# C_2017070EN.01001201.xml

| 6.3.2017 | EN | Official Journal of the European Union | C 70/12 |
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Request for a preliminary ruling from the Vestre Landsret (Denmark) lodged on 30 December 2016 — BEI ApS v Skatteministeriet

(Case C-682/16)

(2017/C 070/19)

Language of the case: Danish

Referring court

Vestre Landsret

Parties to the main proceedings

Applicant: BEI ApS

Defendant: Skatteministeriet

Questions referred

| 1. | Is Article 1(1) of Directive 2003/49/EC,( 1 ) read in conjunction with Article 1(4) thereof, to be interpreted as meaning that a company resident in a Member State that is covered by Article 3 of the Directive and, in circumstances such as those of the present case, receives interest from a subsidiary in another Member State, is the ‘beneficial owner’ of that interest for the purposes of the Directive?
1.1.
Is the concept ‘beneficial owner’ in Article 1(1) of Directive 2003/49/EC, read in conjunction with Article 1(4) thereof, to be interpreted in accordance with the corresponding concept in Article 11 of the OECD 1977 Model Tax Convention? 1.2.
If Question 1.1. is answered in the affirmative, should the concept then be interpreted solely in the light of the commentary on Article 11 of the 1977 Model Tax Convention (paragraph 8), or can subsequent commentaries be incorporated into the interpretation, including the additions made in 2003 regarding ‘conduit companies’ (paragraph 8.1, now paragraph 10.1), and the additions made in 2014 regarding ‘contractual or legal obligations’ (paragraph 10.2)? 1.3.
If the 2003 Commentaries can be incorporated into the interpretation, is it then a condition for deeming a company not to be a ‘beneficial owner’ for the purposes of Directive 2003/49/EC that there actually has been a channelling of funds to those persons who are deemed by the State in which the interest payer is resident to be ‘the beneficial owners’ of the interest in question, and — if so — is it then a further condition that the actual passing take place at a point close in time to the payment of the interest and/or take place as a payment of interest?
1.3.1.
Of what significance is it in that connection if equity capital is used for the loan, if the interest in question is entered on the principal (‘rolled up’), if the interest recipient has paid tax on the interest received to the State where the interest payer is resident, if the interest recipient has subsequently made an intra-group transfer to its parent company resident in the same State with a view to adjusting earnings for tax purposes under the prevailing rules in the State in question, if the interest in question is subsequently converted into equity in the borrowing company, and if the interest recipient has had a contractual or legal obligation to pass the interest to another person? 1.4.
What significance does it have for the assessment of the issue whether the interest recipient must be deemed to be a ‘beneficial owner’ for the purposes of the Directive if the referring court, following an assessment of the facts of the case, concludes that the recipient — without having been contractually or legally bound to pass the interest received to another person — did not have the ‘full’ right to ‘use and enjoy’ the interest as referred to in the 2014 Commentaries on the 1977 Model Tax Convention? | 1.1. | Is the concept ‘beneficial owner’ in Article 1(1) of Directive 2003/49/EC, read in conjunction with Article 1(4) thereof, to be interpreted in accordance with the corresponding concept in Article 11 of the OECD 1977 Model Tax Convention? | 1.2. | If Question 1.1. is answered in the affirmative, should the concept then be interpreted solely in the light of the commentary on Article 11 of the 1977 Model Tax Convention (paragraph 8), or can subsequent commentaries be incorporated into the interpretation, including the additions made in 2003 regarding ‘conduit companies’ (paragraph 8.1, now paragraph 10.1), and the additions made in 2014 regarding ‘contractual or legal obligations’ (paragraph 10.2)? | 1.3. | If the 2003 Commentaries can be incorporated into the interpretation, is it then a condition for deeming a company not to be a ‘beneficial owner’ for the purposes of Directive 2003/49/EC that there actually has been a channelling of funds to those persons who are deemed by the State in which the interest payer is resident to be ‘the beneficial owners’ of the interest in question, and — if so — is it then a further condition that the actual passing take place at a point close in time to the payment of the interest and/or take place as a payment of interest?
1.3.1.
Of what significance is it in that connection if equity capital is used for the loan, if the interest in question is entered on the principal (‘rolled up’), if the interest recipient has paid tax on the interest received to the State where the interest payer is resident, if the interest recipient has subsequently made an intra-group transfer to its parent company resident in the same State with a view to adjusting earnings for tax purposes under the prevailing rules in the State in question, if the interest in question is subsequently converted into equity in the borrowing company, and if the interest recipient has had a contractual or legal obligation to pass the interest to another person? | 1.3.1. | Of what significance is it in that connection if equity capital is used for the loan, if the interest in question is entered on the principal (‘rolled up’), if the interest recipient has paid tax on the interest received to the State where the interest payer is resident, if the interest recipient has subsequently made an intra-group transfer to its parent company resident in the same State with a view to adjusting earnings for tax purposes under the prevailing rules in the State in question, if the interest in question is subsequently converted into equity in the borrowing company, and if the interest recipient has had a contractual or legal obligation to pass the interest to another person? | 1.4. | What significance does it have for the assessment of the issue whether the interest recipient must be deemed to be a ‘beneficial owner’ for the purposes of the Directive if the referring court, following an assessment of the facts of the case, concludes that the recipient — without having been contractually or legally bound to pass the interest received to another person — did not have the ‘full’ right to ‘use and enjoy’ the interest as referred to in the 2014 Commentaries on the 1977 Model Tax Convention? |
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| 1.1. | Is the concept ‘beneficial owner’ in Article 1(1) of Directive 2003/49/EC, read in conjunction with Article 1(4) thereof, to be interpreted in accordance with the corresponding concept in Article 11 of the OECD 1977 Model Tax Convention? | | | | | | | | | | |
| 1.2. | If Question 1.1. is answered in the affirmative, should the concept then be interpreted solely in the light of the commentary on Article 11 of the 1977 Model Tax Convention (paragraph 8), or can subsequent commentaries be incorporated into the interpretation, including the additions made in 2003 regarding ‘conduit companies’ (paragraph 8.1, now paragraph 10.1), and the additions made in 2014 regarding ‘contractual or legal obligations’ (paragraph 10.2)? | | | | | | | | | | |
| 1.3. | If the 2003 Commentaries can be incorporated into the interpretation, is it then a condition for deeming a company not to be a ‘beneficial owner’ for the purposes of Directive 2003/49/EC that there actually has been a channelling of funds to those persons who are deemed by the State in which the interest payer is resident to be ‘the beneficial owners’ of the interest in question, and — if so — is it then a further condition that the actual passing take place at a point close in time to the payment of the interest and/or take place as a payment of interest?
1.3.1.
Of what significance is it in that connection if equity capital is used for the loan, if the interest in question is entered on the principal (‘rolled up’), if the interest recipient has paid tax on the interest received to the State where the interest payer is resident, if the interest recipient has subsequently made an intra-group transfer to its parent company resident in the same State with a view to adjusting earnings for tax purposes under the prevailing rules in the State in question, if the interest in question is subsequently converted into equity in the borrowing company, and if the interest recipient has had a contractual or legal obligation to pass the interest to another person? | 1.3.1. | Of what significance is it in that connection if equity capital is used for the loan, if the interest in question is entered on the principal (‘rolled up’), if the interest recipient has paid tax on the interest received to the State where the interest payer is resident, if the interest recipient has subsequently made an intra-group transfer to its parent company resident in the same State with a view to adjusting earnings for tax purposes under the prevailing rules in the State in question, if the interest in question is subsequently converted into equity in the borrowing company, and if the interest recipient has had a contractual or legal obligation to pass the interest to another person? | | | | | | | | |
| 1.3.1. | Of what significance is it in that connection if equity capital is used for the loan, if the interest in question is entered on the principal (‘rolled up’), if the interest recipient has paid tax on the interest received to the State where the interest payer is resident, if the interest recipient has subsequently made an intra-group transfer to its parent company resident in the same State with a view to adjusting earnings for tax purposes under the prevailing rules in the State in question, if the interest in question is subsequently converted into equity in the borrowing company, and if the interest recipient has had a contractual or legal obligation to pass the interest to another person? | | | | | | | | | | |
| 1.4. | What significance does it have for the assessment of the issue whether the interest recipient must be deemed to be a ‘beneficial owner’ for the purposes of the Directive if the referring court, following an assessment of the facts of the case, concludes that the recipient — without having been contractually or legally bound to pass the interest received to another person — did not have the ‘full’ right to ‘use and enjoy’ the interest as referred to in the 2014 Commentaries on the 1977 Model Tax Convention? | | | | | | | | | | |

| 2. | Does a Member State’s reliance on Article 5(1) of the Directive on the application of national provisions for the prevention of fraud or abuse, or of Article 5(2) of the Directive, presuppose that the Member State in question has adopted a specific domestic provision implementing Article 5 of the Directive, or that national law contains general provisions or principles on fraud, abuse and tax evasion that can be interpreted in accordance with Article 5?
2.1.
If Question 2 is answered in the affirmative, can Paragraph 2(2)(d) of the Law on corporation tax, which provides that the limited tax liability on interest income does not include ‘interest which is tax-exempt under Directive 2003/49/EC on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States’, then be deemed to be a specific domestic provision as referred to in Article 5 of the Directive? | 2.1. | If Question 2 is answered in the affirmative, can Paragraph 2(2)(d) of the Law on corporation tax, which provides that the limited tax liability on interest income does not include ‘interest which is tax-exempt under Directive 2003/49/EC on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States’, then be deemed to be a specific domestic provision as referred to in Article 5 of the Directive? |
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| 2.1. | If Question 2 is answered in the affirmative, can Paragraph 2(2)(d) of the Law on corporation tax, which provides that the limited tax liability on interest income does not include ‘interest which is tax-exempt under Directive 2003/49/EC on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States’, then be deemed to be a specific domestic provision as referred to in Article 5 of the Directive? | | |

| 3. | Is a provision in a double taxation convention entered into between two Member States and drafted in accordance with the OECD Model Tax Convention, under which taxation of interest is contingent on whether the interest recipient is deemed to be the beneficial owner of the interest, a conventional anti-abuse provision covered by Article 5 of the Directive? |
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| 4. | Is a Member State that does not wish to recognise that a company in another Member State is the beneficial owner of interest and claims that the company in the other Member State is a so-called artificial conduit company, bound under Directive 2003/49/EC or Article 10 EC to state whom the Member State in that case deems to be the beneficial owner? |
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( 1 )  Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (OJ 2003 L 157, p. 49).

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