The implications of ECJ case law for Malta's Income Tax Acts

Abstract

Over the past decade there has been a notable increase in the number of ECJ judgments which found national tax law of other Member States incompatible with the EC Treaty, in particular the four freedoms. There were judgments that have even undermined fundamental concepts in international tax law such as the distinction between residents and non-residents, both natural and legal. Now that Malta is a member of the European Union, these rulings are also applicable in our country. There are over one hundred ECJ cases which could have an impact on income tax law. Throughout this dissertation, I selected a considerable number of these cases and analysed their implications. In Chapter 5 of this dissertation, I applied these implications to the local Income Tax Acts. It was noted that the Maltese rules are generally conformant with primary and secondary EC legislation, yet there are a number of provisions which appear incompatible and deserve attention by the legislators. There is a risk that if no remedial action is taken, Malta might eventually have to face costly legal proceedings in Luxembourg, brought about by a request for a preliminary ruling by a national court, or alternatively through infringement proceedings initiated by the Commission. However, even if a local income tax provision will never be brought before the ECJ for interpretation, Malta still has a responsibility, to take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of the EC Treaty or resulting from action taken by the institutions of the Community and also to abstain from any measure which could jeopardise the attainment of the objectives of the EC Treaty.