# C_2019139EN.01000701.xml

| 15.4.2019 | EN | Official Journal of the European Union | C 139/7 |
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15.4.2019

EN

Official Journal of the European Union

C 139/7

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Judgment of the Court (Grand Chamber) of 26 February 2019 (requests for a preliminary ruling from the Østre Landsret — Denmark) — Skatteministeriet v T Danmark (C-116/16), Y Denmark Aps (C-117/16)

(Joined Cases C-116/16 and C-117/16) (1)

(Reference for a preliminary ruling - Approximation of laws - Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States - Directive 90/435/EEC - Exemption of the profits distributed by companies of a Member State to companies of other Member States - Beneficial owner of the distributed profits - Abuse of rights - Company established in a Member State and paying to an associated company established in another Member State dividends all or almost all of which are then transferred outside the European Union - Subsidiary subject to an obligation to withhold tax on the profits at source)

(2019/C 139/04)

Language of the case: Danish

Referring court

Østre Landsret

Parties to the main proceedings

Applicant: Skatteministeriet

Defendants: T Danmark (C-116/16), Y Denmark Aps (C-117/16)

Operative part of the judgment

| 1. | Cases C-116/16 and C-117/16 are joined for the purposes of the judgment. |
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1.

Cases C-116/16 and C-117/16 are joined for the purposes of the judgment.

| 2. | The general principle of EU law that EU law cannot be relied on for abusive or fraudulent ends must be interpreted as meaning that, where there is a fraudulent or abusive practice, the national authorities and courts are to refuse a taxpayer the exemption from withholding tax on profits distributed by a subsidiary to its parent company, provided for in Article 5 of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, as amended by Council Directive 2003/123/EC of 22 December 2003, even if there are no domestic or agreement-based provisions providing for such a refusal. |
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2.

The general principle of EU law that EU law cannot be relied on for abusive or fraudulent ends must be interpreted as meaning that, where there is a fraudulent or abusive practice, the national authorities and courts are to refuse a taxpayer the exemption from withholding tax on profits distributed by a subsidiary to its parent company, provided for in Article 5 of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, as amended by Council Directive 2003/123/EC of 22 December 2003, even if there are no domestic or agreement-based provisions providing for such a refusal.

| 3. | Proof of an abusive practice requires, first, a combination of objective circumstances in which, despite formal observance of the conditions laid down by the EU rules, the purpose of those rules has not been achieved and, second, a subjective element consisting in the intention to obtain an advantage from the EU rules by artificially creating the conditions laid down for obtaining it. The presence of a certain number of indications may demonstrate that there is an abuse of rights, in so far as those indications are objective and consistent. Such indications can include, in particular, the existence of conduit companies which are without economic justification and the purely formal nature of the structure of the group of companies, the financial arrangements and the loans. |
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3.

Proof of an abusive practice requires, first, a combination of objective circumstances in which, despite formal observance of the conditions laid down by the EU rules, the purpose of those rules has not been achieved and, second, a subjective element consisting in the intention to obtain an advantage from the EU rules by artificially creating the conditions laid down for obtaining it. The presence of a certain number of indications may demonstrate that there is an abuse of rights, in so far as those indications are objective and consistent. Such indications can include, in particular, the existence of conduit companies which are without economic justification and the purely formal nature of the structure of the group of companies, the financial arrangements and the loans.

| 4. | In order to refuse to accord a company the status of beneficial owner of dividends, or to establish the existence of an abuse of rights, a national authority is not required to identify the entity or entities which it regards as being the beneficial owner(s) of those dividends. |
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4.

In order to refuse to accord a company the status of beneficial owner of dividends, or to establish the existence of an abuse of rights, a national authority is not required to identify the entity or entities which it regards as being the beneficial owner(s) of those dividends.

| 5. | In a situation where the system, laid down by Directive 90/435, as amended by Directive 2003/123, of exemption from withholding tax on dividends paid by a company resident in a Member State to a company resident in another Member State is not applicable because there is found to be fraud or abuse, within the meaning of Article 1(2) of that directive, application of the freedoms enshrined in the FEU Treaty cannot be relied on in order to call into question the legislation of the first Member State governing the taxation of those dividends. |
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5.

In a situation where the system, laid down by Directive 90/435, as amended by Directive 2003/123, of exemption from withholding tax on dividends paid by a company resident in a Member State to a company resident in another Member State is not applicable because there is found to be fraud or abuse, within the meaning of Article 1(2) of that directive, application of the freedoms enshrined in the FEU Treaty cannot be relied on in order to call into question the legislation of the first Member State governing the taxation of those dividends.

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(1)  OJ C 270, 25.7.2016.

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