Opinion of the Advocate General — ECLI:EU:C:2021:857
Date: 2021-10-14
Language of the case: French
Subject matter: Taxation;Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: France

Translation C-556/20 – 1 
Case C-556/20 
Request for a preliminary ruling 
Date lodged:  
23 October 2020 
Referring court:  
Conseil d’État (France) 
Date of the decision to refer:  
23 October 2020 
Appellants:  
Schneider Electric SA 
Axa SA 
BNP Paribas 
ENGIE 
Orange SA 
L’Air liquide, société anonyme pour l’étude et l’exploitation des 
procédés Georges Claude 
Respondents:  
Premier ministre 
Ministre de l’Economie, des Finances et de la Relance 
  
[…] 
Having regard to the following procedure: 
[…] the [appellants] […] claim that the Conseil d’État (Council of State, France) 
should: 
1. annul as ultra vires the administrative commentary published in the basic 
documentation on 1 November 1995 […]; 
EN 
REQUEST FOR A PRELIMINARY RULING OF 23. 10. 2020 – CASE C-556/20 
 
2  
2. annul as ultra vires the administrative commentary […] published in the 
bulletin officiel des impôts (Official Tax Gazette) No 62 on 30 March 2001; 
[…] 
The appellant companies submit that the contested commentaries restate the 
provisions governing the advance payment of tax laid down in Article 223 sexies 
of the code général des impôts (General Tax Code), provisions which are 
themselves incompatible with Article 4 of Directive 90/435/EC of 23 July 1990 on 
the common system of taxation applicable in the case of [Or. 2] parent companies 
and subsidiaries of different Member States, since the advance payment of tax is 
in the nature of a tax measure established by the Member State of a parent 
company providing for the levy of a tax when the parent company distributes 
dividends and the basis of assessment of which tax is the amounts of the dividends 
distributed, including those originating from that company’s non-resident 
subsidiaries. 
[…] the Minister for Economic Affairs, Finance and Recovery contends that the 
application should be dismissed [on the ground that it is inadmissible and 
unfounded]. 
[…] 
[The appellants request the submission of a priority question on constitutionality 
concerning, in essence, the principle of equal treatment] 
[…] 
[…] [Or. 3] 
[…] 
[One of the appellants] […] submits that the contested commentaries restate the 
provisions governing the advance payment of tax laid down in Article 223 sexies 
of the General Tax Code, provisions which are themselves incompatible with: 
– Article 4 of Directive 90/435/EC of 23 July 1990 on the common 
system of taxation applicable in the case of parent companies and 
subsidiaries of different Member States, since the advance payment of 
tax is in the nature of a tax measure established by the Member State 
of a parent company providing for the levy of a tax when the parent 
company distributes dividends and the basis of assessment of which 
tax is the amounts of the dividends distributed, including those 
originating from that company’s non-resident subsidiaries; 
[…] 
[…] [Or. 4] […] 
SCHNEIDER ELECTRIC AND OTHERS 
 
3 
Having regard to: 
[…] 
– the Treaty on the Functioning of the European Union; 
– Council Directive 90/435/EC of 23 July 1990; 
– the judgment of the Court of Justice of the European Union of 
12 February 2009, Cobelfret, C-138/07, EU:C:2009:82; 
– the judgments of the Court of Justice of the European Union of 
15 September 2011, Accor, C-310/09, EU:C:2011:581, and of 
4 October 2018, Commission v France (Advance payment), C-416/17, 
EU:C:2018:811; 
– the judgments of the Court of Justice of the European Union of 
17 May 2017, X, C-68/15, EU:C:2017:379, and AFEP and Others, 
C-365/16, EU:C:2017:378; 
[…] 
Whereas: 
[…] [Or. 5] […] [joinder of the various actions] 
Pleas of inadmissibility raised by the Minister: 
[…] 
[…] [plea of inadmissibility upheld as regards one appellant and dismissed as 
regards the others] [Or. 6] 
Interpretation of Article 223 sexies of the General Tax Code: 
6. In the version applicable on both 1 November 1995 and 21 March 2001, 
Article 158 bis of the General Tax Code provides that persons who receive 
dividends distributed by French companies are to be deemed in that respect to 
have received income in the form of the sums they receive from the company and 
a tax credit represented by a credit opened with the Treasury. Article 216 of that 
code provides, moreover, that ‘net income from shareholdings, conferring 
entitlement to the application of the regime applicable to parent companies and 
referred to in Article 145, received by a parent company during a financial year, 
may be deducted from its total net profits …’. Furthermore, under the first 
paragraph of Article 223 sexies(1) of that code, as amended by Article 98 of the 
loi du 30 décembre 1991 de finances pour 1992 (Law on finance for 1992 of 
30 December 1991), ‘… where the profits distributed by a company are subject to 
a deduction on the ground that that company has not been subject to corporation 
tax at the normal rate … that company is required to make an advance payment 
REQUEST FOR A PRELIMINARY RULING OF 23. 10. 2020 – CASE C-556/20 
 
4  
equal to the credit provided for in Article 158 bis and applied to those 
distributions. The advance payment shall be due whoever the recipients of those 
distributions may be’. Lastly, under Article 146(2) of that code, before its repeal 
by Article 93 of the loi du 30 décembre 2003 de finances pour 2004 (Law on 
finance for 2004 of 30 December 2003), ‘where distributions made by a parent 
company give rise to the application of the advance payment provided for in 
Article 223 sexies, that advance payment shall be reduced, where appropriate, by 
the amount of the tax credits which are applied to the income from 
shareholdings … received in the course of the tax years ending within the last five 
years at most’. 
7. By judgment of 15 September 2011, Accor (C-310/09, EU:C:2011:581), the Court 
of Justice of the European Union held that ‘Articles 49 TFEU and 63 TFEU 
preclude legislation of a Member State intended to eliminate economic double 
taxation of dividends, … which allows a parent company to set off against the 
advance payment, for which it is liable when it redistributes to its shareholders 
dividends paid by its subsidiaries, the tax credit applied to the distribution of those 
dividends if they originate from a subsidiary established in that Member State, but 
does not offer that option if those dividends originate from a subsidiary 
established in another Member State, since, in that case, that legislation does not 
give entitlement to a tax credit applied to the distribution of those dividends by 
that subsidiary’. It follows that the company in receipt of the dividends is entitled 
to a tax credit which ensures that dividends originating from companies 
established in France and those originating from companies established in another 
Member State of the European Union are given the same tax treatment. 
8. Article 4 of Council Directive 90/435/EC of 23 July 1990 on the common system 
of taxation applicable in the case of parent companies and subsidiaries of different 
Member States, in the version in force on 1 November 1995 and 21 March 2001, 
provides as follows: ‘1. Where a parent company, by virtue of its association with 
its subsidiary, receives distributed profits, the State of the parent company shall, 
except when the subsidiary is liquidated, either: – refrain from taxing such profits, 
or – tax such profits while authorising the parent company to deduct from the 
amount of tax due that fraction of the corporation tax paid by the subsidiary 
which relates to those profits and, if appropriate, the amount of the withholding 
tax levied by the Member State in which the subsidiary is resident, pursuant to the 
derogations provided for in Article 5, up to the limit of the amount of the 
corresponding domestic tax. 2. However, each Member State shall retain the 
option of providing that any charges relating to the holding and any losses 
resulting from the distribution of the profits of the subsidiary may not be deducted 
from the taxable profits of the parent company. [Or. 7] Where the management 
costs relating to the holding in such a case are fixed as a flat rate, the fixed 
amount may not exceed 5% of the profits distributed by the subsidiary …’ 
9. Those provisions, as clarified by the case-law of the Court of Justice of the 
European Union, in particular by the judgment of 25 September 2003, Océ van 
der Grinten (C-58/01, EU:C:2003:495), are designed to prevent the profits 
SCHNEIDER ELECTRIC AND OTHERS 
 
5 
distributed to a resident parent company by a non-resident subsidiary from being 
taxed first in the hands of the subsidiary in its State of residence and then in the 
hands of the parent company in its State of residence. To that effect, they leave 
Member States a choice between two systems: the exemption system and the 
imputation system. However, Member States retain the option of providing that 
any charges relating to the holding and any losses resulting from the distribution 
of the profits of the subsidiary may not be deducted from the taxable profits of the 
parent company. It is also clear from that provision that where the management 
costs relating to the holding in such a case are fixed as a flat rate, the fixed amount 
may not exceed 5% of the profits distributed by the subsidiary. 
10. The choice between the exemption system and the imputation system does not 
necessarily lead to the same result for the company receiving the dividends. It 
follows from the case-law of the Court of Justice of the European Union, in 
particular its judgment of 12 February 2009, Cobelfret (C-138/07, EU:C:2009:82), 
that a Member State which has opted, when transposing a directive, for one of the 
alternative systems for which it provides cannot rely on the effects or limitations 
which might have resulted from the implementation of the other system. As 
regards the tax treatment of profits covered by the Parent-Subsidiary Directive, 
Articles 145 and 216 of the General Tax Code opted for an exemption system, 
subject to the imposition of a proportion of the costs and fees, fixed at the flat rate 
of 5%, representing the costs and fees borne by the parent company relating to its 
shareholding in the subsidiary which distributed those profits. Those profits are 
therefore exempt up to 95%. 
11. It also follows from the case-law of the Court of Justice of the European Union, in 
particular its judgments of 17 May 2017, X (C-68/15, EU:C:2017:379), and AFEP 
and Others (C-365/16, EU:C:2017:378), that, for the purposes of Articles 5 and 6 
and Article 7(1) of Council Directive 90/435/EC of 23 July 1990, a withholding 
tax is a tax in respect of which the chargeable event is the payment of dividends or 
any other income from shares, the basis of assessment is the income from those 
shares, and the taxable person is the holder of the shares. Consequently – and as is 
common ground between the parties – the advance payment of tax, to which only 
the redistributing party is subject, is not in the nature of a withholding tax. By 
contrast, it is apparent from those judgments that, by providing that the Member 
State of the parent company is to ‘refrain from taxing such profits’, Article 4 of 
Council Directive 90/435/EC of 23 July 1990 prohibits Member States from 
taxing the parent company in respect of profits distributed to it by its subsidiary, 
without drawing a distinction based on whether the chargeable event of the 
taxation of the parent company is the receipt of those profits or their 
redistribution. Accordingly, the advance payment of tax under Article 223 sexies 
of the General Tax Code is capable of falling within the scope of those provisions. 
12. Taxation of those profits by the Member State of the parent company in the hands 
of that company when they are redistributed, which has the effect of subjecting 
those profits to taxation exceeding, de facto, the 5% ceiling provided for in 
Article 4(2) of the directive, would result in double taxation at the level of that 
REQUEST FOR A PRELIMINARY RULING OF 23. 10. 2020 – CASE C-556/20 
 
6  
company, which is prohibited by that directive. The Court of Justice inferred from 
that, in the judgments cited above, that the [Or. 8] provisions of Article 4(1)(a) of 
Council Directive 2011/96/EU of 30 November 2011 on the common system of 
taxation applicable in the case of parent companies and subsidiaries of different 
Member States, which reproduce the wording of the first indent of Article 4(1) of 
Council Directive 90/435/EC of 23 July 1990, must be interpreted as precluding 
‘a tax measure laid down by the Member State of a parent company … providing 
for the levy of a tax when the parent company distributes dividends and the basis 
of assessment of which tax is the amounts of the dividends distributed, including 
those coming from that company’s non-resident subsidiaries’. 
13. However, Article 7(2) of Council Directive 90/435/EC of 23 July 1990 provides 
that ‘this directive shall not affect the application of domestic or agreement-based 
provisions designed to eliminate or lessen economic double taxation of dividends, 
in particular provisions relating to the payment of tax credits to the recipients of 
dividends’. It follows from those provisions, which were clarified by the case-law 
of the Court of Justice of the European Union, in particular by the judgments of 
25 September 2003, Océ van der Grinten (C-58/01, EU:C:2003:495), and of 
24 June 2010, P. Ferrero e C. and General Beverage Europe (C-338/08 and 
C-339/08, EU:C:2010:364), that a levy falls within the scope of those provisions 
only if, first, it is based on provisions designed to eliminate or lessen economic 
double taxation of dividends and, second, its application does not obstruct the 
objective pursued by the directive. 
14. The advance payment of tax, as provided for in Article 223 sexies of the General 
Tax Code, before its repeal by the Law on finance for 2004 of 30 December 2003, 
is payable in the event of a distribution of profits giving rise to the application of a 
tax credit, where those profits have not been subject to corporation tax at the 
ordinary rate. That levy is thus one of the constituent elements of a mechanism for 
eliminating economic double taxation of distributed income, which seeks to avoid 
the situation whereby (i) the justification for the tax credit applied to that income 
is lost in the light of the tax borne by the distributing company on the profits out 
of which the distributions were made and, thus (ii) the application of that tax 
credit results in a windfall for the recipient of the distributions. Having regard in 
particular to the right to a tax credit which may be set off against the advance 
payment – a right enjoyed by all companies which receive dividends under the 
conditions and on the grounds set out in paragraph 7 – the application of that 
advance payment does not appear to have the effect of obstructing the objective 
pursued by the directive. 
15. The interpretation of the national provisions and the assessment of their 
compatibility with the Directive of 23 July 1990 depend on whether Article 4 of 
the directive, in view, in particular, of Article 7(2) thereof, precludes a provision 
such as Article 223 sexies of the General Tax Code, which provides, in order to 
ensure the correct implementation of a scheme designed to eliminate economic 
double taxation of dividends, for a levy when a parent company redistributes 
SCHNEIDER ELECTRIC AND OTHERS 
 
7 
profits which have been distributed to it by subsidiaries established in another 
Member State. 
16. That question raises a serious difficulty of interpretation of EU law. 
Priority question on constitutionality: [Or. 9]  
[…] 
[…] [There is no need to refer the matter to the Conseil constitutionnel 
(Constitutional Council, France)]. 
The other pleas raised in the actions: 
19. In the first place, since the question set out in paragraph 15 raises a serious 
difficulty of interpretation of EU law, as indicated above, it is appropriate, 
pursuant to Article 267 of the Treaty on the Functioning of the European Union, 
to refer the matter to the Court of Justice of the European Union for a preliminary 
ruling.  
[…] 
[…] [Or. 10] […] 
22. Accordingly, proceedings on the form of order sought in the applications are 
stayed until the Court of Justice of the European Union has given a preliminary 
ruling on the following question: 
[…] 
THE COURT HAS DECIDED AS FOLLOWS: 
[…] 
Article 2: The following question is referred to the Court of Justice of the 
European Union: does Article 4 of Directive 90/435/EC of 23 July 1990, in view, 
in particular, of Article 7(2) thereof, preclude a provision such as Article 223 
sexies of the General Tax Code, which provides, in order to ensure the correct 
implementation of a scheme designed to eliminate economic double taxation of 
dividends, for a levy when a parent company redistributes profits which have been 
distributed to it by subsidiaries established in another Member State? 
[…] 
[…] [Or. 11] [Or. 12] 
[…] 
[…] 
REQUEST FOR A PRELIMINARY RULING OF 23. 10. 2020 – CASE C-556/20 
 
8  
[…] [Signatures]