# C_2006261EN.01000202.xml

| 28.10.2006 | EN | Official Journal of the European Union | C 261/2 |
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28.10.2006

EN

Official Journal of the European Union

C 261/2

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Judgment of the Court (First Chamber) of 7 September 2006 (reference for a preliminary ruling from the Gerechtshof te Arnhem (Netherlands)) — N v Inspecteur van de Belastingdienst Oost/kantoor Almelo

(Case C-470/04) (1)

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(Freedom of movement for persons - Article 18 EC - Freedom of establishment - Article 43 EC - Direct taxation - Taxation of notional increases in value of substantial shareholdings where tax residence transferred to another Member State)

(2006/C 261/04)

Language of the case: Dutch

Referring court

Gerechtshof te Arnhem (Netherlands)

Parties to the main proceedings

Applicant: N

Applicant:

Defendant: Inspecteur van de Belastingdienst Oost/kantoor Almelo

Defendant:

Re:

Reference for a preliminary ruling from the Gerechtshof te Arnhem — Free movement of persons — Freedom of establishment — Tax charge resulting from the transfer of residence to another Member State — Pursuit of an economic activity in the latter state — Income tax on the basis of deemed profit from the sale of a substantial shareholding in a company — Provision of a guarantee in order to obtain deferment of payment — Articles 18 EC and 43 EC

Operative part of the judgment

The Court:

| 1. | A Community national, such as the applicant in the main proceedings, who has been living in one Member State since the transfer of his residence and who holds all the shares of companies established in another Member State, may rely on Article 43 EC. |
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1.

A Community national, such as the applicant in the main proceedings, who has been living in one Member State since the transfer of his residence and who holds all the shares of companies established in another Member State, may rely on Article 43 EC.

| 2. | Article 43 EC must be interpreted as precluding a Member State from establishing a system for taxing increases in value in the case of a taxpayer's transferring his residence outside that Member State, such as the system at issue in the main proceedings, which makes the granting of deferment of the payment of that tax conditional on the provision of guarantees and does not take full account of reductions in value capable of arising after the transfer of residence by the person concerned and which were not taken into account by the host Member State. |
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2.

Article 43 EC must be interpreted as precluding a Member State from establishing a system for taxing increases in value in the case of a taxpayer's transferring his residence outside that Member State, such as the system at issue in the main proceedings, which makes the granting of deferment of the payment of that tax conditional on the provision of guarantees and does not take full account of reductions in value capable of arising after the transfer of residence by the person concerned and which were not taken into account by the host Member State.

| 3. | An obstacle arising from a requirement, in breach of Community law, that a guarantee be constituted cannot be raised with retroactive effect merely by releasing that guarantee. The form of the document on the basis of which the guarantee was released is immaterial to that assessment. Where a Member State makes provision for the payment of interest on arrears where a guarantee demanded in breach of national law is released, such interest is also due in the case of an infringement of Community law. Moreover, it is for the national court to assess, in accordance with the guidelines provided by the Court of Justice and in compliance with the principles of equivalence and effectiveness, whether the Member State is liable on account of the damage caused by the obligation to constitute such a guarantee. |
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3.

An obstacle arising from a requirement, in breach of Community law, that a guarantee be constituted cannot be raised with retroactive effect merely by releasing that guarantee. The form of the document on the basis of which the guarantee was released is immaterial to that assessment. Where a Member State makes provision for the payment of interest on arrears where a guarantee demanded in breach of national law is released, such interest is also due in the case of an infringement of Community law. Moreover, it is for the national court to assess, in accordance with the guidelines provided by the Court of Justice and in compliance with the principles of equivalence and effectiveness, whether the Member State is liable on account of the damage caused by the obligation to constitute such a guarantee.

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(1)  OJ C 31, 05.02.2005.

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