Can Tax Authorities Scrutinise the Ideas of Foreign Charities? The ECJ's Persche Judgment and Lessons from US Tax Law
The European Court of Justice's (ECJ's) recent Persche judgment poses important questions about the relationship between taxation of gifts and charitable purposes in the light of EC law requirements. This article argues that by applying its established case-law to the matter of donors to foreign recipient bodies, the ECJ takes a position on the social role of both charities and tax deduction. Moreover, the position of the ECJ clearly paves the way for tax authorities to check the objectives and the values pursued by recipient bodies seeking tax-preferred status, a situation that recalls a similar power recognised under specific circumstances of the US Internal Revenue Services. Arguably, the ECJ case-law has more profound consequences on charitable action, since it seems that the power accorded to tax authorities of the Member States to check the purposes of charitable organisations leads to a cosmopolitan apprehension of charitable action while it pushes charities to enhance transparency in their activities.
Prohibition of abuse of (Community) law: The creation of a new general principle of EC law through tax
The Court of Justice has been alluding to abuse and abusive practices in its rulings for more than thirty years.For a long time however the significance of these references was unclear. Not many commentators delved into this issue, and the few that did doubted whether the references by the Court to abuse amounted to the development of a general Community principle of abuse of law. This state of affairs has changed radically within the last few years, largely due to jurisprudential developments within the field of tax. This paper analyses the evolution of the Court’s case law on abuse, from the first cases on free movement of services, to the latest rulings on taxation. It then considers whether the case law developed by the Court, on what has been designated as “prohibition of abuse of law”, does indeed amount to a new general principle of Community law.
Intensity of Judicial Review in Equal Treatment Cases
Courts are frequently confronted with complaints about unequal treatment of various sorts, varying from legislative acts limiting the rights of inheritance of illegitimate children, to unequal taxation criteria for property taxes. The need to assess different cases of unequal treatment against the equality principle places before the courts a difficult task. The equality principle demands that the courts examine the reasonableness and justifiability of each specific case of unequal treatment, however different the subject. In doing so, the courts need to respect both the discretion or freedom of the party that is responsible for the difference in treatment, and the interests of the person or group that is disadvantaged by it. In order to enable the courts to take account of all interests at stake in any relevant equal treatment case, some variation in the intensity of review is indispensable. In some cases, it is appropriate to exercise restraint in assessing the justification for an inequality in treatment, while other cases call for the strictest scrutiny. In this contribution, the various factors that are relevant to the determination of the appropriate level of review are identified on the basis of a comparative study of the case law of the European Court of Justice, the European Court of Human Rights and the US Supreme Court. In addition, a standard is offered to balance intensity-determining factors pointing in different directions.