Trending topics: withholding taxes on cross-border services, freedom to provide services – rentenciones en la fuente sobre services transfronterizos y libre prestación de servicios
Tom O’Shea has sent us a relevant comment on the ECJ judgment on the X NV case (C-498/10) [“ECJ Upholds Dutch Withholding Tax On Cross-Border Services” in Tax Notes International, vol. 69, no. 10]: “the European Court of Justice upheld Dutch withholding tax rules that were applied to foreign service providers but that were not imposed on Dutch service providers. The Court determined that the Dutch rules at issue were justified and proportionate. Background”, p. 957.
In his analysis Tom stresses that:
“The Court went on to investigate the proportionality of the Dutch rules and pointed out that the recovery of taxes directive was not intended to replace taxation at source as a means of collecting taxes. The Court stated that
while the recovery of taxes directive carries out a degree of approximation of national provisions in the area of taxation inasmuch as it obliges all Member States to treat claims originating in other Member States as being national claims . . . its aim . . . was not to replace the taxation at source as a method of collecting tax.
The Court explained that: the withholding tax allows the tax authorities to take note of the event giving rise to the tax for which the non-resident service provider is liable. In the absence of such a withholding tax, the tax authorities of the Member State concerned would be likely to be required to impose an obligation on the service recipient, established on the territory of that State, to declare the service carried out by the non-resident service provider.
The Court also highlighted that: the renunciation of withholding tax would give rise to the need to collect the tax from the nonresident service provider, something which could . . . lead to a serious burden on the foreign service provider in that he would have to submit a tax return in a foreign language and to familiarise himself with a tax system in a Member State other than that in which he is established.
The Court also noted that ‘‘such direct collection from the non-resident service provider would also give rise to a significant administrative burden for the tax authorities responsible for the service recipient in view of the large number of services provided on an ad hoc basis.’’
Accordingly, the Court determined that ‘‘the collection of the tax directly from the non-resident service provider would not necessarily constitute a less severe means than deduction at source.’’30 Therefore, the Dutch rules at issue were proportionate and justified by the need to ensure the effective collection of taxes”, p. 960.
Many thanks for this valuable contribution, dear Tom.
Tom O’Shea nos ha enviado un interesante comentario a la sentencia del TJUE en el caso X NV (C-498/10) [“ECJ Upholds Dutch Withholding Tax On Cross-Border Services” in Tax Notes International, vol. 69, no. 10]. En esta sentencia “el Tribunal de justicia considera adecuadas las normas holandesas que imponían una retención en la fuente sobre la remuneración de los prestadores de servicios no residentes, que no se aplicaba a los prestadores de servicios residentes. El Tribunal considera que las normas holandesas estaban justificadas y eran proporcionadas”, p. 957.
En su análisis Tom destaca cómo el tribunal -a diferencia de lo que sucedía en el caso Truck Center- considera que existe una restricción de la libre prestación de servicios, pero entiende que tal restricción está justificada por la necesidad de garantizar la recaudación de las deudas tributarias. Teóricamente sería posible garantizar de otro modo dicho cobro a través de la directiva de asistencia mutua en materia de recaudación, pero esta no pretende suprimir los sistemas nacionales de retención y, además, si la retención se suprimiera, el prestador de servicios debería quedar obligado a presentar una declaración en un país distinto de aquél en el que reside, lo cual supondría una mayor restricción a la libre prestación de servicios.
Muchas gracias por tu valioso análisis, querido Tom.