1. WITHHOLDING TAXES AND THE FUNDAMENTAL FREEDOMS
Karin Simader
EATLP Congress, Lisbon 1 June, 2013

2. Table of Contents Introduction
Different Treatment based on Withholding Taxes
The Fundamental Freedoms under the TFEU and EU Agreements
Comparability Analysis
Justifications
Proportionality
Conclusions: The Admissibility of Withholding Taxes

3. Taxpayers subject to WHT
A is a resident of State X. He earns income in State Y. The taxes are collected by withholding by the payment debtor. State Y taxes income earned by resident taxpayers by assessment. X Y Y
100
- 20

4. Findings I Cash-flow disadvantages
Fundamental Freedoms of the TFEU, EEA Agreement, Agreements with Switzerland, Association and Partnership Agreements
Different situations with regard to the recovery of taxes (Truck Center)?
Justifications
Compensatory advantages
Effective collection of taxes
Prevention of tax avoidance
Proportionality: recovery assistance (X.)

5. Income subject to WHT
A receives interest income. Taxpayers resident in State X who earn income in State Y from a perma- nent establishment are taxed by assessment. X Y X Y
100
- 20

6. Findings II Horizontal comparability?
Permanent establishment enables direct supervision and recovery of taxes
Outcome if withholding taxes also for residents
Variation: Comparable situations are treated differently, e.g. different professions
Impossibility of justification?
Going beyond what is necessary?

7. WHT in the absence of a tax liability
The interest income received by A is exempt from taxation in State Y under the tax treaty between State X and State Y. A claims an exemption from the withholding tax. X Y Y
100
- 20
+ 20

8. Findings III Different treatment
Temporary over-taxation, need for refund procedure
But: No tax treaty exemption for residents
Comparability with regard to tax exemptions, directly linked expenses
Justifications: Effective collection of taxes?
Proportionality
Taxpayer participation vs. certificates beforehand or at a later stage (exchange of information), 3rd countries!
Liability of the payment debtor vs. recovery assistance
Payment debtor: choice or obligation?

9. Further issues treated
1. Tax collection method 1.1. The income recipient’s perspective Taxpayers subject to withholding taxes Income subject to withholding taxes Withholding taxes in the absence of a tax liability 1.2. The payment debtor’s perspective The withholding obligation The liability for the tax payment Assessment of the withholding obligation 2. Tax amount 2.1. (Non-)Taxation 2.2. Taxable base 2.3. Tax rate

10. Contact Dr. Karin Simader, LL.B.
TJP Austroexpert Steuerberatungsgesellschaft m.b.H.
Austrian tax firm of the year 2011 and (Aquisition International Legal Awards)
European Newcomer (ITR European Tax Awards)
Telefon/Telephone: DW / Ext 222
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