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Tax consequences when transferring company seat - a comparison between Sweden and Germany

Johansson, Maria (2008)
Department of Law
Abstract
This essay deals with the possibility for companies within the European Union to transfer their seat, special focus will be on the primary freedom of establishment and the regulations in Sweden and Germany. The transfer of company seat can be achieved through the transfer of the effective management because the OECD-MC assesses the tax liability on this criterion. As a result of the lost revenues the state of emigration will levy exit taxation. When doing so the Member States in the European Union nevertheless has to consider the European Law and the freedom of establishment laid down in articles 43 and 48 EC. Because no directives exist concerning the transfer of company seat the ambit of the freedom of establishment and companies'... (More)
This essay deals with the possibility for companies within the European Union to transfer their seat, special focus will be on the primary freedom of establishment and the regulations in Sweden and Germany. The transfer of company seat can be achieved through the transfer of the effective management because the OECD-MC assesses the tax liability on this criterion. As a result of the lost revenues the state of emigration will levy exit taxation. When doing so the Member States in the European Union nevertheless has to consider the European Law and the freedom of establishment laid down in articles 43 and 48 EC. Because no directives exist concerning the transfer of company seat the ambit of the freedom of establishment and companies' possibility to claim their right against the Member States' obstacles of emigration and immigration is decided through the ECJ's case law. Due to the fact that the ECJ in its judgement Daily Mail has stated that the right to emigrate depends upon whether the company remains validly incorporated in the state of formation, many questions has been raised in regard of the ambit of the freedom of establishment for companies. The ECJ has however through its case law come to shed more light on the freedom of establishment in regard of immigration obstacles in the cases Centros, Überseering and Inspire Art, meanwhile the ambit of the freedom of establishment in regard of emigration obstacles still can be considered diffuse. The opinions in the literature concerning the ambit of establishment for companies are many and take different directions. Nevertheless most authors agree on that it is a distortion of the freedom of establishment to apply this freedom differently on individuals and companies as the Daily Mail case do, especially since the wording of article 48 EC states that individuals and companies should be treated the same way. The opinions however differ in regard of if the extent of the freedom of establishment should be considered applying differently in immigration and emigration situations or if the extent should be considered to be the same. A question connected there with is whether the Lasteyrie case and the N-case concerning individuals and emigration obstacles also are applicable on companies. If clarity already has been shed on the problematic through the Sevic case is controversial. It will therefore be most interesting to see if the ECJ's judgement in the Cartesio case, concerning the transfer of the registered office, will provide a contribution to the discussion. Another debated issue is if the real seat theory still stands. Because the ECJ has made the right of establishment depending upon whether the company can transfer it seat while remaining validly incorporated in the state of formation, the question has been raised if the ECJ thereby has overruled the real seat theory or if the ECJ has come to create a new theory for the European Union. Of interest in this aspect is also that Germany during 2008 is going to change from the real seat theory to the incorporation theory. (Less)
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author
Johansson, Maria
supervisor
organization
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
EG-rätt, Skatterätt
language
English
id
1558829
date added to LUP
2010-03-08 15:55:23
date last changed
2010-03-08 15:55:23
@misc{1558829,
  abstract     = {This essay deals with the possibility for companies within the European Union to transfer their seat, special focus will be on the primary freedom of establishment and the regulations in Sweden and Germany. The transfer of company seat can be achieved through the transfer of the effective management because the OECD-MC assesses the tax liability on this criterion. As a result of the lost revenues the state of emigration will levy exit taxation. When doing so the Member States in the European Union nevertheless has to consider the European Law and the freedom of establishment laid down in articles 43 and 48 EC. Because no directives exist concerning the transfer of company seat the ambit of the freedom of establishment and companies' possibility to claim their right against the Member States' obstacles of emigration and immigration is decided through the ECJ's case law. Due to the fact that the ECJ in its judgement Daily Mail has stated that the right to emigrate depends upon whether the company remains validly incorporated in the state of formation, many questions has been raised in regard of the ambit of the freedom of establishment for companies. The ECJ has however through its case law come to shed more light on the freedom of establishment in regard of immigration obstacles in the cases Centros, Überseering and Inspire Art, meanwhile the ambit of the freedom of establishment in regard of emigration obstacles still can be considered diffuse. The opinions in the literature concerning the ambit of establishment for companies are many and take different directions. Nevertheless most authors agree on that it is a distortion of the freedom of establishment to apply this freedom differently on individuals and companies as the Daily Mail case do, especially since the wording of article 48 EC states that individuals and companies should be treated the same way. The opinions however differ in regard of if the extent of the freedom of establishment should be considered applying differently in immigration and emigration situations or if the extent should be considered to be the same. A question connected there with is whether the Lasteyrie case and the N-case concerning individuals and emigration obstacles also are applicable on companies. If clarity already has been shed on the problematic through the Sevic case is controversial. It will therefore be most interesting to see if the ECJ's judgement in the Cartesio case, concerning the transfer of the registered office, will provide a contribution to the discussion. Another debated issue is if the real seat theory still stands. Because the ECJ has made the right of establishment depending upon whether the company can transfer it seat while remaining validly incorporated in the state of formation, the question has been raised if the ECJ thereby has overruled the real seat theory or if the ECJ has come to create a new theory for the European Union. Of interest in this aspect is also that Germany during 2008 is going to change from the real seat theory to the incorporation theory.},
  author       = {Johansson, Maria},
  keyword      = {EG-rätt,Skatterätt},
  language     = {eng},
  note         = {Student Paper},
  title        = {Tax consequences when transferring company seat - a comparison between Sweden and Germany},
  year         = {2008},
}