Malta's tax system and European community law : areas of tension or concern

Abstract

The scope of this thesis is to analyse whether the Maltese taxation system is in line with Community law principles. Reference is made to the development within the European Community in the area of direct taxation. A brief analysis of the main principles affecting direct taxation is made. For the proper functioning of the internal market any restrictions to the four freedoms have to be removed. Important decisions of the European Court of Justice on this regard are discussed. The Code of Conduct on Harmful Taxation and the principles arising from State Aid rules are also discussed in order to understand the reasons which brought Malta to review its tax legislation. A brief analysis of the amendments which the Maltese tax system had to undergo to address the harmful tax measures identified by the Code of Conduct, whilst still remaining an attractive destination for financial services, is made. Areas of potential conflict are then analysed in the light of particular judgments delivered by the European Court of Justice. The new refundable tax credit system is considered in the light of State aid rules. The effects of the Marks & Spencer judgment and the Maltese group relief provisions are analysed. The possible consequences of the Persche judgment are discussed. Withholding taxes and their conformity with Community law are also referred to.