Arnoud Gerriste Case C-234/01 12 June 2003
The European Court of Justice has paved the way for the harmonisation of EU taxation of touring artists by radically overhauling the German system of taxation of foreign entertainments. The system had long been derided by artists and their advisors and the International Live Music Conference (ILMC) has campaigned for root and branch reform of the system.
The Fifth Chamber’s decision of 12 June held that with respect to foreign artist taxation in Germany: (1) foreign artists must have the right to deduct expenses prior to a performance profit being taxed (2) when profitable, foreign artists must have the right to be taxed at the normal, progressive tax rates applicable in Germany (or indeed any member state) and (3) the free taxable amount [for example a personal allowance which can be earned free of tax] is not applicable to foreigner entertainers when calculating the tax payable.
The court ruled that ‘Article 49 of the EC Treaty and Article 50 of the EC Treaty preclude a national provision which, as a general rule, takes into account gross income when taxing non-residents, without deducting business expenses, whereas residents are taxed on their net income, after deduction of those expenses.’
The ILMC’s Dick Molenaar and Dr Harald Grams commented that the first two decisions were positive and whilst the third was negative it is a side issue. Grams commented that “we have won a very important test case regarding foreign artist taxation in Germany (and other countries). After this decision all EU countries need to change their artist tax legislation and adjust to European standards. England and the Netherlands are examples how to improve the artist tax rules”.

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