ABSTRACT

In early 2006, the Court of Justice of the European Communities (ECJ) rendered its first decision on direct taxation and the free movement of capital in a case that involved the taxation of capital by a member state of the European Union and a resident of a country that was not a member of the European Union. Less than 18 months later, there were already ten judgments, indicating the pace at which this branch of EU tax law is developing. A number of important issues concerning the ECJ's approach to the third-country dimension have been resolved, but many questions remain unanswered. This chapter examines some of the potential direct tax implications of the emerging case law for Canadian investors in member states of the European Union, and for European investors in Canada.