European Commission Taxation and Customs Union Brussels, 10 November Taxation of International Artistes and Community Law European Commission ”Seminar on social security and taxation in the context of mobility in the live performance sector”

European Commission / Taxation and Customs Union Brussels, 10 November Questions for the Panel on « International Artiste Taxation » 1) What is changing after the ECJ case rulings (Gerritse – 2003, Scorpio – 2006) for artist taxation? 2) What’s the situation across Europe? 3) What has improved for the live performance sector and which areas are still a problem? 4) How can Europe respond better to the principles of freedom of movement of persons and services?

European Commission / Taxation and Customs Union Brussels, 10 November What « Europe » can do (and/or is doing) to remove fiscal obstacles for artistes using the Internal Market’s freedoms? OUTLINE 1. EC Law and Taxation: General Remarks on the limits of the “positive integration” 2. The EC Treaty Freedoms and the “negative integration” 3. The EU Cross-border Citizens and Their Rights

European Commission / Taxation and Customs Union Brussels, 10 November EC Law and Taxation General Remarks The limits of the positive EC action/integration A. Legal Constraints : (1) Legal basis: Direct Taxation is only indirectly taken in account by the EC Treaty Art. 93 ECT «The Council shall … adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation … » Art.94 ECT « The Council shall … issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the common market. »

European Commission / Taxation and Customs Union Brussels, 10 November EC Law and Taxation General Remarks The limits of the positive EC action/integration A. Legal Constraints : (2) Double Taxation: Article 293 ECT does not oblige Member States to eliminate double taxation Art. 293 ECT « Member States shall, so far as is necessary, enter into negotiations with each other with a view to securing for the benefit of their nationals … the abolition of double taxation within the Community … » “Article [293] is not intended to lay down a legal rule directly applicable as such, but merely defines a number of matters on which the Member States are to enter into negotiations with each other ’ far as is necessary’. … it is clear from the wording of that provision that it cannot itself confer on individuals any rights on which they might be able to rely before their national courts.” (ECJ, C-14/96, Gilly, para )

European Commission / Taxation and Customs Union Brussels, 10 November EC Law and Taxation General Remarks The limits of the positive EC action/integration B. Political/Legal Constraints : (1) The need for unanimity among European Union members over tax matters. Article 94 ECT « The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of laws …. »

European Commission / Taxation and Customs Union Brussels, 10 November EC Law and Taxation General Remarks The limits of the positive EC action/integration B. Political/Legal Constraints : (2) Fiscal sovereignty of MSs (subsidiarity). Article 5 ECT « In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States … ». “ … as Community law stands at present, direct taxation does not as such fall within the purview of the Community …” ECJ, C-279/93, Schumacker, para.21; C-290/04, Scorpio, 30) “ … direct taxation falls within the competence of the Member States … “ (ECJ, C-345/04, Centro Equestre, para 19)

European Commission / Taxation and Customs Union Brussels, 10 November The EC Treaty Freedoms The negative integration  the role of the ECJ Member States remain competent to determine the criteria for taxation, however their tax provisions must be compatible with EC Law. “ … the powers retained by the Member States must nevertheless be exercised consistently with Community law” ( ECJ, C-279/93, Schumacker, para.21; C-290/04, Scorpio, 30 )

European Commission / Taxation and Customs Union Brussels, 10 November The EC Treaty Freedoms Tax Treaties are not an exception to the rule. Like other tax provisions, tax conventions must not contravene the requirements of EC law “ Irrespective of its extent, the difference in tax treatment resulting from the application of that [tax] convention … constitutes discrimination … which is incompatible with the freedom of establishment guaranteed by the Treaty ” ( ECJ, C-170/05, Denkavit France, para.49 )

European Commission / Taxation and Customs Union Brussels, 10 November The EC Treaty Freedoms Member States may take their inspiration from OECD Model (e.g. Article 17 on taxation of artistes) but their provisions are not necessarily compatible with EC Law “ …the fact that the rules are consistent with the provisions of the OECD model convention does not also mean that they comply with Article 43 EC. Neither the provisions nor the objectives of the OECD model convention, on the one hand, or of the EC Treaty, on the other, are in fact the same.” ( A.G. Micho, C-324/00, Lankhorst-Hohorst, para.79 )

European Commission / Taxation and Customs Union Brussels, 10 November The EU Cross-border Citizens and Their Rights  The role of the European Commission  as policy maker:  the “coordination” of national tax policies (to transform the “negative integration” into a positive, constructive action)  as “guardian of the Treaty” (Art. 211 ECT)  the infringement procedures (main aim of an infringement action is to remedy breach of Community law) No direct access for tax payer to the ECJ Art. 226 ECT: Infringement procedure (Commission) Art. 234 ECT: Preliminary ruling (national courts)

European Commission / Taxation and Customs Union Brussels, 10 November Direct tax cases decided by/pending before the ECJ (by year of reference to the Court; 31/12/2008 )

European Commission / Taxation and Customs Union Brussels, 10 November Direct taxation: new infringements per year (31/12/07) Year Complaints Own initiative Total (EU 25) (EU 27) The EU Cross-border Citizens and Their Rights

European Commission / Taxation and Customs Union Brussels, 10 November Complaints about the taxation of non-resident 1) Different collection mechanism 2) Different tax base (gross versus net) 3) Different tax rates 3. The EU Cross-border Citizens and Their Rights For press releases in respect of infringement cases : infringement_cases/index_en.htm (See, e.g.: IP/09/292; IP/09/291; IP/08/1533; IP/08/144 …)

European Commission / Taxation and Customs Union Brussels, 10 November Complaints – Who and how? Anyone, free of charge Against any measure or practice by a Member State incompatible with EU law Complainant does not have to: –demonstrate a formal interest or –be directly concerned by the alleged infringement Complainants are not a party to the infringement proceedings; they must safeguard their rights at national level In writing, by letter, fax or (any EU language) 3. The EU Cross-border Citizens and Their Rights For more information: EC Infringement-Website:

European Commission / Taxation and Customs Union Brussels, 10 November Thank You For Your Attention !! Arnoud Gerritse & the free movement of musical notes (Source: