Jose Manuel Panero Rivas
MA in Economics for Competition Law, King’s College London, LL.M in European Law, College of Europe, Bruges
Almost 70 years after the Normandy landings, the Centre of European Law of King’s College London arrived to the heart of Brussels to celebrate its 40th anniversary with the community of distance learners’ alumni. There, some of the most prominent London-based professors of the Centre were celebrating the success of the institution with their Brussels-based colleagues and former students. In attendance were Professors Biondi, Turk, Whish, Flynn, Jones, Wils, Buendía, Stefan amongst many others.
After a short introductory speech by Prof. Biondi (director of the CEL), the event was arranged in such a way that two different sessions ran simultaneously, one on EU Law (which was, in turn, divided into two sub-sessions) and another one on EU Competition Law. As the author is not ubiquitous, the EU Competition Law session, bearing the title “The increased use of settlements and commitments in antitrust enforcement: a success or a problem?” is not reviewed or summarised (although sources reported it was excellent, as it is the rule when one thinks of a session lectured by Profs. Whish and Wils). The lectures were followed by a great dinner not summarised here.
Free movement of capital with Prof. Flynn
There were two topics within the EU Law session. The first was “Recent developments on free movement of capital in relation to fiscal sovereignty” and was conducted by Prof. Flynn. This consisted in a review of two interesting 2009 CJEU judgments on the application of free movement of capital to issues related to charity. As Prof. Flynn mentioned, there is the general belief that “charity remains at home” but, notwithstanding that, the CJEU has consistently held that fundamental freedoms should equally apply to cases where the State provides a given framework for private entities and individuals donating to certain goals or institutions (not directly, as otherwise State aid rules might be applicable if the beneficiary develops an economic activity).
The first of them is Persche. Mr Persche claimed that his donation of certain goods (Zimmer frames, toys, bed linen and towels) to Centro Popular de Lagoa, in Portugal, should qualify as deductible expenses for the purpose of his tax return in Germany. However, the German authorities refused his request on the grounds that the recipient of the donation was not established in Germany.
The Court clarified that the taxable treatment of such goods are within the scope of the rules on capital, irrespectively of their in-kind nature, and that the inability to deduct these donations when the recipient is not established in Germany constitutes a restriction on the free movement of capital.
Thereafter, the Court analysed whether the restriction could be justified. Three arguments were put forward : (i) a tax allowance decreases Member State’s tax revenues, and the Member State should have to allow it only if there is a corresponding decrease in its expenses by the taxpayer taking a burden that would otherwise fall on the State; (ii) the tax advantages allow the Member State to discharge it of some of its duties, which are confined to the territory of the Member State itself; and (iii) tax authorities cannot control that the funds benefiting from tax advantages granted outside the relevant Member States are indeed going to a truly charitable cause.
The Court dismissed all three arguments on the basis that: (i) the idea of justifications based on a reduction of fiscal incomes is neither a pure economic reason fitting within Article 65 TFEU nor does it constitute an overriding reason of public interest; (ii) the Member State should be free to choose the charitable goals it might consider appropriate and there is no good reason to consider that only specific institutions within its borders can fulfil such goal; and (iii) concerning the effectiveness of fiscal supervision, there are mechanisms within the EU for mutual assistance between tax administrations.
The second judgment is Servatius, where was at stake the eligibility of a social housing project in Liège (Belgium) promoted by an association established in The Netherlands for the purpose of funding by the Dutch authorities of social housing projects. The system of prior authorisation established by the Dutch authorities was considered by the Court as a restriction of the free movement of capital. However, the Court considered that the financing of public housing could be considered as an overriding reason of public interests, particularly in the specific context of The Netherlands. Ultimately, as it happens often with preliminary rulings, the question on whether the measure was proportionate or not was left for the national court.
The paper prepared by Prof. Flynn is available here.
Constitutional problems with Prof. Turk
The second topic was a presentation by Prof. Turk on the constitutional problems posed by the current architecture of EU regulation of the financial sector under the title of ‘EU Institutional Architecture for Financial Regulation – Constitutional Issues and Solutions’.
As the readers of this blog know, there are currently different levels of regulation in the field. On the first level there are EU Directives and Regulations (such as the Capital Requirements Directive (CRD) and the Bank Recovery and Resolution Directive (BRRD)). On a lower level, the Commission adopts subordinate regulations. However, the ever increasing number of agencies (European Securities and Markets Authority – ESMA -, European Banking Authority _- EBA – European Insurance and Occupational Pensions Authority – EIOPA) prepare the drafts of those technical regulations, which specify the relatively broad concepts contained in the Directives or Regulations. Whilst those technical rules are formally approved by the Commission, some observers have pointed out the existence of a certain “rubberstamping” on the action of the Commission (especially because agencies are increasingly well funded while the Commission struggles to have the necessary resources to do a proper job). However, the problem is that, irrespective of the kind of “technical” decisions that are to be adopted, they would almost always have a political content. Therefore, the involvement of the Commission might be necessary after all.
This happens in a scenario in which there is a progressive takeover of the agencies by the Member States, whose representatives involved in the decision-making processes within the agencies act in the “general interest of the Union” but, one might wonder whether this “general interest of the Union” is as general as the one genuinely promoted by the Commission.
This status quo was reconsidered in the cases of Meroni and ESMA, which should be taken into account if the powers and acts of the agencies or the Commission in the field are challenged in the future.
The presentation prepared by Prof. Turk is available here.
Both presentations within the EU Law session were extremely interesting, fostering a remarkable debate.
Although the dinner is not to be reviewed, Prof. Whish’s speech is worth noting. The highly respected and regarded KCL Competition Law Emeritus Professor expressed his genuine joy for the success of the distance learning programmes, of which he is very proud. Prof Whish is fully committed with the distance learning programmes as he is the Director and Professor in the Programme on Competition Law, as well as co-director of the Economics for Competition Law Programme.
Overall, it has been an excellent experience that deserves to be repeated. Besides the interest of the lectures, it has been an excellent occasion for the Centre to consolidate its footprint in Brussels. And it has been extremely successful as it has been perceived as a tour de force and, when testing the audience, certain remembrances with the unforgettable passages in which Oliver Twist says “Please, Sir, I want some more” (even if the Directors of the Centre do not resemble Mr. Bumble in any way) become apparent.
And finally, a big thank you to Andrea Cordwell James for her assistance in providing the presentations and obtaining the consent of the authors to share with the readers the materials presented during the lectures.
 Case C-318/07 Persche  ECR I-359.
 Even if the provisions on free movement of goods were to be applied, one might not expect a different result given the facts of the case. This might, however, be different if the situation would refer to beneficiaries located outside the EU.
 Particularly Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation.
 Case C-567/07 Winingstichtung Sin Servatius  ECR I-9021.
 Capital Requirements Directive. For the documents integrating the CRDIV package see http://ec.europa.eu/internal_market/bank/regcapital/legislation_in_force_en.htm#maincontentSec1
 Bank Recovery and Resolution Directive. For an overview of the progress of adoption of the Directive see http://ec.europa.eu/internal_market/bank/crisis_management/index_en.htm
 Case 9/56 Meroni.
 Case C-270/12 UK v Paliament and Council. n.y.r.
 C. Dickens, Oliver Twist.