TaxCorporate TaxECJ says authorities must reveal tax affairs before deals

ECJ says authorities must reveal tax affairs before deals

Local authority services in Europe now cannot keep tax affairs secret when competing with private companies

A tax dispute between two German crematorium operators looks set to establish
a legal precedent that local authority services cannot keep their tax affairs
secret where they are in competition with private companies.

The European Court of Justice (ECJ) has ruled that when a business – in this
case, Halle crematorium Feuerbestattungsverein Halle – wants to prevent a
council-owned competitor from enjoying tax breaks, it is entitled to information
on whether these actually exist.

Furthermore, it can then rely on Article 4(5) of the European Union’s (EU)
sixth VAT directive, which says that public authorities ‘shall be considered
taxable persons’, where a tax exemption ‘would lead to significant distortions
of competition’.

The case was brought by the private crematorium, which wanted to prove
suspicions that the town of Lutherstadt Eisleben paid no VAT regarding its
crematorium services, which the ECJ heard ‘would enable that local authority to
offer cremation services at prices lower than those which Feuerbestattungsverein
itself charges’.

The ECJ backed the private service, ruling: ‘A private person… in competition
with a body governed by public law and alleges that that body is… treated as a
non-taxable person for VAT or under-taxed (can) rely… on the sixth (VAT)
directive in legal proceedings’, allowing it to access tax records, and legally
challenge an exemption.

Related Articles

Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

2m Alia Shoaib, Reporter
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3m Austin Clark, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

3m Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

3m Austin Clark, Reporter
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
Should I incorporate my buy-to-let business?

Corporate Tax Should I incorporate my buy-to-let business?

4m Emma Rawson