Post on 13-Mar-2020
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EU Tax News Issue 2019 – nr. 001 November – December 2018
This bi-monthly newsletter is prepared by members of PwC’s pan-European EU Direct Tax
Group (EUDTG) network. To receive this newsletter and our newsalerts automatically and
free of charge, please send an e-mail to: eudtg@nl.pwc.com with “subscription EU Tax
News”. For previous editions of PwC’s EU Tax News see: www.pwc.com/eudtg
Editorial Board: Bob van der Made, Erisa Nuku and Phil Greenfield.
Contents
CJEU Developments
Austria CJEU confirms compatibility of Austrian stability charge for
credit institutions with EU law
France CJEU judgment in Sofina
National Developments
Germany Fiscal Court of Hesse applies CJEU Bevola judgment in
domestic case
Hungary Domestic implementation of ATAD
PwC EU Tax News Page 2
Italy Tax Court of Appeal decision on beneficial owner
requirement in IRD
Italy Supreme Court rules on place of effective management and
tax residence referring to EU law
Italy Introduction of a domestic digital services tax (DST)
Italy Italian Supreme Court decision on “subject to tax”
requirement in EU Parent-Subsidiary Directive
Netherlands Foreign real estate funds eligible for Netherlands FBI status
Netherlands Supreme Court maintains preliminary questions to CJEU on
comparability of Dutch and foreign investment funds
Sweden Compatibility of 2013 interest deduction limitations with EU
law
Switzerland Swiss tax reform update
Spain Introduction of a domestic digital services tax (DST)
Spain Implementation of ATAD 1 and tax havens provisions
Spain Draft Financial Transaction Tax
Spain Supreme Court Decision admitting the appeals on two
potential restrictions of EU free movement of capital
EU Developments
EU ECOFIN Council policy debate on DST: DST proposal
rejected
EU ECOFIN Council adopts 6-monthly progress report to the
European Council on tax issues
EU Code of Conduct Group (business taxation) update on its
agreed guidance
EU Austrian Presidency publishes State of Play on CCTB
Directive
EU Implementation of Article 4 ATAD: European Commission
publishes list of EU Member States with equivalent effective
rules
EU European Parliament TAX3 special committee final draft
report
EU European Commission considerations on the Spanish
mandatory reporting on assets and rights located abroad
PwC EU Tax News Page 3
Fiscal State aid
Germany CJEU judgment in A-Brauerei
Italy CJEU State aid judgment on real estate tax exemption
granted to Italian non-commercial entities
Spain EU General Court confirms the European Commission’s
decisions on the Spanish tax scheme for the amortization of
financial goodwill
European Commission EC publishes non-confidential version of final EC decision in
McDonald's
European Commission Final negative State aid decision in the Gibraltar case
PwC EU Tax News Page 4
CJEU Developments
Austria – CJEU confirms compatibility of Austrian stability charge for credit
institutions with EU law
On 22 November 2018, the CJEU issued its judgment on the Austrian stability charge for
credit institutions (C-625/17), which was introduced in 2011. The case at hand concerned the
Vorarlberger Landes- und Hypothekenbank AG (Hypothekenbank), which filed an appeal
against the stability charge assessment notice. The Hypothekenbank argued that the stability
charge might infringe the EU freedom to provide services and the EU State aid provisions.
During the financial crisis, a stability charge was introduced for credit institutions operating
in Austria. The basis of assessment for the stability charge was the average unconsolidated
balance sheet total of a credit institution. Hypothekenbank claimed it was not obliged to pay
the stability charge on the ground that this charge is contrary, first, to the EU State aid
provisions and, second, to the EU freedom to provide services. In particular, Hypothekenbank
argued that the rule is discriminatory in so far as it treats similar transactions differently
because a group of undertakings would be taxed more favourably than an undertaking that
did not belong to a group. In the case of a group of undertakings, the criterion of non-
consolidation means that the balance sheet of subsidiaries established in a Member State
other than Austria is automatically excluded from the basis of assessment of the charges in
question. That is not the case for a single undertaking which, directly or through a branch,
supplies services in Member States other than Austria since those services would
automatically be included in the balance sheet of that undertaking and in the basis of
assessment of the stability charge. According to Hypothekenbank, this is discriminatory.
The CJEU pointed out that the stability charge does not draw any distinction based on the
origin of the clients or the place where the services are supplied. The CJEU dismissed the
argument that banking institutions established in Austria that enter into banking transactions
in another Member State without an intermediary are being discriminated when compared to
banking institutions that offer such services by means of independent subsidiaries established
in that other Member State. According to the CJEU, the latter type of institution has chosen
to exercise their EU freedom of establishment, whereas the former type is established only in
Austria and supplies services of a cross-border nature, which is covered by the EU freedom to
provide services. According to the CJEU, Member States are free to take account of the
disparities between those two freedoms and to treat differently the activities of persons and
undertakings, which fall, respectively, under the freedom of establishment and the freedom
to provide services. The CJEU considered the reference to the reasoning in Hervis Sport- és
Divatkereskedelmi (C-385/12) as irrelevant since it was not ascertained from the few statistics
provided by Hypothekenbank on the Austrian banking sector whether that claim was well
founded. Further, such facts were not made clear by the referring court. Therefore, the CJEU
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considered there was no need to consider whether that judgment could be applied by analogy
in respect of the freedom to provide services.
The judgment clarifies that the Austrian stability charge is in line with EU law. It follows from
this judgment that any reasoning claiming such an indirect discrimination by the taxpayer
must be supported by sound and clear evidence and statistical data.
-- Richard Jerabek and Nikolaus Neubauer, PwC Austria; richard.jerabek@pwc.com
France – CJEU judgment in Sofina
On 22 November 2018, the Court of Justice of the European Union (CJEU) issued its
judgment in the French case Sofina (C-575/17). The CJEU held that the French legislation
under which non-resident companies in a loss-making position are subject to a definitive
withholding tax on French sourced dividends is incompatible with the free movement of
capital.
Under French law, a resident company that receives dividends from another French company
is subject to corporate income tax at 33.33% whereas a non-resident company is subject to a
withholding tax of 30% (25% at the time of the case) except in those instances when the
Parent-Subsidiary regime is applicable. A French resident company in a loss-making position
can offset its losses against the dividends received. As a result, the French resident company
is not effectively taxed in relation to this income during the relevant fiscal year while a non-
resident company in a loss-making position is always subject to an immediate and definitive
French withholding tax on its French sourced income.
The CJEU ruled that the law created a restriction on the free movement of capital since:
i. the deferred taxation of the revenue, which only applies to resident companies,
constitutes a disadvantage in terms of cash-flow, which infringes the free movement
of capital;
ii. the existence of a difference (or lack thereof) in treatment must be analysed on the
basis of each fiscal year; and
iii. in case the resident company ceases its activities, the tax deferral becomes a definitive
tax exemption, which only applies to resident companies.
The CJEU established that a tax disadvantage borne by a non-resident cannot be compensated
by another advantage such as a reduced withholding tax rate (i.e. when it is lower than the
applicable rate to residents), or by the fact that the legislation at stake does not infringe EU
law in all situations. As regards the justifications, the CJEU reiterated that residents and non-
residents are comparable and that such legislation cannot be justified by overriding reasons
in the public interest such as the balanced allocation of taxing powers among EU Member
States or the effective collection of tax.
PwC EU Tax News Page 6
With this judgment, the CJEU has refined its case law regarding withholding taxes applicable
to non-resident companies. As this judgment will have to be applied in all EU jurisdictions
having a similar tax system, EU Members States should now be required to offer the possibility
to defer the taxation of revenue, and to exempt it where companies ceased trading without
becoming profitable after receiving it, also to non-resident loss-making companies. This
judgment will also likely have an impact on other types of revenue for which withholding taxes
apply in the source country (e.g. royalties, interest, and sometimes capital gains). Moreover,
as the judgment is based on the free movement of capital (Art. 63 TFEU), it may have an
impact with respect to non-resident companies established in a third country.
-- Emmanuel Raingeard de la Blétière, PwC France; emmanuel.raingeard@pwcavocats.com
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National Developments
Germany – Fiscal Court of Hesse applies CJEU Bevola judgment in domestic case
On 4 September 2018, the Fiscal Court of Hesse, with reference to the CJEU case Bevola (C-
650/16), decided that final foreign PE losses are deductible in Germany (case 4 K 385/17).
The plaintiff is a German stock corporation. The plaintiff realised losses through a UK PE
which was established in 2004. Those losses were exempt in Germany via the Germany-UK
double tax treaty. The activities of the PE were discontinued in 2007. The plaintiff applied for
a deduction of the final losses in Germany at the time of closing the PE on grounds of EU Law.
The competent fiscal authority refused the deduction of the final foreign losses. In the Bevola
case, the CJEU decided that final losses of a foreign PE were deductible in Denmark as a head
office state under the freedom of establishment. Therefore, the Bevola case brought new life
into the tax treatment of final PE losses after the negative CJEU judgment in Timac Agro (C-
388/14).
Applying the Bevola case, the Fiscal Court of Hesse decided that the freedom of establishment
requires the deduction of the final losses accrued at the level of the German parent company
for corporate tax and trade tax purposes. Not deducting the losses in the head office state
would have been disproportionate because the plaintiff lost the possibility of deducting
foreign losses from future foreign gains in the UK by closing the PE. The appeal against this
judgment is – amongst other cases – pending with the Federal Fiscal Court.
-- Arne Schnitger and Ronald Gebhardt, PwC Germany; ronald.gebhardt@pwc.com
PwC EU Tax News Page 7
Hungary – Domestic implementation of ATAD
On 13 November 2018, the Hungarian Parliament enacted a number of significant changes in
the Hungarian corporate income tax (CIT) regulation with effect from 1 January 2019.
Amended controlled foreign company (CFC) rules
Almost two years ago (effective from 18 January 2017), Hungary already largely implemented
the CFC rules of ATAD 1 and initially opted for taxing the CFC’s passive income streams (i.e.
option a) of Article 7 (2) of ATAD. However, Hungary recently switched to the transfer pricing
based approach (option b) of Article 7 (2) of ATAD. This means that effective from 1 January
2019, Hungary no longer treats foreign passive income streams as tainted but targets the
foreign income arising from non-genuine arrangements generated by significant people
functions exercised by a Hungarian controlling taxpayer.
Some other changes to the CFC rules include:
i. a foreign entity or permanent establishment will only qualify as CFC, if – in addition
to the conditions connected to voting rights/equity/profit participation and the level
of corporate tax paid – it realises income from non-genuine arrangements. In this
sense, non-genuine arrangements are defined as arrangements which cumulatively
satisfy the below conditions:
a. the arrangement was put in place for the essential purpose of obtaining a tax
advantage; and
b. the foreign entity or permanent establishment only owns the asset or
undertakes the risks (generating the income in question) because a
Hungarian taxpayer carries out the significant people functions, which are
instrumental in generating the foreign income;
ii. the recognized stock exchange carve-out rule will be omitted; and
iii. respecting the double tax treaties concluded by Hungary, non-EU and non-EEA
permanent establishments will only give rise to CFC status if they do not qualify as a
permanent establishment in the application of a tax treaty that obliges Hungary to
exempt their income from taxation.
If the CFC test is met, the Hungarian taxpayer must include in its tax base an am0unt of the
undistributed profit of the foreign entity or the PE proportionate to the significant people
functions carried out by the Hungarian taxpayer (and calculated on an arms’ length basis). As
a grandfathering rule, in the tax year starting in 2019, taxpayers may opt to apply the previous
CFC rules which were still effective on 31 December 2018.
Modification of the interest limitation rules
In addition, in light of ATAD, domestic thin capitalisation rules have been amended. Instead
of the existing current debt-to-equity ratio test (3 to 1), the deductibility of interest expenses
PwC EU Tax News Page 8
is now linked to the EBITDA. Accordingly, exceeding borrowing costs of the taxpayer (with
the exception of financial institutions) will be deductible only up to 30% of EBITDA. It is
important to note that under the previous thin capitalisation regime, interest on bank loans
did not have to be taken into consideration while under the new EBITDA rule, it will be taken
into account.
This 30% limit will however only apply if the amount of exceeding borrowing costs is higher
than the HUF equivalent of EUR 3 million per year (in the case of group taxation, on a group
level). In addition to such an escape clause, Hungary has also opted for the application of most
ATAD derogations, including the ones connected to standalone entities, loans concluded
before 17 June 2016, loans used to fund long-term infrastructure projects, and the carry
forward of exceeding borrowing costs and unused interest capacity. Additionally, members of
a consolidated group for financial accounting purposes are granted both the group equity and
the group EBITDA carve-out possibility.
Introduction of group taxation
Per 1 January 2019, Hungary introduced a group taxation regime. Hungarian taxpayers may
opt to apply group taxation if:
i. the level of direct or indirect voting rights is at least 75% (a common controlling
company also has to be taken into consideration);
ii. they apply the same GAAP for statutory purposes;
iii. with the application of the same balance sheet date (or same tax year if the
balance sheet date is not applicable); and
iv. they have the same functional currency.
Group members still have to quantify their standalone tax bases per the general rules.
Nonetheless, 50% of the total of the positive individual tax bases may be offset by the negative
individual tax bases within the group. The negative individual tax bases may be utilised in the
year of occurrence and in the five consecutive tax years within the group. In a given tax year,
the utilized tax losses carried forward on an individual and group level cannot exceed 50% of
the total of positive individual tax bases. Careful review of existing structures is recommended
since the CFC status and thin capitalization have to be considered on different grounds than
was the case under the previous rules, and to explore the potential possibilities the group
taxation regime may hold.
-- Gergely Juhasz and Orsolya Bognar; PwC Hungary orsolya.bognar@hu.pwc.com
Italy – Tax Court of Appeal decision on beneficial owner requirement in IRD
On 13 June 2018, the Tax Court of Appeal in Milan issued a decision (n. 2707-viii-2018)
concerning the domestic application of the Interest and Royalty Directive (IRD) with respect
to a Luxembourg holding structure. In essence, the Italian Tax Authorities challenged the
PwC EU Tax News Page 9
application of the IRD to interest payments, pursuant to an intercompany loan agreement,
made by two Italian companies to a Luxembourg associated company because the
Luxembourg company was not considered to be the beneficial owner, which is one of the
requirements of the IRD. The Tax Court upheld the Italian Tax Authorities’ requests on 13
June 2018.
The Italian Tax Authorities argued that the Luxembourg company was established for the only
purpose of benefiting from the IRD, in order to ‘channel’ the proceeds from a second loan to
the real beneficial owner of the income (which was not entitled to the IRD benefits).
In particular, the Italian Tax Authorities highlighted that:
i. the contested loan agreement between the Luxembourg company and the Italian
associated companies was put in place the day after the establishment of the former
company and that – during the same period – the Luxembourg company benefited
from a loan from its shareholder of an equal amount and concluded under the same
economic conditions;
ii. it resulted from the board of directors’ minutes that the purpose of the last-mentioned
loan was to indeed provide the Luxembourg company with the financial resources
necessary to grant the contested loan to the Italian associated companies;
iii. the Luxembourg company did not have any employees and it did not bear any risks
related to the contested loan; and
iv. the Luxembourg company was, among others, entitled to a small reduction equal to
0,03% of the interest rate to be paid to its shareholder which the Italian Tax
Authorities considered as a commission for the “intermediary activities” performed.
The Tax Court upheld the Italian Tax Authorities’ requests, dismissing the taxpayer’s
counterarguments, including the reference to the 2016 Italian Supreme Court decisions on
substance requirements for holding companies (see EU Tax News Issue 2018 – nr. 002
‘Italian court rules on incompatibility of presumption of abuse/tax evasion with EU freedom
of establishment’ for further references on the matter). According to the Tax Court, in the case
at stake, the facts pertaining to the structure itself (e.g. absence of employees and its
establishment the day before the issuance of the loan) proved that the entity was acting as a
mere conduit company. Interestingly, the Supreme Court, in rejecting the request for a
preliminary ruling concerning the interpretation of the beneficial owner requirement, had
made reference to the EU ATAD general anti-abuse rule (GAAR) as an example of how the
application of EU law does not preclude the enforcement of domestic provisions aimed at
preventing fraud or abuse.
-- Claudio Valz, Luca la Pietra, Guglielmo Ginevra, PwC Italy; claudio.valz@pwc.com
PwC EU Tax News Page 10
Italy – Supreme Court rules on place of effective management and tax residence
referring to EU law
On 21 December 2018, the Italian Supreme Court issued two ‘twin’ decisions (nn. 33234-
5/2018) in a high-profile case concerning a Luxembourg structure put in place by the owners
of a famous Italian fashion brand. According to the appealed decision issued by the Milan Tax
Court of Appeal in 2011, the Luxembourg company of the group owner of the brand (the
exploitation of which was granted to the Italian parent company in return for deductible
royalty payments) was indeed de facto managed in Italy during years 2004 and 2005.
Therefore, it should have been considered as an Italian resident for tax purposes and thus
subject to worldwide taxation therein.
The Italian Supreme Court dismissed the appealed decision and agreed with the taxpayer,
referring the case back to the Milan Tax Court of Appeal which should now issue a new
decision based on the principles laid out by the Supreme Court. In particular, the Supreme
Court - quoting the relevant CJEU jurisprudence on the abuse of law (in particular, Cadbury
Schweppes) - first stated that the fact that a company was created in another EU Member
State to benefit from more advantageous tax legislation does not as such constitute an abuse
of the freedom of establishment. What is relevant according to the Supreme Court “is not to
ascertain the existence or non-existence of economic reasons other than those relating to tax
advantages, but to ascertain [...] if the operation put in place is a wholly artificial
arrangement which does not reflect economic reality”.
Second, with respect to the assessment of the place of effective management of the company,
the Supreme Court quoted the CJEU decision in Planzer (C-73/06) concerning VAT,
according to which the “determination of a company’s place of business requires a series of
factors to be taken into consideration, the first amongst which are its registered office, the
place of its central administration, the place where its directors meet and the place, usually
identical, where the general policy of that company is determined, other factors, such as the
place of residence of the main directors, the place where general meetings are held, the place
where administrative and accounting documents are kept, and the place where the
company’s financial, and particularly banking, transactions mainly take place, may also
need to be taken into account”.
The Italian Supreme Court then applied the abovementioned case law pointing out that in the
specific case at issue the mere circumstance that the Luxembourg company strictly followed
directives issued by its Italian parent company was not sufficient to consider the structure put
in place as abusive and to relocate its place of effective management to Italy. The Italian
Supreme Court underlined that the motivation of the appealed decision had been too hasty in
considering the top management of the Luxembourg company to be located in Italy. On the
contrary, a thorough analysis on “the activity carried out in Luxembourg which emerges from
the email correspondence” should have been performed. Lastly, the Italian Supreme Court
made reference to its own findings from the decision already issued in a criminal procedure
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(decision n. 43809/2015) from which it emerged that ‘something was actually done in
Luxembourg, so to justify an administrative seat different from that legal seat as well as the
costs of the personnel seconded and, eventually, directly hired ".
-- Claudio Valz, Luca la Pietra, Guglielmo Ginevra, PwC Italy; claudio.valz@pwc.com
Italy – Introduction of a domestic digital services tax (DST)
On 28 December 2018, the Italian Parliament approved the 2019 Italian Finance Bill which
introduces inter alia a new tax on digital services (the so-called “web tax”) repealing the
domestic web tax on digital transactions contained in the previous Italian Finance bill but
which never entered into force in the absence of the implementation decree (see EU Tax News
Issue 2018 – nr. 001 ‘Italy – Final approval of the 2018 Finance Bill’ for further references
on the matter).
The new Italian web tax follows consistently the Council Directive proposal on a common
digital services tax dated 21 March 2018. It will be due by both Italian and non-Italian resident
service providers who, during a calendar year, individually or at group level, cumulatively
meet the following conditions:
i. total amount of worldwide reported revenues of at least EUR 750,000,000; and
ii. total amount of revenues derived from the provision of digital services in Italy of
at least EUR 5,500,000.
The web tax rate is set at 3%, and the taxable base is the consideration paid (net of VAT) for
the provision of the following services:
a) the placing on a digital interface of advertising targeted at users of that interface; or
b) the making available of a multi-sided digital interface, which allows users to find other
users and to interact with them, and which may also facilitate the provision of
underlying supplies of goods or services directly between users; or
c) the transmission of data collected about users and generated from users' activities on
digital interfaces.
The revenues resulting from the provision of the abovementioned services are taxable if the
user of those services is located in Italian territory in that period. A user is considered to be
located in Italian territory if:
i. in the case of a service falling within category a), the advertising in question appears
on the user's device at a time when the device is being used in Italy in that tax period
to access a digital interface; or
ii. in the case of a service falling within category b), the service involves a multi-sided
digital interface that facilitates the provision of underlying supplies of goods or
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services directly between users and the user uses a device in Italy in that tax period to
access the digital interface and concludes an underlying transaction on that interface
in that tax period or if the user has an account for all or part of that tax period allowing
the user to access the digital interface and that account was opened using a device in
Italy;
iii. in the case of a service falling within category c), data generated from the user having
used a device in Italy to access a digital interface, whether during that tax period or
any previous one, is transmitted in that tax period.
In any case, revenues resulting from the provision of the abovementioned services to entities
that, pursuant to Article 2359 of the Italian Civil Code, are considered to be controlling or
controlled by the same entity are not taxable. Taxable persons are required to pay the tax on
a quarterly basis and to submit an annual declaration of the amount of taxable services
provided within four months from the end of the tax period. Resident persons belonging to
the same group of a non-resident taxpayer are jointly liable for the payment of the tax due by
the non-resident associated companies.
As regards the entry into force of the new tax, a specific ministerial decree containing the
implementation measures need to be issued within 4 months from the entry into force of the
2019 Finance Act (i.e. 1 January 2019). The Italian DST will start to apply from the sixtieth
day following the publication in the Official Gazette of the aforementioned decree
(indicatively, starting from 30 June 2019).
-- Claudio Valz, Luca la Pietra, Guglielmo Ginevra, PwC Italy; claudio.valz@pwc.com
Italy – Italian Supreme Court decision on “subject to tax” requirement in EU
Parent-Subsidiary Directive
On 13 December 2018, the Italian Supreme Court issued a questionable decision (n.
32255/2018) in a case concerning the domestic implementation of the EU Parent-Subsidiary
Directive (PSD). The case originates from a refund claim submitted to the Italian Tax
Authorities in 2005 by a parent company resident in Luxembourg asking for reimbursement
- on the basis of the domestic implementation of the PSD - of the withholding tax suffered on
a dividend payment received from its Italian subsidiary in 2004.
Following the silent rejection by the Italian Tax Authorities, the Claimant filed an appeal
before the Provincial Tax Court of Pescara which upheld the appellant’s requests assessing the
presence of all the requirements for the application of the PSD as implemented by Italy,
namely:
i. the residence in an EU Member State;
ii. incorporation under one of the legal form listed in the law;
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iii. direct participation in the capital of the company distributing the dividends not less
than 25% for an interrupted period of at least one year; and
iv. be subject to one of the taxes listed in the law (the Luxembourg "impôt sur le revenues
des collectivités").
The Italian Tax Authorities appealed the decision before the Regional Tax Court of Pescara,
which surprisingly dismissed the appealed decision by stating that due to the fact that the
dividends were not subject to tax in Luxembourg under article 166 of the Luxembourg
Corporate Income Tax Code, not subjecting those dividends to withholding tax in their
country of origin (Italy) would be equivalent to excluding the dividend from any taxation.
The Italian Supreme Court confirmed the above decision of the Regional Tax Court of Pescara
by stating that article 27-bis of Presidential Decree no. 600 of 29 September 1973, (which
provides for the exemption from dividend withholding tax for an EU parent company in
accordance with the PSD) cannot be applied in the case at stake since the Luxembourg
company already benefited from a dividend exemption in its country of residence.
According to the Italian Supreme Court, the aforementioned exemption is in fact sufficient to
eliminate the risk of double taxation of the dividends. The Supreme Court stated that in the
absence of the withholding tax, the dividends at issue would have been exempted from any
taxation. The Supreme Court rejected the taxpayer’s arguments according to which the
dividend exemption granted in Luxembourg did not preclude the reimbursement of the
withholding tax in Italy since the “subject to tax” requirement of the PSD relates to the EU
parent company being subject to one of the taxes listed in the law and not to the specific
taxation of the dividend received. The Supreme Court also rejected the taxpayer’s secondary
arguments with respect to a potential breach of the freedom of establishment by stating that
the CJEU decision in Commission v. Italy (C-540/07) was not applicable in the case at stake.
As previously mentioned, the decision of the Italian Supreme Court is questionable. The
interpretation of the domestic implementation of the PSD as given by the Regional Tax Court
of Pescara, and subsequently by the Italian Supreme Court is, in fact, in clear contrast with
the purpose and aim of the PSD and with its text, which provides for the elimination of both
juridical and economic double taxation allowing the taxation of dividends only in the hands
of the distributing associated company and not in the hands of the receiving parent company.
-- Claudio Valz, Luca la Pietra, Guglielmo Ginevra, PwC Italy; claudio.valz@pwc.com
Netherlands – Foreign real estate funds eligible for Netherlands FBI status
On 23 November 2018, the Lower Court in Breda, the Netherlands, decided that a German
Open-Ended Public Fund (represented by PwC) is entitled to the FBI regime providing, among
others, for a 0% Corporate Income Tax (CIT) rate on Dutch source real estate income. The
Court also ruled that the portfolio investment test (one of the requirements of the Dutch FBI
regime) should apply only to the Dutch real estate activities. The German fund held a large
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portfolio of Dutch real estate investments and was assessed with Dutch CIT on Dutch source
real estate income in the years 1996 – 2010. The FBI regime is a facility in the Dutch CIT Act
that can be applied by listed and non-listed (real estate) investment funds such as CIVs and
REITs.
Object and purpose of the FBI regime
In the case at hand, the Dutch tax authorities (DTA) took the position that the German fund
was not eligible for the FBI regime as the (German) investors were neither subject to Dutch
dividend withholding tax nor German income tax over the Dutch source real estate income.
However, the Lower Court rejected this argument, since the requirements for the FBI regime,
as laid down in the Dutch CITA, do not require the shareholders of the FBI to be subject to
(withholding) tax.
Comparable legal form
For the years starting on or after 1 August 2017, the DTA took the position that, although the
Dutch CITA allows entities incorporated under the laws of another EU Member State to elect
for the FBI status, such entity can on the basis of the wording of the law only elect for the FBI
regime if it finds itself under the same circumstances as an entity under Dutch law. The Lower
Court rejected this argument, as the law does not require that the non-Dutch entities shall
find themselves exactly at the same circumstances as an entity under Dutch law. On the
contrary, for the years starting prior to 1 August 2007, Dutch tax law required that a FBI be
incorporated under Dutch law. Therefore, for these years the German fund would not qualify
for the FBI regime. According to the Court, such disqualification of funds incorporated or
governed by foreign law constitutes a restriction on the free movement of capital. In addition,
and contrary to the opinion of the DTA, the Court considered the German fund be objectively
comparable to a Dutch FBI. With reference to the recent Court of Justice of the EU (CJEU)
judgment in Fidelity Funds (C-480/16), the Lower Court concluded that the fact that the
taxation of the income of the German fund is not shifted to the level of the investors does not
make such fund objectively incomparable with a Dutch fund. In addition, the Court concluded
that there are no valid justification grounds for not applying the FBI regime to the German
fund. Moreover, the Court considered that not applying the 0% CIT rate to the German fund
would result in economic double taxation of Dutch individual investors investing in Dutch real
estate through the German fund. For non-Dutch individual investors the Court concluded that
an investment in Dutch real estate through the German fund results in a higher amount of
Dutch taxation than in case of an investment by the same investors through a Dutch FBI.
Given these circumstances, the argument that the purpose of the FBI regime aims to achieve
fiscal neutrality cannot be used to deny the application of the FBI regime to the German fund.
Portfolio investment test
Under Dutch tax law, the activities of an FBI must solely consist of portfolio investment
activities. The Lower Court considered that this test should apply based on Dutch law and
Dutch case law. According to the Court, the burden of proof that the activities consist solely of
portfolio investment under Dutch tax law lies on the taxpayer. In that regard, the DTA took
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the position that the activities of the German fund go beyond the level of portfolio
investments. Based on the facts presented by both parties, the Court decided that the activities
of the German fund, as far as it consists of purchasing, renting out and selling real estate,
qualifies as portfolio investment activities. However, with respect to the German fund’s
activities of entering into so called “turn-key” projects with development companies, the Court
considered that these activities fall within a grey area. Based on the limited information
available to the Court as to the actual activities of the taxpayer in relation to these projects,
the Court decided that the taxpayer did not deliver the required proof that the activities did
not go beyond portfolio investment activities.
Furthermore, the German fund claimed that it does fulfil the investment test for German tax
purposes on a global basis. The German fund claimed that based on EU case law the
investment test for Dutch tax purposes should only apply on the Dutch activities of the
German fund. The DTA, however, claimed that all activities (including those in other
territories) should fulfil the investment test for Dutch tax purposes. The Lower Court
considered that, although applying the Dutch investment test on a global basis may not be
considered discriminatory per se, such application may be considered in conflict with the free
movement of capital based on the CJEU judgment in Van der Weegen (C-580/15). Although
the Court was not without doubt as to its interpretation of EU law, it sought for a fair balance
between the tax sovereignty of EU Member States and the free movement of capital. It thus
ruled that a German fund fulfilling the investment test requirement for German tax purposes
is required to meet the investment test for Dutch tax purposes only for its Dutch activities.
Finally, the German fund claimed that, should the Lower Court decide that (part of) its
activities go beyond portfolio investment activities for Dutch tax purposes, based on the
principle of equality it should still be entitled to the FBI regime. The German fund provided
public information (annual reports) as to the activities of four Dutch FBIs from which it
appears that these FBIs were engaged in property development activities in the years up to
2007. The German fund claimed that the DTA were applying the investment test less strictly
to Dutch FBIs than to the German fund, which is in conflict with the principle of equality. In
that regard, the Court decided on the basis of the non-contested facts presented by the
German fund that based on the principle of equality the German fund does comply with the
investment test for the years starting before 1 August 2007. For the years starting on or after
1 August 2007, the Court ruled that the German fund did not substantiate that the principle
of equality is violated, because from these years FBIs were allowed to engage in property
development activities through a taxable development subsidiary. Taking all of the above into
account, the Court decided that in years starting on or after 1 August 2007 in which the
German fund engaged in “turn-key projects” in relation to Dutch real estate, it did not deliver
the required proof that the activities did not go beyond portfolio investment activities so to
apply for the FBI regime.
PwC EU Tax News Page 16
State aid
The DTA claimed that granting the FBI regime to the German fund without the taxation of the
income of the fund being shifted to the investors, would constitute State aid. The Lower Court
did not uphold this argument based on a number of reasons, including that the DTA did not
sufficiently substantiate their position.
-- Hein Vermeulen and Vassilis Dafnomilis, PwC Netherlands; hein.vermeulen@pwc.com
Netherlands – Dutch Supreme Court maintains preliminary questions to CJEU
on comparability of Dutch and foreign investment funds
On 3 December 2018, the Dutch Supreme Court published its decision in which it decided to
maintain part of the preliminary questions to the Court of Justice of the European Union
(CJEU) in the case Köln Aktienfonds Deka (C-156/17). At the same time, the Supreme Court
decided to withdraw its request for a preliminary ruling in the case X Fund (C-157/17) and a
similar question in the case Köln Aktienfonds Deka considering that, in the view of the
Supreme Court, this question has already been sufficiently answered in the previous CJEU
judgment in Fidelity Funds (C-480/16).
A Dutch Fiscal Investment Institution (FII) is entitled to a tax credit when it distributes its
profits to its participants. The tax credit can be offset against the Dutch dividend withholding
tax that the FII withholds at the moment of distribution, whereby effectively the Dutch input
dividend withholding tax is being refunded. Foreign investment funds have requested a
similar treatment by filing requests for a refund of Dutch dividend withholding tax for past
years, as they are not able to credit Dutch dividend withholding tax upon distributions of their
profits. This has resulted in several litigations before the Dutch courts. On 1 August 2016, a
Dutch District Court referred questions for a preliminary ruling to the Dutch Supreme Court
in the two aforementioned cases. Given the apparent legal uncertainties and the then pending
Fidelity Funds case, the Supreme Court referred questions for a preliminary ruling to the
CJEU.
In summary, the preliminary questions of the Supreme Court to the CJEU, related to the
following:
i. Is not providing a refund of Dutch withholding tax on the ground that a foreign
investment fund does not have a Dutch withholding tax obligation on distributions to
its investors in accordance with the free movement of capital?
ii. How are the shareholder and distribution requirements for an FII to be applied to a
non-resident investment fund?
In the meantime, the CJEU ruled in the case Fidelity Funds that the Danish legislation in
question, which provides a refund of Danish input dividend withholding tax to Danish UCITS
funds, but subjects non-resident UCITS funds to a final non-refundable Danish dividend
withholding tax was contrary to the free movement of capital.
PwC EU Tax News Page 17
Considering that the Supreme Court’s preliminary questions related to similar considerations
as in Fidelity Funds, the CJEU asked the Supreme Court whether it wanted to uphold its
requests for a preliminary ruling in the two aforementioned cases.
On 3 December 2018, the Supreme Court informed the CJEU that its first question as
mentioned above has already been answered in Fidelity Funds. According to the Supreme
Court, Fidelity Funds confirms that the fact that foreign investment funds do not withhold
dividend tax on the profits paid to their participants, should not be a reason to deny these
foreign investment funds a refund of dividend withholding tax. The questions with respect to
the relevance of the shareholders and distribution requirements are, in the view of the
Supreme Court, not answered in Fidelity Funds and are thus maintained.
The decision of the Dutch Supreme Court is positive news for foreign investment funds which
filed claims in the Netherlands, as the fact that they are not subject to a Dutch withholding tax
obligation on distributions to their investors does not make them incomparable with a Dutch
FII. Furthermore, a CJEU judgment on the relevance of the shareholders and distribution
requirements is desirable and would finally provide certainty on the matter. The outcome of
this case will likely dictate the course of action for pending refund claims in the Netherlands.
-- Job Hoefnagel and Hein Vermeulen, PwC Netherlands; hein.vermeulen@pwc.com
Sweden – Compatibility of 2013 interest deduction limitations with EU law
Sweden enacted new interest deduction limitation rules in 2013. The main rule is that intra-
group interest expenses are non-deductible. There are exceptions to this main rule based on
which interest expenses can be deducted even if the loan is from a related entity. One of the
exceptions can be found in the so-called 10% rule, according to which interest costs on loans
from related entities can be deducted if the income equivalent to the interest expenses would
have been taxed with a tax rate of at least 10%. This assessment should be made as a
hypothetical test based on the regulations in the country in which the related company
actually having the right to the income is resident (assuming that the company would have
only had this income). There is also an exception to the 10% rule, which states that if the main
reason for the debt relationship is that the group will obtain a substantial tax benefit, then the
interest expenses may not be deducted.
There has been a heavy debate for years in Sweden on whether the rules are compatible with
EU law or not. In the preparatory works, the government stated that the deduction should not
be denied if the lender and borrower could exchange group contributions with each other
(under the Swedish tax consolidation system). This means that it is more likely that loans from
non-Swedish lenders could be challenged. The Swedish Tax Agency has issued many negative
decisions for taxpayers over the years, and the lower level courts have typically been very
restrictive in their assessments, resulting in denied deductions. In December 2014, the
European Commission (EC) sent a formal notice to the Swedish government stating that the
PwC EU Tax News Page 18
rules are not compatible with the EU freedom of establishment. The Swedish government
disagreed, but the EC has to date not taken any further steps in the case.
On 22 November 2018, the Supreme Administrative Court decided to grant leave to appeal in
one case (case number 4849-4850-18) in order to assess whether it would be in line with the
EU freedom of establishment to deny the interest deduction under the exception to the 10%
rule. The Supreme Administrative Court will need to decide whether it will refer preliminary
questions to the CJEU.
The case at hand concerns a Swedish company, which acquired shares in a group company
from a Spanish group company, and financed the acquisition with an intra-group loan from a
French group company. The French group company could offset the Swedish interest income
against tax losses carried forward. The French corporate income tax rate was above 10% but
the Swedish Tax Agency, the Administrative Court and the Administrative Court of Appeal
considered the exception to the 10% rule to be applicable and denied the deduction. The
courts, however, noted that the deduction would have been granted if the French group
company would have been resident in Sweden. This led to a restriction of the EU freedom of
establishment, which the courts considered to be justified and proportionate and thus the
appeal was dismissed. It now remains to see whether the Supreme Administrative Court (and
possibly the CJEU) will confirm this or decide differently.
-- Fredrik Ohlsson, PwC Sweden; fredrik.ohlsson@pwc.com
Switzerland – Swiss Tax Reform Update
Following the approval of the Swiss Tax Reform Bill on 28 September 2018, sufficient
signatures were deposited for a referendum, meaning that a public vote will be required for
the tax reform. The date for this public vote has been set for 19 May 2019. If the vote is
successful, the reform will enter into force on 1 January 2020.
There are very strong reasons why the Swiss citizens should vote yes on 19 May 2019, and the
bill is supported by all large parties as well as the Cantons and the cities. The fact that the
cantons support the federal tax bill is particularly demonstrated by the fact that they have
started to push ahead with the implementation of the new rules into their cantonal tax laws,
independent of the above federal vote. Depending on the Canton, the procedure is more or
less advanced while for instance in Canton Basel-Stadt there will be also a public vote on 10
February 2019. It is currently expected that partial reforms and Cantonal rate reductions will
be passed in several Cantons within 2019 irrespective of the federal bill status.
The Swiss Tax Reform Bill intends to ensure international acceptance of the Swiss corporate
tax system. With the amendments in the federal & cantonal tax law the cantonal tax regimes
for holding, mixed and domiciliary companies, as well as the Federal taxation rules for
Principal companies and Swiss Finance Branches will be abolished. With respect to the two
latter federal regimes, the authorities already announced that they have "closed" such regimes
PwC EU Tax News Page 19
with immediate effect in mid-November 2018 for new entrants whilst existing companies can
for the time being continue benefitting from these regimes. Next to the abolition of the current
regimes, the bill includes the introduction of internationally recognised substitute measures
such as e.g. a patent box and a R&D super-deduction.
-- Armin Marti and Anna-Maria Widrig Giallouraki, PwC Switzerland;
armin.marti@ch.pwc.com
Spain – Introduction of a domestic digital services tax (DST)
In October 2018, the Spanish Government issued a draft law with a proposal for the
implementation of a Digital Services Tax (DST) closely following the initial proposed EU
Directive on this matter. The Draft remained subject to a Public Information Procedure until
15 November 2018, which was the final date for the submission of contributions.
According to the draft bill, the taxable event is limited to one the following categories:
i. Online advertising: The inclusion, in a digital interface, of advertising aimed at users
of such interface.
ii. Online intermediation: Services whereby multifaceted digital interfaces are made
available which enable the users thereof to locate other users and interact with them,
or which facilitate underlying supplies of goods or services taking place directly
between such users. The underlying supplies of goods or services fall outside the scope
of the tax. Provisions of online intermediation services are also deemed not subject to
taxation under this category when the sole or main purpose of such services, provided
by the entity by which the digital interface is made available, is to supply digital
contents to users or provide communication services or payment services to them.
iii. Transmission of data: Services in relation to, and the transmission of, data collected in
respect of users which have been generated by the activities of such users on digital
interfaces. Sales of goods or services contracted online through the website of the
supplier thereof, where the supplier is not acting as an intermediary, are not subject to
the tax.
The services must be understood to be rendered in Spain where use is made of a device located
in Spain (irrespective of whether or not the user is a Spanish resident). This will be the case in
one the following circumstances:
i. Online advertising services: when at the point at which the advertising is displayed on
the user's device, such device is located in Spain.
ii. Online intermediation services involving the facilitation of underlying supplies of
goods or services taking place directly between users: when the underlying operation
performed by a user is executed through the digital interface of a device which, at the
time of concluding the operation, is located in Spain.
PwC EU Tax News Page 20
iii. Other intermediation services: when the account which enables the user to access the
digital interface has been opened using a device which, at the time of such opening,
was located in Spain;
iv. Data transmission services: when the data transmitted have been generated by a user
through a digital interface which was accessed by means of a device which, at the point
in time at which the data were generated, was in Spain.
Both resident and non-resident companies can be taxpayers for the purposes of the DST.
The DST only applies to companies which, for the previous year, had a global turnover in excess
of EUR 750 million and obtained revenues from digital services provided in Spanish territory
of more than EUR 3 million.
The tax rate will be 3%, applied to the revenues obtained by the company from digital services
that are subject to the DST. Revenues subject to taxation will be determined on a proportional
basis, as follows:
i. Online advertising services: the proportion corresponding to the number of times the
advertising is displayed on devices located in Spain in relation to the total number of
times such advertising is displayed on any device, irrespective of location, is applied to
the total revenues obtained.
ii. Online intermediation services involving the facilitation of underlying supplies of
goods or services taking place directly between users: the proportion corresponding to
the number of users located in Spain in relation to the total number of users
participating in the service, irrespective of their location, is applied to the total
revenues obtained.
iii. Other intermediation services: The tax base will be determined based on the total
amount of revenues obtained directly from users when the accounts which enable
them to access the digital interface used were opened using a device which, at the time
of such opening, was located in Spain.
iv. Data transmission services: the proportion corresponding to the number of users
generating such data who are located in Spain in relation to the total number of users
generating the data, irrespective of location, shall be applied to the total revenues
obtained.
Apart from the general penalties regime applicable in cases of default, it is established, as a
special rule, that the falsification or concealment of evidence which determines where supplies
of digital services have taken place shall be classed as a serious tax offence. Specifically, such
an offence shall be deemed to have been committed where there has been any action or
omission which implies the falsification or concealment of the Internet Protocol (IP) address
or other geolocation instruments or evidence on the basis of which the place of supply of
provisions of digital services, referred to in Article 7 of the Law, is determined.
PwC EU Tax News Page 21
The penalty shall consist of a fixed pecuniary fine of EUR 150 for each instance of access in
which such location has been falsified or concealed, up to a maximum limit, for all offences of
this type committed during the calendar year, of EUR 15.000 euros in the case of persons or
entities not engaging in economic activities or of 0.5 per cent of turnover for the previous
calendar year - as established in Article 8 of the Law - in the case of persons or entities engaging
in economic activities.
Despite the status of the DST at EU level, the Spanish Government continues to move forward
in this respect. At this stage, there is no clear information on whether this draft law will be
finally approved or whether it would be amended following the EU steps. In any case, this
should be closely monitored.
-- Antonio Puentes and Roberta Poza, PwC Spain; roberta.poza.cid@pwc.com
Spain – Implementation of ATAD 1 and tax havens provisions
On 23 October 2018, a draft bill addressing the implementation of some of the rules within
ATAD 1 was published by the Spanish government. The Draft remained subject to a Public
Information Procedure until 15 November 2018, which was the final date for the submission of
contributions. Of the anti-tax avoidance measures contained in ATAD 1, the draft bill will only
transpose the rules on exit taxes and controlled foreign companies (CFC).
The ATAD general anti-abuse rule (GAAR) and the anti-hybrid rules contained in ATAD 1 will
not be transposed to the extent that the Spanish government believes that the existing law
already meets ATAD’s requirements. The tax bill also excludes the ATAD 1 provision that deals
with the limitation of interest expenses; in this regard, the EC granted Spain the option to
postpone the transposition of this rule until 2024 on the ground that the Corporate Income Tax
Law (CITL) already contains equally effective provisions. Spain also has decided to postpone
the introduction of the anti-hybrid rules contained in ATAD 2 until 2021, given their
complexity.
Exit tax
The CITL currently contains an exit tax provision that generally applies whenever a company
shifts its tax residence from Spain to a foreign jurisdiction. However, when the tax residence
shifts to an EU/EEA jurisdiction, the taxpayer may defer the payment of capital gains tax until
the assets are transferred to a third party. The draft bill if adopted will eliminate this possible
deferral, but would provide the EU/EEA migrating taxpayer the option of paying the tax due
in five equal annual instalments. The first instalment will be payable when the income tax
return for the taxable year in which the migration takes place is due. The remaining four
instalments are interest-bearing. Moreover, the tax authorities may require the taxpayer to
provide a bank guarantee on the tax amount owed if there is a reasonable indication that the
taxpayer may fail to pay the deferred tax. The draft bill also contemplates tax migrations to
Spain, which are currently not addressed specifically in the tax code. When there is a migration
or transfer of assets from another EU jurisdiction, provided that the migration has been subject
PwC EU Tax News Page 22
to an exit tax in the exit state, Spain will recognize a tax basis in the assets that is equal to the
value assessed by the exit state, unless it is not at arm’s length.
Controlled foreign company rules
The draft bill broadens the scope of Spain’s existing CFC rules to align them with ATAD. The
current CFC rules apply only to non-resident subsidiaries of Spanish taxpayers. The draft bill
extends the application of the CFC rules to foreign permanent establishments (PEs). Therefore,
if the PE generates passive income and that income is subject to income tax at an effective rate
lower than 18.75%, [i.e., 25% x 75%], then the income is immediately subject to Spanish income
tax and not eligible for the branch exemption.
Further, the draft bill expands the concept of passive income to include two new categories
namely income generated from insurance, banking, financial leasing, and other financial
activities, unless the activity is deemed to constitute a business activity and sales and services
income from transactions with related parties, when the CFC adds no or little economic value.
The current CFC rules include a safe harbour whereby income from financial, insurance,
leasing, and service activities is not regarded as passive if the CFC generates at least 50% of
that income from unrelated parties. The draft bill raises this percentage to two-thirds.
Furthermore, an existing carve out from the CFC rules for certain intermediate holding
companies is repealed. The proposed CFC rules do not apply to EU/EEA subsidiaries and PEs,
provided that they carry out an economic activity. The current rules only carve-out EU-resident
entities.
Finally, the draft bill expands the “tax haven” concept to align it with the EU and the OECD
initiatives in this field, and includes the possibility of listing not only countries or jurisdictions
but also tax regimes.
-- Antonio Puentes and Roberta Poza, PwC Spain; roberta.poza.cid@pwc.com
Spain – Draft Financial Transaction Tax
On 23 October 2018, the text of the Draft Law of the Financial Transactions Tax (the Draft) and
its corresponding Memorandum of Analysis of the Normative Impact (the Memorandum) were
published. The Draft remained subject to a Public Information Procedure until 15 November
2018, which was the final date for the submission of contributions.
Scope of application
The scope of application of the tax is extraterritorial, upon the establishment of the principle
of issuance, according to which "the tax shall be applied regardless of the place where the
acquisition is made and whatever the residence of the persons or entities that intervene in the
operation" (Article 1).
PwC EU Tax News Page 23
Taxable event and tax rate
The tax is applied at a 0.2% rate on acquisitions for consideration of shares representing the
share capital of companies of Spanish nationality. The Memorandum explains that the concept
of "acquisition for consideration” has a broad sense meaning that not only the shares acquired
by purchase and sale contracts are taxed but also those acquired through other contracts for
consideration, such as exchanges, or when they derive from the settlement of other securities
or from the executions of financial instruments and contracts that may lead to their acquisition,
as explained below.
Acquisitions of shares will be subject to tax when the following conditions are met:
i. The shares are admitted to trading on a Spanish market, or on a market of another
European Union State, which is considered to be a regulated market in accordance
with the provisions of the Directive 2014/65 / EU of the European Parliament and of
the Council of 15 May 2014, or in a market considered equivalent to a third country
according to the provisions of article 25.4 of said Directive.
ii. The stock market capitalization value of the company is, on December 1 of the year
prior to the acquisition, greater than EUR 1,000 million.
Exemptions
Exemptions are established for the following acquisitions of shares:
i. Those derived from the issuance of shares;
ii. Those derived from a public offer for the sale of shares, in their initial placement
among investors.
iii. Those carried out by certain financial intermediaries (underwriters, insurers, financial
intermediaries in charge of price stabilization, central counterparties, central
securities depositories, liquidity providers and market makers), in compliance with
their obligations or functions, with the scope and under the conditions strictly
established in article 3, letters c) to h) of the Draft;
iv. Those made between entities that are part of the same mercantile group;
v. Acquisitions to which the tax neutrality regime for restructuring transactions,
established in the Spanish Corporate Income Tax Law, could be applicable, and
acquisitions originated by mergers or demergers of collective investment institutions,
or compartments or sub-funds of collective investment institutions;
vi. Repurchase transactions, securities lending and borrowing, buy-sell back transactions
or sell-buy back transactions, margin lending transactions and collateral operations
with change of ownership as a result of a financial guarantee agreement with change
of ownership (all of the former, as defined according to EU regulations);
vii. Acquisitions derived from the application of resolution measures adopted by the Single
Resolution Board, or the competent national resolution authorities, under the terms
provided in Regulation (EU) 806/2014 of the European Parliament and of the Council,
of 15 July 2014.
PwC EU Tax News Page 24
Taxable base
As a general rule, the taxable base will be the amount of the consideration, not including the
transaction costs derived from the market infrastructures prices, nor the commissions for the
intermediation, nor any other expense associated with the operation.
Taxpayers
The following rules are established:
i. Acquisitions made in a trading centre. As a general rule, the taxpayer will be the
member of the market that executes it, whether acting on behalf of themselves or third
parties. However, when one or more financial intermediaries are involved in the
transfer of the order to the market member on behalf of the purchaser, at least one of
them acting on their own behalf, the taxpayer shall be the first financial intermediary
closest to the acquirer that has transmitted the order of the latter in his own name;
ii. Acquisitions executed outside a trading centre, in the scope of activity of a systematic
internaliser. The taxpayer will be the systematic internaliser itself;
iii. Acquisitions made outside a trading centre and of the activity of a systematic
internaliser. The taxpayer will be the investment services entity or credit institution
which directly performs the operation on its own account or the financial intermediary
receiving the order from the acquirer of the securities or who makes its delivery to the
latter under the execution or settlement of a financial instrument or contract;
iv. In the event that the acquisition is executed outside of a trading centre and without the
intervention of any of the persons or entities referred to in the preceding letters, the
taxpayer will be the entity that provides the custody service for the securities on behalf
of the purchaser.
Tax filing and payment obligations
As a general rule, taxpayers have the filing and payment obligations, although the procedures
and terms will be established through a later Regulation. There will also be an annual
declaration of the tax in which the exempt operations will have to be included. However, it is
foreseen that through a subsequent Regulation, the taxpayers may make the filing and payment
of the tax through a central securities depository located in Spanish territory, and through
collaboration agreements, through central securities depositories located in other States of the
EU, or in third States recognized to provide services in the EU.
Entry into force
The Law will come into force three months after publication in the Spanish Official State
Gazette.
-- Antonio Puentes and Roberta Poza, PwC Spain; roberta.poza.cid@pwc.com
PwC EU Tax News Page 25
Spain – Supreme Court Decision admitting the appeals on two potential
restrictions of EU free movement of capital
On 5 and 12 December 2018, the Spanish Supreme Court released several decisions admitting
the appeals, lodged by the General State Administration, claiming for the potential
infringement of Article 63 of the TFEU concerning the EU free movement of capital between
EU Member States and Third Countries in relation to the tax levied under the Spanish
Inheritance and Gift Tax. The appeal is based on the fact that inheritors and/or gift
recipientswho are residents in third countries cannot get benefits from the tax reduction
within the regional tax laws on the matter, a reduction which is available to residents within
the EU or EEA. The difference in treatment may constitute an infringement against the free
movement of capital.
The Supreme Court will rule on whether the CJEU’s decision of 3 September 2014 in EC vs.
Spain (C-127/12) applies to residents in countries not part of the EU and EEA (in particular,
if the CJEU’s doctrine at hand applies in cases in which there is a resident in Switzerland and
in Brazil, respectively).
-- Antonio Puentes and Roberta Poza, PwC Spain; roberta.poza.cid@pwc.com
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EU Developments
EU – December ECOFIN Council policy debate on DST: DST proposal rejected
The EU’s 28 Finance Ministers held a public policy debate on the proposal to establish an
interim digital services tax (DST). Following a thorough analysis of all technical issues, the
Austrian Presidency put forward a compromise text containing the elements that had the most
support from Member States. However, the ECOFIN Council issued a press release saying
that: “at this stage a number of delegations cannot accept the text for political reasons as a
matter of principle, while a few others are not satisfied yet with some specific points in the
text. That text did not gain the necessary support and was not discussed in detail.
Ministers also examined a joint declaration by the French and German delegations.
The Austrian ECOFIN Presidency recommended that the Council working group continues
working on the basis of the latest Presidency compromise text and the elements proposed by
France and Germany, with the aim of reaching an agreement as soon as possible.
PwC EU Tax News Page 26
For the time being there is no agreement at international level on how to respond to such
challenges. The OECD has taken up work on this issue and has published an interim report in
March 2018. Its "Task Force on digital economy" aims at producing a final report by 2020."
NEXT STEPS:
The outgoing Austrian Presidency instructed the Council to prepare / adjust the DST draft
Directive at technical level, with the assistance of the Commission;
The new proposal should reflect: a) the Franco-German joint declaration/proposed
approach -which was accepted under conditions by Member States and b) the Austrian
Presidency's work done so far to reach a compromise (and the input by some individual
Member States including the UK), and will be based and build on the Commission's draft
DST Directive (i.e the EC will not formally issue a new EU legislative proposal for a
Directive);
The adjusted new draft compromise text should be announced 'as soon as possible', most
probably in the course of January 2019;
The ECOFIN Council's working assumption / self-imposed deadline for reaching political
agreement is 12 March 2019.
-- Bob van der Made, PwC Netherlands; bob.vandermade@pwc.com
EU – ECOFIN Council adopts 6-monthly progress report to the European Council
on tax issues
The ECOFIN Council on 4 December 2018 chaired by Austria endorsed ECOFIN’s 6-monthly
progress report to the European Council of 13 December 2018. The progress report was
published on 6 December 2018 and provides an overview of the achievements in the Council
during the term of the Austrian Presidency, as well as an overview of the state of play of the
most important dossiers under negotiations in the area of taxation. The ECOFIN Report to
the European Council can be found here.
-- Bob van der Made, PwC Netherlands; bob.vandermade@pwc.com
EU – Code of Conduct Group (business taxation) update on its agreed guidance
The Code of Conduct Group (business taxation) has issued another of its now regular updates
on its agreed guidance since its creation in March 1998. The report is a compilation of all Code
Group guidance notes listed in chronological order. The guidance document per 20 December
2019 can be found here.
-- Bob van der Made, PwC Netherlands; bob.vandermade@pwc.com
PwC EU Tax News Page 27
EU – Austrian Presidency publishes State of Play on CCTB Directive
On 5 December 2018, the Austrian EU Council Presidency published a Presidency
compromise text on the European Commission’s CCTB proposal (Chapters I to V). The CCTB
compromise text can be found here.
-- Bob van der Made, PwC Netherlands; bob.vandermade@pwc.com
EU – Implementation of Article 4 ATAD: European Commission publishes list of
EU Member States with equivalent effective rules
The European Commission has decided which 5 EU Member States qualify for the
postponement of the implementation of Article 4 of the ATAD until 2024 on the basis of
having equivalent effective rules in their domestic law. The EC published the list in the EU's
Official Journal (see below) on 17 December 2018. The list includes Greece, France, Slovakia,
Slovenia and Spain.
-- Bob van der Made, PwC Netherlands; bob.vandermade@pwc.com
EU – European Parliament TAX3 special committee final draft report
The European Parliament’s Special Committee on Financial Crimes, Tax Evasion and Tax
Avoidance (aka ‘TAX3’) issued its final draft report on 9 November 2018. The Co-rapporteurs
are: Jeppe Kofod (S&D/Denmark) and Luděk Niedermayer (EPP/Czech Republic). The
Committee will vote to adopt its final report on 27 February 2019 after which it will be put to
a vote in the plenary session of the European Parliament on 26 March 2019. The European
Parliament only has an advisory role in the EU’s decision-making process on Taxation, i.e. the
European Parliament’s ensuing Resolution of 26 March will not be legally binding on Member
States or the European Commission.
-- Bob van der Made, PwC Netherlands; bob.vandermade@pwc.com
EU – European Commission considerations on the Spanish mandatory reporting
on assets and rights located abroad
In 2017, the European Commission (EC) issued a reasoned opinion in which it stated that the
Spanish mandatory reporting on assets and rights located abroad are discriminatory and
disproportionate with the EU fundamental freedoms. The reasoned opinion has been leaked to
the press, following the request made to the Spanish Ministry from a national Court dealing
with a specific case of a taxpayer affected by the regime.
The EC understands that the regime is discriminatory and affects the EU fundamental
freedoms. Apparently, the EC would have stated that the penalty regime applicable to that
obligation would be discriminatory considering the regime for similar infringements,
applicable to domestic taxpayers, under the Spanish General Tax Act. In addition, the EC might
PwC EU Tax News Page 28
have considered that the proportional/variable penalty applied on the capital gains, linked to
those foreign assets and rights located abroad and non-reported, would be non-proportional.
It should be noted that the EC’s reasoned opinion on this matter has not been officially
released.
-- Antonio Puentes and Roberta Poza, PwC Spain; roberta.poza.cid@pwc.com
Back to top
Fiscal State aid
Germany – CJEU judgment in A-Brauerei
On 19 December 2018, the CJEU delivered its judgment in A-Brauerei (C-374/17) concluding
that Germany’s exemption from Real Estate Transfer Tax (RETT) in section 6a of the RETT
Act, which applies to group restructurings, is compatible with EU State aid rules as it is not
selective. In 2009, Germany introduced the RETT exemption to facilitate reorganisations of
company groups that appeared necessary due to the financial crisis. In 2012, A-Brauerei
acquired all assets of its 100% subsidiary by an upstream merger. As the merged subsidiary
owned German real estate, RETT would have been triggered if the tax exemption under
section 6a RETT Act had not come into play. The provision applies to:
i. a restructuring regulated by German law or the law of an EU/EEA Member State if
ii. all entities involved belong to the same group (i.e. they are linked by direct or indirect
participations of at least 95%) and
iii. the participations exist continuously during the five years before and after the
transaction.
The German Federal Fiscal Court decided that A-Brauerei is entitled to the RETT exemption
unless the rule constitutes illegal State aid. In May 2017, it referred the case to the CJEU and
asked for its assessment on EU State aid compatibility. The CJEU held that the RETT
exemption constitutes a derogation from the general reference framework, under which all
transfers of ownership in German real estate trigger RETT. Group companies and companies
outside groups are legally and factually comparable in the light of the objective of the reference
framework, which is to tax all transfers of ownership. However, the CJEU found that the
derogation can be justified by the intention to prevent double taxation. In a case where it can
be assumed that the integration of the subsidiary into the group already triggered RETT, it is
legitimate to exempt the subsequent merger from RETT. As regards requirement (iii) relating
PwC EU Tax News Page 29
to the duration of the holding, the CJEU found it to be justified by the objective to prevent
abuse. The CJEU did not comment on requirement (i).
-- Arne Schnitger and Björn Bodewaldt, PwC Germany; bjoern.bodewaldt@pwc.com
Italy – CJEU State aid judgment on real estate tax exemption granted to Italian
non-commercial entities
On 6 November 2018, the Court of Justice of the European Union (CJEU) issued its judgment
in the joined cases Scuola Elementare Maria Montessori Srl vs European Commission and
Others (C-622/16 P to C-624/16 P) partially setting aside the earlier judgments of the General
Court in the related cases T-219/13 and T-220/13.
The case concerns the European Commission’s (EC) decision, dated 19 December 2012, which
concluded that the exemption from the payment of the Italian municipal tax on real estate
(ICI), enjoyed from 1992 until 2012 by non-commercial entities, constituted incompatible
State aid. Notably, the EC decided not to order the recovery of the aid based on the alleged
Italian Tax Administration’s absolute impossibility to do so. A private school, Montessori, and
the owner of a B&B, liable to the tax at issue, appealed the decision before the General Court
claiming to be damaged by the exemption granted to their competitors and by the EC’s
decision to not recover the aid at issue. The appellants also claimed – in contrast to the EC’s
decision - that the new real estate tax exemption rules adopted by Italy on 19 November 2012
also constituted incompatible State aid. The General Court endorsed the admissibility of the
claimants’ actions with two decisions issued on 15 September 2016 but rejected the remaining
claims including the alleged unlawfulness of the EC’s decision related to recovery.
With respect to the procedural issues, the CJEU, for the first time in a State aid case and in
accordance with the mentioned General Court’s decisions, admitted a direct action against an
EC decision brought by competitors of the beneficiaries of a State aid measure.
In particular, the CJEU made reference to the concept of ‘regulatory act’ (Article 263 TFEU)
extended by the Lisbon Treaty, according to which an EC decision could be considered as an
act applicable in a general manner to objectively determined situations and producing effects
towards a category of persons envisaged in an abstract manner, including appellants in their
capacity of competitors of the beneficiaries of the contested aid. As to the substance of the
case, the CJEU affirmed that the EC can assess the non-recovery of an aid – already at the
stage of the formal investigation procedure – if such recovery would be in conflict with a
general principle of the EU law, such as the legal principle that ‘no one is obliged to do the
impossible’.
The CJEU, however, upheld the claimants’ appeal affirming that this condition was not
satisfied in the case at stake because the alleged difficulties of the Italian Tax
PwC EU Tax News Page 30
Administration to obtain the information needed for the recovery from the domestic land
registry and databases are not sufficient to conclude for the absolute impossibility of recovery.
Second, according to the CJEU, the EC was – in any case – obliged, in cooperation with the
concerned Member State to suggest alternative methods of recovery.
Lastly, the CJEU confirmed the General Court decisions and rejected the arguments brought
by Montessori with respect to the unlawfulness of the new real estate municipal tax exemption
regime.
This decision is of great importance due to the fact that a direct action against an EC decision
brought by competitors of the beneficiaries of a State aid measure was admitted for the first
time.
-- Claudio Valz, Luca la Pietra, Guglielmo Ginevra, PwC Italy; claudio.valz@pwc.com
Spain – EU General Court confirms the European Commission’s decisions on the
Spanish tax scheme for the amortization of financial goodwill
On 15 November 2018, the General Court of the EU issued its judgments confirming the
European Commission’s (EC) decisions on the special Spanish tax regime for the amortization
of financial goodwill in the cases: Deutsche Telekom (T-207/10), Banco Santander (T-227/10),
Sigma Alimentos Exterior (T-239/11), Axa Mediterranean (T-405/11), Prosegur Compañía de
Seguridad (T-406/11), World Duty Free Group (T-219/10) and Banco Santander (T-399/11).
Background
The general rule under Spanish tax law is that the amortization of goodwill for tax purposes is
only possible in case of business combinations. However, in 2001, a particular tax measure was
included in the Spanish Corporate Income Tax Act (CITA) allowing Spanish tax resident
corporations to deduct, in the form of an amortization, the financial goodwill arising from the
acquisition of shareholdings of at least 5% in non-resident companies. This was subject to the
condition that the non-resident company was held without interruption for at least one year.
In 2005 and 2006, some members of the European Parliament asked the EC to determine
whether the Spanish measure qualified as State aid. The EC considered that it was not the case.
However, in October 2017, a private party requested the EC to start a formal investigation on
the Spanish tax measure. The formal investigation was concluded with two decisions in which
the EC considered that the tax measure at hand constituted State aid.
The Conclusions of the General Court:
The key conclusions of the General Court in its judgments as referred to above are as follows:
i. The tax measure at issue was selective, even though its tax advantage was accessible to
all undertakings tax resident in Spain. Thus, a measure may be selective even if the
PwC EU Tax News Page 31
difference in treatment is based on the distinction between undertakings choosing to
perform the transaction covered by the measure and those undertaking that choose to
not perform it. Thus, the difference in treatment based on their specific characteristic
is not the key element.
ii. With respect to the identification of the reference system, the General Court, in
confirming the EC’s view, states that the tax treatment on the financial goodwill should
be seen as the relevant reference system for the case at hand.
iii. Regarding the beneficiary of the tax advantage, the General Court considers that the
beneficiary is the company making the acquisition which deducts the financial
goodwill following the procedure under the challenged tax measure, and not the
vendors as the interested parties argued by stating that the tax advantage was passed
on to the disposal price attached to the shareholding in the form of a higher price. The
General Court concludes that the identification of the beneficiary of the State aid
should be done in an objective manner.
iv. Finally, the General Court recognizes the right to rely on the principle of legal certainty
to challenge any State aid decision from the EC. In particular, in its Deutsche Telekom
judgment, the General Court confirms the application of the tax measure at hand and
the non-recovery of the granted aid for those acquisitions performed before 21
December 2007 or those transactions in which an irrevocable obligation to acquire the
shareholding was entered into before the aforementioned date. This exception protects
the legitimate expectations of the beneficiaries.
These judgments clarify certain points in the EU’s State aid doctrine inter alia with regard to
the selective character, the concept of beneficiary and the role of the principle of legal certainty.
In the same way, these General Court judgments would imply the recovery of the declared State
aid by the Spanish government in those cases not covered by the legal certainty exception.
These judgments could still be appealed before the CJEU.
-- Antonio Puentes and Roberta Poza, PwC Spain; roberta.poza.cid@pwc.com
European Commission – EC publishes non-confidential version of final EC
decision in McDonald's
On 17 December 2018, the European Commission published the non-confidential version of
the final no-aid decision adopted on 19 September 2018 concluding that Luxembourg did not
give selective tax treatment to McDonald's. The Commission concluded that the non-taxation
of certain McDonald's profits in Luxembourg did not lead to unlawful State aid, as it is in line
with national tax laws and the Luxembourg-United States Double Taxation Treaty. The non-
confidential decision is available under case number SA.38945 on the Commission’s
competition website.
-- Bob van der Made, PwC Netherlands; bob.vandermade@pwc.com
PwC EU Tax News Page 32
European Commission – Final negative State aid decision in the Gibraltar case
On 19 December 2018, the European Commission (EC) concluded the State aid investigation
which it originally opened in October 2013 and which it extended in October 2014. The EC
found that Gibraltar's corporate tax exemption regime for interest and royalties, as well as five
tax rulings, are unlawful under EU State aid rules. The beneficiaries now have to return unpaid
taxes which are estimated to be in the region of €100 million to Gibraltar.
In October 2013, the EC opened an in-depth investigation into Gibraltar's corporate tax
regime, to verify whether the non-taxation of intercompany loan interest during the period 1
January 2011 to 30 June 2013 and royalty income during the period 1 January 2011 to 31
December 2013 selectively favoured certain categories of companies, in breach of EU State aid
rules. The relevant legislation was amended to tax these income streams in 2013 to the EC’s
satisfaction. The EC extended the investigation in October 2014 to also cover Gibraltar's tax
rulings practice. The investigation focused on 165 tax rulings granted between 2011 and 2013.
The EC had concerns that these tax rulings involved State aid because in their view they were
not based on sufficient information to ensure that the companies which received these rulings
were taxed on equal terms with other companies generating or deriving income from
Gibraltar.
The EC concluded that in their view there was no valid justification for the non-taxation of
inter-company interest and royalty income. The EC found that it provides a selective
advantage as they consider that the measure was designed to attract companies belonging to
multi-national groups. The EC concluded that 5 of the 165 rulings reviewed involved unlawful
State aid. All 5 rulings concerned the tax treatment of certain income generated by Dutch
Limited Partnerships. According to the EC, under the tax legislation applicable in both
Gibraltar and the Netherlands, the profits made by a limited partnership in the Netherlands
should be taxed at the level of the partners. In all 5 cases the partners of the Dutch
partnerships were resident for tax purposes in Gibraltar and the EC’s conclusion is that they
should have been taxed there. The EC did not identify any selective advantage in relation to
the other 160 rulings investigated and therefore found that these rulings do not infringe EU
State aid rules. The EC also welcomed recent changes made by the Gibraltar Government to
enhance its tax ruling procedure. Gibraltar must now recover unpaid taxes on the basis of the
methodology established in the EC decision from the companies that benefitted from
Gibraltar's corporate tax exemption regime for interest and royalties between 2011 and 2013
and the companies that the EC claim benefitted from the tax treatment under the five tax
rulings.
Since June 2013, the EC has investigated individual tax rulings of Member States under EU
State aid rules. It extended this information inquiry to all Member States in December 2014.
Since 2015 there has been a number of high profile decisions involving multinational groups
and unlawful State aid. At present only the press release is available in respect of the current
PwC EU Tax News Page 33
decision. We will need to wait for the publication of the detailed decision to better understand
the full implications of this case.
-- Edgar Lavarello and Patrick Pilcher, PwC Gibraltar; edgar.lavarello@pwc.com
Back to top
PwC EU Tax News Page 34
PWC EUDTG - KEY CONTACTS:
EUDTG Chair
Stef van Weeghel
stef.van.weeghel@pwc.com
Co-chair State Aid Working Group
Emmanuel Raingeard de la Blétière
emmanuel.raingeard@pwcavocats.com
Co-chair State Aid Working Group
Chair CCCTB Working Group
Jonathan Hare
jonathan.hare@pwc.com
EUDTG Network Driver,
EU Public Affairs-Brussels (TAX) Bob van der Made
bob.vandermade@pwc.com
Chair EU Law Technical Committee
Jürgen Lüdicke
juergen.luedicke@pwc.com
Chair FS-EUDTG Working Group
Patrice Delacroix
patrice.delacroix@pwc.com
Chair Real Estate-EUDTG WG
Jeroen Elink Schuurman
jeroen.elink.schuurman@pwc.com
EUDTG COUNTRY LEADERS: Austria Richard Jerabek richard.jerabek@pwc.com
Belgium Patrice Delacroix patrice.delacroix@pwc.com
Bulgaria Orlin Hadjiiski orlin.hadjiiski@bg.pwc.com
Croatia Lana Brlek lana.brlek@hr.pwc.com
Cyprus Marios Andreou marios.andreou@cy.pwc.com
Czech Rep. Peter Chrenko peter.chrenko@cz.pwc.com
Denmark Soren Jesper Hansen sjh@dk.pwc.com
Estonia Iren Lipre iren.lipre@ee.pwc.com
Finland Jarno Laaksonen jarno.laaksonen@fi.pwc.com
France Emmanuel Raingeard emmanuel.raingeard@pwcavocats.com
Germany Arne Schnitger arne.schnitger@pwc.com
Gibraltar Edgar Lavarello edgar.c.lavarello@gi.pwc.com
Greece Vassilios Vizas vassilios.vizas@gr.pwc.com
Hungary Gergely Júhasz gergely.juhasz@hu.pwc.com
Iceland Fridgeir Sigurdsson fridgeir.sigurdsson@is.pwc.com
Ireland Denis Harrington denis.harrington@ie.pwc.com
Italy Claudio Valz claudio.valz@it.pwc.com
Latvia Zlata Elksnina zlata.elksnina@lv.pwc.com
Lithuania Nerijus Nedzinskas nerijus.nedzinskas@lt.pwc.com
Luxembourg Alina Macovei alina.macovei@lu.pwc.com
Malta Edward Attard edward.attard@mt.pwc.com
Netherlands Hein Vermeulen hein.vermeulen@pwc.com
Norway Steinar Hareide steinar.hareide@no.pwc.com
Poland Agata Oktawiec agata.oktawiec@pl.pwc.com
Portugal Leendert Verschoor leendert.verschoor@pt.pwc.com
Romania Mihaela Mitroi mihaela.mitroi@ro.pwc.com
Slovakia Todd Bradshaw todd.bradshaw@sk.pwc.com
Slovenia Miroslav Marchev miroslav.marchev@pwc.com
Spain Carlos Concha carlos.concha.carballido@es.pwc.com
Sweden Fredrik Ohlsson fredrik.ohlsson@pwc.com
Switzerland Armin Marti armin.marti@ch.pwc.com
UK Jonathan Hare jonathan.hare@pwc.com
PwC EU Tax News Page 35
About the EUDTG EUDTG is PwC’s pan-European network of EU law experts. We specialise in all areas of direct
tax, including the fundamental freedoms, EU directives and State aid rules. You will be only
too well aware that EU direct tax law is moving quickly, and it’s difficult to keep up. But, it is
crucial that taxpayers with an EU or EEA presence understand the impact as they explore their
activities, opportunities and investment decisions.
So how do we help you? ● Our experts combine their skills in EU law with specific industry knowledge by working
closely with colleagues in the Financial Services and Real Estate sectors.
● We have set up client-facing expert working groups to address specific key topics such as
EU State aid, BEPS, taxation of the digital economy and the CCCTB.
● Through our Technical Committee we constantly develop new and innovative EU law
positions and solutions for practical application by clients.
● We closely monitor direct tax policy-making and political developments on the ground in
Brussels.
● We input to the EU and international tax debate and maintain regular contact with key EU
and OECD policy-makers in Brussels and Paris.
● Our central EUDTG secretariat in Amsterdam operates an EU tax news service, keeping
our clients up to date with developments as they happen.
And what specific experience can we offer for instance? ● Our PwC State Aid Working Group helps clients identify and manage EU State Aid risks.
● Together with our Financial Services colleagues, we have assisted foreign pension funds,
insurance companies and investment funds with dividend withholding tax refund claims.
● We have assisted clients before the CJEU and the EFTA Court in landmark cases e.g.
Marks & Spencer (C-446/03), Aberdeen (C-303/07), X Holding BV (C-337/08), Gielen
(C-440/08), X NV (C-498/10), A Oy (C-123/11), Arcade Drilling (E-15/11), SCA (C-
39/13), X (C-87/13) and Kieback (C-9/14).
● We have carried out a number of tax studies for the European Commission.
Find out more on: www.pwc.com/eudtg or contact the EUDTG’s Network Driver Bob van
der Made (+31 6 130 96 296, or: bob.vandermade@pwc.com) or contact any of the EUDTG
country contacts listed on the previous page.
© 2018 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. At PwC, our purpose is to build trust in society and solve important problems. We're a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.