The Prohibition of Abuse of Rights after the ECJ Danish cases Analysis of the ECJ judgments, reading by national courts, and impact on tax treaty practice

Intertax, vol. 49, issue 6/7, pp. 482–516

35 Pages Posted: 14 Dec 2021

See all articles by Robert Danon

Robert Danon

University of Lausanne

Daniel Gutmann

University Paris 1 Panthéon Sorbonne (Sorbonne Law School)

Margriet Lukkien

Loyens & Loeff N.V.

Guglielmo Maisto

Catholic University of the Sacred Heart of Milan - Catholic University of the Sacred Heart of Piacenza

Adolfo Martin Jimenez

Universidad de Cádiz

Benjamin Malek

University of Lausanne - Faculty of Law, Criminal Justice and Public Administration

Date Written: April 5, 2021

Abstract

Since they were delivered in February 2019 the judgments of the Court of Justice of the European Union (ECJ) in the well-known ‘Danish cases’ have already been referred to by several courts of EU Member States to tackle alleged cases of directive shopping. In light of the increased convergence between EU and current OECD standards (notably the Principal Purpose Test), the findings of the ECJ will likely also have an impact in tax treaty practice and with respect to corporate structures involving dividends, interest or royalties. Against this background, this article discusses the findings of the ECJ in light of EU law but also contrasts these findings with tax treaty law and practice, including the rules of the Vienna Convention on the Law of Treaties (VCLT). Following an analysis of the prohibition of abuse of rights under EU and tax treaty law, the authors test the indicators of abuse in concrete cases by distinguishing inter alia between wholly artificial (sham) arrangements, on the one hand and ‘real’ business structures driven by tax motives, on the other hand. Finally, the impact of the ECJ findings on the interpretation of beneficial ownership is considered by taking into account recent tax treaty case law involving the 2014 OECD Commentary.

Keywords: tax law, international tax, eu tax law, ECJ, CJEU, abuse, beneficial ownership, OECD, tax treaty

Suggested Citation

Danon, Robert and Gutmann, Daniel and Lukkien, Margriet and Maisto, Guglielmo and Martin Jimenez, Adolfo and Malek, Benjamin, The Prohibition of Abuse of Rights after the ECJ Danish cases Analysis of the ECJ judgments, reading by national courts, and impact on tax treaty practice (April 5, 2021). Intertax, vol. 49, issue 6/7, pp. 482–516, Available at SSRN: https://ssrn.com/abstract=3977088

Robert Danon

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

Daniel Gutmann

University Paris 1 Panthéon Sorbonne (Sorbonne Law School)

12 place du Panthéon
Paris, 75005
France

Margriet Lukkien

Loyens & Loeff N.V.

P.O.Box 2888
3000 CW Rotterdam
Netherlands

Guglielmo Maisto

Catholic University of the Sacred Heart of Milan - Catholic University of the Sacred Heart of Piacenza ( email )

Via Emilia Parmense, 84
Piacenza
Italy

Adolfo Martin Jimenez

Universidad de Cádiz ( email )

Facultad de Derecho, Avda de la Universidad, s/N
Jerez de la Frontera, Cádiz 11405
Spain

Benjamin Malek (Contact Author)

University of Lausanne - Faculty of Law, Criminal Justice and Public Administration ( email )

Lausanne, 1015
Switzerland

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