# C_2006060EN.01000602.xml

| 11.3.2006 | EN | Official Journal of the European Union | C 60/6 |
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11.3.2006

EN

Official Journal of the European Union

C 60/6

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JUDGMENT OF THE COURT

JUDGMENT OF THE COURT

(Third Chamber)

of 19 January 2006

in Case C-265/04: Reference for a preliminary ruling from the Kammarrätten i Sundsvall in Margaretha Bouanich v Skatteverket (1)

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(Direct taxation - Free movement of capital - Dividend tax - Share repurchase - Deductibility of the cost of acquisition of shares - Separate treatment of residents and non-residents - Agreement for the avoidance of double taxation)

(2006/C 60/12)

Language of the case: Swedish

In Case C-265/04: Reference for a preliminary ruling under Article 234 EC from the Kammarrätten i Sundsvall (Sweden ), made by decision of 17 June 2004, received at the Court on 24 June 2004, in the proceedings Margaretha Bouanich v Skatteverket — the Court (Third Chamber), composed of A. Rosas, President of the Chamber, J. Malenovský, S. von Bahr, A. Borg Barthet and U. Lõhmus (Rapporteur), Judges; J. Kokott, Advocate General; R. Grass, Registrar, gave a judgment on 19 January 2006, the operative part of which is as follows:

Margaretha Bouanich

Skatteverket

| 1. | Articles 56 EC and 58 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which provides that a payment in respect of a share repurchase to a non-resident shareholder in connection with a reduction in share capital is taxed as a dividend without there being a right to deduct the cost of acquisition of those shares, whereas the same payment made to a resident shareholder is taxed as a capital gain with a right to deduct the cost of acquisition. |
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1.

Articles 56 EC and 58 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which provides that a payment in respect of a share repurchase to a non-resident shareholder in connection with a reduction in share capital is taxed as a dividend without there being a right to deduct the cost of acquisition of those shares, whereas the same payment made to a resident shareholder is taxed as a capital gain with a right to deduct the cost of acquisition.

| 2. | Articles 56 EC and 58 EC must be interpreted as precluding national legislation which derives from a double taxation agreement, such as the Agreement between the Government of the French Republic and the Government of the Kingdom of Sweden for the Avoidance of Double Taxation and the Prevention of Tax Evasion in respect of Taxes on Income and Wealth, signed on 27 November 1990, which fixes a lower ceiling on the taxation of dividends for non-resident shareholders than for resident shareholders, and, by interpreting that agreement in the light of the commentaries of the Organisation for Economic Cooperation and Development on its applicable model convention, permits the nominal value of such shares to be deducted from the share repurchase payment, except where, under such national legislation, non-resident shareholders are not treated less favourably than resident shareholders. It is for the national court to determine whether that is the case in the specific circumstances of the main proceedings. |
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2.

Articles 56 EC and 58 EC must be interpreted as precluding national legislation which derives from a double taxation agreement, such as the Agreement between the Government of the French Republic and the Government of the Kingdom of Sweden for the Avoidance of Double Taxation and the Prevention of Tax Evasion in respect of Taxes on Income and Wealth, signed on 27 November 1990, which fixes a lower ceiling on the taxation of dividends for non-resident shareholders than for resident shareholders, and, by interpreting that agreement in the light of the commentaries of the Organisation for Economic Cooperation and Development on its applicable model convention, permits the nominal value of such shares to be deducted from the share repurchase payment, except where, under such national legislation, non-resident shareholders are not treated less favourably than resident shareholders. It is for the national court to determine whether that is the case in the specific circumstances of the main proceedings.

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(1)  OJ C 228, 11.09.2004.

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