CJEU – Recent Developments in Direct Taxation 2017

1. S. 2Overview

On 12 September 2017, the CJEU handed down its judgment in Republic of Austria v Federal Republic of Germany (C-648/15). This case is rather special: it concerns a dispute over the interpretation of a particular rule in the Austria-Germany tax treaty. This dispute is now resolved by the CJEU’s judgment, the Court having acted, in effect, as an arbitration tribunal. The CJEU was given the competence to do this by the two contracting states in their bilateral tax treaty: when the Austria-Germany tax treaty established arbitration as the ultimate resolution mechanism over tax treaty disputes (in its Article 25 para. 5), the CJEU was explicitly chosen as the (exclusive) court of arbitration.

In this respect, the present case is absolutely unique: since the Austria-Germany tax treaty (which was negotiated around the year 2000), no other bilateral (or multilateral) tax treaty has given the CJEU such a role. For many years, there was no practical experience of any kind of arbitration under the Austria-Germany tax treaty itself. The present case is actually the first case ever for a dispute between the two states to have escalated to the CJEU for arbitration, after an unsuccessfu...