Month: May 2020

The tax treatment of non-performing loans, Covid-19 and the need for harmonisation at the European level

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 by João Sérgio Ribeiro, Professor of Tax Law, UMinho

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Introduction

The tax treatment of bank loan losses has been a controversial issue.  Banks generally want tax rules recognising loan losses to conform in a close manner to regulatory accounting, in order to obtain tax benefits from loss provisioning. Tax officials, on the other hand, often fear that accepting said close conformity for tax purposes will dramatically reduce corporate tax paid by banks.

Loan losses represent inevitable costs that banks have to bear in order to generate income. Therefore, these losses should be accepted as an expense for both tax and financial purposes. The fundamental question is, at the end of the day, when and how non-performing loan losses should be recognized as an expense for tax purposes.

Now, with the Covid-19 crisis and the most certain upsurge of non-performing loans, the topic gains added relevance. The tax treatment of non-performing loans varies greatly around the world, and the European Union is not an exception.
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Directive 2005/36/EC and torture in Bahraini hospitals

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 by Gerry Liston, Legal Officer at GLAN - Global Legal Action Network

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What role could Directive 2005/36/EC on the recognition of professional qualifications have in addressing the systematic use of torture in Bahrain?

The Royal College of Surgeons in Ireland (‘RCSI’) is Ireland’s largest medical school. In addition to its Irish campus, it operates a number of “constituent colleges” overseas, including one in Manama, the capital of Bahrain, which is called the RCSI-Bahrain. The programme of education delivered to students of the RCSI-Bahrain is the same the programme delivered to students in Dublin; graduates of the RCSI-Bahrain are also awarded the same degrees as their Irish counterparts.

Throughout the period of political unrest which commenced in Bahrain in 2011, patients of the training hospitals associated with the RCSI-Bahrain were subjected to extreme abuse for their involvement in protests. Physicians for Human Rights reported, for example, that ‘egregious abuses against patients including torture, beating, verbal abuse, humiliation and threats of rape and killing’ occurred in the Salmaniya Medical Complex – Bahrain’s largest hospital.[i]
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Summaries of judgments

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Summaries of judgments made in collaboration with the Portuguese judge and référendaires of the CJEU (Nuno Piçarra, Mariana Tavares and Sophie Perez)
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Judgment of the Court (Fourth Chamber) of 29 January 2020, GAEC Jeanningros v Institut national de l’origine et de la qualité (INAO) and Others – Case C-785/18, EU:C:2020:46

Reference for a preliminary ruling – Agriculture – Protection of geographical indications and designations of origin for agricultural products and foodstuffs – Protected designation of origin ‘Comté’ – Minor amendment to a product specification – Action before national courts contesting an application for an amendment – Case-law of the national courts according to which the action becomes devoid of purpose when the European Commission has approved the amendment – Effective judicial protection – Obligation to rule on the action

1. Facts

The request for a preliminary ruling concerned the interpretation of, inter alia, Article 53 of Regulation (EU) No 1151/2012 of the European Parliament and of the Council of 21 November 2012 on quality schemes for agricultural products and foodstuffs (OJ 2012 L 343, p. 1). The main proceedings concerned the amendment of the product specification for the protected designation of origin (PDO) ‘Comté’.

On 8 September 2017, the Minister for Agriculture and Food and the Minister for Economic Affairs and Finance (France) issued a decree approving a minor amendment to the product specification for the ‘Comté’ PDO with a view to submitting that minor amendment to the Commission for approval, in accordance with the procedure laid down in Article 53 of Regulation No 1151/2012. By an action brought on 16 November 2017 before the Conseil d’État (Council of State, France), GAEC Jeanningros sought the annulment of the decree, in so far as it approved that minor amendment. While those proceedings were still pending, by decision published on 1 June 2018 (OJ 2018 C 187, p. 7), the Commission approved the application for a minor amendment to the product specification for the ‘Comté’ PDO at issue, in accordance with the second subparagraph of Article 53(2) of Regulation No 1151/2012.
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Time for a Little More Time? Post-Brexit Trade Negotiations and the Current Pandemic

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 by Allan F. Tatham, Professor at Facultad de Derecho, Universidad San Pablo CEU

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Background

In the present context of the COVID-19 pandemic, with its impact on the health, economic and social systems of states around the world, it appears somewhat trivial in comparison for the UK and the EU to be still pursuing agreement in the post-Brexit negotiations. On 18 March, the Union published its draft legal agreement for the future EU-UK partnership, in accordance with its 2020 Negotiating Directives and the 2019 Political Declaration of the parties. And while, by then, the UK had not presented a comparable document, its approach to the negotiations had been published on 27 February. From these sources, it would be fair to draw the conclusion that there remain many outstanding issues that need to be discussed and resolved. Among them the maintenance of a “level-playing field” to ensure fair competition and protection of standards; fisheries; financial services; security and police matters; and the role of the Court of Justice of the European Union or another mechanism for resolving disputes under a Comprehensive Free Trade  Agreement (CFTA). Even the negotiating styles are different, with the UK seeming to display a sort of “pick-and-mix” approach – essentially using as precedents different provisions selected from various agreements (that the EU has already concluded with other third countries), collecting them together and then arguing for their inclusion in the CFTA.

Given these real challenges, the onset of the pandemic appeared initially to have caused only ripples on the surface of the negotiations. In fact, the UK desired to portray a “business-as-usual” approach to the negotiations and so to “carry on regardless” with them through video conferencing. Moreover, shortly before he himself was quarantined and hospitalised for the virus, the British Prime Minister Boris Johnson in his daily coronavirus press briefings was continuing to repeat the mantra of sticking to the 31 December deadline. Only with Michel Barnier’s diagnosis with the virus, the need for more officials on both teams to self-isolate and the recognised limitations to video-conferencing, were the negotiations suspended at the end of March 2020.
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Fyodor Dostoyevsky and the primacy of EU law: overcoming the “eternal husband complex”

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by Alessandra Silveira, Editor
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The Arts have always helped the human being to organize the knowledge and to provide a way to understand the meaning of things. The recent decision of the German Constitutional Court[i] on the European Central Bank (ECB) and its Public Sector Purchase Programme (PSPP) has served to create distrust in an atmosphere that is already very sensitive – and it has reminded me an academic episode that shows the role of the Arts in the process of learning. A few years ago, I carefully assessed a paper presented by a Master’s student entitled «Constitutionalism and the principle of primacy of EU law: overcoming the ‘eternal husband complex’». The unexpected title touched on “The Eternal Husband”, Fyodor Dostoyevsky’s literary work. Of course, this needs to be contextualized.

It is said that Russians under czarist rule used to refer in this way, “eternal husband”, to those who never dared to separate from their wives, regardless of the misfortune of the conjugality – from the mere lack of interest to adultery. Adapting the characters to the legal script of integration, the Master’s student explained me his objectives. He wanted to show that the constitutional system of checks and balances which guides the functioning of the EU legal order prevents EU Institutions from betraying the principles that establish and sustain the Member States constitutional paradigm. Therefore, the student argued, there are no credible reasons for resentments and misgivings – and it is urgently required to overcome the “eternal husband complex” of the national constitutionalism.

If we test this argument in light of the concept of European Union as a Union of law, we will conclude that the student may well be right. That legal principle affirms the idea that the Union is based on the rule of law, inasmuch as neither its Member States nor its Institutions can avoid a review of the question whether the measures adopted by them are in conformity with the EU basic constitutional charter – the Constitutive Treaties. Therefore, the principle of primacy of EU law does not qualify each and every EU legal act, but only those issued in accordance with the Constitutive Treaties – and the ECJ is solely responsible for assessing this validity. According to Article 19(1) TUE, the ECJ shall ensure that in the interpretation and application of the Treaties the law is observed, i. e., the ECJ is who decides on the scope and the exercise of the EU competences.
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1951 and 2020 – On Europe Day

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by Pedro Madeira Froufe, Editor
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What does the year of 1951 have in common with 2020? For now, not much. Given the circumstances we live in, few periods of recent history have anything in common with the strange year of 2020, which closes the first fifth of the 21st century. The pandemic crisis exposed some fragilities and unimaginable weaknesses, until not so long ago, in the construction of our current lives. It is clear that we are still very far away from a conclusive ending to the crisis we are living; it is still too early to draw conclusions of a more philosophical character, or even structuring lessons! Moreover, in times of war, we cannot rest, and it is in some kind of contemporary war (at least relating some of its effects) in which we are currently moving, on a planetary scale. To some extent, we are, indeed, experiencing a type of third world war, with no formal declaration of war!

But let us return to the question at stake and place ourselves in the European context, rectius, of the European Union. It is important to remember that the 18th of April this year marked 69 years since France, Italy, the Federal Republic of Germany and the three Benelux states (Belgium, Holland, and Luxemburg) formally signed the European integration papers. The Paris Treaty was signed on the 18th of April of 1951, which established the ECSC (European Coal and Steel Community), leading to the creation of the first common market which, then, covering fundamental raw materials for the so-called “war industry” (coal and steel), emerged loaded with symbolism, but also distrust in the various public opinions of the Member States that founded the project.
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Editorial of May 2020

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by José Igreja Matos, President of the European Association of Judges
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“With all due respect, I have no time for this”. The Hungarian Case

1. The Pandemic Crisis in Hungary. Background.

In Hungary, like in many other countries, the Covid19 pandemic and the envisaged measures to prevent its expansion determined the approval of emergency laws.

The Hungarian Government declared the state of danger on 11 March 2020. On that occasion the power to issue decrees in order to suspend the application of certain laws and to take other extraordinary measures was granted for a period of 15 days, except if the Government – on the basis of an authorization from Parliament – decided to extend the effect of the decree. In effect, on 30 March 2020, this extension has been granted by the Parliament on broad terms: “until the endangering situation cease to exist.”

It is now undisputable the absence of any defined time limit for the extensive powers conceded to the national Government.

In the particular case of the functioning of the courts, on 14 March, the Government declared an extraordinary period of judicial vacations. This means that for the duration of judicial vacation, no regular trial hearing should be scheduled except in urgent court cases. Hearings must be held by videoconference. If the personal contact during the hearing is unavoidable a special protocol were applicable for the protection of health.
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