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Tax & Financial Standards New Judgments of the ECJ For October 2020

30.10.2020

Tax & Financial Standards New Judgments of the ECJ For October 2020

Tax & Financial Standards New Judgments of the ECJ For October 2020

New judgments

С-331/19 of 01 October 2020

Value added tax - Option for the Member States to apply a reduced rate of VAT to certain supplies of goods and services - Products the supply of which is subject to a reduced rate of VAT - Definitions of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’ – Aphrodisiac products

Key aspects of the decision in the economic range:

Taxation. Reduced rates. Libido stimulants. Aphrodisiac products.

Definitions of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’.

Proceedings concerning the application of the reduced rate of value added tax for foodstuffs to products sold and used as aphrodisiacs, which are composed essentially of elements of animal or vegetable origin, and consumed orally.

С-405/19 of 01 October 2020

Value added tax – Right to deduct input tax – Services also having benefited third parties – Existence of a direct and immediate link with the taxable person’s economic activity – Existence of a direct and immediate link with one or more output transactions

Key aspects of the decision in the economic range:

Expenditure incurred by a taxable person, a property developer, in respect of advertising costs, administrative costs and estate agents’ commission, in connection with the sale of apartments, which also benefits a third party. This circumstance does not preclude that taxable person deducting in full the input VAT paid on that expenditure.

The fact that it is possible for the taxable person to pass on, to the third party who benefits from it, part of the expenditure he or she has incurred, has an impact on that taxable person’s right to deduct the VAT relating to those costs.

Proceedings concerning the deductibility of value added tax charged on the acquisition of estate agency, advertising and administrative services.

С-743/18 of 01 October 2020

Structural Funds — Infringement of a provision of EU law resulting from an act or omission on the part of an economic operator — Prejudice caused to the general budget of the European Union — Insolvency of the beneficiary’s sole business partner — Concept of ‘irregularity’

Key aspects of the decision in the economic range:

Obligation to make financial corrections in connection with irregularities. A situation in which the beneficiary of ERDF funding is unable to achieve the level of turnover expected as part of the project eligible for financing because the business of its sole partner has been suspended or that partner has become insolvent is to be regarded as an ‘irregularity’ within the meaning of that provision.

Meaning of an ‘irregularity’.

Proceedings concerning the termination of a contract relating to the award of a grant co-financed by the European Regional Development Fund (ERDF), on the grounds of serious irregularities.

Joined Cases С-245/19 and C-246/19 of 06 October 2020

Administrative cooperation in tax matters - Order to provide information to the competent authority of one Member State, acting following a request for the exchange of information from the competent authority of another Member State - Person holding information which the competent authority of the first Member State requires disclosure - Taxpayer targeted by the investigation at the origin of the request by the competent authority of the second Member State - Third parties with whom this taxpayer has legal, banking, financial or, more broadly, economic relations - Right to an effective remedy - Foreseeable relevance of the information covered by the disclosure order

Key aspects of the decision in the economic range:

Requests for information from the tax authorities of another Member State. Information order issued by the requested tax authority. Fundamental right to data protection of the persons responsible for providing information, taxpayers and other third parties — who may not be aware of the transfer of their data. Existence of a remedy allowing the litigants in question to obtain effective control of all relevant questions of fact and law, as well as effective judicial protection of the rights guaranteed to them by Union law. Exclusion of legal remedies for the person responsible for providing information, the taxpayer concerned by the information and other third parties concerned by the information.

Two disputes concerning two decisions of the Director of the Direct Taxation Administration ordering, respectively, company B and bank A to communicate certain information to him, following requests for the exchange of information between Member States.

С-235/19 of 08 October 2020

Value added tax — Exemption of insurance transactions — Supply of pension fund management services to trustees by investment fund managers — Exclusion of any risk indemnity — Exercise of an insurance activity — Authorised entities — Concept of ‘insurance transactions’

Key aspects of the decision in the economic range:

A classification for value added tax purposes of the investment management services supplied to a company for the purposes of the administration of its pension scheme. National tax practice. Exemption of insurance transactions. Earlier national tax practice consisting in distinguishing between entities authorised by the financial supervisory authorities to carry out an insurance activity and entities not having such authorisation.

Concept of ‘insurance transactions’.

Proceedings concerning the imposition of value added tax on pension fund management services.

С-558/19 of 08 October 2020

Free movement of capital — Calculation of the taxable income of companies — Persons having a relationship of interdependence — Unusual advantage granted by a resident branch to a non-resident company — Correction of the taxable income of the branch of a non-resident company — No correction of taxable income in the event of an identical advantage granted by a branch to a resident company — Principle of free competition — Restriction on freedom of establishment — Balanced allocation of the power to tax between Member States

Key aspects of the decision in the economic range:

National legislation which seeks to prevent profits generated in the Member State concerned from being transferred outside the tax jurisdiction of that Member State via transactions that are not in accordance with market conditions. A bank transfer of money from a company branch resident in one Member State to the parent company resident in another Member State may be reclassified as a revenue-generating transaction, with the consequent obligation to apply the rules on transfer pricing, whereas, if the same transaction had been effected between a company branch and a parent company, both of which were resident in the same Member State, that transaction could not have been reclassified.

Proceedings between I and the National Tax Administration Office regarding the annulment of a fiscal administrative act issued by that office and the tax assessment based on that act.

С-641/19 of 08 October 2020

Consumer protection - Distance contract – Supply of digital content and digital services – Right of withdrawal – Obligations of the consumer in the event of withdrawal – Determination of the amount to be paid by the consumer for the services provided before the exercise of the right of withdrawal – Exception to the right of withdrawal in the case of the supply of digital content

Key aspects of the decision in the economic range:

Consumer rights. The proportionate amount to be paid by the consumer to the trader where that consumer has expressly requested that the performance of the contract concluded begin during the withdrawal period and withdraws from that contract. The circumstances relating to the market value of the service provided. In order to assess whether the total price is excessive, account should be taken of the price of the service offered by the trader concerned to other consumers under the same conditions and that of the equivalent service supplied by other traders at the time of the conclusion of the contract.

Proceedings between E, as a consumer, and P concerning the amount owed to the latter following the exercise by E of the right to withdraw from a contract concluded with that company.

С-657/19 of 08 October 2020

Value added tax — Tax exemption — Supply of services and of goods closely linked to welfare and social security work — Expert reports to assess the need for support — Taxable person acting on behalf of the medical service of an insurance support institution — Entities recognized as "devoted to social wellbeing"

Key aspects of the decision in the economic range:

Activity falling within the scope of the VAT Directive. Taxable person who prepares expertise on the need for support of certain patients. Exemptions for certain activities in the public interest. Recognition of the taxable person as organization devoted to social wellbeing on the condition that he has actually concluded a contract with a social security institution or a social welfare institution.

Proceedings between the tax administration and E regarding exemption from value added tax on the supplies of services, expressed in the preparation of expertises for assessment of the support needs of the persons insured in this fund, provided by E as a subcontractor of the medical service to the insurance support fund.

С-335/19 of 15 October 2020

Common system of value added tax - Reduction of the VAT taxable amount – Total or partial non-payment of the price – Conditions imposed by national legislation for the exercise of the right to reduction – Condition that the debtor must not be the subject of insolvency or winding-up proceedings – Condition that the creditor and the debtor must be subject to VAT

Key aspects of the decision in the economic range:

Point in time at which the input tax deduction in respect of the recipient of the supply is adjusted if he has not yet paid the consideration and is therefore not subject to the burden of any VAT. National legislation which makes the reduction of the VAT taxable amount subject to the condition that, on the day of the delivery of the goods or provision of the services and on the day preceding that on which the adjusted tax return seeking that reduction is filed, the debtor is still registered as a taxable person for the purposes of VAT and is not subject to insolvency.

Proceedings between E. and the Minister for Finance concerning tax rulings issued by that minister.

С-778/18 of 15 October 2020

Consumer protection — Credit agreements for consumers relating to residential immovable property — Bundling practices — Payment accounts — Obligation to deposit income on a payment account held with the lender during a period fixed by the credit agreement as consideration for an individual advantage — Duration of the obligation — Loss of the individual advantage in the event of early termination of the account — Concepts of „bundling practice“, „tying practice“ and „charges“

Key aspects of the decision in the economic range:

Payment services in the internal market. Obligation for the borrower to deposit his or her income in a payment account during a period fixed by the loan agreement. National legislation which permits the creditor to make a mortgage loan offer conditional upon the borrower depositing the whole of his or her salary or similar income in a payment account opened with the creditor, during a period of 10 years or for the duration of the credit agreement if it is shorter, provided that the creditor confers on the borrower an individual advantage as consideration.

Concepts of „bundling practice“, „tying practice“ and „charges“.

A dispute between an Association A and the Minister for Economic Affairs and Finance concerning the legality of a decree fixing the period during which a lender may require a borrower to deposit his or her salary or similar income on a payment account.

 

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