CYIL vol. 12 (2021)

tomáš křivka CYIL 12 (2021) evaluated the situation with the conclusion that the matter does not concern a case of freedom of establishment (which even cannot be derived from the actual Treaty for non-profit-making entities either), unless the real property is directly administered by that foreign foundation in a proactive way, because then the condition of permanent performance of economic activities through a permanent establishment (enterprise) in another Member State for an indefinite time period is not met. 41 Instead of this approach, however, the CJEU qualified the activities of the foundation as execution of free capital movement and stressed that national tax regulations are really discriminatory in an unjustified way, if the only reason for refusal of tax advantages was a foreign seat of the foundation, and a foundation having its seat in Germany would have been entitled to such tax advantages under the same conditions. Nevertheless, the answer to the question whether there were any other reasons for which Mr. Stauffer’s foundation would not have been entitled to tax advantages, or whether a domestic foundation could have claimed tax advantages under the same conditions, was left by the CJEU up to national proceedings. Although this decision therefore did not contain any specific confirmation of freedom of establishment of non-profit-making entities, it is possible to derive from it that if the real property had been administered directly by the foundation, this side business activity could have met preconditions of the freedom of establishment, in spite of being carried out by a non-profit-making entity. Another important consequence in the field of tax law was the conclusion that it is not possible to link tax advantages of public service entities with nationality (if the foreign entities performed public service activities in that state as well), as it had been practised by tax laws in some Member States of the EU till that time. Case C-318/07: Persche 42 Another similar case which also concerned rather the principle of free movement of capital in relation to public service entities was the decision in the Persche case. The facts of the case were as follows: Mr. Persche, a German national, donated, during his foreign stay in Portugal, material gifts amounting to EUR 18,000 to a local municipality, and subsequently he exercised the same as tax deduction while filing his tax return in Germany. According to German tax laws, however, an entitlement to tax deduction only arose if a donation was provided to German public service entities, and therefore the tax authority refused to recognise the tax deduction to him, which was challenged by Mr. Persche before German courts. The matter was referred to the CJEU through the preliminary ruling procedure, and the Court was to assess compatibility of German rules with principles of the single internal market (in particular free movement of capital). The CJEU really assessed the issue of provision by a natural person of a donation to a foreign public service entity having its seat in another Member State of the EU as an act regulated by the freedom of free movement of capital, and with regard to prohibition of discrimination by nationality it decided that national legislation which prohibits the exercising of tax deduction for a donation just for the reason that the donation was provided to a foreign non-profit-making entity as discriminatory without any justified reasons. The issue whether Mr. Persche would already have been entitled to tax 41 Judgement of the Court of Justice of 25 July 1991. The Queen v. Secretary of State for Transport, ex parte Factortame Ltd and others . Case C-221/89. Par. 20. 42 Judgement of the Court of Justice of 27 January 2009. Persche Hein Persche v. Finanzamt Lüdenscheid . Case C-318/07.

190