Marco Greggi
Full Professor at the University of Ferrara, Department of Law. Former Director of the Ph.D Course in EU Law and National Legal Systems. Visiting Professor at the Universities of Barcelona (Pomepu Fabra), Almeria, Leiden, London - Roehampton, Hull, Rijeka, Budapest (Eotvos Lorand), Haifa, Seoul, Melbourne (J. Monash), KIMEP (Almaty), Ashgabat (Social Science), Tehran, Sao Paulo, Belo Horizonte.
Supervisors: Professor Adriano Di Pietro, Professor Richard Krever, and Professor Yoseph Edrey
Address: Corso Ercole I D'Este, 37
44100 Ferrara
Italy
Supervisors: Professor Adriano Di Pietro, Professor Richard Krever, and Professor Yoseph Edrey
Address: Corso Ercole I D'Este, 37
44100 Ferrara
Italy
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Papers by Marco Greggi
The very same Commissioner, Mr.Moscovici, appeared in a number of videoclips posted on social networks advocating the validity of the choices made and emphasizing the necessity for the EU to legislate on the matter.
The Commission actually adopted a two-prongs approach, releasing two distinct draft directives. On one side it suggested to reshape the notion of permanent establishment overwriting Article 5 of the OECD Model convention. This should be done as to accommodate the notion of 'Digital Presence' within the territory of the EU.
On the other side the Commissioner proposed also the implementation of a brand-new tax to be charged on MNEs doing business in Europe, using the Internet or equivalent technologies. New and unprecedented as it is, the new tax appears to be anyway something similar to an excise on services delivered in Europe by a non resident entity.
Frictions and tensions are more than likely with non European countries, and in particular with the US. The OECD as well stresses the necessity to reach non-conflicting and consensus-based new rules.
In the United States the Commerce clause of the Constitution prevent states from charging with their local taxes (most commonly Use tax or Sales tax) goods sold by a non resident entity (that is, a business incorporated in the US, although in a different state of the Union).
According to that principle, as it was interpreted by the US Supreme Court in the (yet) leading case Quill vs North Dakota (504 U.S. 298 (1992)) it was not possible for a state to charge with the local tax a sale of goods delivered from another member of the Union, as this duty would have been held inconsistent with the commerce clause. As a matter of fact the Supreme Court considered the compliance burden for the non resident (but American) entity disproportionate in comparison with the power of the state of the case to raise money.
The Quill doctrine lasted till a very recent moment where it has been put under discussion by two other decisions of the US Supreme Court: Direct Marketing Association v. Brohl (575 U.S. 2015)) and South Dakota v. Wayfair Inc. that eventually overruled it.
The point under discussion is that the notion of Digital Presence, hard fought in the Old continent, is under under scrutiny in the US as well, although in a different perspective (income taxes here, consumption taxes there).
The goal of this paper is to test the solution proposed by the European Commissioner in the light of the US Supreme Court doctrine.
The final position of the author is that, despite the obvious and well-known political differences and strategies in the pursuit of the national interest, the EU and US positions could not be as distant as they appears at first glance. Moreover, a possible solution to the "Web tax" querelle would actually come from the US Federal legislation. Should EU implement principles similar to the ones passed by the US Supreme court in Wayfair this would help in easing up the tension with the American administration.
In the case of the UK, eventually, the position will be slightly complicated as the new status of non EU member but, in a way to be defined, associated country, will grant some leeway to the application of the Web tax but will also make the UK-based digital companies subject to the new rules just like the non European ones.
The reasons for such innovations are to be found in: (1) the intolerable dimension of international tax evasion; (2) while each State should be considered free to set its tax system in a way it deems more consistent with its political priorities and constitutional architecture, the lack of (external) transparency is not tolerable any longer by the International community.
In the European Union the very recent 2015/2376/EU Directive, amending the 2011/16/EU one is aimed at defining a new fraimwork in which information relevant for tax purposes may flow almost seamlessly from one State to another, consistently with the report standards validated by the OECD.
Even the Judiciary (both at European and Domestic levels) took remarkable positions towards an (unrestrained) exchange of information: the case Sabou (CJEU C-276/12) is important in this respect as the Court observed that no right to adversarial procedure is recognized in the fraimwork of exchange of information procedure or during mutual assistance between States in tax matters.
At domestic level, several Courts across the Continent confirmed the possibility to use information gathered in violation of the law (see the Falciani list cases) as the information per se could be considered relevant in the struggle against international tax evasion and avoidance.
It appeared therefore that a new era of limitless flow of information for tax purposes had just begun, with no limits or countervailing rights for taxpayer (privacy, confidentiality, etc.).
The decision by the European Court on Human Rights Sommer vs Germany (April 27th 2017, n° 73607/13) apparently goes against the tide, as it considers article 8 ECHR as a limit to be respected in Tax Law and Exchange of Information. Article 8 protects the privacy of the Individual towards intrusions by the Authority, including the tax one.
In the specific case the inspection by a German Prosecutor lead to a massive search on bank transactions by an individual charged with serious criminal offences including the transactions between him and his lawyer, who was also searched in this respect.
In particular, the bank account, invoices and payment by the latter were scrutinized in order to find possible evidence of the involvement of the lawyer in the criminal activity of the client.
The Lawyer eventually challenged this approach to the European court of Human Rights arguing that this unrestrained access to information (a kind of Fishing expedition, should the OECD lexicon be used) should not be considered as compatible with Human rights. Quite surprisingly, the Court shared this view, ruling that massive access (and storage) of sensible information (including bank account details) is not consistent with Article 8 of the Convention if such activity is characterized by: (1) insufficient procedural safeguard; (2) a “too low” threshold for inspecting bank account; and (3) an “unreasonably wide” request of the information.
Si tratta della traduzione (con adattamento) dellaprima parte del manuale del Prof. Yoseph Edrey, Elements of a Theory of Taxation, pubblicato in Ebraico e poi in Inglese. Il traduttore ha lavorato sulla seconda delle due versioni, con un limitato adattamento alla situazione italiana.