ECJ Ruling Allows EU Residents To Shop Around For Best Tax Deal

by Ulrika Lomas, for LawAndTax-News.com, Brussels

02 November 2004

An opinion released last week by an advocate general at the European Court of Justice (ECJ) is expected to have favourable implications for EU taxpayers, allowing them to 'shop around' for the most favourable tax deals.

Commenting on the case of a German taxpayer who had asked to be taxed in the Netherlands as a Dutch taxpayer, referring to a tax treaty between the Netherlands and Belgium which entitles Belgian non-resident taxpayers to the same tax reductions as Dutch residents, the ECJ ruled that individuals and firms can examine an European country's international tax arrangements and demand to be treated in line with the most favourable.

Speaking to the Sunday Business Post regarding the likely impact of the ruling on Irish taxpayers, Grant Thornton's Bernard Doherty suggested that significant capital gains tax savings could be made on investment properties.

"For example, an Irish person who buys an investment property in France and sells it on within a year or two currently pays CGT in both jurisdictions," he explained, adding: "The new ruling would allow them to cite more favourable tax treaties the French may have with other countries, and escape paying the double tax."

The decision is also expected to have a beneficial effect on non-resident British firms and individuals who pay tax in Ireland.

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