Opinion Statement ECJ-TF 3/2022 on the EFTA Court Decision of 1 June 2022 in PRA Group Europe (Case E-3/21), on the Discriminatory Interaction between the “Interest Barrier” and Group Contributions
droit fiscal européen - EFTA cour - discrimination - intérêts - contribution de groupe - European tax law EFTA Court - interest - group contribution
Abstract :
[en] In this CFE Opinion Statement, the CFE ECJ Task Force comments on the EFTA Court decision of 1 June 2022 in PRA Group Europe (Case E-3/21), on the discriminatory interaction between the “interest barrier” and group contributions.
Disciplines :
Tax law
Author, co-author :
Kofler, G.W.
Garcia Prats, A.
Haslehner, W.
Heydt, V.
Kemmeren, E.
Lang, M.
Nogueira, J.F. Pinto
Panayi, C. HJI
Raventós-Calvo, S.
Richelle, Isabelle ; Université de Liège - ULiège > HEC Liège : UER > UER Finance et Droit : Droit fiscal
Rust, A.
Shiers, R.
Language :
English
Title :
Opinion Statement ECJ-TF 3/2022 on the EFTA Court Decision of 1 June 2022 in PRA Group Europe (Case E-3/21), on the Discriminatory Interaction between the “Interest Barrier” and Group Contributions
Alternative titles :
[fr] Commentaire ECJ TF 3/2022 de la décision de la EFTA Court du 1er juin 2022 dans l'affaire PRA Group Europe (E-3/21), sur l'nteraction discriminatoire entre la "barrière de l'intérêt" et les contributions de groupee
Original title :
[en] Opinion Statement ECJ-TF 3/2022 on the EFTA Court Decision of 1 June 2022 in PRA Group Europe (Case E-3/21), on the Discriminatory Interaction between the “Interest Barrier” and Group Contributions
NO: EFTA Court, 1 June 2022, Case E-3/21, PRA Group Europe AS. The decision and other documents pertaining to the case are available at https://eftacourt.int/cases/e-3-21/(accessed 6 Jan. 2023).
Agreement on the European Economic Area, 2 May 1992, Primary Sources IBFD.
Council Directive 2016/1164 of 12 July 2016 Laying down Rules against Tax Avoidance Practices that Directly Affect the Functioning of the Internal Market, OJ L 193/1 (2016), Primary Sources IBFD [ATAD].
See OECD, Limiting Base Erosion Involving Interest Deductions and Other Financial Payments – Action 4: 2015 Final Report (5 Oct. 2015), Primary Sources IBFD [hereinafter Action 4 Final Report].
It might be noted in passing that, similarly, the interest barrier rule in the Commission’s proposal for a common tax base (Proposal for a Council Directive on a Common Corporate Tax Base,COM(2016) 685 final, art. 13 (26 Oct. 2016), Primary Sources IBFD) similarly refers to the “national group taxation system”, while the Commission’s proposal for a common consolidated corporate tax base (CCCTB) would treat the whole cross-border CCCTB group as a single taxpayer for purposes of the interest barrier (Proposal for a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB), COM(2016) 683 final, art. 69 (26 Oct. 2016), Primary Sources IBFD).
See, e.g. AT: Corporate Income Tax Act (Körperschaftsteuergesetz), § 12a(7) and DE: Corporate Income Tax Act, § 15.
The same effect may arise if a Member State applies a group taxation regime with respect to, e.g., a resident parent company or a non-resident parent company with a PE established in the Member State concerned and subsidiaries resident in that Member State and considering the respective parent companies to be the “single taxpayer” as a consequence of this group taxation regime. See, e.g., the optional fiscal unity regime in the Netherlands (see NL: Corporate Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969, art. 15 [hereinafter Vpb]). In such a situation, the calculation of the exceeding borrowing costs and the EBITDA takes place automatically at the group level, i.e. the “single taxpayer”, based on art. 4(1), first sentence ATAD without the necessity of relying on the option of art. 4(1), second and third sentences ATAD. The Netherlands has explicitly refrained from including the option of the ((inter)) national) group ratios in its domestic interest barrier rule (see art. 15b Vpb and, e.g., Parliamentary Papers (Kamerstukken) II 2018/19, 35030, no. 3, pp. 11 and 21; and Letter of State Secretary of Finance of 28 Oct. 2021, Parliamentary Papers II 2021/22, 35927, no. 32, p. 46). Therefore, according to the Netherlands legislator, the Netherlands fiscal unity is covered by art. 4(1), first sentence ATAD.
SE: ECJ, 20 Jan. 2021, Case C-484/19, Lexel AB v. Skatteverket, paras. 40, 41 and 78, Case Law IBFD and, for analysis, CFE ECJ Task Force, Opinion Statement ECJ-TF 1/2021 on the ECJ Decision of 20 January 2021 in Lexel AB (Case C-484/19) Concerning the Application of the Swedish Interest Deductibility Rules, 61 Eur. Taxn. 6, pp. 264-268 (2021), Journal Articles & Opinion Pieces IBFD.
See NO: Prop. 1 LS (2013–2014) Part 4.7.1, p. 111, available at https://www.regjeringen.no/no/dokumenter/prop-1-ls-20132014/id740943/(accessed 6 Jan. 2023): “Ved at konsernbidrag inkluderes I beregningsgrunnlaget, vil selskap i skattekonsern ha en viss mulighet til å samordne seg med hensyn til rentefradrag i tilfeller der overskudd (“skattemessig EBITDA”) og rentekostnader er ujevnt fordelt mellom konsernselskapene”.
PRA Group Europe AS (E-3/21), para. 26.
See, for a description of these proceedings and the closing of the EFTA Surveillance Authority, the Decision of 3 July 2019 in Case No. 76153, Decision No. 050/19/COL, available at https://www.eftasurv.int/esa-ata-glance/publications/public-access-to-documents/public-documents (accessed 6 Jan. 2023).
