CELEX: 62018CJ0565
Reference for a preliminary ruling
Article 63 TFEU
Free movement of capital
Financial transaction tax
Transactions involving derivative financial instruments based on a security issued by a company resident in the Member State of taxation
Tax due irrespective of the place of conclusion of the transaction
Administrative and reporting obligations

This request for a preliminary ruling concerns the interpretation of Articles 18, 56 and 63 TFEU.
The request has been made in proceedings between Société Générale SA (‘Société Générale’) and Agenzia delle Entrate – Direzione Regionale Lombardia Ufficio Contenzioso (Tax Office – Regional Directorate of Lombardy, Disputes Department, Italy) (‘the Tax Office’) concerning a claim for reimbursement of a tax paid by Société Générale on financial transactions involving derivative financial instruments.
Italian law
Article 1(491), (492) and (494) of legge n. 228 – Disposizioni per la formazione del bilancio annuale e pluriennale dello Stato (Legge di stabilità 2013) (Law No 228 laying down provisions for the establishment of the annual and multiannual State budget (Stability Law 2013)) of 24 December 2012 (Ordinary Supplement to GURI No 302 of 29 December 2012, No 212, p. 1) (‘Law No 228/2012’) provides:
‘491.   The transfer of ownership of shares and other participating financial instruments …, issued by companies resident in the territory of the State, as well as securities representing such instruments, regardless of the State of residence of the issuing entity, shall be subject to a financial transaction tax at the rate of 0.2% of the transaction value. The transfer of ownership of shares resulting from the conversion of bonds is also subject to the above tax. … The tax is due irrespective of the place of conclusion of the transaction and the State of residence of the contracting parties. …
492.   Transactions involving derivative financial instruments …, which mainly have as their underlying instrument one or more of the financial instruments provided for in paragraph 491, or the value of which depends essentially on one or more of the financial instruments provided for in the same paragraph, and transactions in securities …, allowing the purchase or sale mainly of one or more financial instruments referred to in paragraph 491 or involving a cash payment determined mainly in relation to one or more financial instruments referred to in the preceding paragraph, including warrants, hedged warrants and certificates, shall be subject, at the time of conclusion, to a fixed tax, determined according to the type of instrument and the value of the contract, in accordance with Table 3 annexed to this Law. The tax is due irrespective of the place of conclusion of the transaction and the State of residence of the contracting parties. In the event that the transactions referred to in the first sentence also provide, as a method of settlement, for the transfer of shares or other participating financial instruments, the transfer of the right of ownership of such financial instruments, which occurs at the time of settlement, shall be subject to tax in accordance with the terms and to the extent provided for in paragraph 491. …
…
494.   The tax provided for in paragraph 491 shall be payable by the transferee; that provided for in paragraph 492 shall be payable to the extent established by each of the counterparties to the transactions. The tax provided for in paragraphs 491 and 492 does not apply to entities that interpose themselves in the same transactions. In the case of a transfer of ownership of shares and financial instruments provided for in paragraph 491, as well as for transactions in financial instruments provided for in paragraph 492, the tax shall be paid by banks, trust companies and investment firms authorised to provide investment services and activities to the public on a professional basis … and by other entities involved in the execution of the above transactions, including non-resident intermediaries. Where several of the entities indicated in the third sentence are involved in the execution of the transaction, the tax shall be paid by the entity which receives the execution order directly from the purchaser or the final counterparty. In other cases, the tax is paid by the taxpayer. Non-resident intermediaries and other entities involved in the transaction may appoint a tax representative … who is responsible, on the same terms and with the same responsibilities as the non-resident entity, for the obligations related to the transactions referred to in the preceding paragraphs. …’
Table 3, referred to in Article 1(492) of Law No 228/2012, appended to that law and entitled ‘Table: tax on financial transactions by financial instruments (value denominated in euro for each counterparty)’, is set out as follows:

National value of the contract
(in thousands of EUR)
Financial instrument
0-2.5
2.5-5
5-10
10-50
50-100
100-500
500-1 000
More than 1 000
Futures contracts, certificates, hedged warrants and option contracts on returns, measures or indices relating to shares
0.01875
0.0375
0.075
0.375
0.75
3.75
7.5
Futures contracts, warrants, certificates, hedged warrants and equity option contracts
0.125
0.25
0.5
2.5
Equity swaps and related performance, indices or measures
Equity forward contracts and related performance, indices or measures
Financial contracts with payment of a differential linked to the shares and the corresponding returns, indices or measures
Any other security with cash settlement determined by reference to the shares and the corresponding returns, indices or measures
Combinations of the above contracts or securities
0.25
0.5
The dispute in the main proceedings and the question referred for a preliminary ruling
On 28 March 2014 Société Générale, established in France, submitted a declaration through its Italian branch to the Tax Office in respect of the financial transaction tax introduced by Law No 228/2012. On the basis of that declaration, concerning transactions involving derivative financial instruments referred to in Article 1(492) of that law carried out during the 2013 tax year by the French parent company, the amount of that tax stood at EUR 55207.
On 1 August 2014 Société Générale applied to the Tax Office for reimbursement of the sums paid in respect of that tax, arguing that in so far as Law No 228/2012 provides for the taxation of financial transactions involving derivative financial instruments where the security underlying such instruments has been issued by an entity established in Italy, it is contrary to the Italian Constitution, in particular the principles of formal equality and taxpaying ability enshrined in Articles 3 and 53 thereof, respectively, and is also contrary to customary international law, applicable in the Italian legal system under Article 10 of the Italian Constitution, and to EU law, in particular Articles 18, 56 and 63 TFEU.
On 28 January 2015, having had no reply from the Tax Office, Société Générale brought an action before the Commissione tributaria provinciale di Milano (Provincial Tax Court, Milan, Italy) against that tacit decision refusing reimbursement, based on the same arguments. By judgment of 18 May 2016, that court dismissed the action, considering that Law No 228/2012 was neither unconstitutional nor contrary to EU law. Regarding the constitutionality of Article 1(492) of Law No 228/2012, that court held that there was an effective and objective economic link between the chargeable event giving rise to the tax introduced by that provision, namely trading leading to the conclusion of a derivative financial instrument, expressing a taxpaying ability, and the Italian State, and an indissoluble link between the value of such an instrument and the value of the security underlying it. Moreover, the taxation only of transactions involving underlying securities could lead to evasion of the tax and there was no infringement of the international principle of territoriality and fiscal sovereignty. As for the possible incompatibility of that law with EU law, the court found that there was no such incompatibility, given the lack of differentiated tax regimes between taxable persons in Italy and those established in other Member States.
Société Générale brought an appeal against that judgment before the referring court, the Commissione tributaria regionale per la Lombardia (Regional Tax Court, Lombardy, Italy), requesting reimbursement of the tax paid on the basis of the same arguments as those raised before the court of first instance and, in the alternative, requesting referral of the case to the Corte costituzionale (Constitutional Court, Italy) and to the Court of Justice for a preliminary ruling.
The referring court explains that the purpose of the financial transaction tax introduced by Article 1(491) to (500) of Law No 228/2012 is to ensure that entities which carry out transactions involving financial instruments in their respective markets and which have a link to Italian territory contribute to public expenditure.
That court notes that there is symmetry between paragraphs 491 and 492 of Article 1 of that law – the former refers to shares and participating financial instruments issued by companies established in Italy as well as securities representing those instruments and the latter to derivative financial instruments which have as their underlying security one or more of the shares and instruments mentioned in paragraph 491 of that article, or the value of which is linked to those shares and instruments – since both paragraphs provide that the tax is payable, albeit according to different calculation methods, irrespective of the place where the transaction is concluded and the State in which the contracting parties are resident.
The referring court also notes that any financial operator carrying out transactions involving such derivative financial instruments benefits from the value of the underlying security, the existence of which depends on the existence of the Italian legal system regulating the issuing of that security. Therefore, the Italian legislature is correct in its view that there is an indissociable economic link between those instruments and the legal system of that Member State. That court adds that it disagrees with Société Générale’s argument that there is no territorial link between the tax provided for in Article 1(492) of Law No 228/2012 and the Italian legal system.
The referring court questions, however, whether Law No 228/2012 complies with the principles of EU law in so far as it imposes a tax and administrative and reporting obligations on transactions carried out between non-resident entities, through the intermediary of entities that are also non-resident, involving derivative financial instruments based on securities issued by a resident company, given that transactions involving those underlying securities are subject to a similar tax.
In particular, the referring court questions whether the tax provided for in Article 1(491) and (492) of Law No 228/2012 is, as Société Générale claims, liable to discriminate between resident and non-resident taxable persons and obstruct the freedom to provide services and the free movement of capital.
In those circumstances, the Commissione tributaria regionale per la Lombardia (Regional Tax Court, Lombardy) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:
‘Do Articles 18, 56 and 63 TFEU preclude national legislation from charging a tax on financial transactions – irrespective of the State of residence of the financial market participants and the intermediary – which is payable by the counterparties to the transaction and consists of a fixed amount which rises incrementally in ranges of trading values and which varies according to the type of instrument traded and the value of the contract, and which is due by virtue of the fact that the taxable transactions concern the trading of a derivative based on a security issued by a company resident in the State imposing that tax?’
Consideration of the question referred
By its question, the referring court asks, in essence, whether Articles 18, 56 and 63 TFEU are to be interpreted as precluding legislation of a Member State which imposes a tax and administrative and reporting obligations on financial transactions involving derivative financial instruments, for which the parties to the transaction are liable, irrespective of the place where the transaction is concluded or the State in which those parties and any intermediaries involved in the execution of the transaction are resident, where those instruments are based on a security issued by a company established in that Member State.
As a preliminary point, it should be borne in mind that Article 18 TFEU applies independently only to situations governed by EU law for which the Treaty lays down no specific rules of non-discrimination. However, the Treaty lays down such a specific rule, in particular, in Article 56 TFEU in relation to the freedom to provide services (see, to that effect, judgment of19 June 2014, Strojírny Prostějov and ACO Industries Tábor,
C‑53/13 and C‑80/13
,
EU:C:2014:2011
, paragraph
and the case-law cited) and in Article 63 TFEU in relation to the free movement of capital (see, to that effect, order of 6 September 2018, Patrício Teixeira,
C‑184/18
, not published,
EU:C:2018:694
, paragraphs
and
and the case-law cited).
That said, as regards, first of all, the freedom applicable to the facts of the dispute in the main proceedings, the referring court mentions the freedom to provide services and the free movement of capital.
It must be stated that legislation of a Member State which taxes transactions involving derivative financial instruments, such as Article 1(492) of Law No 228/2012, falls within the scope of the free movement of capital where the tax applies to financial transactions implementing capital movements. Such legislation is also liable to affect the freedom to provide services, inasmuch as it may have an impact on financial services involving securities issued by companies established in that Member State and offered in another Member State.
It is settled case-law that, where a national measure relates to the freedom to provide services and the free movement of capital at the same time, the Court will in principle examine the measure in dispute in relation to only one of those two freedoms if it appears, in the circumstances of the case in the main proceedings, that one of them is entirely secondary in relation to the other and may be considered together with it (see, to that effect, judgments of 3 October 2006, Fidium Finanz,
C‑452/04
,
EU:C:2006:631
, paragraph
; of 26 May 2016, NN (L) International,
C‑48/15
,
EU:C:2016:356
, paragraph
; and of 8 June 2017, Van der Weegen and Others,
C‑580/15
,
EU:C:2017:429
, paragraph
).
In the circumstances of the case in the main proceedings, the freedom to provide services appears to be secondary in relation to the free movement of capital. The legal conditions for the tax at issue, which concerns financial transactions, apply irrespective of whether or not those transactions involve a supply of services. In addition, the referring court is uncertain as to the possible restrictive effects which might result from the very introduction of such a tax, without identifying which aspects of it might specifically affect such a supply. Lastly, according to the information set out in the request for a preliminary ruling, Société Générale paid the relevant tax in its capacity as a financial operator participating in the transactions at issue in the main proceedings, although no further information regarding those transactions or its involvement therein has been provided. In particular, the request does not state on what basis and for what purposes those transactions were traded.
It follows that the question referred must be examined in the light of the free movement of capital.
Next, in accordance with the Court’s case-law, the measures prohibited by Article 63(1) TFEU, as restrictions on the movement of capital, include those that are such as to discourage non-residents from making investments in a Member State or to discourage that Member State’s residents from doing so in other States (judgments of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen,
C‑436/08 and C‑437/08
,
EU:C:2011:61
, paragraph
, and of 18 January 2018, Jahin,
C‑45/17
,
EU:C:2018:18
, paragraph
and the case-law cited).
The right which Member States derive from Article 65(1)(a) TFEU to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested is a derogation from the fundamental principle of the free movement of capital. That derogation is itself limited by Article 65(3) TFEU, according to which the national provisions referred to in Article 65(1) ‘shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 63 [TFEU]’ (see, to that effect, judgment of 22 November 2018, Sofina and Others,
C‑575/17
,
EU:C:2018:943
, paragraph
and the case-law cited).
The Court has also held that a distinction must therefore be made between the differences in treatment authorised by Article 65(1)(a) TFEU and discrimination prohibited by Article 65(3) TFEU. Before national tax legislation can be regarded as compatible with the provisions of the Treaty on the free movement of capital, the difference in treatment must concern situations which are not objectively comparable or be justified by an overriding reason in the public interest (judgment of 22 November 2018, Sofina and Others,
C‑575/17
,
EU:C:2018:943
, paragraph
and the case-law cited).
In addition, it is settled case-law that discrimination can also arise through the application of the same rule to different situations (judgment of 6 December 2007, Columbus Container Services,
C‑298/05
,
EU:C:2007:754
, paragraph
and the case-law cited).
Lastly, it should be borne in mind that, in order to establish whether discrimination exists, the comparability of a cross-border situation with an internal situation within a Member State must be examined having regard to the aim pursued by the national provisions at issue (judgment of 26 February 2019, X (Controlled companies established in third countries),
C‑135/17
,
EU:C:2019:136
, paragraph
and the case-law cited).
In the present case, Société Générale maintains that the tax provided for in Article 1(492) of Law No 228/2012 introduces discrimination between residents and non-residents and restrictions on the free movement of capital.
That company claims that that provision treats the situation of residents and non-residents liable for that tax in the same way, even though their situations are different, and makes it less attractive for non-residents to invest in derivative financial instruments based on a security issued by a company established in Italy than to invest in such instruments based on a security emanating from another State. This creates a barrier to access to the market for those derivative financial instruments, particularly as the implementation of that tax entails administrative and reporting obligations over and above those imposed in the States in which the financial operators and any intermediaries are resident.
In that regard, it should be noted that it is apparent from the information set out in the request for a preliminary ruling that the tax provided for in Article 1(492) of Law No 228/2012 concerns financial transactions involving derivative financial instruments with a link to the Italian State. That tax is payable irrespective of the place where the transaction is concluded or the State in which the parties thereto and any intermediaries are resident, so that resident and non-resident entities are subject to identical tax rules.
In particular, that tax applies in the same way to resident and non-resident financial operators and to transactions concluded in the State of taxation or in another State. It varies according not to the place where the transactions are concluded or the State in which the parties or any intermediaries are resident, but to the amount of those transactions and the type of instrument in question. It thus appears that transactions which occur in a domestic context are, for tax purposes, treated in the same way as similar transactions of a cross-border nature and that no difference in treatment between the respective situations of resident and non-resident entities can be established.
As regards the comparability of the situations, the referring court states that the national legislation at issue in the main proceedings pursues the objective of ensuring that entities which carry out financial transactions involving the financial instruments covered by that legislation contribute to public expenditure. In the light of that objective, contrary to Société Générale’s assertions, resident and non-resident entities which participate in transactions involving derivative financial instruments based on a security issued in Italy, and which are subject to tax under that national legislation, are in a comparable situation.
By contrast, as the Advocate General stated in point 52 of his Opinion, in view of that objective, derivative financial instruments based on securities governed by Italian law which are subject to that tax are not comparable to those based on securities not governed by Italian law to which the tax does not apply.
It follows from the foregoing that the tax provided for in Article 1(492) of Law No 228/2012 does not appear to entail discrimination prohibited by Article 65(3) TFEU.
In so far as Société Générale claims that the difference in treatment under the Italian rules between derivative financial instruments based on securities governed by Italian law and those based on securities not governed by Italian law makes investment in the former less attractive, it should be borne in mind that the Court has held on many occasions that, in the absence of harmonisation at EU level, the disadvantages which could arise from the tax competences of the various Member States do not, to the extent that the exercise of those competences is not discriminatory, constitute restrictions on the freedom of movement and, moreover, that the Member States are not obliged to adapt their own tax systems to the different tax systems of other Member States (judgment of 26 May 2016, NN (L) International,
C‑48/15
,
EU:C:2016:356
, paragraph
and the case-law cited).
In particular, free movement cannot be understood as meaning that a Member State is required to adjust its tax rules on the basis of those of other Member States in order to ensure, in all circumstances, taxation which removes any disparities arising from national tax rules, given that the decisions made by a taxpayer as to investment in another Member State may be to the taxpayer’s advantage or not, according to circumstances (judgment of 30 January 2020, Köln-Aktienfonds Deka,
C‑156/17
,
EU:C:2020:51
, paragraph
).
Accordingly, as the Italian Government and the Commission contend in their written observations, the tax provided for in Article 1(492) of Law No 228/2012 cannot be regarded as a restriction on the free movement of capital.
As regards the existence of reporting and administrative obligations associated with the payment of that tax, it should be observed that the referring court did not expand on that subject in the request for a preliminary ruling and, in particular, did not identify the obligations involved or mention the relevant applicable provisions. In any event, as the Advocate General noted in point 53 of his Opinion, there is nothing in that request to suggest that the obligations on non-resident entities differ from those imposed on resident entities, or that those obligations go beyond what is necessary for the collection of the tax provided for in Article 1(492) of Law No 228/2012.
As regards the latter aspect, the Court has held that the need to ensure the effective collection of tax is a legitimate objective capable of justifying a restriction on fundamental freedoms. A Member State may therefore apply measures which enable the amount of the tax payable to be ascertained clearly and precisely, provided, however, that those measures are appropriate for securing attainment of the objective pursued and do not go beyond what is necessary for that purpose (see, to that effect, judgments of 15 May 1997, Futura Participations and Singer,
C‑250/95
,
EU:C:1997:239
, paragraph
, and of 22 November 2018, Sofina and Others,
C‑575/17
,
EU:C:2018:943
, paragraph
). It is for the referring court to carry out the necessary verifications in that respect.
In the light of all the foregoing considerations, the answer to the question referred is that Article 63 TFEU must be interpreted as not precluding legislation of a Member State which charges a tax on financial transactions involving derivative financial instruments, payable by the parties to the transaction, irrespective of the place where the transaction is concluded or the State in which those parties and any intermediaries involved in the execution of that transaction are resident, where those instruments are based on a security issued by a company established in that Member State. The administrative and reporting obligations for non-resident entities entailed by that tax must not, however, go beyond what is necessary for the collection of that tax.
Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Second Chamber) hereby rules:

Article 63 TFEU must be interpreted as not precluding legislation of a Member State which charges a tax on financial transactions involving derivative financial instruments, payable by the parties to the transaction, irrespective of the place where the transaction is concluded or the State in which those parties and any intermediaries involved in the execution of that transaction are resident, where those instruments are based on a security issued by a company established in that Member State. The administrative and reporting obligations for non-resident entities entailed by that tax must not, however, go beyond what is necessary for the collection of that tax.

[Signatures]
(
*1
)	Language of the case: Italian.