In Verder LabTec GmbH & Co.KG v Finanzamt Hilden (C-567/13) (26 February 2015) the advocate general (AG) opined that an exit charge complied with EU law.
A German limited partnership had transferred intellectual property rights from its German permanent establishment to its Dutch permanent establishment. This had triggered a tax liability payable in instalments over a ten year period. The issue was whether this charge infringed the principle of freedom of establishment.
The AG noted that the CJEU accepts that on a transfer of assets to another member state the originating member state may tax unrealised capital gains generated in its territory even though this creates a restriction on the freedom of establishment. This is based on the general recognition of the member state’s right to exercise its power of taxation in relation to activities carried on in its territory.
The AG also rejected the Commission’s...
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