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ECJ Case on Freedom of Services – Joined cases C-52/21 & C-53/21 – Compatibility of separate corporation tax levy for services provided by companies in another Member State

On February 24, 2022, the ECJ issued its decision in the joined cases C-52/21 & C-53/21. This is a case qualified under ”Freedom of Services”, this is not a VAT Case, though there is reference to VAT.

Context: Reference for a preliminary ruling — Freedom to provide services — Article 56 TFEU — Restrictions — Tax legislation — Corporation tax — Obligation for purchasers of services to draw up and send to the tax authorities supporting documents relating to the sums invoiced by service providers of services established in another Member State – Absence of such an obligation in the case of purely internal services – Justification – Effectiveness of tax controls – Proportionality”

Question

Should Article 56 TFEU be interpreted as meaning that it precludes national legislation or practice under which companies established in a first Member State using the services of companies established in a second Member State are obliged, in order to avoid the establishment of a contribution to corporation tax equal to 100 [%] or 50 [%] of the sums invoiced by the latter, to draw up and forward to the tax administration of the sheets and [the] summary statements relating to these expenses when, if they have recourse to the services of resident companies, they are not subject to such an obligation in order to avoid the establishment of the said contribution?

Decision

Article 56 TFEU must be interpreted as meaning that it precludes rules of a Member State which require any company established in the territory of that first Member State to send the tax authorities statements relating to payments for services purchased from service providers established in another Member State, in which the latter are subject to the regulations on business accounting and to the obligation to issue invoices in accordance with the regulations relating to the value added tax, under penalty of a corporation tax increase equal to 50% or 100% of the value of these services, whereas, in accordance with an administrative practice,that first Member State does not impose any equivalent obligation when those services are provided by service providers established in its territory. 

Source Curia

 

 

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