Presentation Transcript

1. Case C48/11Veronsaajien oikeudenvalvontayksikkö (Tax Recipients' Legal Services Unit)vA Oy

   Katja Tiainen Anne Koskela 14.2.2013
2. Question referred Reference for a preliminaryrulingfrom the FinnishSupremeAdministrativeCourt (KHO) Exchange of sharesbetweenFinnishlimitedliabilitycompany (A Oy) and a Norwegiancompany (B AS) Is an exchange of sharesconsidered as a disposalbetween A Oy and B AS according to the Finnish Business Income Tax Act? The meaning of EEA Agreement: Article 31 (freedom of establishment) and Article 40 (Freemovement of capital)
3. Finnish Business Income Tax Act Exchange of Shares (52f §) Arrangementwhere a limitedliabilitycompany (e.g. D Oy) acquires a portion of the shares of anotherlimitedliabilitycompany (e.g. E Oy) and as compensationgives to the shareholders of thiscompany (E Oy) new shareswhichit (D Oy) hasissuedorsharesthatitholds After the exchange the acquiredsharesmustgive to the acquiringcompanymorethan 50% of the totalvotingrights. Alternativelyif the companyalreadyholdsmorethan 50% of the votingrights, the companycanacquiremoreshares Cash compensationmax. 10% of the nominalvalue of the shares The exchange of shares is notregarded as a disposal (OBS! Cash compensation is considered as a disposal) Applicability of 52f § Exchange of shares of domesticlimitedliabilitycompanies Exchange of sharesbetweencompanies of differentEU MemberStates(implementation of Directive 2009/133)
4. Exchange of shares Beforeacquisition Afteracquisition 19,7% B AS A Oy B AS A Oy 6,0% 19,7% 80,3% 100,0% C Oy C Oy
5. EEA Agreement Examination of the Finnishdomesticlaw in the light of the EEA Agreement The purpose of the EEA Agreement is to ensurefreemovement of goods, persons, services and capital within the EEA The internalmarketestablishedwithin the EU is extended to the EFTA States (e.g. Norway)
6. Freedom of establishment Question of freemovement of capital or the freedom of establishment?  operationsinvolvingownershiportakingcontrol of a company  coveredby the freedom of establisment Article 31 of the EEA Agreement: no restrictions of the freedom of establishment of nationals of a Member State of the European Community or a State of the European Free Trade Association (EFTA) in the territory of any other of these States. This shall also apply to the setting up of agencies, branches or subsidiaries. Guarantee the benefit of national treatmentbyprohibitinganydiscriminationbased on the placewherecompanieshavetheirseat Allmeasuresthatprohibit, hinder (etc.) thisfreedommustberegarded as restrictions
7. Discrimination? Domesticcompaniesand/orcompanies in EU MemberStates exchange of sharesnotregarded as disposal Company in a third country (party to the EEA Agreement)  exchange of shares is treated as a taxabledisposal The taxtreatment is determinedsolelyby the place of the company’sregisteredoffice  the difference in treatmentwasnotexplainedby a difference in the objectivesituation Principle of non-discrimination (Article 31 of the EEA Agreement)  the taxtreatment of exchange of shares for domesticcompaniesmustbeapplied to a situationwhere the otherparty is a companyestablished in a country which is a party to the EEA Agreement
8. Justifications to a restriction of the freedom of establishment? Overridingreasonsrelated to publicinterest? Public interestrelated to the need to combattaxevasion? No presumption of taxevasionbased on the issuethat the acquiringcompany is situated in an EEA country Effectiveness of the tax supervision? Agreement on mutualadministrativeassistancesignedbetween Finland and Norway. Finnishgovernmenthasconfirmedthatexchange of information is effective  No grounds for justifications
9. The Ruling The taxrules of taxneutralexchange of sharesmustbeapplied to the exchange of sharesbetween A Oy and B AS The exchange of shares between A Oy and B AS is not regarded as a disposal for taxation purposes