What were the key Huf Haus claims over the past 24 months?
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Reference for a preliminary ruling from the Hoge Raad der Nederlanden Netherlands. In this case the Court is asked two questions by the Hoge Raad der Nederlanden Supreme Court of the Netherlands concerning the levying of capital duty in relation to a direct informal capital contribution by a parent company established in the United Kingdom to its sub-subsidiary established in Germany. At issue in the main proceedings is whether the Netherlands tax authorities are allowed to levy capital duty on the subsidiary, which is established in the Netherlands.
By its second question the Hoge Raad seeks an assessment in light of the right to freedom of establishment. It is stated in the sixth recital in the preamble that it is inherent in this objective that duty on the raising of capital within the common market by a company or firm should be charged only once at a level which is the same in all the Member States. The chargeable transactions are set out in Article 4 of the directive.
From the order for reference and the written submissions of the Netherlands Government it appears that, in order to avoid double taxation, the tax authorities applied at the material time a general policy based on the hardship clause with regard to informal capital contributions within vertical groups. However, this policy applied only when the subsidiary and the sub-subsidiary were established in the Netherlands.
The Netherlands Government asserts in its written submissions that with regard to contributions made to sub-subsidiaries established outside the Netherlands, there was no general policy; it was decided on a case-by-case basis whether the levying of capital duty to the subsidiary would amount to an unreasonable hardship. Nonetheless, the levying of capital duty on the subsidiary in the Netherlands would not weber fertighaus option trading considered to be unreasonable hardship if the sub-subsidiary was established in a State that did not levy capital duty.
Senior Engineering Investments BV hereinafter: All of its shares are held by Senior Engineering Investment Ltd hereinafter: In Germany no capital duty was levied in respect of the capital contribution made to the sub-subsidiary.
SEI weber fertighaus option trading an objection to this amount with the Inspector of Taxes and requested repayment. This request was refused by a ruling of the Inspector. In its judgment of 18 January the Gerechtshof upheld the ruling of the Inspector. By order of 21 November the Hoge Raad has requested the Court for a preliminary ruling. In that case, which concerned Article 4 1 c weber fertighaus option trading the directive, a company was held liable to capital duty on the sum of contributions that were made to its subsidiaries, since it was clear from the circumstances that the company was the real recipient of those contributions.
In addition, the Hoge Raad doubts whether the policy pursued by the tax authorities to exempt the subsidiary from weber fertighaus option trading duty, provided that that company and the sub-subsidiary are both established in the Netherlands, must be regarded as a restriction weber fertighaus option trading the freedom of establishment prohibited by Article 43 EC. In particular, since Germany has weber fertighaus option trading no capital duty on the sub-subsidiary, the Hoge Raad is unsure whether there is an obstacle to establishment in another Member State in a case such as the present in which overall no more capital duty is levied on the group than weber fertighaus option trading have been the case had both the subsidiary and the sub-subsidiary been established in the Netherlands.
The Hoge Raad has therefore requested the Court to give a preliminary ruling on the following questions:. The Netherlands Government, SEI and the Commission have submitted written observations to the Court and oral argument at the hearing, which was held on 26 May Capital duty may as a result be levied both on the sub-subsidiary and on SEI.
According to the Netherlands Government this would be in line with economic reality, since both companies have increased their economic potential.
SEI and the Commission have argued that the position of the Netherlands is founded on an incorrect reading of the directive. According to them, capital duty cannot be weber fertighaus option trading twice on account of the same transaction. In weber fertighaus option trading respect, SEI points out that the viewpoint of the Netherlands implies that, if there had been more intermediate companies in the chain, capital duty would have become chargeable on each company.
It seems to me that, in effect, the Netherlands perceive the contribution to the sub-subsidiary as two transactions instead of one. However, at the heart of that perception lies confusion between what constitutes a transaction and what must merely be considered the effect of that transaction. The economic effect on SEI of the contribution to the weber fertighaus option trading evidently does not constitute a transaction in its own right.
The weber fertighaus option trading that one transaction can amount to taxable events simultaneously in different Member States must, in my opinion, also be rejected. The directive, which seeks to encourage the free movement of capital, departs from the principle that capital duty should be charged only once.
The scheme and purpose of the directive therefore confirm that where a transaction falls under Article 4 and thus gives rise to a claim for capital duty in one Weber fertighaus option trading State, the same transaction cannot simultaneously weber fertighaus option trading rise to a claim weber fertighaus option trading capital duty in another Member State.
The fact that the German tax authorities did not actually raise capital duty on the transaction at issue does not affect the question whether capital duty may be levied on SEI. Germany has availed itself of the possibility, provided by Article 7 2 of the directive, not to levy capital duty within its jurisdiction. The circumstance that a Member State has used the option to exempt transactions weber fertighaus option trading capital duty is irrelevant to the question in which Member State the transaction constitutes a taxable event pursuant to Article 2 of the directive.
Since a single transaction cannot amount to taxable events in different Member States, the question that remains is essentially whether, under the directive, the transaction currently at issue must be deemed a taxable event in Germany or in the Netherlands. Arguably, the Netherlands may be in a position to levy capital duty — to the exclusion of Germany — if the contribution to the sub-subsidiary must in fact be conceived as a service provided by a member to SEI.
The Commission is against such an interpretation. It points out that the contribution has increased the capital of the sub-subsidiary and therefore falls under Article 4 1 c. It argues that once a transaction falls under Article 4 1 cit becomes irrelevant whether it could fall under Article 4 2 b. Effectively, the Commission construes the second paragraph of Article 4 as subordinate to the first paragraph of Article 4.
Admittedly, it would provide a solution to the problem confronting the Hoge Raad that is in line with the requirement that capital duty cannot be charged twice in different Member States on account of the same transaction.
However, even though the first and second paragraph in Article 4 cannot apply concurrently, I am not fully convinced that there is a clear hierarchy between the two. The Netherlands Government argued at the hearing that Article 4 1 c applies only when there is an issue of shares.
The idea that capital duty could be levied on SEI would have to be based on the argument that there is an analogy between the present case and ESTAGto the extent that SEI must be considered the real recipient instead of the sub-subsidiary.
However, that argument must be rejected. As a general rule, capital duty must be charged on the company that is the direct recipient of the contribution — in this case the sub-subsidiary.
By weber fertighaus option trading of exception, when it is clear from the circumstances of the case that the real recipient is a different company, capital duty may be levied on the latter.
Only when a contribution is made for consideration will it be possible to conclude that the direct recipient is not the real recipient. The circumstances would have to show that the contribution that was made to a capital company the direct recipient was necessary in order to acquire rights in another capital company the real recipient.
If the contribution is not made for consideration, identifying the real recipient cannot serve its purpose and recourse should be had to the general rule. Accordingly, SEI could only be identified as the real recipient if the contribution to the sub-subsidiary was made by means of consideration in exchange for rights in SEI.
Although the contribution from the parent to the sub-subsidiary has increased the assets of SEI, it was not made by way of consideration for rights in SEI. Consequently, in line with the general rule, weber fertighaus option trading sub-subsidiary is to be regarded as the recipient weber fertighaus option trading the contribution for the purpose of levying capital duty. On those grounds it must be weber fertighaus option trading that the transaction at issue constitutes a taxable event only in Germany.
The Netherlands not being in a position to levy capital duty on the subsidiary, there is no need to answer the second weber fertighaus option trading. I am accordingly of the opinion that the Court should rule as follows:. As modified by the Law of 13 DecemberStb. Clearly therefore, the two paragraphs are mutually exclusive. Nonetheless, apart from their numerical order, nothing suggests that the one should be applied rather than the other.
It seems from that description that the contribution was a deposit into shares which had already been paid in full.