CJEU judges in Case C-94/19, San Domenico Vetraria (VAT — Articles 2 and 6 of the Sixth Council Directive — Taxable transactions — Services supplied for consideration — Secondment of staff by a parent company to its subsidiary)
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On March 11, 2020 the Court of Justice of the European Union (CJEU) judged in Case C‑94/19, San Domenico Vetraria SpA versus Agenzia delle Entrate (supported by: Ministero dell’Economia e delle Finanze) (ECLI:EU:C:2020:193).
This request for a preliminary ruling concerns the interpretation of Articles 2 and 6 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation 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, p. 1; ‘the Sixth Directive’) and the principle of the neutrality of value added tax (VAT).
The request has been made in proceedings between San Domenico Vetraria SpA and the Agenzia delle Entrate (Revenue Authority, Italy) concerning deductions made by San Domenico Vetraria, in respect of the 2005 tax year, from VAT paid on sums repaid to its parent company, Avir SpA, for the secondment of a director.
The opinion of the AG in Case C-231/19 - Blackrock Investment Management (UK) (VAT — Article 135(1)(g) of Directive 2006/112/EC — Exemptions for the management of special investment funds — Supply of a package of services using an IT platform)
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On March 11, 2020 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Pikamäe in the Case C-231/19, BlackRock Investment Management (UK) Limited versus Commissioners for Her Majesty’s Revenue and Customs (ECLI:EU:C:2020:196), was published.
The system of value added tax (VAT) is once again being tested by new technologies. At issue this time is artificial intelligence in the field of investment in the context of different types of investment funds.
The management of special investment funds (‘SIFs’) is expressly exempted under Article 135(1)(g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. By contrast, the management of investment funds that are not SIFs (‘other funds’) is subject to VAT.
BlackRock Investment Management (UK) Ltd (‘BlackRock’) manages both SIFs and other funds. To do this, it uses the services of BlackRock Financial Management Inc. (‘BFMI’), a company established in the United States which belongs to the same group as BlackRock. BFMI uses an IT platform known as Aladdin which provides a broad range of investment management services, such as market analysis, monitoring performance, risk assessment, monitoring regulatory compliance and implementing transactions. Since BFMI is a company incorporated under US law, BlackRock must pay the VAT itself, under the reverse charge mechanism, in respect of the services supplied by BFMI.
The dispute in the main proceedings is between BlackRock and the Commissioners for Her Majesty’s Revenue and Customs (United Kingdom) (‘the tax authority’) and concerns the granting of the exemption provided for in Article 135(1)(g) of Directive 2006/112. In so far as BFMI provides management services using Aladdin, in the same way, to SIFs and to other funds, the question arises as to which tax scheme applies to those services, given that exemption.
The referring court, the Upper Tribunal (Tax and Chancery Chamber) (United Kingdom) asks the Court whether, and under what conditions, that exemption should be granted in view of the particular circumstances of the present case, namely the supply of management services to all types of funds taken together, using a single IT platform.
The MLI entered into force with respect to the Russian Federation
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On October 1, 2019 the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) entered into force with respect to the Russian Federation.
Read more: The MLI entered into force with respect to the Russian Federation
The MLI entered into force with respect to India
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On October 1, 2019 the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) entered into force with respect to India.
The MLI entered into force with respect to Belgium
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On October 1, 2019 the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) entered into force with respect to Belgium.
Read more: The MLI entered into force with respect to Belgium
Iceland deposits its instrument of ratification for the MLI
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On September 26, 2019 Iceland deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
Iceland’s Status of List of Reservations and Notifications upon Deposit of the Instrument of Acceptance can be found here.
Read more: Iceland deposits its instrument of ratification for the MLI
General Court of the European Union confirms that Luxembourg granted illegal State Aid to Fiat Chrysler Finance Europe
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On September 24, 2019 the General Court of the European Union judged in the joined cases T-755/15 (Grand Duchy of Luxembourg versus the European Commission) and T-759/15 (Fiat Chrysler Finance Europe versus the European Commission) (ECLI:EU:T:2019:670). In its judgment the General Court confirms the European Commission’s decision on the aid measure granted by Luxembourg to Fiat Chrysler Finance Europe.
General Court of the European Union judges that Starbucks did not receive illegal State Aid from the Netherlands
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On September 24, 2019 the General Court of the European Union judged in the joined cases T-760/15 (Netherlands versus Commission) and T-636/16 (Starbucks Corp. and Starbucks Manufacturing Emea versus Commission) (ECLI:EU:T:2019:669). In its judgment the General Court annuls the Commission’s decision on the aid measure implemented by the Netherlands in favour of Starbucks. According to the General Court the Commission was unable to demonstrate the existence of an advantage in favour of Starbucks.
CJEU judges in Case C-700/17 Peters (VAT — Article 132(1)(b) and (c) of Dir 2006/112/EC — Exemptions — Hospital and medical care — Provision of medical care in the exercise of the medical and paramedical professions)
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On September 18, 2019 the Court of Justice of the European Union (CJEU) judged in Case C‑700/17, Finanzamt Kyritz versus Wolf-Henning Peters (ECLI:EU:C:2019:753).
This request for a preliminary ruling concerns the interpretation of Article 132(1)(b) and (c) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).
The request has been made in proceedings between the Finanzamt Kyritz (Kyritz Tax Office, Germany; ‘the Tax Office’) and Mr Wolf-Henning Peters concerning the refusal to exempt from value added tax (‘VAT’) the medical care provided by the latter as a specialist in clinical chemistry and laboratory diagnostics.
The MLI entered into force with respect to United Arab Emirates
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On September 1, 2019 the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) entered into force with respect to United Arab Emirates.
Read more: The MLI entered into force with respect to United Arab Emirates
Switzerland deposits its instrument of ratification for the MLI
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On August 29, 2019 Switzerland deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
Read more: Switzerland deposits its instrument of ratification for the MLI
Canada deposits its instrument of ratification for the MLI
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On August 29, 2019 Canada deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
Read more: Canada deposits its instrument of ratification for the MLI
Saudi Arabia signed the MCAA on the Exchange of Country-by-Country Reports
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From the overview of Signatories of the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA) as available on the website of the OECD we understand that as per August 6, 2019 the total number of signatories to the CbC MCAA went up to 80.
Read more: Saudi Arabia signed the MCAA on the Exchange of Country-by-Country Reports
Dominican Republic deposits its Instrument of Ratification for the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters
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Based on the overview of Jurisdictions Participating in the Convention on Mutual Administrative Assistance in Tax Matters as available on the website of the OECD, on August 2, 2019 the Dominican Republic deposited its instrument of ratification, acceptance or approval for the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The Dominican Republic signed the Convention on June 28, 2016.
The OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters entered into force on August 1, 2019 with respect to Dominica
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Based on the overview of Jurisdictions Participating in the Convention on Mutual Administrative Assistance in Tax Matters as available on the website of the OECD, the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters entered into force on August 1, 2019 with respect to Dominica.
The MLI to enter into force with respect to Luxembourg
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On August 1, 2019 the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) will enter into force with respect to Luxembourg.
Read more: The MLI to enter into force with respect to Luxembourg
Eswatini joined the Inclusive Framework on BEPS
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From the list of Members of the Inclusive Framework on BEPS as available on the website of the OECD it can be concluded that Eswatini is the latest jurisdiction that joined the Inclusive Framework on BEPS. Therewith the total number of jurisdictions that have joined the Inclusive Framework on BEPS comes to 132.
Non-confidential version published of the European Commission’s decision that the UK CFC Group Financing Exemption is partly to be considered to constitute illegal State Aid
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On April 2, 2019 the European Commission announced that it concluded that the Group Financing Exemption and, hence, the different treatment, was partially justified. At the same time, the exemption grants a selective advantage to certain multinational companies. On July 16, 2019 the non-confidential version of this decision was made available in the State Aid Register on the European Commission's competition website.
The opinion of the AG in the joined Case C-469/18 & C-470/18, Belgische Staat (Judicial review of a tax assessment notice — Competence of the Court of Justice in the context of income tax assessment)
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On July 11, 2019 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Kokott in the joined Cases C-469/18 (IN versus Belgische Staat) and C-470/18 (JM versus Belgische Staat) (ECLI:EU:C:2019:597), was published.
Is a Member State implementing Union law if its tax authorities use, for an income tax assessment, evidence that the investigating authorities obtained after the discovery of a VAT carousel? In other words, does a breach of fundamental rights of the European Union when gathering evidence lead to a prohibition on the use of evidence in the context of an income tax assessment? These are essentially the questions that the Court of Justice has to consider by means of two requests for a preliminary ruling from the Belgian Court of Cassation.
The questions are asked against the background of criminal investigations in the context of which Luxembourg transferred evidence to Belgium in breach of a provision stipulating judicial authority provided for in an international agreement. This evidence was used at least for the income tax assessments. It is only these assessments that are contested by the appellants in cassation in the main proceedings (‘the appellants in cassation’).
The matter at issue is therefore the application of the Charter of Fundamental Rights of the European Union (‘the Charter’) — Article 47 of the Charter in this case — in the context of income tax assessment. This matter goes beyond the much-discussed Åkerberg Fransson judgment from 2013. In that judgment, the Court ruled that criminal proceedings regarding VAT fraud serve to ‘implement … Union law’ within the meaning of Article 51(1) of the Charter. It is now necessary to examine whether the assessment of income tax serves to implement Union law if evidence that was obtained during a pre-trial investigation initiated due to suspicion of VAT fraud is used.
