# C_2006294EN.01000701.xml

| 2.12.2006 | EN | Official Journal of the European Union | C 294/7 |
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Judgment of the Court (Grand Chamber) of 3 October 2006 (reference for a preliminary ruling from the Bundesfinanzhof (Germany)) — FKP Scorpio Konzertproduktionen GmbH v Finanzamt Hamburg-Eimsbüttel

(Case C-290/04)( 1 )

(Article 59 of the EEC Treaty (later Article 59 of the EC Treaty, now, after amendment, Article 49 EC) and Article 60 of the EEC Treaty (later Article 60 of the EC Treaty, now Article 50 EC) - Tax legislation - Income tax - Provision of services by a non-resident in the context of artistic performances - Principle of retention of tax at source - Provider of services not possessing the nationality of a Member State)

(2006/C 294/11)

Language of the case: German

Referring court

Bundesfinanzhof

Parties to the main proceedings

Applicant: FKP Scorpio Konzertproduktionen GmbH

Defendant: Finanzamt Hamburg-Eimsbüttel

Re:

Reference for a preliminary ruling — Bundesfinanzhof — Interpretation of Article 59 of the EC Treaty (now, after amendment, Article 49 EC) and Article 60 of the EC Treaty (now Article 50 EC) — National income tax legislation under which a resident recipient of a service is obliged to deduct tax on remuneration paid to a non-resident provider of services

Operative part of the judgment

| 1) | Articles 59 and 60 of the EEC Treaty must be interpreted as not precluding
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national legislation under which a procedure of retention of tax at source is applied to payments made to providers of services not resident in the Member State in which the services are provided, whereas payments made to providers of services resident in that Member State are not subject to such a retention; —
national legislation under which liability is incurred by a recipient of services who has failed to make the retention at source that he was required to make. | — | national legislation under which a procedure of retention of tax at source is applied to payments made to providers of services not resident in the Member State in which the services are provided, whereas payments made to providers of services resident in that Member State are not subject to such a retention; | — | national legislation under which liability is incurred by a recipient of services who has failed to make the retention at source that he was required to make. |
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| — | national legislation under which a procedure of retention of tax at source is applied to payments made to providers of services not resident in the Member State in which the services are provided, whereas payments made to providers of services resident in that Member State are not subject to such a retention; | | | | |
| — | national legislation under which liability is incurred by a recipient of services who has failed to make the retention at source that he was required to make. | | | | |

| 2) | Articles 59 and 60 of the EEC Treaty must be interpreted as
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precluding national legislation which does not allow a recipient of services who is the debtor of the payment made to a non-resident provider of services to deduct, when making the retention of tax at source, the business expenses which that service provider has reported to him and which are directly linked to his activity in the Member State in which the services are provided, whereas a provider of services residing in that State is taxable only on his net income, that is, the income received after deduction of business expense; —
not precluding national legislation under which only the business expenses directly linked to the activity that generated the taxable income in the Member State in which the service is provided, which the service provider established in another Member State has reported to the payment debtor, are deducted in the procedure for retention at source, and expenses that are not directly linked to that economic activity can be taken into account if appropriate in a subsequent refund procedure; —
not precluding a rule that the tax exemption granted under the Convention of 16 June 1959 between the Federal Republic of Germany and the Kingdom of the Netherlands for the avoidance of double taxation in the area of income, capital, and various other taxes and for regulating other tax matters, to a non-resident provider of services who has carried on activity in Germany can be taken into account by the payment debtor in the procedure for retention of tax at source, or in a subsequent procedure for exemption or refund, or in proceedings for liability brought against him, only if a certificate of exemption stating that the conditions laid down to that end by that convention are satisfied is issued by the competent tax authority. | — | precluding national legislation which does not allow a recipient of services who is the debtor of the payment made to a non-resident provider of services to deduct, when making the retention of tax at source, the business expenses which that service provider has reported to him and which are directly linked to his activity in the Member State in which the services are provided, whereas a provider of services residing in that State is taxable only on his net income, that is, the income received after deduction of business expense; | — | not precluding national legislation under which only the business expenses directly linked to the activity that generated the taxable income in the Member State in which the service is provided, which the service provider established in another Member State has reported to the payment debtor, are deducted in the procedure for retention at source, and expenses that are not directly linked to that economic activity can be taken into account if appropriate in a subsequent refund procedure; | — | not precluding a rule that the tax exemption granted under the Convention of 16 June 1959 between the Federal Republic of Germany and the Kingdom of the Netherlands for the avoidance of double taxation in the area of income, capital, and various other taxes and for regulating other tax matters, to a non-resident provider of services who has carried on activity in Germany can be taken into account by the payment debtor in the procedure for retention of tax at source, or in a subsequent procedure for exemption or refund, or in proceedings for liability brought against him, only if a certificate of exemption stating that the conditions laid down to that end by that convention are satisfied is issued by the competent tax authority. |
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| — | precluding national legislation which does not allow a recipient of services who is the debtor of the payment made to a non-resident provider of services to deduct, when making the retention of tax at source, the business expenses which that service provider has reported to him and which are directly linked to his activity in the Member State in which the services are provided, whereas a provider of services residing in that State is taxable only on his net income, that is, the income received after deduction of business expense; | | | | | | |
| — | not precluding national legislation under which only the business expenses directly linked to the activity that generated the taxable income in the Member State in which the service is provided, which the service provider established in another Member State has reported to the payment debtor, are deducted in the procedure for retention at source, and expenses that are not directly linked to that economic activity can be taken into account if appropriate in a subsequent refund procedure; | | | | | | |
| — | not precluding a rule that the tax exemption granted under the Convention of 16 June 1959 between the Federal Republic of Germany and the Kingdom of the Netherlands for the avoidance of double taxation in the area of income, capital, and various other taxes and for regulating other tax matters, to a non-resident provider of services who has carried on activity in Germany can be taken into account by the payment debtor in the procedure for retention of tax at source, or in a subsequent procedure for exemption or refund, or in proceedings for liability brought against him, only if a certificate of exemption stating that the conditions laid down to that end by that convention are satisfied is issued by the competent tax authority. | | | | | | |

| 3) | Article 59 of the EEC Treaty must be interpreted as not being applicable in favour of a provider of services who is a national of a non-member country. |
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( 1 )  OJ C 228, 11.09.2004.

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