CJEU – Recent Developments in Direct Taxation 2022

1. Introduction

The CJEU’s ruling in the Viva Telecom Bulgaria case has settled several EU law issues that had previously remained unresolved. The case centres on two primary matters, the first of which pertains to the application of the Interest-Royalty Directive (“IRD”) and the Parent-Subsidiary Directive (“PSD”). Specifically, it examines whether a legal “void” exists between the two directives whenever a super-maturity debt instrument is excluded from the scope of the IRD based on the exceptions outlined in Article 4(1) of the IRD. Prevailing academic literature generally supports the notion that super-maturity debt would be excluded, which aligns with the ultimate position taken by AG Rantos and eventually the CJEU, albeit for slightly different reasons.

The second issue, which concerns the fundamental freedoms, involves a noteworthy example of transfer pricing provisions that apply equally to both domestic and cross-border situations, but which could lead to potentially discriminatory treatment with regard to withholding taxation on the deemed payment once an adjustment is made. This chapter‘s structure will first examine the case’s facts and the applicable domestic legal frame...