92002E3078

WRITTEN QUESTION E-3078/02

by Ulpu Iivari (PSE) to the Commission

(28 October 2002)

Subject: Double taxation of orchestras

Under Community legislation and in particular Article 49 of the EC Treaty, Member States are forbidden to restrict the freedom to provide services by means of double taxation. Avanti!, a Finnish chamber orchestra financed mainly by public funds, was subjected to double taxation in Germany, in the Land of Schleswig-Holstein, when it performed at the Schleswig-Holstein music festival in August 2001. It had to pay tax to the Land on its appearance fees, even though, in accordance with the taxation agreement between Germany and Finland, it produced evidence supplied by the Finnish authorities to the effect that its activities were subsidised, the tour that it was making had been publicly funded, and it functioned as an employer, in other words it paid the musicians' wages, from which it deducted tax, and was responsible for the employer's contributions. The orchestra has already been in correspondence with the Land tax authorities about the double taxation for nearly two years, and there is no end in sight.

Does the Commission consider that cases of this kind impede the operation of the internal market? What will it do to improve its operation and specifically to tackle the problems linked to double taxation?

Answer given by Mr Bolkestein on behalf of the Commission

(9 December 2002)

The Commission is pleased to inform the Honourable Member that, according to information received from the German tax authorities, the case of the Finnish orchestra Avanti! is being settled in favour of the orchestra so that no German tax has to be paid.

The Commission is aware that there are specific tax issues related to cultural cross-border performances. These have to do with the fact that under most double taxation treaties taxing rights are attributed to the performance State; insofar they follow Article 17 of the Organisation for Economic Cooperation and Development Model Convention. This means in practice that a cross-border performing artist will normally have to deal with more than one tax system.

Where the Commission believes that the national tax rules applied are discriminatory, it is ready to take action under Article 226 of the EC Treaty. In this context it should also be mentioned that a case is pending with the Court of Justice (case C-234/01 Gerritse(1)) concerning the German taxation of non-resident artists. A judgement will probably be rendered in 2003.

(1) OJ C 245, 1.9.2001.