L 157, 49 as amended by Council Directive 2004/66/EC of 26 April 2004, OJ 2004 L 168, 35, Corrigendum to Council Directive 2004/76/EC of 29 April 2004, OJ L 195, 33 and Council Directive 2006/98/EC of 20 November 2006, OJ 2006 L 363, 129. A proposal for further amendment under Council Directive of 30 December 2003, COM (2003) 841, OJ 2004 C 96, 37, has been repealed by the Commission in September 2010, OJ 2010 C 252, 11.