ECJ Tax Cases 2010 Index

Article 49 EC must be interpreted as: precluding national legislation which allows taxpayers to deduct from gross tax the costs of attending university courses provided by universities situated in that Member State but excludes generally that possibility for university tuition fees incurred at a private university established in another Member State; not precluding national legislation which allows taxpayers to deduct from gross tax university tuition fees incurred at a private university established in another Member State up to the maximum amount set for the corresponding costs of attending similar courses at the national State university nearest to the taxpayer’s residence for fiscal purposes. Article 18 EC must be interpreted as: precluding national legislation which allows taxpayers to deduct from gross tax the costs of attending university courses provided by universities situated in that Member State but excludes generally that possibility for university tuition fees incurred at a university established in another Member State; not precluding national legislation which allows taxpayers to deduct from gross tax university tuition fees incurred at a university established in another Member State up to the maximum amount set for the corresponding costs of attending similar courses at the national State university nearest to the taxpayer’s residence for fiscal purposes.

Article 40 of the Agreement on the European Economic Area of 2 May 1992 does not preclude national legislation such as that at issue in the main proceedings, which exempts from the tax on the market value of immovable property located in a Member State of the European Union companies which have their seat in that Member State and which, in respect of a company which has its seat in a country belonging to the European Economic Area which is not a Member State of the European Union, makes that exemption conditional either on the existence of a convention on administrative assistance between the Member State and the non-member State for the purposes of combating tax evasion and avoidance or on the fact that, pursuant to a treaty containing a clause prohibiting discrimination on grounds of nationality, those legal persons must not be taxed more heavily than companies established in that Member State.

The Court:

Dismisses the action;
Orders the European Commission to pay the costs;
Orders the Republic of Lithuania to bear its own costs.

Article 56 EC precludes legislation of a Member State according to which taxpayers resident in that Member State who receive interest or dividends from investments made in another Member State are subject to a supplementary municipal tax when they have not elected for that income from moveable assets to be paid to them by an intermediary established in their Member State of residence, whereas income of the same type from investments made in their Member State of residence, because it is subject to withholding tax at source, need not be declared and, in that case, is not subject to the supplementary municipal tax.

The Court:

Declares that, by making the exemption of dividends distributed by companies resident in Spain subject to a level of holding by the recipient companies in the distributing companies which is higher for recipient companies residing in another Member State than for recipient companies resident in Spain, the Kingdom of Spain has failed to fulfil its obligations under Article 56(1) EC.
Dismisses the action as to the remainder.
Orders the European Commission and the Kingdom of Spain to bear their own costs.

Article 11(1)(a) of Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States is to be interpreted as meaning that the favourable arrangements which that directive introduces may not be withheld from a taxpayer who has sought, by way of a legal stratagem involving a company merger, to avoid the levying of a tax such as that at issue in the main proceedings, namely transaction tax, where that tax does not come within the scope of application of that directive.

1. Subject, inter alia, to determination by the referring court, as specified in paragraph 38 of this judgment, of the nature of the ‘refund’ of the ‘adjustment surtax’ at issue in the cases before it, made by an Italian company to a Netherlands company, pursuant to Article 10(3) of the Convention for the avoidance of double taxation with respect to taxes on income and on capital and for prevention of fiscal evasion (with protocol), signed at The Hague on 8 May 1990, in so far as it applies to that refund, a withholding tax such as that at issue in the cases in the main proceedings is not a withholding tax on distributed profits generally prohibited by Article 5(1) of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, in the version thereof in force at the material time. However, if the referring court were to find that the ‘refund’ of the ‘adjustment surtax’ is not fiscal in nature, a withholding tax such as that at issue in the cases before it would be a withholding tax on distributed profits which is, as a rule, prohibited by Article 5(1) of Directive 90/435.
If the referring court were to regard the withholding tax at issue in the cases before it as a withholding tax on distributed profits within the meaning of Article 5(1) of Directive 90/435, that withholding tax could be held to come within the scope of Article 7(2) of that directive only if, first, that convention contained provisions intended to eliminate or mitigate the economic double taxation of dividends and, secondly, the charging of that withholding tax did not cancel out the effects thereof, a matter which it would be for the referring court to assess.

Articles 56 EC and 58 EC must be interpreted as precluding a tax scheme under a double-taxation agreement concluded between two Member States, which provides for withholding tax of 15 % on the dividends distributed by a company established in one Member States to a company established in another Member State, where the national legislation of the first Member States exempts from that tax dividends paid to a resident company. It would be otherwise only if the tax withheld at source could be set off against the tax payable in the second Member State in the full amount of the difference in treatment. It is for the national court to determine whether such a neutralization of the difference in treatment has been effected by the application of all the provisions of the convention for the avoidance of double taxation and prevention of the avoidance or evasion of taxes with respect to taxes on income, concluded on 26 October 1993 between the Portuguese republic and the Kingdom of Spain.

Article 43 EC, read in conjunction with Article 48 EC, must be interpreted as not precluding, in principle, legislation of a Member State, such as that at issue in the main proceedings, under which a resident company is taxed in respect of an unusual or gratuitous advantage where the advantage has been granted to a company established in another Member State with which it has, directly or indirectly, a relationship of interdependence, whereas a resident company cannot be taxed on such an advantage where the advantage has been granted to another resident company with which it has such a relationship. However, it is for the referring court to verify whether the legislation at issue in the main proceedings goes beyond what is necessary to attain the objectives pursued by the legislation, taken together.

Article 56 TFEU is to be interpreted as precluding a provision of a Member State pursuant to which the benefit of a tax credit for investments is denied to an undertaking which is established solely in that Member State on the sole ground that the capital goods, in respect of which that credit is claimed, are physically used in the territory of another Member State.

Part 2: Pending Cases

Article 56 EC in conjunction with Article 58 EC must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which provides that, for the calculation of gift tax, the allowance to be set against the taxable value in the case of a gift of immovable property in that State is smaller where the donor and the donee were resident in another Member State on the date of the gift than the allowance which would have applied if at least one of them had been resident in the former Member State on that date.

Articles 43 EC and 48 EC do not preclude legislation of a Member State which makes it possible for a parent company to form a single tax entity with its resident subsidiary, but which prevents the formation of such a single tax entity with a non-resident subsidiary, in that the profits of that non-resident subsidiary are not subject to the fiscal legislation of that Member State.

Taxation of the dividends obtained by non-resident pension funds at a rate higher than the dividends obtained by pension funds resident in Portuguese territory

Compatibility with Article 45 of EU Treaty the legislation not providing exemption from income tax on individuals to non-residents whose total income is so small that an exemption from income tax would apply to them if they were resident taxpayers

Taxation of dividends paid to foreign pension funds

Residence for tax purposes

Anti-avoidance measures in the field of non-harmonised taxes

Limitation period in respect of inheritance tax payable on registered shares

Withholding tax on dividends paid to the company with the registered office in the other Member State

Legislation of a Member State according to which payments for supplies or services are not to be regarded as deductible business expenses where they are made or attributed directly or indirectly to a taxpayer resident in another Member State

Compatibility with Articles 49 and 56 EC Treaty of Luxembourg provisions granting Luxembourg taxpayers a tax credit for investments only if the investments are made in an establishment situated in the Grand-Duchy and are intended to remain there on a permanent basis, and only if they are physically used on Luxembourg territory