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Tax & Financial Standards New Judgments of the ECJ For August 2018

28.08.2018

Tax & Financial Standards New Judgments of the ECJ For August 2018

С-16/17 of 7 August 2018

Deduction of input tax - Origin and scope of the right to deduct

Key aspects of the decision in the economic range:

Law on value added tax.

Consequences for the right of deduction in the case where an economic interest group formed by undertakings apportions its general costs among its members. Apportionment of the general costs of a company’s business activity among its members.

Proceedings between TG B and Tax and Customs Authority („ATA“) concerning that authority’s refusal to grant TG B a value added tax deduction resulting from the re-invoicing of costs from an Economic Interest Group (EIG).

С-52/17 of 7 August 2018

Supervision of credit institutions — Supervisory powers and powers to impose penalties — Large exposure limits — Legislation of a Member State under which interest is levied where those limits are exceeded — Attribution of areas of competence between the European Central Bank (ECB) and national authorities — Formally initiated supervisory procedure

Key aspects of the decision in the economic range:

Cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities.

National legislation which provides that, where the exposure limits are exceeded, ‘absorption’ interest is to be levied automatically on a credit institution, even if that institution fulfils the conditions, under which a credit institution may exceed those limits.

Supervisory procedure.

An express decision to open the procedure, whatever the material grounds that led to the formal adoption of such a decision.

Proceedings concerning a decision to levy ‘absorption’ interest for exceeding the large exposure limits set out in Article 395(1) of Regulation No 575/2013.

С-96/16 of 7 August 2018

Loan agreement concluded with a consumer - Criteria for assessing the unfairness of a contractual term setting default interest - Consequences of that unfairness - Assignment of debts.

Key aspects of the decision in the economic range:

Proceedings between bank institutions and consumers.

Assigning or purchasing a consumer’s debt, without any provision for such an assignment having been made in the loan agreement concluded with the consumer.

Business practice of purchasing a consumer’s debt for a negligible price without his consent or knowledge.

Defining the term to be unfair in order to ensure a maximum degree of protection for the consumer. Defining the term to be unfair in order to ensure a maximum degree of protection for the consumer.

Proceedings concerning the enforcement of loan agreements.

С-122/17 of 7 August 2018

Compulsory insurance against civil liability in respect of the use of motor vehicles - Liability for personal injury caused to all passengers other than the driver - Non-application of a contractual clause contrary to a directive

Key aspects of the decision in the economic range:

Compulsory insurance.

Approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles.

Direct effect of directives. Obligation to disapply national legislation contrary to a directive. 

Whether the State may rely on a directive against an individual. Scope of the case-law to the effect that a directive that has not been transposed or has been incorrectly transposed may not be relied on by one individual against another.

Relevant national provisions providing for an exclusion from cover that have already been adjudged to be contrary to EU law in an earlier decision of the Court.

Proceedings concerning compensation for injuries suffered as a result of a road traffic accident involving a vehicle.

С-475/17 of 7 August 2018

Common system of value added tax (VAT) - Essential characteristics of VAT - Domestic taxes which can be characterised as turnover taxes — Local sales tax - Concept of ‘turnover tax’

Key aspects of the decision in the economic range:

Turnover taxes.

Legislation on turnover taxes that does not distort conditions of competition or hinder the free movement of goods and services.

A national tax which applies generally and is proportionate to the price, but which, pursuant to the relevant provisions, is to be levied only at the stage of the sale of goods.

Concept of „turnover tax“.

Proceedings concerning the reimbursement of sales tax paid by some companies.

July

C-5/17 of 25 July 2018

Transactions concerning payments and transfers - Dental payment plan by direct debit

Key aspects of the decision in the economic range:

Design and implementation of direct debit dental payment plans.

Lack of a supply entailing the transfer of a sum of money. The identity of the formal recipient of the supply is irrelevant.

Debt collection. Principle of economic reality.

Proceedings concerning the refusal by the tax authority to exempt from value added tax a supply of services.

C-96/17 of 25 July 2018

Disciplinary dismissal of a permanent worker in the service of a public authority - Difference in treatment between permanent workers and temporary workers with a fixed-term contract or contract of indefinite duration - Consequences of a disciplinary dismissal found to be ‘unfair’

Key aspects of the decision in the economic range:

Disciplinary dismissal of a permanent worker in the service of a public authority declared wrongful. Consequences of a disciplinary dismissal found to be ‘unfair’. Reinstatement of the worker or granting of compensation.

Worker employed under a temporary contract or a temporary contract of indefinite duration.

Illegal termination of the employment contract by the employer of a fixed-term worker in the public sector. Non-discrimination against fixed-term workers. Prohibit fixed-term workers to be treated less favourably than permanent workers. Worker’s right to reinstatement in the event of unlawful disciplinary dismissal.

Proceedings concerning dismissal on disciplinary grounds.

C-107/17 of 25 July 2018

Enforcement of financial collateral arrangements — Commencement of insolvency proceedings against the collateral taker — Inclusion of the financial collateral in the assets remaining after the insolvency — Obligation to satisfy the claims primarily from the financial collateral

Key aspects of the decision in the economic range:

Community regime for the provision of securities and cash as collateral.

Rules which enable a taker of collateral provided under a security financial collateral arrangement to recover its claim, arising from a failure to discharge the relevant financial obligations, from that collateral, where the enforcement event occurs after insolvency proceedings have been commenced against that taker.

Claim, arising from a failure to discharge the relevant financial obligations.

Proceedings between A and Ū concerning a claim for payment made by the bank Ū against A under the collateral arrangements entered into by them.

C-140/17 of 25 July 2018

Deduction of input tax - Initial allocation to an activity which does not confer entitlement to deduct input tax and subsequently also to an activity subject to VAT - Allocation of the capital goods where their intended economic use remains uncertain

Key aspects of the decision in the economic range:

A body governed by public law being entitled to a right to adjustment of deductions of VAT paid on immovable property acquired as capital goods in a situation where, at the time of the acquisition of those goods, first, they could, by their very nature, be used both for taxable activities and for non-taxable activities but were initially used for non-taxable activities, and second, that public body had not expressly stated its intention to use those goods for a taxable activity but had also not excluded the possibility that they might be used for such a purpose.

Taxable-person status at the time of the taxable transaction.

Proceedings concerning a decision by the Minister for Finance to refuse to allow a municipality to adjust the deduction of input VAT paid for immovable property, acquired as capital goods, which was, initially, allocated to a non-taxable activity and, subsequently, to a taxable activity.

C-338/17 of 25 July 2018

Protection of employees in the event of employer’s insolvency - Employees’ claims borne by guarantee institutions - Exclusion of wage claims arising over three months prior to the entry in the commercial register of the judicial decision initiating insolvency proceedings

Key aspects of the decision in the economic range:

Social policy.

Limitation on the liability of guarantee institutions. Option of restricting the category of persons who have standing as employees and outstanding wage claims against the insolvent employer.

Length of the period for which outstanding claims are to be met by the guarantee institution.

National legislation, which does not guarantee the wage claims of employees whose employment relationship ended more than three months prior to the entry in the commercial register the judicial decision initiating insolvency proceedings in respect of their employer.

Proceedings concerning the refusal to guarantee the payment of outstanding wage claims.

C-553/16 of 25 July 2018

Obligation to charge withholding tax on income from a domestic source paid to a non-resident company - Obligation to pay interest payable from the expiry of the statutory time limit for payment until the date on which evidence that the double taxation convention is applicable is furnished

Key aspects of the decision in the economic range:

Payments made by a company resident in a Member State to non-resident companies for the leasing of rail tankers.

Obligation to pay interest for the period from the point at which the time limit laid down for the payment of the tax on such income expires until the day on which a non-resident company established in another Member State furnishes evidence that the requirements for the application of a double taxation convention have been fulfilled, including in cases in which, pursuant to the convention, no such tax or a lower amount thereof is to be paid. Charging the resident company default interest for non-payment of the withholding tax.

Provision which, in the event of failure to comply with the legal requirement to prove that a right exists, requires another person to be charged interest in respect of a tax which does not have to be paid.

Proceedings regarding the payment, by company, of irrecoverable default interest for failure to comply with its obligation to charge withholding tax on cross-border payments of income to unconnected companies established in a Member State other than the Republic of Bulgaria.


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