24-09-2010 / Hoge Raad raises prejudicial questions to ECJ about withholding tax
Today the Hoge Raad der Nederlanden has decided to raise prejudicial questions to the European Court of Justice in Luxemburg regarding the Dutch withholding tax for a UK football team, which played in a friendly match in The Netherlands in August 2002. This withholding tax was 20% from the gross fee with the option to file an application to deduct expenses and the option to file income or corporation tax returns after the year. But then two parties were involved, the Dutch football team and the UK football team, and both at the withholding stage and after the taxable in tax returns figures needed to be mentioned.
Easier would have been to skip the Dutch football team as withholding agent and let the UK football team file directly the Dutch income / corporation tax return for the income from the Dutch friendly match. When so, the right figures would be filed directly, leading to the right tax obligation and only one party would be involved in the tax process. That would cause less administrative expenses. And if the UK football team would not file or pay the Dutch tax, the Dutch tax authorities could order their UK colleagues to assist with the collection of the tax assessment.
Therefore the question for the ECJ is, whether the existing 2002 withholding tax regime in The Netherlands was an obstacle for entering the Dutch market and therefore in breach with the freedom to provide services of the EC Treaty.
See for a translation of the case: www.sportsandtaxation.com/index.php?page=news&id=169.
