The Resource Austria v Germany : Case C-648/15

Austria v Germany : Case C-648/15

Austria v Germany : Case C-648/15
Austria v Germany : Case C-648/15
Judgment by the Court of Justice of the European Union (Grand Chamber), judgment date 12 September 2017. The taxpayer was an Austrian resident company that held certain certificates issued by a German company that entitled the holder to the payment of annual interest at a fixed rate of the nominal value of the certificates. Austria disputed Germany's claim to be able to tax the remuneration paid in respect of the certificates under the Treaty. Both parties agreed that the income constituted interest within the meaning of Art. 11 of the Treaty, and not dividends within the meaning of Art. 10. Under Art. 11(1) exclusive taxing rights are granted to the state of residence, in this case, Austria. However, Art. 11(2) provides that the source state may also tax in the case of 'income from rights or debt-claims with participation in profits'. Although the parties agreed that only remuneration from debt-claims that were dependent on profits were covered by Art. 11(2), they disagreed as to the required level of dependency. Germany took the position that the criterion of dependency is satisfied where the payment is dependent on the realization of a certain level of profit by the debtor while Austria argued that the provision should be interpreted narrowly, i.e., as referring to remuneration, in addition to the fixed interest component, computed on the basis of the issuer's profits. The mutual agreement procedure (MAP) initiated by the taxpayer under Art. 25(1) of the Treaty did not resolve the matter and the taxpayer accordingly requested Austria to refer the matter to the Court of Justice of the European Union in accordance with Art. 25(5) of the Treaty. The CJEU held that the certificates at issue did not constitute debt-claims with participation in profits within the meaning of Article 11(2) of the Treaty
Citation source
In: International tax law reports. - London. - Vol. 20 (2018), part 3 ; p. 385-401
Geographic coverage
  • European Union
  • Europe
Language note
Baker, P
  • ECJ case law
  • MAP
  • interest
  • dividend
  • treaty interpretation
  • arbitration
Austria v Germany : Case C-648/15

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