CFE’s Top Tax 5 – December 2016


  13 December 2016

European Commission refers France to the Court of Justice for discriminatory taxation on dividends

European Commission has referred France to the Court of Justice of the European Union for failure to comply with the judgment C-310/09 Accor of 15 September 2011.  The infringement action against France was initiated following a reasoned opinion sent on 29 April 2016 to France, which was not complied with.

European Commission takes the view that France maintains discriminatory taxation of dividends coming from other EU Member states which is contrary to the freedom of establishment and freedom of movement of capital, specifically on three points:

  • France does not take into account the tax already paid by non-French subsidiaries;
  • The French tax system limits tax credits of the dividend redistributed by a non‑French subsidiary. Such limitations amount to discriminatory treatment between companies receiving dividends originating in other Member States and those receiving dividends of French origin;
  • France also maintains administrative requirements concerning evidence in breach of the criteria established in the Accor judgment.

Concerning the refund of taxes paid in France by entities with subsidiaries in other EU Member states under the ‘advance payment mechanism’, Conseil d’Etat has taken a restrictive interpretation of C-310/09 Accor judgment. The Commission maintains that the French interpretation is incompatible with EU law, which led to the infringement procedure.

Link: European Commission December infringement package

French Conseil constitutionnel repeals public country-by-country reporting  

Conseil constitutionnel declared parts of the Act on transparency, control of corruption and modernisation of the economy (Loi relative à la transparence, à la lutte contre la corruption et à la modernisation de la vie économique) which enacted public country-by-country reporting by multinational companies contrary to the Constitution.

The Decision 2016-741, essentially upheld other sections of the Act, but repealed the section promulgating public-country-by-country reporting obligation for multinational companies with a turnover exceeding €750 million, that had originally been planned to enter into force from 2018.

The Conseil constitutionnel recognised that the purpose of public country-by-country reporting obligations is tackling fiscal fraud and tax avoidance, but the measure was found to be contrary to the principles of proportionality, going beyond what was necessary to achieve the aim of the legislation. Also, the section was found to be in breach of the right to do business and entrepreneurship.

Failure to reach agreement of proposed amendments to ATAD Directive

At the recent ECOFIN meeting on 6 December agreement could not be reached on the proposed changes to the Anti-Tax Avoidance Directive (ATAD) to extend hybrid mismatch rules to third countries and specific scenarios within EU Member States.

It is believed that disagreements arose from U.K. proposals in relation to exemptions for the financial services sector, and a proposal from the Netherlands to extend the effective date of the rules.

CFE encourages members to participate in OECD tax certainty questionnaire

CFE is encouraging member organisations to participate in the OECD Survey on tax certainty. The survey is available online and should take 15-20 minutes to complete.

The Survey has been launched in response to the OECD receiving a mandate from the G20 leaders and Finance Ministers to work on solutions to support certainty in the tax system with the aim of promoting investment, trade and balanced growth. The survey builds on responses gathered by the European Tax Policy Forum (ETPF) and the Oxford University Centre for Business Taxation (OUCBT) in early 2016.

The survey will run from 18 October to 16 December 2016. It represents an opportunity to identify specific tax policy issues for the future G20 tax agenda and to contribute to creating practical and concrete solutions for a more certain and predictable tax system. The results of the survey will be published and presented to the G20 leaders in 2017.

The Business Survey is available at the following link:  link


The selection of the remitted material has been prepared by Piergiorgio Valente / Filipa Correia /

Aleksandar Ivanovski / Mary Dineen

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5 December 2016


  1. European Commission proposes modernising VAT rules to support e-commerce and online business in the EU

On 1 December 2016 the European Commission published a series of measures aimed at improving the operation of VAT rules for online business in the EU. It is hoped that the new rules will simplify VAT Compliance, particularly for SMEs and encourage and accelerate growth for online business.

The new proposals essentially see an extension of the so-called ‘one stop shop’ which already exists for “e-sellers”. This will enable companies that sell goods online to handle all of their EU wide VAT obligations through an online portal hosted by their domestic tax administration. Under this proposed new system for compliance online businesses will no longer be obliged to register for VAT in every Member State in which they sell goods but instead will make 1 simple quarterly for the VAT due across all the EU via the online VAT One Stop Shop portal hosted by the domestic tax administration of the business.

Other proposals include:

  • The introduction of a threshold of 10,000 euro for goods and 100,000 euro for services under which cross-border sales for online companies will be treated as domestic goods and subject to domestic VAT rules.
  • The removal of the current exemption from VAT for imports of small consignments from outside the EU (less than 20 euro) It is hoped that this proposal will curb unfair competition and distortion for EU companies.
  • The reduction of VAT rates for e-publications such as e-books and online newspapers

For more information, please follow the following links.

  1. EU Council’s Legal Service issues legal opinion that public country by country reporting is a taxation matter

In November 2016 the legal service of the Council of the European Union gave a written opinion concluding that the aim of the provisions relating to public country by country reporting (“CbCR”) are in essence fiscal provisions, and therefore implementation requires unanimity from the members of the Council of the EU in order to conclude adoption of the measures.

The legal opinion is based on the conclusion that the aim of the proposed amendments to the “Accounting Directive” (otherwise known as public CbCR) is to deter tax avoidance and protect the interest of public administrations in combatting tax avoidance. Therefore, the purpose of these proposals is to protect the functioning of the internal market. Consequently, the legal basis for the proposals is not the protection of shareholders and the public pursuant to Article 50 TFEU (Freedom of establishment).

In order for the public CbCR proposals to be characterised a “tax file” by the EU Commission, Member States must unanimously request that the Commission do so, therefore the Legal Opinion alone has limited practical consequences without subsequent action.

In the event that the proposals are not characterised as a “tax file” but full implementation proceeds it is likely that the implementation would be successfully challenged before the EU Courts of Justice based on the Council’s Legal Service written opinion.

As yet, member states are still assessing the situation.

  1. European Commission publishes guidelines for a Model for European Taxpayers’ Code

Following a 2013 consultation, the European Commission has published guidelines for a Model for European Taxpayers’ Code. The guidelines aim to ensure a balance between the rights and obligations of both taxpayers and tax administrations. It is based on best practices which aim to enhance cooperation, trust and confidence between tax administrations and taxpayers ensuring greater transparency on the rights and obligations of both parties. It also seeks to encourage an improved service orientated approach by tax administrations.

It is envisaged to be a model for the European taxpayers and Member States’ tax administrations rather than a template to follow as a strict code or charter. It is a non-binding (soft-law) EU instrument.

The guidelines for a Model for European Taxpayers’ Code are available at the following Link

  1. The OECD releases further BEPS guidance on Country-by-Country reporting and country-specific information on implementation

The Inclusive Framework on BEPS has today released two new documents to support the global implementation of Country-by-Country (CbC) reporting (BEPS Action 13).

The details on jurisdictions’ legal frameworks for CbC reporting include the status of the legislation, first reporting periods, availability of surrogate filing and voluntary filing, and whether local filing can be required. This will be updated as Inclusive Framework members continue to finalise their legal frameworks.

The additional guidance also clarifies that jurisdictions have flexibility as to the time period required where a notification to the tax administration may be required to identify the reporting entity within a MNE Group (as provided in Article 3 of the Model Legislation in the Action 13 Report). This may be particularly relevant during the transition period where jurisdictions are still completing their implementation of CbC reporting, as MNE Groups may not yet have the necessary information to submit their notifications.

The guidance also confirms that jurisdictions may wish to consider other transitional relief for MNE Groups with respect to these notifications, which would also be consistent with the minimum standard.

For more information, follow this link

  1. European Court of Justice gives judgment in SECIL Case (Case C-464/14); Portugal must grant company at least partial tax deduction for dividends received from Tunisian or Lebanese subsidiaries

The preliminary reference was made by the Lisbon tax court in a case involving a Portuguese tax resident company in receipt of dividend income from 2 third country subsidiaries in the 2009 tax year. This income was taxed in Portugal but did not receive any economic double taxation relief or mitigation. The taxpayer company brought proceedings against a refusal to apply a reverse charge of corporation tax relating to the 2009 tax year on the basis inter alia that it contravened Articles 49 and 63 TFEU and the EC-Tunisia Agreement and the EC-Lebanon Agreement.

The Court concluded a restriction to the free movement of capital existed because the law discouraged Portuguese resident companies from investing in shares of companies’ resident outside the EU. This arose by virtue of the differential treatment applied to a Portuguese corporate shareholder who could avail of double tax deduction or mitigation measures in relation to dividends received from a domestic subsidiary but could not avail of any tax deduction or mitigation measures in respect of dividends received from a subsidiary resident outside the EU.

Consequently, the question therefore to be addressed was whether the restriction was justified. The Court held that the restriction may be justified if it ensured effective fiscal supervision and the prevention of tax evasion in circumstances where it would be impossible for the tax administration of the shareholder company to obtain information to verify that the payee subsidiary is subject to tax in the third country.

The Court held that where the tax authority of the Member State can obtain verification from the third country that the payee company is subject to tax this justification cannot be relied upon.

On the facts of this case, the Court held that the impugned measures contravened Articles 63 and 65 TFEU and the EC-Tunisia Agreement and the EC-Lebanon Agreement.

The full text of the judgement is available here: Judgment                                         


The selection of the remitted material has been prepared by Piergiorgio Valente / Filipa Correia / 

Aleksandar Ivanovski / Mary Dineen

Follow CFE on Linked in  and Twitter