Opinion of the Advocate General — ECLI:EU:C:2016:45
Date: 2016-01-21
Language of the case: French
Subject matter: Right of establishment;Taxation;Free movement of capital;Freedom to provide services;Indirect taxation
Procedure: Reference for a preliminary ruling
Origin: Belgium

summary of the subject-matter of the dispute and the relevant findings of fact or, at least, an account of the facts on which the questions are based, the content of any national provisions applicable to the dispute in the main proceedings, and a statement of the reasons which prompted the referring court or tribunal to inquire about the interpretation of certain provisions of EU law, and the relationship between those provisions and the national legislation applicable to the main proceedings. 23 In the present case, the order for reference does not indicate the administrative burdens to which UCIs governed by foreign law are subject and does not specify the provisions of national law under which or on account of which those burdens are imposed or the reasons why the referring court raises the question in that regard of the interpretation of EU law. In those circumstances, the Court does not have sufficient factual or legal material before it to give a useful answer to the fifth question, which must therefore be declared inadmissible. The first question 24 By its first question, the referring court essentially asks whether Articles 2, 4, 10 and 11 of Directive 69/335 must be interpreted as precluding legislation of a Member State which imposes an annual tax on UCIs, such as that at issue in the main proceedings, which levies that tax on UCIs governed by foreign law marketing units in that Member State. 25 In that regard, it should be stated that the annual tax on UCIs does not correspond to any of the transactions subject to capital duty pursuant to Article 4 of Directive 69/335 which, as the Court observed in paragraph 20 of the judgment of 27 October 1998 in Nonwoven (C‑4/97, EU:C:1998:507), are characterised by the transfer of capital or assets to a company with share capital in the taxing Member State or take form of an actual increase in the company’s capital or assets, which is obviously not the case with the ‘net amounts invested in Belgium’ to which that tax applies. Nor does such a tax come under those prohibited by Article 10 of Directive 69/335 since (i) it does not correspond to any of the taxable transactions listed in Article 4 of that directive, to which Article 10(a) and (b) of the directive referred, and (ii) it has no link with registration or any other formality required before the commencement of business within the meaning of Article 10(c) of that directive. Likewise, that tax by no means corresponds to any of the transactions subject to Article 11 of the directive. 26 Consequently, the annual tax on UCIs does not fall within the scope of Directive 69/335. That directive therefore does not preclude UCIs governed by foreign law being subject to such a tax. 27 Therefore, the answer to the first question is that Articles 2, 4, 10 and 11 of Directive 69/335 must be interpreted as not precluding legislation of a Member State imposing an annual tax on UCIs, such as the tax at issue in the main proceedings, which makes UCIs governed by foreign law marketing units in that Member State subject to that tax. The fourth question 28 By its fourth question, the referring court essentially asks whether Directive 85/611, read, if appropriate, in conjunction with Article 10 EC and Article 293, second indent, EC, must be interpreted as precluding the legislation of a Member State imposing an annual tax on UCIs, such as the tax at issue in the main proceedings, which makes UCIs governed by foreign law marketing units in that Member State subject to that tax. 29 The Belgian Government takes the view that that question is inadmissible because the referring court does not state the articles of Directive 85/611 which it seeks to have interpreted or the reasons why it is unsure as to the interpretation of that directive. 30 However, it is apparent from the wording of that question that the referring court is uncertain whether Directive 85/611, read in conjunction with Article 10 EC and Article 293, second indent, EC, precludes taxation such as the annual tax on UCIs, in so far as it prejudices the principal aim of that directive of facilitating the marketing of the units of UCITS in the European Union. That information is sufficient to enable the Court to provide the referring court with interpretative guidance which will assist it in resolving the dispute in the main proceedings. The question is therefore admissible. 31 As for the substance, it follows from the second to fourth recitals of Directive 85/611 that, in order to ensure that UCITS units are marketed freely within the European Union, that directive sought to coordinate national laws governing UCITS, in order, first, to approximate, within the European Union, the conditions of competition between those undertakings, and, secondly, to ensure more effective and more uniform protection for unit-holders. To that end, that directive established common basic rules governing the authorisation, supervision, structure and activities of UCITS and the information which they must publish (judgment of 11 September 2014 in Gruslin, C‑88/13, EU:C:2014:2205, paragraph 33). 32 It is clear that the taxation of UCITS did not fall within the area governed by Directive 85/611, which did not contain any provision relating to that area. Nevertheless, Article 44(3) of that directive required that the laws, regulations and administrative provisions applicable in a Member State to UCITS which did not fall within the field governed by that directive had to be applied in a non-discriminatory way. 33 It follows that the annual tax on UCIs does not fall within the area governed by Directive 85/611 and that, since Article 10 EC and Article 293, second indent, EC cannot alter that finding, nor does that directive preclude UCIs governed by foreign law being subject to such a tax, provided that the provisions relating thereto are applied in a non-discriminatory way, which will be examined in the second, third and sixth questions. 34 Consequently, the answer to the fourth question is that Directive 85/611, read, if appropriate, in conjunction with Article 10 EC and Article 293, second indent, EC, must be interpreted as not precluding the legislation of a Member State imposing an annual tax on UCIs, such as the tax at issue in the main proceedings, which makes UCIs governed by foreign law marketing units in that Member State subject to that tax, provided that that legislation is applied in a non-discriminatory way. The second and third questions 35 The second and third questions, which it is appropriate to examine together, relate (i) to Articles 49 to 60 EC, read, if appropriate, in conjunction with Article 10 EC and Article 293, second indent, EC, and (ii) Articles 49 and 56 EC, read, if appropriate, in conjunction with Article 10 EC and Article 293, second indent, EC. However, it must be observed that only Articles 49 and 56 EC are relevant for the purposes of answering those questions. 36 First, Articles 50 to 55, 57, 59 and 60 EC clearly have nothing to do with the questions of the referring court regarding the compatibility of the annual tax on UCIs with the freedom to provide services and the free movement of capital. 37 Secondly, Article 58 EC is of no help in answering those questions, since that tax is imposed without distinction on UCIs governed by Belgian law and on UCIs governed by foreign law. 38 Thirdly, Article 10 EC, which sets out a general obligation of the Member States, cannot be interpreted as giving rise to any independent obligations on Member States beyond those arising from Articles 49, 56 and 293 EC. As for the latter article, Article 293 EC is not intended to lay down a legal rule directly applicable as such, but merely defines a number of matters on which the Member States are to enter into negotiations with each other so far as is necessary. Although the elimination of double taxation within the European Union is thus included amongst the objectives of the EC Treaty, it is clear from the wording of that provision that it cannot itself confer on individuals any rights on which they might be able to rely before their national courts (see, to that effect, order of 19 September 2012 in Levy and Sebbag, C‑540/11, not published, EU:C:2012:581, paragraphs 26 and 27 and the case-law cited). 39 In addition, it should be observed that, when a national measure concerns both the freedom to provide services and the free movement of capital, the Court will in principle examine the measure in dispute in relation to only one of those two freedoms if it appears, in the circumstances of the case, that one of them is entirely secondary in relation to the other and may be considered together with it (see, to that effect, judgments of 3 October 2006 in Fidium Finanz, C‑452/04, EU:C:2006:631, paragraph 34, and 1 July 2010 in Dijkman and Dijkman-Lavaleije, C‑233/09, EU:C:2010:397, paragraph 33). 40 However, as the Advocate General observed in points 48 and 49 of his Opinion, the annual tax on UCIs, in so far as it is levied on the net assets of UCIs governed by foreign law, is linked to the acquisition by residents of units of foreign undertakings which may or may not be dealt in on a stock exchange. That transaction is one of the capital movements set out in part A, relating to ‘[t]ransactions in units of [UCIs]’ of Section IV of Annex I to Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (repealed by the Treaty of Amsterdam) (OJ 1988 L 178, p. 5), entitled ‘Operations in units of [UCIs]’, the indicative value of which was acknowledged by the Court (see, to that effect, judgments of 7 June 2012 in VBV — Vorsorgekasse, C‑39/11, EU:C:2012:327, paragraph 21, and 21 May 2015 in Wagner-Raith, C‑560/13, EU:C:2015:347, paragraphs 23 and 24). Such a tax therefore comes under the free movement of capital. 41 Although the freedom to provide services is also liable to be affected by taxation such as the annual tax on UCIs, in so far as the latter may have effects on the financial services offered in Belgium by UCIs governed by foreign law, that freedom is secondary in relation to the free movement of capital and may be considered together with it. 42 In those circumstances, by its second and third questions, the referring court must be regarded as essentially asking whether Article 56 EC must be interpreted as precluding legislation of a Member State imposing an annual tax on UCIs, such as the tax at issue in the main proceedings, which makes UCIs governed by foreign law marketing units in that Member State subject to that tax. 43 In that regard, it should be observed that, according to the settled case-law of the Court, the Member States must exercise their competence in the area of direct taxation consistently with EU law and, in particular, with the fundamental freedoms guaranteed by the Treaty (see, inter alia, judgment of 23 February 2016 in Commission v Hungary, C‑179/14, EU:C:2016:108, paragraph 171 and the case-law cited). 44 As regards the free movement of capital, it also follows from the Court’s settled case-law that the measures prohibited by Article 56(1) EC, as restrictions on the movement of capital, include those which are such as to discourage non-residents from making investments in a Member State or to discourage that Member State’s residents from doing so in other States (see, to that effect, judgment of 10 February 2011 in Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 50 and the case-law cited). 45 In the present case, NN (L), which takes the view that, by imposing the annual tax on UCIs on UCIs governed by foreign law, the Kingdom of Belgium exercises extraterritorial tax jurisdiction contrary to international tax practice, submits that that tax is discriminatory and constitutes a restriction to the free movement of capital, in so far as UCIs governed by Belgian law and UCIs governed by foreign law are to be treated in the same way for tax purposes, even though they are in a situation which is not objectively comparable. Unlike UCIs governed by Belgian law, UCIs governed by foreign law are constituted in accordance with foreign law, are not resident in Belgium and both their capital and the place in which their capital is invested are abroad. Moreover, that tax constitutes an additional financial burden on UCIs governed by foreign law, which is in addition to, so far as concerns UCIs governed by Luxembourg law, a subscription tax, which reduces the profitability of the units to the detriment of all the — Belgian or foreign — unit holders, discourages subscription to such units and, consequently, disadvantages UCIs governed by foreign law in relation to those governed by Belgian law. 46 However, it should be noted that, since the annual tax on UCIs applies without distinction to all UCIs, irrespective of whether they are governed by Belgian law or foreign law, the only objective difference between situations of those two categories of UCIs, in terms of their liability to that tax, resides in the fact that, for UCIs governed by foreign law, the annual tax on UCIs is in addition to the taxation to which they may be subject in the Member State in which they are established. 47 The Court has held on many occasions that, in the absence of harmonisation at EU level, the disadvantages which could arise from the parallel exercise of tax competences by different Member States, to the extent that such an exercise is not discriminatory, do not constitute restrictions on the freedom of movement (judgments of 8 December 2011 in Banco Bilbao Vizcaya Argentaria, C‑157/10, EU:C:2011:813, paragraph 38 and the case-law cited, and 21 November 2013 in X, C‑302/12, EU:C:2013:756, paragraph 28) and, moreover, the Member States are not obliged to adapt their own tax systems to the different tax systems of other Member States, in order inter alia to eliminate double taxation (see, to that effect, judgment of 12 February 2009 in Block, C‑67/08, EU:C:2009:92, paragraph 31). 48 It follows that the annual tax on UCIs cannot be considered to be a restriction on the free movement of capital. 49 Consequently, the answer to the second and third questions is that Article 56 EC must be interpreted as not precluding the legislation of a Member State imposing an annual tax on UCIs, such as the tax at issue in the main proceedings, which makes UCIs governed by foreign law marketing units in that Member State subject to that tax. The sixth question 50 By its sixth question, the referring court essentially asks whether Articles 49 EC and 56 EC must be interpreted as precluding a national provision such as Article 162(2) of the Inheritance Tax Code, by which a Member State imposes a specific penalty, namely the prohibition, ordered by a court, of making future investments of its units in that Member State on UCIs governed by foreign law in the event of non-compliance by the latter with the obligation to file the annual declaration necessary for the recovery of a tax on UCIs or in the event of non-payment of that tax. 51 The Belgian Government submits that that question is also inadmissible. According to the Belgian Government, since the subject of the dispute in the main proceedings is not the penalty laid down in Article 162(2) of the Inheritance Tax Code but the reimbursement of the annual tax on UCIs paid by NN (L) for the financial year 2006, that question has no connection with the subject-matter of that dispute and the question whether a penalty will be imposed on that company in the future is hypothetical. 52 However, it is apparent from the order for reference that NN (L) disputes, in the main proceedings, the lawfulness of the tax imposed on it, arguing, inter alia, that the provisions of the Inheritance Tax Code governing the annual tax on UCIs, including those relating to penalties, are not consistent with EU law. The question asked by the referring court is not therefore clearly unrelated to the subject-matter of the dispute in the main proceedings. As for the hypothetical nature of the penalty, a party cannot be required to infringe national law and, as a result, have a penalty imposed on it in order for it to be able to invoke a breach of EU law before the national court (see, to that effect, judgment of 13 March 2007 in Unibet, C‑432/05, EU:C:2007:163, paragraph 64). The sixth question is therefore admissible. 53 In so far as it consists in prohibiting UCIs governed by foreign law from marketing units in Belgium, the penalty provided for in Article 162(2) of the Inheritance Tax Code must, as the Advocate General stated in point 65 of his Opinion, be examined in the light of the rules relating to the freedom to provide services. 54 As regards that penalty, the Belgian Government stated, in its written observations and at the hearing before the Court, that it echoes the penalty provided for in Article 133 ter of the Inheritance Tax Code, to which Article 161(1) of that code refers and which applies both to UCIs under Belgian law and to UCIs under foreign law. 55 However, contrary to that Government’s submissions, the penalty provided for in Article 133 ter of the Inheritance Tax Code and that provided for in Article 162(2) of the code cannot be considered to be equivalent, even though the former may involve the closure of a UCI established in Belgium, while the latter does not prevent a UCI governed by foreign law carrying out its activities elsewhere. First of all, as the Belgian Government stated at the hearing before the Court, those penalties do not penalise the same facts. Next, unlike the second of those penalties, the former can be imposed only after the conviction of certain persons for infringements of the Inheritance Tax Code, whereas the second penalty may be imposed on a UCI governed by foreign law which failed to submit the annual declaration or which did not pay the tax. Lastly, the second of those penalties, which does not preclude the first, is not — unlike the first — limited in time. 56 Thus, the system of penalties provided for under Belgian law appears harsher with regard to UCIs governed by foreign law than it is with regard to UCIs governed by Belgian law which fail to comply with the same statutory obligations. Such a difference in treatment, based on the place of establishment, is such as to dissuade UCIs governed by foreign law from marketing units in Belgium. They therefore constitute a restriction on the freedom to provide services. 57 In order to justify that different treatment, the Belgian Government asserts that the prohibitions on engaging in a professional activity or decisions to close the undertaking which employs the employee or manager convicted under Article 133 ter and Article 162(1) of the Inheritance Tax Code are difficult to apply to UCIs governed by foreign law which market their units by having recourse to a financial intermediary in Belgium, because such UCIs are not resident in that country, and that other penalties, such as financial penalties, are also difficult to enforce abroad. 58 It should be observed in that regard that a restriction on the freedom to provide services may be accepted only if it is justified by overriding reasons in the public interest. Even if that were so, application of that restriction would still have to be such as to ensure achievement of the aim pursued and not go beyond what is necessary for that purpose (judgment of 18 October 2012 in X, C‑498/10, EU:C:2012:635, paragraph 36 and the case-law cited). 59 The Court has already held that the need to ensure the effective collection of a tax may constitute an overriding reason in the public interest capable of justifying a restriction on the freedom to provide services (judgments of 18 October 2012 in X, C‑498/10, EU:C:2012:635, paragraph 39, and 19 June 2014 in Strojírny Prostějov and ACO Industries Tábor, C‑53/13 and C‑80/13, EU:C:2014:2011, paragraph 46). It has also observed that the imposition of penalties, including criminal penalties, may be considered to be necessary in order to ensure compliance with national rules, subject, however, to the condition that the nature and amount of the penalty imposed is in each individual case proportionate to the gravity of the infringement which it is designed to penalise (judgment of 3 December 2014 in De Clercq and Others, C‑315/13, EU:C:2014:2408, paragraph 73 and the case-law cited). 60 In the present case, the possibility of imposing a penalty on UCIs governed by foreign law which failed to comply with the obligation to file a declaration and the payment obligation would appear to be justified by the need to ensure collection of the annual tax on UCIs and appropriate for ensuring that that objective is attained. 61 However, even if it is subject to assessment by a court, a penalty consisting of prohibiting such UCIs from marketing units in Belgium in the future, such as that laid down in Article 162(2) of the Inheritance Tax Code, goes beyond what is necessary to attain that objective, since that provision does not limit the duration of such a prohibition and does not provide for the possibility of modifying it or of imposing other less restrictive penalties, depending on the seriousness of the infringement committed. 62 Consequently, the answer to the sixth question is that Article 49 EC must be interpreted as precluding a national provision, such as Article 162(2) of the Inheritance Tax Code, by which a Member State imposes a specific penalty, namely the prohibition, ordered by a court, of making future investments of its units in that Member State, on UCIs governed by foreign law in the event of non-compliance by the latter with the obligation to file the annual declaration necessary for the recovery of a tax on UCIs or in the event of non-payment of that tax. Costs 63 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Second Chamber) hereby rules: 1. Articles 2, 4, 10 and 11 of Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital, as amended by Council Directive 85/303/EEC of 10 June 1985, must be interpreted as not precluding legislation of a Member State imposing an annual tax on undertakings for collective investment, such as the tax at issue in the main proceedings, which makes undertakings for collective investment governed by foreign law marketing units in that Member State subject to that tax. 2. Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), read, if appropriate, in conjunction with Article 10 EC and Article 293, second indent, EC, must be interpreted as not precluding the legislation of a Member State imposing an annual tax on UCIs, such as the tax at issue in the main proceedings, which makes UCIs governed by foreign law marketing units in that Member State subject to that tax, provided that that legislation is applied in a non-discriminatory way. 3. Article 56 EC must be interpreted as not precluding the legislation of a Member State imposing an annual tax on UCIs, such as the tax at issue in the main proceedings, which makes UCIs governed by foreign law marketing units in that Member State subject to that tax. 4. Article 49 EC must be interpreted as precluding a national provision, such as Article 162(2) of the Inheritance Tax Code, as amended by the Programme Law of 22 December 2003, by which a Member State imposes a specific penalty, namely the prohibition, ordered by a court, of making future investments of its units in that Member State, on UCIs governed by foreign law in the event of non-compliance by the latter with the obligation to file the annual declaration necessary for the recovery of a tax on UCIs or in the event of non-payment of that tax. [Signatures] * Language of the case: French.