Taxation and the Third Country Dimension of Free Movement of Capital in EU Law: The ECJ's Rulings and Unresolved Issues

British Tax Review, Vol. 6, pp. 628-666, 2008

40 Pages Posted: 26 Mar 2009

See all articles by Martha O'Brien

Martha O'Brien

University of Victoria - Faculty of Law

Date Written: March 9, 2009

Abstract

The free movement of capital guaranteed by Article 56(1) of the EC Treaty applies not only within the European Union (EU), but also to movements of capital between EU Member States and non-EU (or third) countries. Over the last 15 years the Court of Justice of the European Communities (ECJ) has ruled repeatedly in intra-EU cases that Member States' direct tax laws must not impede exercise of the fundamental freedoms, including free movement of capital. The ECJ has now begun to define how Article 56(1) applies to direct tax restrictions on capital movements between the EU and third countries, providing some important indications, but also raising many questions, as to the differences and similarities in the way the ECJ will approach third country cases as compared to intra-EU cases. This article provides an analytical overview of the EC Treaty provisions on free movement of capital, the range of intra-EU cases that have held Member State tax laws incompatible with free movement of capital, and discusses the implications of recent third country decisions and the provisions of the Treaty of Lisbon on the future evolution of the third country dimension.

Keywords: Taxation, European Union, capital

Suggested Citation

O'Brien, Martha, Taxation and the Third Country Dimension of Free Movement of Capital in EU Law: The ECJ's Rulings and Unresolved Issues (March 9, 2009). British Tax Review, Vol. 6, pp. 628-666, 2008, Available at SSRN: https://ssrn.com/abstract=1356125

Martha O'Brien (Contact Author)

University of Victoria - Faculty of Law ( email )

PO Box 2300, STN CSC
McGill at Ring Rds (Fraser Bldg)
Victoria, British Columbia V8W 3B1
Canada

HOME PAGE: http://www.law.uvic.ca/mcobrien

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