# C_2005006EN.01002603.xml

| 8.1.2005 | EN | Official Journal of the European Union | C 6/26 |
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Reference for a preliminary ruling by the High Court of Justice (England & Wales), Chancery Division, by order of that court dated 13 October 2004, in the case of Test Claimants in the FII Group Litigation against Commissioners of Inland Revenue

(Case C-446/04)

(2005/C 6/51)

Language of procedure: English

Reference has been made to the Court of Justice of the European Communities by order of the High Court of Justice (England & Wales), Chancery Division, dated 13 October 2004, which was received at the Court Registry on 22 October 2004, for a preliminary ruling in the case of Test Claimants in the FII Group Litigation and Commissioners of Inland Revenue on the following questions:

| 1. | Is it contrary to Article 43 or 56 EC for a Member State to keep in force and apply measures which exempt from corporation tax dividends received by a company resident in that Member State (‘the resident company’) from other resident companies and which subject dividends received by the resident company from companies resident in other Member States (‘non-resident companies’) to corporation tax (after giving double taxation relief for any withholding tax payable on the dividend and, under certain conditions, for the underlying tax paid by the non-resident companies on their profits in their country of residence)? |
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| 2. | Where a Member State has a system which in certain circumstances imposes advance corporation tax (‘ACT’) on the payment of dividends by a resident company to its shareholders and grants a tax credit to shareholders resident in that Member State in respect of those dividends, is it contrary to Article 43 or 56 EC or Article 4(1) or 6 of Council Directive 90/435/EEC( 1 ) for the Member State to keep in force and apply measures which provide for the resident company to pay dividends to its shareholders without being liable to pay ACT to the extent that it has received dividends from companies resident in that Member State (either directly or indirectly through other companies resident in that Member State) and do not provide for the resident company to pay dividends to its shareholders without being liable to pay ACT to the extent that it has received dividends from non-resident companies? |
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| 3. | Is it contrary to the provisions of EC law referred to in Question 2 above for the Member State to keep in force and apply measures which provide for the ACT liability to be set against the liability of the dividend-paying company, and that of other companies in the group resident in that Member State, to corporation tax in that Member State upon their profits:
a.
but which do not provide for any form of set off of the ACT liability or some equivalent relief (such as the refund of ACT) in respect of profits earned, whether in that State or in other Member States, by companies in the group which are not residents in that Member State; and/or b.
which provide that any double tax relief which a company resident in that Member State enjoys reduces the liability to corporation tax against which the ACT liability can be set? | a. | but which do not provide for any form of set off of the ACT liability or some equivalent relief (such as the refund of ACT) in respect of profits earned, whether in that State or in other Member States, by companies in the group which are not residents in that Member State; and/or | b. | which provide that any double tax relief which a company resident in that Member State enjoys reduces the liability to corporation tax against which the ACT liability can be set? |
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| a. | but which do not provide for any form of set off of the ACT liability or some equivalent relief (such as the refund of ACT) in respect of profits earned, whether in that State or in other Member States, by companies in the group which are not residents in that Member State; and/or | | | | |
| b. | which provide that any double tax relief which a company resident in that Member State enjoys reduces the liability to corporation tax against which the ACT liability can be set? | | | | |

| 4. | Where the Member State has measures which in certain circumstances provide for resident companies, if they so elect, to recover the ACT paid on distributions to their shareholders to the extent that distributions are received by the resident companies from non resident companies (including for this purpose companies resident in third countries), is it contrary to Article 43 or 56 EC or Article 4(1) or 6 of Council Directive 90/435/EEC for those measures:
a.
to oblige the resident companies to pay ACT and to reclaim it subsequently; and b.
not to provide for the shareholders of the resident companies to receive a tax credit which they would have received on a dividend from a resident company which had not itself received dividends from non- resident companies? | a. | to oblige the resident companies to pay ACT and to reclaim it subsequently; and | b. | not to provide for the shareholders of the resident companies to receive a tax credit which they would have received on a dividend from a resident company which had not itself received dividends from non- resident companies? |
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| a. | to oblige the resident companies to pay ACT and to reclaim it subsequently; and | | | | |
| b. | not to provide for the shareholders of the resident companies to receive a tax credit which they would have received on a dividend from a resident company which had not itself received dividends from non- resident companies? | | | | |

| 5. | Where, prior to 31 December 1993, a Member State adopted the measures outlined in Questions 1 and 2, and after that date it adopted the further measures outlined in Question 4, and if the latter measures constitute a restriction prohibited by Article 56 of the EC Treaty, is that restriction to be taken to be a new restriction not already existing on the 31 December 1993? |
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| 6. | In the event of any of the measures set out in Questions 1 to 5 being in breach of any of the Community provisions referred to herein, then in circumstances where the resident company or other companies in the same group of companies make the following claims in respect of the relevant breaches:
(i)
a claim for the repayment of corporation tax unlawfully levied in the circumstances to which Question 1 relates; (ii)
a claim for the reinstatement (or compensation for the loss) of reliefs applied against the corporation tax unlawfully levied in the circumstances to which Question 1 relates; (iii)
a claim for repayment of (or compensation for) ACT which could not be set off against the company's corporation tax liability or otherwise relieved and which would not have been paid (or would have been relieved) but for the breach; (iv)
a claim, where the ACT has been set off against corporation tax, for loss of use of money between the date of payment of the ACT and such set-off; (v)
a claim for repayment of corporation tax paid by the company or by another group company where any of those companies incurred a corporation tax liability by disclaiming other reliefs in order to allow its ACT liability to be set off against its corporation tax liability (the limits imposed on set-off of ACT resulting in a residual corporation tax liability); (vi)
a claim for loss of use of money due to corporation tax having been paid earlier than would otherwise have been the case or for reliefs subsequently lost in the circumstances set out in (v) above; (vii)
a claim by the resident company for payment of (or compensation for) surplus ACT which that company has surrendered to another company in the group and which remained unrelieved when that other company was sold, demerged or went into liquidation; (viii)
a claim, where ACT has been paid but subsequently reclaimed under the provisions described in Question 4, for loss of use of money between the date of payment of the ACT and the date on which it was reclaimed; (ix)
a claim for compensation where the resident company elected to reclaim the ACT under the arrangements described in Question 4 and compensated its shareholders for the inability to receive a tax credit by increasing the amount of the dividend, in respect of each of those claims set out above, is it 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 the repayment of corporation tax unlawfully levied in the circumstances to which Question 1 relates; | (ii) | a claim for the reinstatement (or compensation for the loss) of reliefs applied against the corporation tax unlawfully levied in the circumstances to which Question 1 relates; | (iii) | a claim for repayment of (or compensation for) ACT which could not be set off against the company's corporation tax liability or otherwise relieved and which would not have been paid (or would have been relieved) but for the breach; | (iv) | a claim, where the ACT has been set off against corporation tax, for loss of use of money between the date of payment of the ACT and such set-off; | (v) | a claim for repayment of corporation tax paid by the company or by another group company where any of those companies incurred a corporation tax liability by disclaiming other reliefs in order to allow its ACT liability to be set off against its corporation tax liability (the limits imposed on set-off of ACT resulting in a residual corporation tax liability); | (vi) | a claim for loss of use of money due to corporation tax having been paid earlier than would otherwise have been the case or for reliefs subsequently lost in the circumstances set out in (v) above; | (vii) | a claim by the resident company for payment of (or compensation for) surplus ACT which that company has surrendered to another company in the group and which remained unrelieved when that other company was sold, demerged or went into liquidation; | (viii) | a claim, where ACT has been paid but subsequently reclaimed under the provisions described in Question 4, for loss of use of money between the date of payment of the ACT and the date on which it was reclaimed; | (ix) | a claim for compensation where the resident company elected to reclaim the ACT under the arrangements described in Question 4 and compensated its shareholders for the inability to receive a tax credit by increasing the amount of the dividend, | | 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 the repayment of corporation tax unlawfully levied in the circumstances to which Question 1 relates; | | | | | | | | | | | | | | | | | | | | | | | | |
| (ii) | a claim for the reinstatement (or compensation for the loss) of reliefs applied against the corporation tax unlawfully levied in the circumstances to which Question 1 relates; | | | | | | | | | | | | | | | | | | | | | | | | |
| (iii) | a claim for repayment of (or compensation for) ACT which could not be set off against the company's corporation tax liability or otherwise relieved and which would not have been paid (or would have been relieved) but for the breach; | | | | | | | | | | | | | | | | | | | | | | | | |
| (iv) | a claim, where the ACT has been set off against corporation tax, for loss of use of money between the date of payment of the ACT and such set-off; | | | | | | | | | | | | | | | | | | | | | | | | |
| (v) | a claim for repayment of corporation tax paid by the company or by another group company where any of those companies incurred a corporation tax liability by disclaiming other reliefs in order to allow its ACT liability to be set off against its corporation tax liability (the limits imposed on set-off of ACT resulting in a residual corporation tax liability); | | | | | | | | | | | | | | | | | | | | | | | | |
| (vi) | a claim for loss of use of money due to corporation tax having been paid earlier than would otherwise have been the case or for reliefs subsequently lost in the circumstances set out in (v) above; | | | | | | | | | | | | | | | | | | | | | | | | |
| (vii) | a claim by the resident company for payment of (or compensation for) surplus ACT which that company has surrendered to another company in the group and which remained unrelieved when that other company was sold, demerged or went into liquidation; | | | | | | | | | | | | | | | | | | | | | | | | |
| (viii) | a claim, where ACT has been paid but subsequently reclaimed under the provisions described in Question 4, for loss of use of money between the date of payment of the ACT and the date on which it was reclaimed; | | | | | | | | | | | | | | | | | | | | | | | | |
| (ix) | a claim for compensation where the resident company elected to reclaim the ACT under the arrangements described in Question 4 and compensated its shareholders for the inability to receive a tax credit by increasing the amount of the dividend, | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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)
is such a claim a consequence of, and an adjunct to, the right conferred by the abovementioned Community provisions; or (b)
must 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) | is such a claim a consequence of, and an adjunct to, the right conferred by the abovementioned Community provisions; or | (b) | must 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) | is such a claim a consequence of, and an adjunct to, the right conferred by the abovementioned Community provisions; or | | | | | | |
| (b) | must 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 to the answers to Questions 6 or 7 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 case 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 of the Court of Justice on the interpretation of the relevant Community provisions, the breach was excusable or as to whether in any particular case there is a sufficient causal link to constitute a ‘direct causal link’ within the meaning of that judgment? |
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( 1 )  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 (OJ L 225, 20.8.1990, p. 6).

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