EU tax advantages denied by abuse of rights principle on its own (N Luxembourg 1 and T Danmark)

Table of contents

• What are the practical implications of these cases?
• What was the background?
• What did the Court of Justice decide?
• Broad concept of beneficial owner in IRD
• Application of EU law principle of abuse of rights
• The constituent elements of an abuse of rights and indicators of abusive practice
• The burden of proving abuse of rights
• Case details

Article summary

Tax analysis: The Court of Justice decided that, where the benefit of the Interest and Royalties Directive or the Parent-Subsidiary Directive is invoked for fraudulent or abusive practices, the tax authority (and/or the courts) of a Member State must, as a result of the EU law principle prohibiting the abuse of rights, refuse a taxpayer the benefit of the withholding tax exemption afforded under the relevant directive even if the domestic tax law or agreement-based provisions entered into by the relevant Member State (such as double tax treaties) do not themselves provide the basis for such refusal.