EUU, Alm.del - 2020-21 - Endeligt svar på spørgsmål 265: Spm. om indholdet og status på drøftelserne mellem EU-Kommissionen og de danske myndigheder om mulighederne for at nægte udbetaling af hjælpepakker til firmaer i skattely, til skatteministeren, kopi til udenrigsministeren

Europaudvalget 2020-21
EUU Alm.del
Offentligt

August, 2021

J.nr. 2020 - 8222

Ministry of Taxation

Nicolai Eigtveds Gade 28

DK 1402

–

København K

Tel. +45 33 92 33 92

Mail [email protected]

www.skm.dk

Questions from the Danish authorities on the Commis-

sion’s

Recommendation of 14 July 2020 on making

State financial support to undertakings in the Union

conditional on the absence of links to non-cooperative

jurisdictions

In April 2020, the Danish authorities concluded that according to EU law COVID-19 fi-

nancial support cannot be excluded for Danish companies owned or controlled by a

company in another EU/EEA Member State, unless the structure of the specific group

of companies may be regarded as an artificial arrangement, which is not set up for rea-

sons that reflect economic reality, and which must be considered as an abuse of EU law.

This conclusion, which is based on the interpretation of the case law of the ECJ de-

scribed below, covers companies indirectly owned by companies based in a jurisdiction

included on the EU list of non-cooperative jurisdictions.

As the

Commission’s

Recommendation of 14 July 2020 conflicts with the interpretation

of the Danish authorities, the matter has been subject to intense public debate in Den-

mark.

It should be emphasised that it is a high priority for the Danish Government to play an

active part in the fight against tax evasion and tax fraud. Thus, the Danish Government

fully supports the

aim and the purpose of the Commission’s

Recommendation. However,

the Danish authorities are worried that following the Recommendation with regard to un-

dertakings owned or controlled by a company in another EU/EEA Member State would

not be in line with EU law, and that it could lead to legal challenges initiated by compa-

nies that would be cut off from financial support. This concern is especially relevant in

the light of the public focus on the Danish

authorities’ and the Commission’s different

interpretations.

It is therefore essential for the Danish Government to obtain certainty regarding the legal

reasoning behind the Commission’s

Recommendation before potentially changing the

conditions of receiving COVID 19 financial support or any other kind of financial sup-

port in accordance with the Recommendation.

The case law of the ECJ

The Danish authorities’ interpretation

is based on the view that

–

in the case of control

–

the relevant question is whether excluding financial support would constitute a restriction

of the freedom of establishment. In this context, it follows from the consistent case law

of the ECJ, that

“any national

measure which, albeit applicable without discrimination on grounds of

EUU, Alm.del - 2020-21 - Endeligt svar på spørgsmål 265: Spm. om indholdet og status på drøftelserne mellem EU-Kommissionen og de danske myndigheder om mulighederne for at nægte udbetaling af hjælpepakker til firmaer i skattely, til skatteministeren, kopi til udenrigsministeren

nationality, is liable to hinder or render less attractive the exercise by EU nationals of the freedom of es-

tablishment guaranteed by the Treaty constitutes a restriction within

the meaning of Article 49 TFEU”

(see e.g. joined cases C-570/07 and C-571/07,

Blanco Perez,

paragraph 54).

Furthermore, apart from the specific area of tax rules (which is not relevant for granting

COVID 19 financial support), the ECJ has consistently held that even national measures

which do not imply a difference in treatment (“discrimination”) between purely internal

situations and cross-border situations can be considered as a

restriction

of the freedom of

establishment.

This case law has been applied consistently in relation to all the fundamental freedoms

since a number of landmark-cases

from the 1990’s, including

the judgments in Case C-

19/92,

Krauss,

and Case C-55/94,

Gebhard.

Case C-299/02,

Commission v. Kingdom of the Netherlands,

concerns a situation very similar to

the question at hand, namely whether rules liable to hinder or to render the exercise of

the freedom of establishment less attractive constitute a restriction if those rules apply to

undertakings from other Member States whose owners are situated in third countries.

More specifically, the ECJ examined Dutch rules according to which the shareholders

and directors of companies owning seagoing ships, which they wished to register in the

Netherlands, had to be based in either the EU or the EEA. The ECJ held that those rules

were contrary to the freedom of establishment even if the Dutch rules applied equally to

all companies, i.e. they implied no difference in treatment as such between a company

owned domestically and a company owned by another company in another Member

State.

The fact that the concept of restriction does not presuppose a difference in treatment be-

tween internal and cross-border situations has been explicitly stated in numerous judg-

ments which concern the freedom of establishment. Examples are:

Case C-442/02,

Caixa-Bank France,

paragraph 11,

Case C-169/07,

Hartlauer,

paragraph 33.

Case C-140/03,

Commission v. Hellenic Republic,

paragraph 27,

Case C-89/09,

Commission v. France,

paragraph 44,

Joined Cases C-159-161/12,

Venturini,

paragraph 30, and

Case C-384/18,

Commission v. Kingdom of Belgium,

paragraph 75.

Most recently, on 8 July 2021, the ECJ confirmed in case C-71/20,

VAS Shipping ApS,

point 22, that

the term “restriction”

“should

be understood as measures which, although applied

without discrimination on grounds of nationality, may make it more difficult or less attractive to exercise

the freedom of establishment”.

However, according to

the Commission’s

Recommendation (point 3

“[f]

or the purpose of

determining whether an undertaking may be granted financial support, it should be irrelevant how many

Side 2 af 4

tiers of legal entities or legal arrangements may sit between the undertaking established in the Member

State that grants the financial

support and the entity in a jurisdiction that features on the EU list.”

Contrary to the

Danish authorities’

interpretation of the case law of the ECJ, the Com-

mission seems to consider that it will never constitute a restriction of the freedom of es-

tablishment if a Member State excludes the granting of financial support to an undertak-

ing indirectly controlled from a blacklisted country even if the direct owner is an under-

taking in the EU/EEA.

In response to previous questions from the Danish authorities

, TAXUD has con-

firmed that it is

the Commission’s view that

such an exclusion cannot amount to a re-

striction of one of the Treaty freedoms.

It has further been confirmed that the Recom-

mendation is not limited to COVID 19 financial support or to financial support that in-

volves monies directly paid to undertakings, but that the Recommendation also covers all

other forms of financial support, e.g. tax exemptions.

As neither the Recommendation nor

TAXUD’s

previous responses contain a legal analy-

sis commenting on the abovementioned case law, it is difficult for the Danish authorities

to follow the legal reasoning behind the

Commission’s

interpretation.

Hence, the Danish authorities would appreciate receiving the

Commission’s Legal Ser-

vice’s

comments on the topic. In particular, the Legal Service is kindly asked to provide

legal substantive responses on the following questions:

1. Should it be considered as a restriction of the freedom of establishment to exclude a

company from financial support solely with reference to the indirect control from a

company based in a blacklisted country?

In the negative,

could the Legal Service clarify why it does not agree

with the

Danish authorities’ interpretation of

the case law of the ECJ as

mentioned above and provide specific references to relevant judgments,

outside the area of tax law, that support the Commission’s interpreta-

tion?

In the affirmative,

would it in the Commission’s opinion be possible

justify the restriction with reference to the objective of counteracting tax

evasion, and would the Commission consider the restriction as necessary

and appropriate in order to attain this objective even if the company has

paid taxes during e.g. the last years, which must be considered adequate

when compared to the overall turnover or level of activities of the com-

pany? If not, what is/are the requirement(s) in the public interest which

can justify the restriction, and what are the legal arguments as regards

the condition that the measure in question must not be appropriate for

ensuring the attainment of the objective pursued and does not go be-

yond what is necessary for that purpose?

For convenience’s sake, the

previous correspondence between the Danish authorities and TAXUD is enclosed.

Side 3 af 4

Is the Commission’s interpretation of the notion of restriction

of the freedom of es-

tablishment limited to the issues covered by the Recommendation or is it to be un-

derstood that it is applicable in all contexts?

As regards question 2, it is underlined that if the

Commission’s interpretation of the con-

cept of ‘restriction’

is to be applicable in all contexts, it would seem to have wide-reaching

implications. For instance, it would seem that such a general approach to the concept of

‘restriction’ would allow for

a Member State to decide in the context of privatizations or

public tenders (outside the scope of the harmonised rules of Directive 2014/24) to ex-

clude all undertakings, including those from other Member States, with direct or indirect

owners in one or more specific third country/countries.

Side 4 af 4