# C_2005182EN.01002901.xml

| 23.7.2005 | EN | Official Journal of the European Union | C 182/29 |
| --------- | -- | -------------------------------------- | -------- |

---

Reference for a preliminary ruling from the Special Commissioners by order of that court of 3 May 2005 in Vodafone 2 v Her Majesty's Revenue and Customs

(Case C-203/05)

(2005/C 182/51)

Language of the case: English

Reference has been made to the Court of Justice of the European Communities by direction of the the Special Commissioners of 3 May 2005, received at the Court Registry on 9 May 2005, for a preliminary ruling in the proceedings between Vodafone 2 and Her Majesty's Revenue and Customs on the following questions:

| 1. | Do Articles 43, 49 and/or 56 of the EC Treaty preclude national tax legislation such as that at issue in the main proceedings which provides in specified circumstances for the imposition of a charge to tax upon a company resident in that Member State (‘the Resident Company’) in respect of the profits of a company controlled by it (‘the Controlled Company’) which is resident in another Member State and subject to a lower level of taxation, and in particular:
1.1
imposes such a charge unless the Resigent Company is able to establish that an exemption from that legislation applies to the Controlled Company; 1.2
provides for exemptions from the imposition of such a charge but in terms which give scope for uncertainty as to the availability in practice of an exemption upon the establishment of the Controlled Company or thereafter; 1.3
imposes certain compliance requirements, where the Resident Company does not seek or is not able to claim any such exemption and pays tax in respect of the profits of that Controlled Company; 1.4
imposes compliance requirements where the Resident Company seeks to obtain exemption from that charge to tax which may include the obligation to review and consider the application of the legislation in respect of all of its Controlled Companies and thereafter in each year to monitor the activities of each of its Controlled Companies to ensure qualification for exemption continues; 1.5
imposes in all cases administrative and cost burdens (which may be considerable) on the Resident Company, and in each case, the consequences referred to do not apply in respect of any company established in the Member State in which the Resident Company is established? | 1.1 | imposes such a charge unless the Resigent Company is able to establish that an exemption from that legislation applies to the Controlled Company; | 1.2 | provides for exemptions from the imposition of such a charge but in terms which give scope for uncertainty as to the availability in practice of an exemption upon the establishment of the Controlled Company or thereafter; | 1.3 | imposes certain compliance requirements, where the Resident Company does not seek or is not able to claim any such exemption and pays tax in respect of the profits of that Controlled Company; | 1.4 | imposes compliance requirements where the Resident Company seeks to obtain exemption from that charge to tax which may include the obligation to review and consider the application of the legislation in respect of all of its Controlled Companies and thereafter in each year to monitor the activities of each of its Controlled Companies to ensure qualification for exemption continues; | 1.5 | imposes in all cases administrative and cost burdens (which may be considerable) on the Resident Company, |
| --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --- | --------------------------------------------------------------------------------------------------------- |
| 1.1 | imposes such a charge unless the Resigent Company is able to establish that an exemption from that legislation applies to the Controlled Company; | | | | | | | | | | |
| 1.2 | provides for exemptions from the imposition of such a charge but in terms which give scope for uncertainty as to the availability in practice of an exemption upon the establishment of the Controlled Company or thereafter; | | | | | | | | | | |
| 1.3 | imposes certain compliance requirements, where the Resident Company does not seek or is not able to claim any such exemption and pays tax in respect of the profits of that Controlled Company; | | | | | | | | | | |
| 1.4 | imposes compliance requirements where the Resident Company seeks to obtain exemption from that charge to tax which may include the obligation to review and consider the application of the legislation in respect of all of its Controlled Companies and thereafter in each year to monitor the activities of each of its Controlled Companies to ensure qualification for exemption continues; | | | | | | | | | | |
| 1.5 | imposes in all cases administrative and cost burdens (which may be considerable) on the Resident Company, | | | | | | | | | | |

| 2. | Would the answer to the Question put at 1 be different if:
2.1
the Controlled Company carried out only minimal activities in the Member State in which it is resident; or 2.2
only a minimal part of the profits of the Controlled Company are subject to tax in the Member State in which it is resident; or 2.3
the Controlled Company was established as part of an artificial scheme to avoid tax, and, if so, what are the indicia of such an artificial scheme? | 2.1 | the Controlled Company carried out only minimal activities in the Member State in which it is resident; or | 2.2 | only a minimal part of the profits of the Controlled Company are subject to tax in the Member State in which it is resident; or | 2.3 | the Controlled Company was established as part of an artificial scheme to avoid tax, and, if so, what are the indicia of such an artificial scheme? |
| --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ---------------------------------------------------------------------------------------------------------- | --- | ------------------------------------------------------------------------------------------------------------------------------- | --- | --------------------------------------------------------------------------------------------------------------------------------------------------- |
| 2.1 | the Controlled Company carried out only minimal activities in the Member State in which it is resident; or | | | | | | |
| 2.2 | only a minimal part of the profits of the Controlled Company are subject to tax in the Member State in which it is resident; or | | | | | | |
| 2.3 | the Controlled Company was established as part of an artificial scheme to avoid tax, and, if so, what are the indicia of such an artificial scheme? | | | | | | |

| 3. | Are there circumstances in which:
3.1
the Resident Company may not rely on rights derived from Article 43 and/or Article 56 EC; or 3.2
no rights derived from Article 43 and/or Article 56 EC accrue to the Resident Company; on the ground that such reliance or the accrual of such rights would be an abuse of those rights? If there are such circumstances, what guidance does the Court of Justice consider it appropriate to give as to how the Special Commissioners should determine, in the factual context of this case, whether there are such circumstances or whether there is such an abuse? | 3.1 | the Resident Company may not rely on rights derived from Article 43 and/or Article 56 EC; or | 3.2 | no rights derived from Article 43 and/or Article 56 EC accrue to the Resident Company; |
| --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | -------------------------------------------------------------------------------------------- | --- | -------------------------------------------------------------------------------------- |
| 3.1 | the Resident Company may not rely on rights derived from Article 43 and/or Article 56 EC; or | | | | |
| 3.2 | no rights derived from Article 43 and/or Article 56 EC accrue to the Resident Company; | | | | |

| 4. | Do Articles 56 and 58(1 )(a) of the EC Treaty and Declaration No. 7 of the Maastricht Treaty preclude national tax legislation of a Member State such as that at issue in the main proceedings where one or more exemptions to the application of that legislation would be available but for an amendment to such legislation having effect after 1 January 1994? |
| -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |

| 5. | Do Articles 43, 49 and/or 56 of the EC Treaty preclude national tax legislation such as that at issue in the main proceedings where that legislation would not apply if the Resident Company capitalised the Controlled Company with debt rather than equity? |
| -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |

| 6. | Do Articles 43, 49 and/or 56 of the EC Treaty preclude national tax legislation such as that at issue in the main proceedings where one or more exemptions to the application of that legislation would be available if the Controlled Company's income in the other Member State either:
6.1
comprised income from sources within that Member State and not from another Member State or other jurisdictions; or 6.2
comprised dividend income instead of interest income from the same company? | 6.1 | comprised income from sources within that Member State and not from another Member State or other jurisdictions; or | 6.2 | comprised dividend income instead of interest income from the same company? |
| --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ------------------------------------------------------------------------------------------------------------------- | --- | --------------------------------------------------------------------------- |
| 6.1 | comprised income from sources within that Member State and not from another Member State or other jurisdictions; or | | | | |
| 6.2 | comprised dividend income instead of interest income from the same company? | | | | |

---