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K. Perrou
Intertax
Volume 49, Issue 10 (2021) pp. 853 – 861
https://doi.org/10.54648/taxi2021083
Abstract
An increasing number of taxpayers rely on the EU Charter of Fundamental rights to challenge various aspects of tax procedures. However, not all cases are included in the scope of application of the Charter; an association with Union law is required. For VAT cases or for complaints relating to the direct application of provisions of EU directives, it is relatively easy to identify such association. This is not always as easy with cases involving direct taxation or those related to the application of purely national legislation that may, however, be a corollary to Union law provisions.
For cases that do not have a connecting element with Union law, protection may be granted under the European Convention on Human Rights (ECHR). Tax procedures, however, are only covered by the ECHR if they relate to a criminal charge, leaving a significant number of normal tax proceedings beyond the scope of fair trial guarantees.
The different scope of application and ambit of protection granted by the two instruments might lead to disparities in taxpayer protection. The entry into force of an advisory opinion mechanism before the European Court of Human Rights, similar to the preliminary reference procedure before the Court of Justice, may enhance taxpayer protection in the EU. The latter option, however, is to be used with caution: although referring a case that involves Union law to the ECHR is not expressly prohibited, it could arguably amount to a violation of Union law.
Keywords
Tax treaty, nonresident alien, federal tax exemption benefit, case law precedents.
Extract
This article argues that despite its apparent success as a political instrument to achieve global coordination, and particularly referred to hybrid entity mismatches, the multilateral instrument (MLI) has failed. Most notably, the MLI has been incapable of keeping cohesion with the main object and purpose of tax treaties, reinforcing also an unequal distribution of taxing powers between residence and source states. In light of the above, this article explores some prospective alternatives that could not only help with restoring cohesion and equality within tax treaties, but also add certainty and simplicity to the interpretation of the MLI and the issues related to hybrid entity mismatches.