A legal study into the EU’s approach towards exit taxation
Sammanfattning: The purpose of the thesis is to analyse the EU’s and CJEU’s approach towards exit taxes by finding guidance on how the exit tax rules shall be made to be considered as compatible with the requirements of EU law. The EU law’s presumption of establishing an internal market without boundaries at the frontiers prohibits national measures which hinder, inter alia, the market access. Therefore, the EU’s Member States tax legislation that influences the taxpayer’s behavioural patterns are considered a restriction to the free movement rights. A legitimate objective within the reason of public interest may allow a restrictive national measure. The CJEU strike a balance between the purposes of public interest and the aim of establishing a single internal market within the EU. The States rationale behind the exit tax regimes is to protect their tax base followed by the right from the international tax law to tax an income accumulated within the tax jurisdiction of that State. Within the States’ tax sovereignty, the tax systems are underlined by different principles that, inter alia, determine the subject of taxation. Such mismatches and differences may create double taxation and double non-taxation. It results in a harmful effect but also affects the economic relation between the States. It also creates obstacles to the EU’s internal market. The States enter into bilateral tax treaties, that are based on the OECD model tax convention, to divide and define taxing rights between them. A balanced allocation of taxing rights is recognised by the CJEU as a legitimate aim. The exit taxation triggers at the event of emigration. It affects the mobility of a taxpayer by creating a dissuasive effect and therefore, is regarded as a restriction. The CJEU develops two lines of cases concerning exit taxation on accrued gains. The distinction in the CJEU’s reasoning occurs in the assessment of whether the measure at issue is proportionate to the aim pursued. For instance, in case of emigrating individuals, deferral of payment until realisation shall be granted for the measure to be considered compatible with EU law. However, in the case of emigrating companies, it is established, inter alia, that the taxpayer shall have a choice between immediate taxation and deferral of payment as it is regarded as less harmful to the free movement rights. However, the subsequent cases show that the further case law builds on the precedents established in the cases of emigrating companies. Even it may indicate that the CJEU is going towards a single approach. The ATAD contains a provision on exit taxation in case of taxpayers that are subject to corporate tax followed by the national law. It shows how far the Member States goes in order to co-ordinate, in that matter. Article 5 of the ATAD reflects the established case law on exit taxation in case of emigrating companies.
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