Sample Solution

The issue at hand concerned the compatibility of national measures concerning controlled foreign companies (CFC) legislation with the fundamental freedoms. In examining this legislation, the Court explained that should it be contrary to the freedom of establishment, then the question is whether it can be justified for the prevention of wholly artificial arrangements intended to escape the national tax measures which would otherwise be applicable.

The Court also clarified that the UK anti-abuse legislation must not be applied where, on the basis of objective factors, it can be proven that despite tax motives the subsidiary is established in the host State (Ireland) and carries out genuine economic activity.

Part III: Can multiple forms of abuse exist, or is there one unitary notion?
THE ACADEMIC DEBATE

6.1 Different tests but the same concept
Running against the general grain of this paper, it must be noted that there are of course those such as Lenaerts who would allude to the fact that the definition of a Union concept of abuse of rights by the Commission in Emsland- Stärke and its progressive application to both direct (Halifax) and indirect (Cadbury Schweppes) taxation mean it can be considered an implicit recognition of a general principle only. For many like Lyd , there is simply no difference in how the Court applies its test in areas of indirect and direct taxation.

The language used by the Court is often used to support this argument. Indeed, in the Kofoed case, the Court specifically referred to the prohibition of abuse of rights as one general principle of Union law. The aforementioned interchangeable use of words such as avoidance, fraud and evasio