Credit Method Compatibility and Constraints under EU Law

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As European Union (EU) Member States seek to counteract base erosion and profit shifting (BEPS) practices while avoiding new obstacles to the EU’s internal market such as double taxation, the credit method, also known as the foreign tax credit, is one of the essential tools in this balancing act, yet it is one that has given rise to various EU law challenges and questions. This invaluable book – the first in-depth study of the EU law constraints on designing the credit method – delineates the EU law boundaries within which the Member States must operate when they implement this method of tax relief.

For the first time, the Court of Justice of the European Union (CJEU) cases that may affect, directly or indirectly, the credit method and its main components are systematically identified and analysed in order to extract the legal findings and principles that define the contours within which the Member States can manoeuvre when considering EU-compatible approaches to the credit method. To this end, among others, this book offers:

• an extensive study of the historical legal developments of the credit method;

• an overview of the key design features of the credit method, considering the optional, variable components, such as the credit limitation (maximum creditable amount), that tailor it to different legal and policy considerations;

• an analysis of the legal constraints on the key features of the credit method flowing from CJEU case law on the fundamental freedoms, considering the impact of landmark cases and concepts (e.g., Schumacker, neutralization);

• the EU law implications based on the type of credit method (direct, indirect, imputation) and the feature of the credit method (e.g., credit limitation, credit carryforward); and

• examples to clearly and concisely illustrate the basic operation of the credit method and some of the main calculation and EU law issues.

The author’s doctoral dissertation, on which the book is based, was awarded the Wolfgang Gassner Science Prize 2020 and the European Doctoral Tax Thesis Award 2020.

As a timely, comprehensive and practical study of the relationship between the credit method and EU law, this book will be welcomed by lawyers and other professionals working with taxation matters, as well as by tax policymakers and academics in the fields of international and European tax law.

 

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Dr Rita Julien, LLM, obtained her doctoral degree at WU (Vienna University of Economics and Business), where she worked as a Research and Teaching Associate at the Institute for Austrian and International Tax Law. She obtained her LLM with a specialization in European and International Tax Law at the Faculty of Law, Economics and Finance of the University of Luxembourg. She is a Graduate Tax Scholar in the LLM programme at Georgetown Law, teaches in the LLM programme in International Tax Law atWUand conducts research for the focus group on unexplained wealth in the Tax Transparency and Corruption Project of the Global Tax Policy Center. She has published on various tax law topics and has taught numerous courses and seminars to students, practitioners and government officials, including on Austrian tax law, on dividends and interest under tax treaties and on the methods for the elimination of double taxation. The author’s doctoral dissertation, on which this book is based, was awarded a Wolfgang Gassner Science Prize 2020 and the European Doctoral Tax Thesis Award 2020.