# C_2004228EN.01002602.xml

| 11.9.2004 | EN | Official Journal of the European Union | C 228/26 |
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Reference for a preliminary ruling by the Bundesfinanzhof by order of that court of 28 April 2004 in the case of FKP Scorpio Konzertproduktionen GmbH against Finanzamt (Tax Office) Hamburg-Eimsbüttel

(Case C-290/04)

(2004/C 228/54)

Reference has been made to the Court of Justice of the European Communities by order of the Bundesfinanzhof (Federal Finance Court) (Germany) of 28 April 2004, received at the Court Registry on 7 July 2004, for a preliminary ruling in the case of FKP Scorpio Konzertproduktionen GmbH against Finanzamt Hamburg-Eimsbüttel on the following questions:

| 1. | Must Articles 59 and 60 of the EC Treaty be interpreted as meaning that they are infringed if a payment debtor established in Germany of a payment creditor established abroad within the Community (in this case: in the Netherlands), who holds the nationality of a Member State, can be held liable under the fifth sentence of Paragraph 50a(5) of the Einkommensteuergesetz 1990 in the version in force in 1993 (Law on Income Tax, hereinafter: ‘the EStG’) because he has failed to deduct tax at source pursuant to Paragraph 50a(4) of the EStG, whereas payments to a payment creditor liable without limitation to income tax in Germany (that is, a German resident) are not subject to any deduction of tax at source pursuant to Paragraph 50a(4) of the EStG and therefore no liability of the payment debtor for non-deduction or insufficient deduction of tax at source can arise? |
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| 2. | Is the answer to Question 1 different if, at the time of providing his service, the payment creditor established abroad within the Community is not a national of a Member State? |
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| 3. | If the answer to Question 1 is in the negative:
(a)
Are Articles 59 and 60 of the EC Treaty to be interpreted as meaning that business expenses incurred by a payment creditor established abroad within the Community and economically connected with his activities in Germany giving rise to the payments must be taken into account in reduction of tax by the debtor at the time of deducting tax at source pursuant to Paragraph 50a(4) of the EStG because, as is also the case with German residents, only the net income remaining after deduction of business expenses is subject to income tax? (b)
Is it sufficient for the purpose of avoiding an infringement of Articles 59 and 60 of the EC Treaty if, in deducting tax at source pursuant to Paragraph 50a(4) of the EStG, only the business expenses economically connected with the activity in Germany giving rise to the claim for payment and which the payment creditor established abroad within the Community has reported to the payment debtor are taken into account in reduction of tax, and any further business expenses can be taken into account in a subsequent refund procedure? (c)
Are Articles 59 and 60 of the EC Treaty to be interpreted as meaning that they are infringed if the tax exemption to which a payment creditor established in the Netherlands is entitled in Germany under the double taxation convention between the Federal Republic of Germany and the Kingdom of the Netherlands is initially disregarded in the deduction of tax at source pursuant to Paragraph 50a(4) in conjunction with Paragraph 50d(1) of the EStG and only allowed in a subsequent procedure for exemption or refund and the payment debtor is likewise not entitled to rely on the tax exemption in proceedings concerning liability, whereas German residents' tax-free income is not subject to any deduction of tax and therefore no liability for non-deduction or insufficient deduction of tax at source can arise either? (d)
Are the answers to Questions 3(a) to (c) different if the payment creditor established abroad within the Community is not a national of a Member State at the time of providing his service? | (a) | Are Articles 59 and 60 of the EC Treaty to be interpreted as meaning that business expenses incurred by a payment creditor established abroad within the Community and economically connected with his activities in Germany giving rise to the payments must be taken into account in reduction of tax by the debtor at the time of deducting tax at source pursuant to Paragraph 50a(4) of the EStG because, as is also the case with German residents, only the net income remaining after deduction of business expenses is subject to income tax? | (b) | Is it sufficient for the purpose of avoiding an infringement of Articles 59 and 60 of the EC Treaty if, in deducting tax at source pursuant to Paragraph 50a(4) of the EStG, only the business expenses economically connected with the activity in Germany giving rise to the claim for payment and which the payment creditor established abroad within the Community has reported to the payment debtor are taken into account in reduction of tax, and any further business expenses can be taken into account in a subsequent refund procedure? | (c) | Are Articles 59 and 60 of the EC Treaty to be interpreted as meaning that they are infringed if the tax exemption to which a payment creditor established in the Netherlands is entitled in Germany under the double taxation convention between the Federal Republic of Germany and the Kingdom of the Netherlands is initially disregarded in the deduction of tax at source pursuant to Paragraph 50a(4) in conjunction with Paragraph 50d(1) of the EStG and only allowed in a subsequent procedure for exemption or refund and the payment debtor is likewise not entitled to rely on the tax exemption in proceedings concerning liability, whereas German residents' tax-free income is not subject to any deduction of tax and therefore no liability for non-deduction or insufficient deduction of tax at source can arise either? | (d) | Are the answers to Questions 3(a) to (c) different if the payment creditor established abroad within the Community is not a national of a Member State at the time of providing his service? |
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| (a) | Are Articles 59 and 60 of the EC Treaty to be interpreted as meaning that business expenses incurred by a payment creditor established abroad within the Community and economically connected with his activities in Germany giving rise to the payments must be taken into account in reduction of tax by the debtor at the time of deducting tax at source pursuant to Paragraph 50a(4) of the EStG because, as is also the case with German residents, only the net income remaining after deduction of business expenses is subject to income tax? | | | | | | | | |
| (b) | Is it sufficient for the purpose of avoiding an infringement of Articles 59 and 60 of the EC Treaty if, in deducting tax at source pursuant to Paragraph 50a(4) of the EStG, only the business expenses economically connected with the activity in Germany giving rise to the claim for payment and which the payment creditor established abroad within the Community has reported to the payment debtor are taken into account in reduction of tax, and any further business expenses can be taken into account in a subsequent refund procedure? | | | | | | | | |
| (c) | Are Articles 59 and 60 of the EC Treaty to be interpreted as meaning that they are infringed if the tax exemption to which a payment creditor established in the Netherlands is entitled in Germany under the double taxation convention between the Federal Republic of Germany and the Kingdom of the Netherlands is initially disregarded in the deduction of tax at source pursuant to Paragraph 50a(4) in conjunction with Paragraph 50d(1) of the EStG and only allowed in a subsequent procedure for exemption or refund and the payment debtor is likewise not entitled to rely on the tax exemption in proceedings concerning liability, whereas German residents' tax-free income is not subject to any deduction of tax and therefore no liability for non-deduction or insufficient deduction of tax at source can arise either? | | | | | | | | |
| (d) | Are the answers to Questions 3(a) to (c) different if the payment creditor established abroad within the Community is not a national of a Member State at the time of providing his service? | | | | | | | | |

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