In Galbert Defforey et al, the European Court of Human Rights (ECtHR) addressed the phenomenon of reverse discrimination for the first time, and notably in the context of taxation. That case concerned reverse discrimination with regard to the alienation of shares received in a merger: French domestic tax law essentially projected the alienation of shares received through an exchange of shares in a merger back to the time of such merger (and denied a partial exemption of capital gains that was introduced later), whereas in the case of a cross-border merger covered by the EU Merger Directive the actual time of alienation was relevant (and a partial exemption would be granted). The ECtHR did not find a violation of the prohibition of discrimination under Art 14 ECHR in connection with the right to property under Art 1(1) of Protocol No 1, essentially referring to the wide discretion enjoyed by the domestic tax legislature. Georg Kofler and Katharina Pabel critically analyze this decision.
