Dec 14

CJEU expected to deliver judgment in the Case C-305/16, Avon Cosmetics (VAT – Sales through intermediaries not subject to VAT (Direct selling models) – Derogation)

Questions referred for a preliminary ruling

(1)   Where a direct seller sells goods (“Sales Aids”) to unregistered resellers or the unregistered reseller purchases goods and services from third parties (“Third Party Goods and Services”) which are in both cases used by the unregistered resellers to assist their economic activity of selling other goods which are also purchased from the direct seller and the subject of administrative arrangements issued pursuant to a derogation most recently authorised by Council Decision of 24 May 1989 (89/534/EEC) (the “Derogation”), do the relevant authorisations, implementing legislation and/or administrative arrangements offend any relevant provisions and/or principles of EU law in so far as they require the direct seller to account for output tax on the unregistered resellers’ sale price of the other goods with no reduction for the VAT incurred by the unregistered reseller on such Sales Aids and /or Third Party Goods and Services?

(2)   Whether the United Kingdom was under any obligation to inform the Commission when seeking authorisation from the Council for the Derogation, that unregistered resellers incurred VAT on purchases of Sales Aids and/or Third Party Goods and Services used for the purposes of their economic activities and that, accordingly, an adjustment to reflect that irrecoverable input tax, or overpaid output tax, should be accommodated in the derogation?

(3)   In the event that the answer to questions 1 and/or 2 above is in the affirmative:

(a)   Whether any of the relevant authorisations, implementing legislation or administrative arrangements can and should be interpreted so as to make an allowance in respect of either (i) irrecoverable VAT on Sales Aids or Third Party Goods and Services borne by unregistered resellers and used by such unregistered resellers for the purposes of their economic activities; OR (ii) VAT in excess of the tax avoided being collected by Her Majesty’s Revenue & Customs OR (iii) the potential unfair competition that arises between direct sellers, their unregistered resellers and non-direct selling businesses.

(b)   Whether:

(i)    the authorisation of the UK’s derogation from Article 11(A)(1)(a) of the Sixth Directive was unlawful;

(ii)   a derogation from Article 17 of the Sixth Directive is necessary alongside the derogation from Article 11(A)(1)(a). If so, whether the UK acted unlawfully by failing to ask the Commission or the Council to authorise it to derogate from Article 17;

(iii)  the UK is acting unlawfully by failing to administer VAT in such a way as to allow direct sellers to claim a credit for either Sales Aids or Third Party Goods and Services VAT incurred by unregistered resellers for the purposes of their economic activities;

(iv)  all or any part of the relevant authorisations, implementing legislation or administrative arrangements are therefore invalid and/or unlawful.

(c)    Whether the appropriate remedy is, from the Court of Justice of the European Union or from the national Tribunal or Court:

(i)    a direction that the Member State is required to give effect to the Derogation in domestic law by providing for an appropriate adjustment for any of (a) irrecoverable VAT on Sales Aids or Third Party Goods and Services borne by unregistered resellers and used by such unregistered resellers for the purposes of their economic activities; OR (b) VAT in excess of the tax avoided being collected by Her Majesty’s Revenue & Customs; OR (iii) the potential unfair competition that arises between direct sellers, their unregistered resellers and non-direct selling businesses; or

(ii)   a declaration that the authorisation of the Derogation, and by extension the derogation itself, is invalid; or

(iii)  a declaration that the domestic legislation is invalid; or

(iv)  a declaration that the Notice of Direction is invalid; or

(v)   a declaration that the UK is obliged to apply for authorisation for a further derogation so to provide for an appropriate adjustment for any of (a) irrecoverable VAT on Sales Aids or Third Party Goods and Services borne by unregistered resellers and used by such unregistered resellers for the purposes of their economic activities; OR (b) VAT in excess of the tax avoided being collected by Her Majesty’s Revenue & Customs; OR (iii) the potential unfair competition that arises between direct sellers, their unregistered resellers and non-direct selling businesses.

(4)   Under Article 27 of the Sixth Directive (Article 395 of the Principal VAT Directive), is the “tax eva[ded] or avoid[ed] ” to be measured as the net loss of tax (taking account of both the output tax paid and input tax recoverable in the structure giving rise to the tax evaded or avoided) to the Member State or the gross loss of tax (taking account of only the output tax in the structure giving rise to the tax evaded or avoided) to the Member State?

Opinion of the Advocate General in this case as delivered on September 7, 2017 can be found here

Dec 14

Opinion of the Advocate General expected to be delivered in Case C-382/16, Hornbach-Baumarkt (Freedom of establishment – Corrections on intra-group transfer prices)

Question referred for a preliminary ruling:

Does Article 49 of the Treaty on the Functioning of the European Union (TFEU), in conjunction with Article 54 TFEU, (formerly Article 43 of the Treaty establishing the European Community (TEC), in conjunction with Article 48 EC), preclude legislation of a Member State which provides that income of a resident taxpayer derived from business relations with a company established in another Member State in which that taxpayer has a direct or indirect shareholding of at least 25% and with which that taxpayer has agreed terms that depart from those that would have been agreed on by unrelated third parties under the same or similar circumstances must be calculated as if that income had been earned pursuant to terms agreed on between unrelated third parties, if such a correction is not made in respect of income from business relations with a resident company and the legislation in question does not afford the resident taxpayer the opportunity to present evidence that the terms were agreed on for commercial reasons resulting from its status as a shareholder of the company established in the other Member State?

Dec 15

(14.00 – 15.00 CET)

OECD – Tax Talks Webcast

The OECD's Centre for Tax Policy and Administration (CTPA) will give an update on a.o. the following topics:

·    Taxation of the digitalised economy.

·    BEPS – including progress on the Multilateral Instrument and the latest on mutual agreement procedures.

·    Tax policy – update on revenue statistics and work on inclusive growth.

·    Tax certainty and the latest on the International Compliance Assurance Programme.

·    Public discussion draft on mandatory disclosure rules.

Upfront registration is necessary for being able to watch the webcast live. Click here to be forwarded to the website where on can register for the webcast.