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World Journal of VAT/GST Law Volume 3, 2014 - Issue 3
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Original Articles

Holding complexity: analysing the CJEU's VAT case law as a network

Mick Knops Mick Knops, Tax Advisor, Loyens & Loeff NV. Email: [email protected].
&
Marcel GH Schaper Dr Marcel GH Schaper, Assistant Professor, Maastricht Centre for Taxation, Maastricht University. Email: [email protected].
Pages 141-165 | Published online: 07 May 2015

  • Directory 4.10.02.01 ‘Value-added Tax’ of the CJEU case law in EUR-Lex included 546 judgments and 18 reasoned orders as per 1 August 2014, see http://eur-lex.europa.eu.
  • We use the term ‘holding companies’ for simplicity purposes, but the term is meant to cover all aspects that relate to these activities, eg the buying, issuing and selling of shares, the receiving and paying of dividends, attracting capital etc, although it excludes situations where those activities are done with a commercial purpose, such as by a broker, or an investment bank, etc.
  • Ben Terra and Julie Kajus, Introduction to European VAT (Recast) (IBFD 2014) 1063.
  • Joachim Englisch, ‘Input VAT Deduction by Holding Companies—German Practice and Community Law’ (2007) 18 International VAT Monitor 172.
  • Rita de la Feria, ‘When do dealings with shares fall within the scope of VAT?’ (2008) 17 EC Tax Review 24, 25.
  • Case C-60/90 Polysar Investments Netherlands ECLI:EU:C:1991:268, [1991] ECR I-03111.
  • Case C-142/99 Floridienne and Berginvest ECLI:EU:C:2000:623, [2000] ECR I-09567, para 19.
  • Case 89/81 Hong Kong Trade ECLI:EU:C:1982:121, [1982] ECR 01277. See generally, Stanley A Esajas, ‘The Issue of Shares' (1999) 10 International VAT Monitor 159.
  • Case C-435/05 Investrand ECLI:EU:C:2007:87, [2007] ECR I-01315.
  • Cases C-155/94 Wellcome Trust ECLI:EU:C:1996:243, [1996] ECR I-03013; and C-4/94 BLP Group ECLI:EU:C:1995:107, [1995] ECR I-00983.
  • De la Feria (n 5) 37–38.
  • Case C-29/08 SKF ECLI:EU:C:2009:665, [2009] ECR I-10413; John Watson, Tom Cartwright and Eleanor Dixon, ‘A recipe for chaos' (2010) 21 International VAT Monitor 183; and Ad van Doesum, Herman van Kesteren and Gert-Jan van Norden, ‘Share disposals and the Right of Input VAT' (2010) EC Tax Review 62.
  • Mathias M Siems, ‘Measuring the Immeasurable: How to Turn Law into Numbers’ in Michael Faure and Jan Smits (eds), Does Law Matter: On Law and Economic Growth (Intersentia, 2011).
  • See generally, Lee Epstein and Andrew D Martin, An Introduction to Empirical Legal Research (OUP, 2014).
  • Daniel M Katz, ‘Quantitative Legal Prediction–or–How I Learned to Stop Worrying and Start Preparing for the Data Driven Future of the Legal Services Industry’ (2013) 62 Emory Law Journal 909; Larry Ribstein, ‘Practicing Theory: Legal Education for the Twenty-First Century' (2011) 96 Iowa Law Review 1649; Richard Susskind, The End of Lawyers (OUP, 2010).
  • See Nicola Lettieri and Sebastiano Faro, ‘Computational Social Science and its Potential Impact upon Law’ (2012) 3 European Journal of Law and Technology http://ejlt.org//article/view/175/267 (accessed 3 September 2014).
  • See generally, Anthony Ogus, ‘Legal Systems as Networks’ in Michael Faure and Jan Smits (eds), Does Law Matter: On Law and Economic Growth (Intersentia, 2011); Thomas A Smith, ‘The web of law’ (2007) 44 San Diego Law Review 309.
  • Anthony Arnull, ‘Owning up to fallibility: Precedent and the Court of Justice’ (1993) 30 Common Market Law Review 247; Jan Komárek, Precedent in European Union Law: Reasoning with Previous Decisions of the Court of Justice (DPhil Thesis, Oxford, 2010); Thijmen Koopmans, ‘Stare decisis in European law’, in David O'Keeffe and Henry G Schermers (eds), Essays in European law and integration (Kluwer, 1982); Alec Stone Sweet and Margaret McCown, ‘Discretion and Precedent in European Law’, in Ola Wiklund (ed), Judicial Discretion in European Perspective (Norstedts Juridik/Kluwer Law International, 2003); Eric Tjon Tjin Tai and Karlijn Teuben, ‘European Precedent Law’ (2008) 16 European Review of Private Law 827; AG Toth, ‘The Authority of Judgments of the European Court of Justice: Binding Force and Legal Effects' [1984] Yearbook of European Law 1.
  • James H Fowler and others, ‘Network analysis and the law: Measuring the legal importance of precedents at the US Supreme Court' (2007) 15 Political Analysis 324; James H Fowler and Sangick Jeon, ‘The authority of Supreme Court precedent’ (2008) 30 Social Networks 16.
  • Mattias Derlén and others, ‘Coherence out of Chaos: Mapping European Union Law by Running Randomly Through the Maze of CJEU Case Law’ [2013] Europarättslig Tidskrift 517; Mattias Derlén and Johan Lindholm, ‘Goodbye van Gend en Loos, Hello Bosman? Using Network Analysis to Measure the Importance of Individual CJEU Judgments (2014) 20 European Law Journal 667; Mattias Derlén and Johan Lindholm, ‘The Court of Justice and the Ankara Agreement: Exploring the Empirical Approach’ [2012] Europarattslig Tidskrift 462; Urska Sadl and Sigrid Hink, ‘Precedent in the Sui Generis Legal Order: A Mine Run Approach’ (2014) 20 European Law Journal 544.
  • Marcel Schaper, ‘A Computational Legal Analysis of Acte Clair Rules of EU Law in the Field of Direct Taxes’ (2014) 6 World Tax Journal 77, 80–82.
  • Maarten ‘t Riet and Arjan Lejour, ‘Ranking the Stars. Network Analysis of Bilateral Tax Treaties’ (CPB Netherlands Bureau for Economic Analysis Discussion Paper No 290, 2014) http://cpb.nl/publicatie/ranking-the-starsnetwerkanalyse-van-belastingverdragen (accessed 12 November 2014); Sara Delgado, ‘Shop Till You Drop Those Tax Rates: Treaty Shopping as a Determinant for FDI Stocks’ (CPB Netherlands Bureau for Economic Analysis Background Document, 2014), www.cpb.nl/publicatie/treaty-shopping-en-directe-buitenlandse-investeringencentraliteit-in-het-belastingnetwerk-als-verklarende-factor (accessed 12 November 2014).
  • Case C-333/91 Sofitam ECLI:EU:C:1993:261, [1993] ECR I-03513.
  • There was no clear comparable chapter or paragraph relating to economic activities.
  • A similar search for ‘economic activities’ resulted in such a large amount of cases that inclusion would bring the sample far beyond the scope of research of this article.
  • Given the small size of the sample, a manual collection was considered to be more efficient than the development of an automatic parser.
  • References in the parts of the ruling that concern the legal context, the dispute in the main proceedings or the questions referred by the national court were not counted, since the only interest is in the reasoning by the CJEU itself.
  • If there was no specific paragraph cited, a value of 0 was used.
  • Case C-80/95 Harnas & Helm ECLI:ECLI:EU:C:1997:56, [1997] ECR I-00745.
  • Case C-306/94 Régie dauphinoise ECLI:EU:C:1996:290, [1996] ECR I-03695.
  • Schaper (n 21).
  • Eg Gerald F Davis, Mina Yoo and Wayne E Baker, ‘The small world of the American corporate elite, 1982–2001’ (2003) 1 Strategic Organization 301; Gerald F Davis and Henrich R Greve, ‘Corporate elite networks and governance changes in the 1980s' (1997) 103 American Journal of Sociology 1.
  • Eg Mark EJ Newman, ‘The structure of scientific collaboration networks’ (2001) 98 Proceedings of the National Academy of Sciences USA 404.
  • Komárek (n 18).
  • Eg Yonatan Lupu and Erik Voeten, ‘Precedent in international courts: a network analysis of case citations by the European Court of Human Rights (2012) 42 British Journal of Political Science 413, 434–438; and Marcel GH Schaper, The Structure and Organization of EU Law in the Field of Direct Taxes (IBFD 2013) 155–226.
  • See Mark EJ Newman, ‘Communities, Modules and Large-Scale Structure in Networks’ (2011) 8 Nature Physics 25.
  • Michelle Girvan and Mark EJ Newman, ‘Community Structure in Social and Biological Networks’ (2002) 99 Proceedings of the National Academy of Sciences 7821.
  • Michael J Bommarito II, Daniel M Katz and Jonathen L Zelner, ‘On the Stability of Community Detection Algorithms on Longitudinal Citation Data’(2010) 4 Procedia–Social and Behavioral Sciences 26.
  • The modularity Q that indicates the quality of community detection was 0.93.
  • Case 268/83 Rompelman ECLI:EU:C:1985:74, [1985] ECR 00655.
  • Case C-37/95 Ghent Coal Terminal ECLI:EU:C:1998:1, [1998] ECR I-00001.
  • Case C-98/98 Midland Bank ECLI:EU:C:2000:300, [2000] ECR I-04177.
  • Case C-408/98 Abbey National ECLI:EU:C:2001:110, [2001] ECR I-01361.
  • Case C-110/98 Gabalfrisa and Others ECLI:EU:C:2000:145, [2000] ECR I-01577.
  • Case C-260/98 Commission v Greece ECLI:EU:C:2000:429, [2000] ECR I-06537.
  • Case C-255/02 Halifax and Others ECLI:EU:C:2006:232, [2006] ECR I-01609.
  • Case C-354/03 Optigen and Others ECLI:EU:C:2006:16, [2006] ECR I-00483.
  • Case C-442/01 KapHag ECLI:EU:C:2003:381, [2000] ECR I-06851.
  • Case C-77/01 EDM ECLI:EU:C:2004:243, [2004] ECR I-04295.
  • Case C-110/94 INZO ECLI:EU:C:1996:67, [1996] ECR I-00857.
  • Case C-396/98 Schloßstraße ECLI:EU:C:2000:303, [2000] ECR I-04279.
  • Case C-465/03 Kretztechnik ECLI:EU:C:2005:320, [2005] ECR I-04357.
  • Case C-437/06 Securenta ECLI:EU:C:2008:166, [2008] ECR I-01597.
  • Case 235/85 Commission v Netherlands ECLI:EU:C:1987:161, [1987] ECR 01471.
  • Case 324/87 Stichting Uitvoering Financiële Acties ECLI:EU:C:1989:246, [1989] ECR 01737.
  • Case C-186/89 Van Tiem ECLI:EU:C:1990:429, [1990] ECR I-04363.
  • Case C-97/90 Lennartz ECLI:EU:C:1991:315, [1991] ECR I-03795.
  • Case C-230/94 Enkler ECLI:EU:C:1996:352, [1996] ECR I-04517.
  • Case C-137/02 Faxworld ECLI:EU:C:2004:267, [2004] ECR I-05547.
  • Case C-180/10 Słaby and Others ECLI:EU:C:2011:589, [2011] ECR I-08461.
  • Case C-305/01 MKG-Kraftfahrzeuge-Factoring ECLI:EU:C:2003:377, [2003] ECR I-06729.
  • Case C-291/92 Armbrecht ECLI:EU:C:1995:304, [1995] ECR I-02775.
  • Case 154/80 Coöperatieve Aardappelenbewaarplaats ECLI:EU:C:1981:38, [1981] ECR 00445.
  • Case 230/87 Naturally Yours Cosmetics ECLI:EU:C:1988:508, [1988] ECR 06365.
  • Case C-16/93 Tolsma ECLI:EU:C:1994:80, [1994] ECR I-00743.
  • Case C-288/94 Argos Distributors ECLI:EU:C:1996:398, [1996] ECR I-05311.
  • We note that it was already stated in Floridienne and Berginvest (n 7) para 21, and even before that in Sofitam (n 23) para 13, that dividends are not the consideration for an economic activity. However, these paragraphs are not in this community. It might therefore be inferred that in EDM (n 49) para 63 the CJEU first explicitly brings two concepts or themes in its case law together: dividends are out of scope as they are no consideration, because of the requirement of a direct link.
  • Case 50/87 Commission v France ECLI:EU:C:1988:429, [1988] ECR 04797.
  • Case 5/84 Direct Cosmetics ECLI:EU:C:1985:71, [1985] ECR 00617.
  • Case C-62/93 BP Soupergaz ECLI:EU:C:1995:223, [1995] ECR I-01883.
  • Van Tiem (n 56) para 17.
  • Régie dauphinoise (n 30) para 15.
  • Midland Bank (n 42) para 29.
  • Rompelman (n 40) para 19, Ghent Coal Terminal (n 41) para 15, Midland Bank (n 42) para 19, Gabalfrisa and Others (n 44) para 44, and Abbey National (n 43) para 24.
  • BLP Group (n 10) para 24.
  • BP Soupergaz (n 70) para 18, and Gabalfrisa and Others (n 44) para 43.
  • BP Soupergaz (n 70) para 18.
  • Commission v Netherlands (n 54) para 8, Commission v Greece (n 45) para 26, and Case C-223/03 University of Huddersfield ECLI:EU:C:2006:124, [2006] ECR I-01751, para 47.
  • Rompelman (n 40) para 22.
  • Van Tiem (n 56) para 18.
  • Polysar Investments Netherlands (n 6) para 13, Sofitam (n 23) para 12, Harnas & Helm (n 29) para 15, and Floridienne and Berginvest (n 7) para 17.
  • Polysar Investments Netherlands (n 6) para 17, Sofitam (n 23) para 12, Harnas & Helm (n 29) para 15, and Floridienne and Berginvest (n 7) para 17.
  • Wellcome Trust (n 10) para 33.
  • Sofitam (n 23) para 13, and Régie dauphinoise (n 30) para 17.
  • Régie dauphinoise (n 30) para 17.
  • Polysar Investments Netherlands (n 6) para 14, and Floridienne and Berginvest (n 7) para 18.
  • Floridienne and Berginvest (n 7) para 19.
  • Régie dauphinoise (n 30) para 18.
  • EDM (n 49) para 58.
  • EDM (n 49) para 59.
  • Rompelman (n 40) para 24.
  • INZO (n 50) para 24.
  • Midland Bank (n 42) para 20.
  • Midland Bank (n 42) paras 20 and 24, and Abbey National (n 43) para 26.
  • Midland Bank (n 42) para 30, Abbey National (n 43) para 28, and Case C-16/00 Cibo Participations EU:C:2001:495, [2001] ECR I-06663, para 31.
  • Midland Bank (n 42) para 31.
  • Midland Bank (n 42) para 31.
  • Abbey National (n 43) para 35.
  • Abbey National (n 43) para 36.
  • Kretztechnik (n 52) para 36.

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