CJEU - Recent Developments in Direct Taxation 2021

S. 501. Introduction

The AG Opinion in Viva Telecom Bulgaria addresses a number of issues of EU law that remained undecided in the Court’s case law before that case.

The case revolves around two main matters. The first one is related to the application of the Interest-Royalty Directive (“IRD”) and the Parent-Subsidiary Directive (“PSD”) and looks at whether there is a legal ‘vacuum’ between the two directives whenever a super-maturity debt instrument is excluded from the scope of application of the IRD based on the exceptions under Article 4(1) of the IRD. Generally, the existing academic literature sides with the view that super-maturity debt would be excluded, with the same view also expressed by AG Rantos but for slightly different reasons.

The second main issue concerns the fundamental freedoms and relates to an interesting example of transfer pricing provision that applies indistinctly in law and in fact to both domestic and cross-border situations alike but gives rise to potentially discriminatory treatment as far as withholding taxation is applied on the deemed payment under the adjustment.

In terms of structure, this chapter will first focus on the facts of the case and the relevant...