CJEU - Recent Developments in Direct Taxation 2020

S. 2021. Introduction

The case Viva Telecom Bulgaria poses several points of law, which are new to the existing case law of the CJEU in direct taxation.

The first one is related to the interaction between the Interest-Royalty Directive (IRD) and the Parent-Subsidiary Directive (PSD) and pertains to whether there is a legal ‘vacuum’ between the two directives whenever a particular debt instrument is not awarded the benefits of the IRD based on the exceptions under Article 4(1) of the IRD. Broadly speaking, the latter provision allows Member States to not provide the benefits of the IRD whenever the civil law debt claim has an equity resemblance (for instance, because of a super-maturity date of the debt, e.g., longer than 50 years). There are authors who have expressed views on this issue in academic literature, but the Court is yet to rule on the matter. The case of Viva Telecom Bulgaria will provide an excellent opportunity for this.

The second main issue concerns primary law and, more precisely, whether a provision that creates an irrebuttable presumption of abuse, hence in principle disproportionate, can be scrutinized under EU law when it applies to both domestic and cross-border situat...