Lmao, so I went ahead and actually read that, and I'm preeetty sure you literally just googled that without reading it.
Go and read it first, before commenting, because it doesn't say what you think it does.
I have read many more and i have more reading materials if you want to. I dont think you understood what i was trying to point out with regard to investment within the EU. Let me explain this clearly since it is obvious you got lost . Although there must be no restriction among the EU members, restrictions still happenings between countries whether in the form of quantitative import restrictions (article 34 jo article 35 Treaty on the functioning of the EU) or any other form of restrictions.
Take for instance article 34 Treaty on the functioning of the EU
eur-lex.europa.eu
3.2.1.2 Permissible Restrictions on Free Movement; the Rule of Reason
Given the origins of the Union as a free
trade area, the first most important Treaty Freedom was the free movement of goods (Arts. 28-37). Especially the customs union is a cornerstone of the Union. The free movement of goods encompasses:
—
Abolition of all tariff barriers at intra-EU borders; a total prohibition of customs duties and of any charges having an effect equivalent to a customs duty (Arts. 28-33) (see section 2.1); and
—
Abolition of all non-tariff barriers at intra-EU borders: abolition of quantitative import restrictions and all measures having an effect equivalent to import restrictions (Arts. 34-37).
These prohibitions have direct effect and can therefore be relied upon by individuals and undertakings before national courts in order to invalidate incompatible domestic legislation and administrative practice. The first prohibition forbids prohibits every unilateral pecuniary charge, however small, on the border-crossing of goods. It is irrelevant whether or not the charge seeks to protect domestic production. The decisive question is whether there is, in fact or potentially, a restrictive effect on intra-Union trade, however small. For example, the levying of `statistics duties' at the border is not permitted, not even if they are levied indiscriminately on imported and exported goods, and not even if the proceeds are used solely to pay for the cost of drawing up import and export statistics. Such costs, made for public interest reasons, should be paid out of general public resources.
1 The second prohibition, on quantitative restrictions and measures having the same effect, outlaws:
`all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade.'
2
That is a very broad prohibition. Too broad, really, as the Court had to admit later. Obviously, a national campaign like Buy Irish!' is prohibited,
3 but the Court's prohibition went much further. The Court pussyfooted around the rather unmanageable consequences of its unlimited prohibition for quite some time. It hesitated for years,
e.g., about national rules prohibiting shops to open on Sundays. Obviously, mandatory shop closure one day a week (a non-working day) restricts trade, and therefore also intra-Union trade, but the measure is neutral, and its rationale has no relation whatsoever with trade conditions, competition or market access. Finally, in the landmark
Keck and
Mithouard case,
4 the Court came round, holding that national sales arrangements (such as mandatory shop closure on Sundays, or restricted sale of certain goods,
e.g. alcohol only in government shops, pornography only in certain areas, petrol sales only outside city centres, etc.) fall outside the ambit of Article 30 if the prescribed mode of sale has exactly the same effect on trade in imported goods as it has on trade in domestic products. The trade effect of such neutral mode of sale rules is too general and remote to be covered by the Treaty Freedoms
(rule of remoteness),5A fiscal example is the
Krantz case discussed in section 3.2.3.
Apart from this rule of remoteness, there are two other escapes from the prohibition on restrictions on the free movement of goods: Article 36 TFEU and the ECJ-made
rule of reason. Article 36 allows restrictions on intra-Union trade, even if they distinguish between imported goods and domestic goods, if one of the justification grounds listed therein applies: public morality, public policy, public security, protection of life and health of humans, animals or plants, protection of national artistic, historic or archaeological treasures, and protection of industrial and commercial property. Trade restrictions are justified on these grounds if they do not go any further than is strictly necessary to safeguard these grounds (proportionality), and as long as no Union measures to protect the same interests have come into force. For instance, a restrictive rule on food safety may in itself be justified in the interest of public health, but it may not be an unnecessary duplication of an adequate safety measure already taken in the Member State of origin of the foodstuffs; it is unlikely that,
e.g., Estonians would fall ill of imported
pasta di grano duro if the residents of the Member State of origin have been eating that same pasta for decades without any health drawbacks. In such cases, the concept of
mutual recognition is applied: it is not justified for the Member State of destination, because it is disproportionate, to impose its own, duplicating, rules and checks, as it is difficult to see why these should be superimposed on the comparable rules and checks already applied in the State of origin. If a dentist has been educated, qualified and practicing in the UK, then France must recognize his professional skills and qualifications and may not require him to go to dental school all over again in France if he wishes to open practice in France. If foodstuffs have been legally produced and checked for human consumption in one Member State, then the other Member States must in principle accept the production State's approval. If a company meets all legal requirements imposed by its Member State of incorporation, the host State must recognize its legal personality and
locus standi (see the U
berseering case in section 20.3.1). As observed: this idea of mutual recognition, although apparently sometimes also applied in direct tax matters by the Court (see sections 11.9 and 17.2), does not seem appropriate in direct tax matters, as there is no origin State and destination State, but rather a source State and a residence State, and EU law contains no clue on whether the source jurisdiction or the residence jurisdiction hos the prior right to tax income.
The ECJ applies Article 36 strictly. In principle, it does not accept justifications not mentioned, especially not justifications of an economic nature. However, recognizing that Article 36 (and also the escapes in the Treaty provisions on the other free movement rights) is framed too narrowly to simply prohibit all public interest restrictions not mentioned therein, the Court also allows unwritten justified restrictions under its so-called
rule of reason, a concept first developed by the Court in its
Cassis de Dijon judgment.
6 Under the rule of reason, a restrictive national measure not mentioned in the Treaty, is nonetheless acceptable if (i) it is necessary to protect a legitimate public interest, (ii) it does not distinguish between domestic and comparable imported goods and (iii) its restrictive effects do not go any further than necessary to protect that legitimate interest (proportionality). The reason for the strict non-discrimination requirement is that if a Member State does not consider its own products to be harmful to,
e.g., the environment, then it is difficult to see what reasonable grounds that same Member State could have for considering identical or similor products from other Member States to be so harmful to the environment as to justify a restriction on their importation.
Notes:
1.
Case 24/68 (Commission v. Italy), [1969] ECR 193.
2.
Case 8/74 (Dassonvilk), [1974] ECR 837.
3.
Case 249/81 (Commission v. Ireland), [1982] ECR 4005.
4.
Joined Cases C-267 and 268/91 (Keck and Mithouard), [1993] ECR 1-6097.
5.
See, for a more straightforward application of this remoteness rule, e.g. Case C-93/92 (CMC Motorradcenter), [1993] ECR 1-5009.
6.
Case 120/78 (Reine Zentrak AG v. Bundesmonopolvermakung ftir Branntwein), [1979] ECR 649, commonly called Cassis de Dijon.
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https://defence.pk/pdf/file:///C:/U...iscriminatory and Protective Produ.pdf#page=1
https://defence.pk/pdf/file:///C:/U...iscriminatory and Protective Produ.pdf#page=2
https://defence.pk/pdf/file:///C:/U...iscriminatory and Protective Produ.pdf#page=3
https://defence.pk/pdf/file:///C:/U...iscriminatory and Protective Produ.pdf#page=4
Prohibition of Discriminatory and Protective Product Taxation (Art. 110 TFEU) and ofImport Restrictions (Art. 34 TFEU); Small Phenomenology of International Car Taxationprof.
Article 110, prohibiting discriminatory and protective product taxation, does not in itself affect national tax sovereignty. To theeitent there are no (exhaustive) EU measures on the matter (as far as the Recast VAT Directive and the GeneralArrangements Excise Directive allow), Member States remain free to organize their product tax systems in the way they seefit, and to impose the rates they consider appropriate. However, they may not tax products of other Member States lessfavourably. As observed in section 2.1., Article 110 only allows product taxation as part of a general domestic consumptiontax levied indiscriminately on both domestic and foreign products, such as a general turnover taxes and excise duties.Article 110 has direct effect: it can be relied on by individuals and undertakings before their national courts, in order toinvalidate national tax law incompatible with it.Application of the first paragraph of Article 110 (`similar products') requires a comparison of foreign and domestic products(are they similar?), and a comparison of the fiscal burdens on these similar products. Similarity is mainly determined on thebasis of whether the products serve similar consumer needs and have similar characteristics, placing them in a competitive(potential substitution) relation.[1] Even if a national tax measure on that basis escapes the prohibition of the first paragraph,it may still be caught under the second paragraph: even if the domestic and the imported products are not similar, or if theeffective tax burdens are equal, the tax may still have the indirect effect of protecting domestic production.The Humblot case[2] offers an example of application of Article 110. French Monsieur Humblot liked powerful motor cars. Hepurchased a German brand. In France the use of a car was subject to a road tax at a progressive rate depending on thepower rating of the car. However, the rate was progressive only up to 16 CV (chevaux = horsepower for tax purposes). Theuse of a car powered over 16 CV was taxed at a flat rate of FF 5000 per annum. The highest progressive rate (for a carunder 16 CV) was only FF 1100 per annum. As a result, the tax on a 16-CV car was 4.5 times as high as the tax on a 15-CVcar. Monsieur Humblot considered such taxation to be discriminatory as it could hardly be a coincidence that all carsproduced in France fell within the power rating band of up to and including 15 CV. Only imported (especially German) carswere subject to the very high flat rate. The Court found that, as EU law stood at that moment (no harmonization, except forVAT and customs duties), Member States were free to subject products like cars to a system of road tax which increasesprogressively depending on an objective criterion. However, the French road tax system, although embodying no formaldistinction based on the origin of the car, manifestly showed discriminatory and protective features, as it fixed the powerrating causing subjection to the high rate at a level only catching imported cars. Moreover, the difference between thehighest progressive rate and the flat rate (FF 3900, or 450% of the highest progressive rate) was excessive as compared tothe differences between the steps within the progressive rate structure. Consumers would be discouraged from buying non-French automobiles. The Court, therefore, held the French road tax system to be incompatible with Article 110. Franceproved to be hard-headed on the matter, as it continued to apply covert protective car taxation and was convicted again bythe ECJ on 15 March 2001 for maintaining car taxation which penalized buyers of imported cars fitted with certain (then)innovative technologies, such as five-speed automatic transmissions and six-speed manual transmissions.[3]In another case of a progressive car taxation, by contrast, the Commission could not convince the Court of a protectiveeffect. Case 132/88[4] concerned a Greek tax on new cars in three categories: moderate (up to 1600 cc cylinder capacity),high (between 1600 and 1800 cc), and very high (above 1800 cc). The Commission especially objected to the rate jumpfrom the second category to the third, which was not unlike the rate jump in the Humblot case. The Court considered,however, that a car taxation system is not discriminatory solely because only imported products fall into the highest taxcategory. Member States remain free to tax certain luxury goods very heavily for social policy reasons. All cars in themedium rate class of 1600 to 1800 cc were also non-Greek. The consumer thus had a choice between medium and highwhich differed entirely form the choice between domestic and foreign make, as it was a choice between two foreign products(in the low rate category, by contrast, were both Greek and foreign make cars). Therefore, the Commission had notdemonstrated to the Court's satisfaction that the Greek system was biased against cars manufactured abroad.Link:
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The Commission struck back, however, in two cases on the Greek taxation of imported second-hand cars.[5] Since carsnewly sold in Greece bore the Greek special sales tax described above, Greece also levied a tax on imported used cars. Inorder not to be discriminatory, that tax should not be higher than the residual tax in the price of second-hand cars originallysold in Greece. The tax on imported used cars was calculated on the basis of a 5% reduction on the original sales price foreach year of use, but for only four years, meaning that always at least 80% of the new price would be taxed, irrespective ofthe real value. Obviously, the Court held that car value does not decrease in a linear way, let alone with just 5% per year,that it does not stop decreasing after four years, and that value decrease certainly does not simply stop at 80% of theoriginal price. The Greek system manifestly overtaxed imported used cars as compared to the (much) lower residual tax inthe for domestic used cars. The Greek plea that the tax was meant to discourage the marketing of old, polluting cars wasdismissed; although such policy may be applauded, it may not be implemented in a discriminatory manner, only affectingimported old, polluting cars. Subsequent to this judgment, Greece introduced a degressive depreciation scale for importedsecond-hand cars, reducing the tax base (the value) with a decreasing percentage of the original market price for each yearof use (7% in the first two years, decreasing to 1% in the fifteenth year). The car purchaser was allowed to rebut thisvaluation by demonstrating a lower value. The Commission was not satisfied, however, and took Greece to Court again.[6]The Court was not satisfied either, because (i) in the first year, no depreciation was allowed if mileage remained below 6000km., and (ii) after the first year, the depreciation scale did not take account of mileage at all. Therefore, the system still didnot ensure that'the taxable value imputed to the imported second-hand vehicle by the revenue authorities (...) faithfully reflect(s) the valueof a similar second-hand vehicle already registered on the domestic market'.An example of product taxation which demonstrates the difference between the prohibition of discriminatory and protectiveproduct taxation (Art. 110) and the prohibition of all measures having the effect of a quantitative import restriction (Art. 34), isa Danish tax on the registration of both new cars and imported used cars.[7] The tax on nem cars was very high, so high thatthe Commission considered it a protective measure under Article 110(2). The Court, however, held that Article 110 cannotbe relied on if there is no similar or competing domestic production. Since Denmark did not manufacture cars itself, Article110 could not be applied. However, Article 34 might apply, since a very high tax on imported new cars, even if notdiscriminatory or protective for lack of competing national production, may still have the effect of restricting importation ofnew cars (but the Commission had failed to invoke Article 28). The Danish registration tax on imported second-hand carswas similar to the Greek tax described above. Denmark had fixed the tax base for imported second-hand cars at 90% of theoriginal price, manifestly favouring the purchase of domestic second-hand cars, the price of which included only residualregistration tax.In two Hungarian cases,[8] the ECJ held that Article 110 opposes a registration tax on imported used cars which only takesinto account technical and environmental characteristics of the car, disregarding value decrease, if this leads to a higher taxon imported used cars than the residual tax in the value of comparable domestic used cars.If Denmark, Greece and Hungary had designed their taxes on imported used cars such that they decreased with the factualdecrease in value of the car (thus approximating the residual domestic tax in the second-hand price of comparable domesticused cars), the Court would not have objected.[9]Still, even under a non-discriminatory system of taxation of imported used cars, market distortion persists, as importedsecond-hand cars were already subject to registration tax at the time they were originally marketed in their country of origin.That tax component in the second-hand value of the car is not refunded by the country of origin upon exportation. Therefore,there is still residual foreign firstregistration tax in the import value of imported second-hand cars. An additional tax levied bythe importing State, even if it is strictly commensurate with value depreciation, thus leads to double taxation; once in theState of origin, and once again in the importing State. A similar situation was considered by the ECJ for VAT purposes in theGaston Schul case,[10] concerning the intra-EU importation of a second-hand yacht by an end-consumer (at that time still ataxable event). The Court held that for VAT purposes, the State of importation should prevent cumulation of VAT, relying onboth the (neutrality principle of the) VAT-system and on (now) Article 110. There is no harmonizing EU legislation on carregistration taxes, however, let alone a neutrality principle, and it would seem that double registration tax on imported usedcars is not contrary to existing EU Law as long as neither of the two States discriminates against imported cars or exportedcars, respectively. That is illustrated by two cases, one on a Danish charge on the slaughter of pigs[11] and one on aNetherlands charge on the landing of shrimps.[12] For the assessment of the compatibility of these charges with Article 110TFEU, the Court did not consider it relevant that after transportation to another Member State that other Member Statelevied a similar charge, provided both the exporting and the importing State did not distinguish between pigs/shrimpsdomestically produced/consumed and pigs/shrimps exported/imported. If one wishes to have an internal market, however,such double taxation should obviously be avoided. As regards the double registration tax on second-hand cars, one of thetwo Member States involved should prevent it, either the origin State by refunding residual tax upon exportation, or thedestination State by refraining from taxing second-hand cars imported from other Member States already having beensubject to a similar tax (mutual recognition). In 2005, the Commission tabled a Directive proposal[13] to that end, based on(now) Article 113, calling for a refund of residual tax by the Member State of origin upon the exportation or permanent
transfer of a car to another Member State. The proposal further contains two other elements (i) eventual abolition of carregistration taxes over a transitional period of five to ten years, and (ii) eventual replacement by introduction of a CO2-element into the tax base of annual circulation taxes and pending their abolition — of registration taxes.[14]Article 110 also implies a prohibition of excessive penalties for tax offences connected with cross-border trade as comparedto penalties for similar domestic tax offences. A much higher criminal or administrative fine for failure to pay VAT on an intra-Community transaction than for failure to pay VAT on domestic supplies may be incompatible with Article 110, becauseobviously, those higher penalties affect only imported goods.[15] This is not to say that differentiation according to objectivefactual differences is not allowed. Nothing prevents Member States, when determining penalties, to take into account thatcross-border tax fraud may be more difficult to detect and to curb, and may yield higher proceeds than tax fraud within onlyone jurisdiction, provided the differentiation in penalization is commensurate with the difference in the risk of being caughtand/or in the profitability of the offences.As already appeared from the Greek car tax case 132/88 cited above, Article 110 does not forbid Member States to pursuea legitimate (industrial) policy by way of objective differential taxation of similar products. The Vinal case[16] concerned anItalian charge on alcohol. LIt. 12000 was levied per hectolitre of synthetic alcohol (manufactured from petroleum derivates),but only LIt. 1000 was levied per hectolitre of alcohol obtained through fermentation (manufactured from agriculturalproducts). Italy hosted scarcely any production of synthetic alcohol. The high rate therefore applied almost exclusively toimports of synthetic alcohol from other (Member) States. The Court nonetheless accepted this rate differentiation, as on theone hand, imports from other Member States of agricultural alcohol qualified for the same preferential tax treatment asItalian agricultural alcohol and, on the other hand, although the charge on synthetic alcohol restrained the importation ofsynthetic alcohol, it had an equivalent economic effect in Italy in that it also prevented the establishment of profitableproduction of synthetic alcohol by Italian industry, whilst in itself a national policy of discouraging production of syntheticalcohol (thus promoting production of agricultural alcohol) was not at odds with EU law. Therefore: although only syntheticalcohol was taxed at the high rate and in fact synthetic alcohol was almost exclusively imported, this did not in itself protectnational production of agricultural alcohol, since (i) foreign agricultural alcohol was not discriminated against, and (ii) thevirtual absence of national synthetic alcohol production was a result, precisely, of that high charge on synthetic alcohol,rendering virtually impossible the national development of profitable production of that type of alcohol. It follows that where anational policy pursues objective and legitimate (i.e. non-discriminatory and non-protectionist) aims and does not thwartUnion policy, Member States may levy a `discouragement tax' (a sin tax) on products, services or behaviour they considercontrary to national public policy.For the relationship between discriminatory or protective product taxation and fiscal import restrictions on the one hand, andfiscal State aid on the other, see Joined Cases C-34/01-C-38/01, Enirisorse SpA, discussed in section 2.7.
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Notes
[1]See, for example, for a comparison between (innovative) imported cars and (non-innovative) domestic cars, Case C-265/99 (Commission v. France),[2001] ECR 1-2301.[2]Case 112/84 (Michel Humblot v. Directeur des services fiscaux), [1985] ECR 1376.[3]Case C-265/99 (Commission v. France), [2001] ECR 1-2301.[4]Case 132/88 (Commission v. Hellenic Republic), [1990] ECR 1-1567.[5]Case C-375/95 (Commission v. Hellenic Republic), [1997] ECR 1-5981.[6]Case C-74/06 (Commission v. Hellenic Republic), [2007] ECR 1-7585.[7]Case C-47/88 (Commission v. Denmark), [1990] ECR 1-4509.[8]Joined Cases C-290/05 and C-333/05 (Nádasdi and Németh), [2006] ECR 1-10115.[9]See Case C-101/00 (Tulliasiamies and Siihn), [2002] ECR 1-7487.[10]Case 15/81 (Gaston Schud), [1982] ECR 1409.
Basically investment within the EU is not without hidden obstacles/restrictions put by countries to protect their economy. Thats why there is the EU treaty to make sure everybody play by the same rule, but the thing is, '
'rules are meant to be broken''
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