Tax
The new power in Europe
How companies are monitoring and responding to the tax
decisions of the European Court of Justice
1
Background to the research
• During April, May and June 2005, market research company TNS
interviewed 400 tax directors and CFOs around the world on their
approach towards the tax decisions of the European Court of Justice
• Companies taking part in the research came from Australia, Belgium,
Canada, China/HK, France, Germany, Italy, Japan, South Korea,
Netherlands, Nordics, Spain, Switzerland, UK, USA
• Approximately half the respondents have a turnover greater than
US$3bn with the remainder having a turnover of between US$1-3bn
2
Key findings
• Barely one in five of the respondents said that they viewed monitoring
the decisions of the ECJ as either of a critical or high priority for their
companies
• Another four out of ten said that they viewed monitoring the Court as
either a medium or low priority for them, while the remainder said that
they didn’t trade with or the within the European Union
• Of the 265 companies who did monitor the decisions of the ECJ, only
13 per cent said that they proactively tracked and reserved their
positions with tax authorities ahead of a decision by the Court
•
20 per cent of respondents said that they did track cases but only
took action after Court decisions
• Nearly 60 per cent said that they only reacted to the decisions of the
Court on an ad hoc basis when they were advised to do so
3
Commentary
• Companies say that the Court is important to them but few are then
prepared to act ahead of a judgment and reserve their positions with
their national tax authorities. However, by the time the ECJ has ruled on
the facts of a particular case, the deadline for filing similar tax claims
might already have passed
• Bearing in mind that the ECJ has found in favour of the taxpayer in the
vast majority of cases, it makes economic sense for companies to keep a
close eye on developments and take the necessary steps to ensure that
they are not