Source taxation and joint liability Sample Clauses

Source taxation and joint liability. The German source taxation procedure for non-resident artistes and sportsmen was at issue in Scorpio.192 Scorpio was a company which organized concerts with a regis- tered office in Germany. It concluded a contract with an individual trading under the name of Europop, who made a music group available to it. Europop was resident in the Netherlands and neither subject to unlimited nor limited tax liability in Germany. The German tax authorities called on Scorpio’s liability and demanded payment of the tax that Scorpio should have retained at source from the payment made to Europop, i.e. 15% of the gross amount of that payment. According to the Ger- man rules, the payment debtor must retain tax at source on account of the artiste and sportsman (the tax debtor) who is subject to limited tax liability in Germany under Sec. 46 of the EStG. The payment debtor is responsible for retaining and paying the tax. The ECJ held that the obligation on the recipient of serv- ices to make a retention at source of the tax on the pay- ment made to a provider of services residing in another Member State and the fact that that recipient may in cer- tain cases incur liability are liable to deter companies such as Scorpio from using providers of services resid- ing in other Member States. The Court concluded that legislation such as that at issue constitutes an obstacle to the freedom of services, prohibited in principle by Arts. 59 and 60 of the EEC Treaty (now Arts. 49 and 50 of the EC Treaty).193 The question then arose as to whether or not such legis- lation is nevertheless justified by the need to ensure the effective collection of income taxes. The ECJ held that the procedure of retention at source and the liability rules supporting it constitute a legitimate and appropri- ate means of ensuring the taxation of the income of a non-resident person. The Court recalled that at the material time, in 1993, no Community directive or any other instrument referred to in the case file governed mutual administrative assistance concerning the recov- 185. ECJ, 17 July 1997, Case C-28/95, A. Leur-Bloem v. Inspecteur der Belas- tingdienst/Ondernemingen Xxxxxxxxx 0, Xxxx. 44. 186. See 4.2. 187. See Independent Finance Court, 22 June 2006, Y v. Tax Administration X, UFSW, GZ RV/1007. 188. See Xxxxxxxxxxxxxxxxxxxxx 0000, BGBl. I No. 180/2004. 189. Ministry of Finance, EAS (Express Antwort Service) No. 1595 of 7 Februry 2000, No. 1845 of 6 July 2001, No. 2657 of 28 October 2005. See Rein- hol...

Source taxation and joint liability. In the author’s view, the Swiss-source taxation procedure for non-resident artistes, sportsmen and lectures consti- tutes an obstacle to the freedom to provide and to receive services, prohibited, in principle, by Art. 2 of the AFMP and Art. 19 (provision of services) of Annex I of the AFMP.211 In the light of the Scorpio case, the source taxation procedure and the joint liability provision may be justified on the grounds of the need to safeguard the collection of taxes in Art. 21(3) of the AFMP. The ECJ held that the use of retention at source represents a pro- portionate means of ensuring the recovery of the tax debts of the State of taxation. The same is true of the potential liability of the recipient of services who is required to make such a retention. The joint and several liability (solidarische Mithaftung) of the promoters charged with the presentation in Switzerland, however, appears to go beyond what is nec- xxxxxx to safeguard the collection of Swiss taxes and, therefore, might not comply with the principle of pro- portionality under the AFMP.