# C_2005182EN.01002701.xml

| 23.7.2005 | EN | Official Journal of the European Union | C 182/27 |
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Reference for a preliminary ruling from the High Court of Justice (England and Wales), Chancery Division, by order of that court of 18 March 2005 in The Test Claimants in the CFC and Dividend Group Litigation v Commissioners of Inland Revenue

(Case C-201/05)

(2005/C 182/50)

Language of the case: English

Reference has been made to the Court of Justice of the European Communities by order of the High Court of Justice (England and Wales), Chancery Division of 18 March 2005, received at the Court Registry on 6 May 2005, for a preliminary ruling in the proceedings between The Test Claimants in the CFC and Dividend Group Litigation and Commissioners of Inland Revenue on the following questions:

| 1. | Is it contrary to Articles 43 or 56 of the EC Treaty for a Member State to keep in force and apply measures which:
(i)
exempt from corporation tax dividends received by a company resident in that Member State (‘the resident company’) from other resident companies; but which (ii)
subject to corporation tax dividends received by the resident company from a company resident in another Member State and in particular a company controlled by it resident in another Member State and subject to a lower level of taxation there (‘the controlled company’), after giving double taxation relief for any withholding tax payable on the dividend and for the underlying tax paid by the controlled company on its profits? | (i) | exempt from corporation tax dividends received by a company resident in that Member State (‘the resident company’) from other resident companies; but which | (ii) | subject to corporation tax dividends received by the resident company from a company resident in another Member State and in particular a company controlled by it resident in another Member State and subject to a lower level of taxation there (‘the controlled company’), after giving double taxation relief for any withholding tax payable on the dividend and for the underlying tax paid by the controlled company on its profits? |
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| (i) | exempt from corporation tax dividends received by a company resident in that Member State (‘the resident company’) from other resident companies; but which | | | | |
| (ii) | subject to corporation tax dividends received by the resident company from a company resident in another Member State and in particular a company controlled by it resident in another Member State and subject to a lower level of taxation there (‘the controlled company’), after giving double taxation relief for any withholding tax payable on the dividend and for the underlying tax paid by the controlled company on its profits? | | | | |

| 2. | Do Articles 43, 49 or 56 of the EC Treaty preclude national tax legislation such as that in issue in the main proceedings under which, prior to 1st July 1997:
(i)
certain dividends received by an insurance company resident in a Member State from a company resident in another Member State (‘the non-resident company’) were chargeable to corporation tax; but (ii)
the resident insurance company was allowed to elect that corresponding dividends received from a company resident in the same Member State should not be chargeable to corporation tax, with the further consequence that a company which had made the election was unable to claim payment of the tax credit to which it would otherwise have been entitled? | (i) | certain dividends received by an insurance company resident in a Member State from a company resident in another Member State (‘the non-resident company’) were chargeable to corporation tax; but | (ii) | the resident insurance company was allowed to elect that corresponding dividends received from a company resident in the same Member State should not be chargeable to corporation tax, with the further consequence that a company which had made the election was unable to claim payment of the tax credit to which it would otherwise have been entitled? |
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| (i) | certain dividends received by an insurance company resident in a Member State from a company resident in another Member State (‘the non-resident company’) were chargeable to corporation tax; but | | | | |
| (ii) | the resident insurance company was allowed to elect that corresponding dividends received from a company resident in the same Member State should not be chargeable to corporation tax, with the further consequence that a company which had made the election was unable to claim payment of the tax credit to which it would otherwise have been entitled? | | | | |

| 3. | Do Articles 43, 49 or 56 of the EC Treaty preclude national tax legislation in a Member State such as that in issue in the main proceedings which:
a)
provides in specified circumstances for the imposition of a charge to tax upon the resident company in respect of the profits of a controlled company being a company resident in another Member State as defined in Question 1 (ii) above; and b)
imposes certain compliance requirements where the resident company does not seek or is not able to claim any exemption and pays tax in respect of the profits of that controlled company; and c)
imposes further compliance requirements where the resident company seeks to obtain exemption from that tax? | a) | provides in specified circumstances for the imposition of a charge to tax upon the resident company in respect of the profits of a controlled company being a company resident in another Member State as defined in Question 1 (ii) above; and | b) | imposes certain compliance requirements where the resident company does not seek or is not able to claim any exemption and pays tax in respect of the profits of that controlled company; and | c) | imposes further compliance requirements where the resident company seeks to obtain exemption from that tax? |
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| a) | provides in specified circumstances for the imposition of a charge to tax upon the resident company in respect of the profits of a controlled company being a company resident in another Member State as defined in Question 1 (ii) above; and | | | | | | |
| b) | imposes certain compliance requirements where the resident company does not seek or is not able to claim any exemption and pays tax in respect of the profits of that controlled company; and | | | | | | |
| c) | imposes further compliance requirements where the resident company seeks to obtain exemption from that tax? | | | | | | |

| 4. | Would the answer to Questions 1, 2 or 3 be different if the controlled company (in Questions 1 and 3) or the non-resident company (in Question 2) was resident in a third country? |
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| 5. | Where, prior to 31 December 1993, a Member State adopted the measures outlined in Questions 1, 2 and 3, and after that date amended those measures in the manner described in Part C of this Schedule, and if those measures as amended constitute restrictions prohibited by Article 56 of the EC Treaty, are those restrictions to be taken to be restrictions which did not exist on the 31 December 1993 for the purposes of Article 57 EC? |
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| 6. | In the event that any of the measures referred to in Questions 1, 2 and 3 are contrary to the Community provisions referred to, then in circumstances where the resident company and/or the controlled company make any of the following claims:
(i)
a claim for repayment of (or the loss of use of money paid as) corporation tax unlawfully levied on the resident company in the circumstances referred to in Questions 1, 2 or 3 above; (ii)
a claim for restitution and/or compensation in respect of losses, reliefs and expenses that were used by the resident company (or surrendered to the resident company by other companies in the same group resident in the same Member State) to eliminate or reduce taxation charges incurred by virtue of the measures referred to in Questions 1, 2 and 3 above where such losses, reliefs and expenses would have been available for alternative use or could have been carried forward; (iii)
a claim for compensation for costs, losses, expenses and liabilities incurred in complying with the domestic legislation referred to in Question 3 above; (iv)
where a controlled company has distributed reserves to the resident company to meet the requirements of the national legislation as an alternative to the resident company incurring the charge referred to in Question 3, and the controlled company has incurred costs, expenses and liabilities in doing so which it could have avoided had it been able to put those reserves to alternative use, a claim for compensation for those costs, expenses and liabilities. are such claims to be regarded as:
a claim for repayment of sums unduly levied which arise as a consequence of, and adjunct to, the breach of the abovementioned Community provisions; or a claim for compensation or damages such that the conditions set out in Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame must be satisfied; or a claim for payment of an amount representing a benefit unduly denied? | (i) | a claim for repayment of (or the loss of use of money paid as) corporation tax unlawfully levied on the resident company in the circumstances referred to in Questions 1, 2 or 3 above; | (ii) | a claim for restitution and/or compensation in respect of losses, reliefs and expenses that were used by the resident company (or surrendered to the resident company by other companies in the same group resident in the same Member State) to eliminate or reduce taxation charges incurred by virtue of the measures referred to in Questions 1, 2 and 3 above where such losses, reliefs and expenses would have been available for alternative use or could have been carried forward; | (iii) | a claim for compensation for costs, losses, expenses and liabilities incurred in complying with the domestic legislation referred to in Question 3 above; | (iv) | where a controlled company has distributed reserves to the resident company to meet the requirements of the national legislation as an alternative to the resident company incurring the charge referred to in Question 3, and the controlled company has incurred costs, expenses and liabilities in doing so which it could have avoided had it been able to put those reserves to alternative use, a claim for compensation for those costs, expenses and liabilities. | | a claim for repayment of sums unduly levied which arise as a consequence of, and adjunct to, the breach of the abovementioned Community provisions; or | | a claim for compensation or damages such that the conditions set out in Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame must be satisfied; or | | a claim for payment of an amount representing a benefit unduly denied? |
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| (i) | a claim for repayment of (or the loss of use of money paid as) corporation tax unlawfully levied on the resident company in the circumstances referred to in Questions 1, 2 or 3 above; | | | | | | | | | | | | | | |
| (ii) | a claim for restitution and/or compensation in respect of losses, reliefs and expenses that were used by the resident company (or surrendered to the resident company by other companies in the same group resident in the same Member State) to eliminate or reduce taxation charges incurred by virtue of the measures referred to in Questions 1, 2 and 3 above where such losses, reliefs and expenses would have been available for alternative use or could have been carried forward; | | | | | | | | | | | | | | |
| (iii) | a claim for compensation for costs, losses, expenses and liabilities incurred in complying with the domestic legislation referred to in Question 3 above; | | | | | | | | | | | | | | |
| (iv) | where a controlled company has distributed reserves to the resident company to meet the requirements of the national legislation as an alternative to the resident company incurring the charge referred to in Question 3, and the controlled company has incurred costs, expenses and liabilities in doing so which it could have avoided had it been able to put those reserves to alternative use, a claim for compensation for those costs, expenses and liabilities. | | | | | | | | | | | | | | |
| | a claim for repayment of sums unduly levied which arise as a consequence of, and adjunct to, the breach of the abovementioned Community provisions; or | | | | | | | | | | | | | | |
| | a claim for compensation or damages such that the conditions set out in Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame must be satisfied; or | | | | | | | | | | | | | | |
| | a claim for payment of an amount representing a benefit unduly denied? | | | | | | | | | | | | | | |

| 7. | In the event that the answer to any part of Question 6 is that the claim is a claim for payment of an amount representing a benefit unduly denied:
a)
are such claims a consequence of, and an adjunct to, the right conferred by the abovementioned Community provisions; or b)
must some or all of the conditions for recovery laid down in Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame be satisfied; or c)
must some other conditions be met? | a) | are such claims a consequence of, and an adjunct to, the right conferred by the abovementioned Community provisions; or | b) | must some or all of the conditions for recovery laid down in Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame be satisfied; or | c) | must some other conditions be met? |
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| a) | are such claims a consequence of, and an adjunct to, the right conferred by the abovementioned Community provisions; or | | | | | | |
| b) | must some or all of the conditions for recovery laid down in Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame be satisfied; or | | | | | | |
| c) | must some other conditions be met? | | | | | | |

| 8. | Does it make any difference whether as a matter of domestic law the claims referred to in Question 6 are brought as restitutionary claims or are brought, or have to be brought, as claims for damages? |
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| 9. | What guidance, if any, does the Court of Justice think it appropriate to provide in the present cases as to which circumstances the national court ought to take into consideration when it comes to determine whether there is a sufficiently serious breach within the meaning of the judgment in Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame, in particular as to whether, given the state of the case law on the interpretation of the relevant Community provisions, the breach was excusable? |
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| 10. | As a matter of principle, can there be a direct causal link (within the meaning of the judgment in Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame) between any breach of Articles 43, 49 and 56 EC and the losses falling into the categories identified in Question 6 (i) to (iv) above that are claimed to flow from it? If so, what guidance, if any, does the Court of Justice think it appropriate to provide as to the circumstances which the national court should take into account in determining whether such a direct causal link exists? |
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| 11. | In determining the loss or damage for which reparation may be granted, is it open to the national court to have regard to the question of whether injured persons showed reasonable diligence in order to avoid or limit their loss, in particular by availing themselves of legal remedies which could have established that the national provisions did not [by reason of the application of double taxation conventions) have the effect of imposing the obligations set out in Questions 1, 2 and 3 above? |
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| 12. | Is the answer to Question 11 above affected by the beliefs of the parties at the relevant times as to the effect of the double taxation conventions? |
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