One of the fundamental freedoms that EU law guarantees within the single internal market is the free movement of services which, in order to be more easily implemented, is complemented by a wide range of secondary legislation. Nevertheless, a situation may arise where a Member State refuses to recognize a foreign services provider on its territory due to the fact that conditions according to domestic law are not met. That is also why a dispute came before the Court of Justice of the European Union (the “CJEU”) between the German Federal Tax Office and a company providing tax advice to German clients from the Netherlands.
In this dispute there is a clash between the different practices of EU Member States regarding the requirements for the competence and professional qualifications of tax consultants. While, on the one hand there are Member States that do not set special conditions for foreign providers, such as the Netherlands, on the other hand there are countries which demand that certain requirements be met in order to protect the persons using tax services. The Czech Republic and Germany fall into this second category.
Although the intention of states to protect recipients of tax advice from incorrect advice or to prevent tax evasion was also recognized by the CJEU in the aforementioned decision, at the same time it also laid down the requirement that the conditions imposed on visiting tax advisers must not exceed what is strictly necessary. In other words, the state where the service is provided must take into account education and experience from another Member State.
In this respect, Czech legislation is similar to German legislation. In particular, the time aspect of tax advice is taken into account, on the basis of which both legislations distinguish between the two types of providers, namely the resident and the visiting tax adviser. Whereas, in the first case it involves the continuous provision of services by a foreign tax adviser in the country of the recipient of those services, in the case of a visiting provider it is more likely to involve the occasional provision of services, even without the need to cross national borders.
A resident tax adviser in the Czech Republic must be registered in the list of the Chamber of Tax Advisers of the Czech Republic, based on his or her own application and upon proof of professional qualification or experience. In exceptional cases, it may be necessary to pass a differential examination, the terms of which are also set by the Chamber. There are similar terms in Germany where foreign advisers have the choice of passing a normal examination, which is the same for all applicants, or passing an “Eignungsprüfung” or aptitude test, where the Chamber of Tax Advisers assesses individually the applications of persons from the EU/EEA who already have certain qualifications in this field from their home country.
In the case of visiting tax advisers, in the Czech Republic it is necessary to submit a notification to the Chamber of Tax Advisers of the Czech Republic with proof of professional qualification or experience, similar to a resident adviser. If the Chamber has doubts about the authenticity of the documents that are submitted, it may contact the relevant authority of the Member State, in which they were issued, and ask for confirmation of authenticity, otherwise it will carry out registration and issue a certificate with a validity period. A visiting tax adviser in Germany also has an obligation to report to the relevant Federal Chamber according to his or her nationality and an obligation to provide proof of his or her professional qualifications, on the basis of which he or she is then entered in the Chamber’s professional register. The notification obligation must be renewed annually and liability insurance is also required.
Although there is currently no common legislation at EU level, the European Commission is at least initiating the adoption of common measures to penalize abuse of these services, which may in the end also lead to a reduction in the differences in the legislation of the EU Member States.
Finally, we would add that this also applies similarly to attorneys and the provision of services within other EU countries. In both cases, such cross-border advice may be an advantage in cases where knowledge from more than one country is needed.