Judgment;Summary — ECLI:EU:C:2022:760
Date: 2022-10-06
Language of the case: Italian
Court formation: Eighth Chamber
Subject matter: Right of establishment;Anti-discrimination
Procedure: Reference for a preliminary ruling
Origin: Italy

Summary C-433/21 – 1 
Case C-433/21 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
16 July 2021 
Referring court: 
Corte suprema di cassazione (Italy) 
Date of the decision to refer: 
8 July 2021 
Appellant: 
Agenzia delle entrate 
Respondent on a point of law and cross-appellant on a point of law: 
Contship Italia SpA 
  
Subject matter of the main proceedings 
Appeal brought before the Corte di Cassazione (Supreme Court of Cassation, 
Italy) against a judgment of the Commissione tributaria regionale della Liguria 
(Regional Tax Court, Liguria, Italy) concerning the applicability of the rules on 
shell companies laid down in Article 30 of legge n. 724 del 1994 (Law 
No 724/1994), in the version in force during the reference tax period (2005). 
Subject matter and legal basis of the reference 
Compatibility of Italian rules on shell companies, in the version applicable during 
the reference tax period, with Articles 18 and 49 TFEU. 
Question referred for a preliminary ruling 
Do Articles 18 (ex Article 12 TEC) and 49 (ex Article 43 TEC) TFEU preclude 
national legislation which, like Article 30(1)(5) of legge 23 dicembre 1994, n. 724 
(Law No 724 of 23 December 1994), in the version applicable ratione temporis, 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-433/21 
 
2  
prior to the amendments introduced by legge 27 dicembre 2006, n. 296 (Law 
No 296 of 27 December 2006), excludes from the measures to prevent tax 
avoidance by non-operational companies – based on minimum revenue and 
income thresholds relative to the value of specific corporate assets, which, if not 
met, is a sign that the company is non-operational and means that the taxable 
income must be determined by way of presumption – only companies and entities 
whose securities are traded on Italian regulated markets and not companies and 
entities whose securities are traded on foreign regulated markets, as well as the 
companies that control or are controlled by, even indirectly, those listed 
companies and entities? 
 
Provisions of EU law relied on 
Articles 18 and 49 TFEU and the relevant case-law of the Court of Justice. 
Article 18 TFEU lays down the principle of non-discrimination, which in the area 
of tax entails an obligation for Member States to respect the principle of ‘national 
treatment’ of those who exercise the fundamental freedoms guaranteed by the 
Treaty (judgment of 12 December 2002, De Groot, C-385/00, EU:C:2002:750, 
paragraph 94). The rules regarding equal treatment forbid not only overt 
discrimination based on the location of the registered offices of companies, but 
also covert discrimination based on other criteria (judgments of the Court of 
Justice of 14 February 1995, Schumacker, C-279/93, EU:C:1995:31, 
paragraph 26, and of 5 February 2014, Hervis Sport- és Divatkereskedelmi, 
C-385/12, EU:C:2014:47, paragraph 30). 
Article 49 TFEU enshrines the principle of freedom of establishment. The 
provisions of the TFEU on freedom of establishment prohibit the Member State of 
origin from hindering or rendering more onerous the establishment in another 
Member State of one of its nationals or of a company incorporated in accordance 
with its legislation (judgments of 26 May 2011, Commission v Denmark, 
C-261/11, EU:C:2013:480, paragraphs 26 and 27, and of 16 April 2015, 
Commission v Germany, C-591/13, EU:C:2015:230, paragraph 56). Persons who 
benefit from freedom of establishment may carry out the activities referred to in 
Article 43 TFEU entirely in a Member State other than the Member State of origin 
(primary establishment), or may carry out their activities either in the Member 
State of origin where they have kept their registered office, or in a host Member 
State through a permanent establishment (secondary establishment) (see judgment 
of 27 September 1988, Daily Mail and General Trust, 81/87, EU:C:1988:456, 
paragraphs 16 and 17). Freedom of establishment (secondary establishment) may 
also be exercised through shareholdings (judgments of 25 February 2010, X 
Holding, C-337/08, EU:C:2010:89, paragraph 17; of 12 June 2014, SCA Group 
Holding and Others, C-39/13 to C-41/13, EU:C:2014:1758, paragraphs 20 and 45; 
and of 6 October 2015, Finanziamt Linz, C-66/14, EU:C:2015:661, paragraph 26), 
CONTSHIP ITALIA 
 
3 
as well as through a subsidiary, a branch or an agency (judgment of 12 September 
2006, Cadbury Schweppes and Cadbury Schweppes Overseas, C-196/04, 
EU:C:2006:278, paragraphs 41 and 42). 
Provisions of national law relied on 
Legge del 22 dicembre 1994 n. 724 - Misure di razionalizzazione della finanza 
pubblica, detta una disciplina antielusiva delle società non operative (Law No 724 
of 22 December 1994 – Measures to rationalise public finances and prevent tax 
avoidance by non-operational companies). Specifically:  
Article 30(1) of that law, in the version applicable to the present case, provided: 
‘unless there is evidence to the contrary, public limited companies, partnerships 
limited by shares, limited liability companies, limited partnerships and non-
resident companies and entities of all types, with a permanent establishment in 
State territory, shall be deemed non-operational if the total amount of revenues, 
increase in inventories and income, excluding extraordinary income, as evidenced 
by the income statement, where required, is below [certain thresholds].’ 
The referring court explains that Article 30 regulates ‘shell companies’, also 
known as ‘non-operational companies’: these companies have no business activity 
as such because they were set up for tax avoidance purposes. The article provides 
that an ‘operational test’ should be used to identify shell companies, based on 
minimum income criteria: if a company does not meet the minimum income 
threshold, it is deemed ‘non-operational’ and its taxable income is presumed to 
correspond to an amount calculated by inductive reasoning – in other words, on 
the basis of presumptions rather than accounting records. The ‘operational test’ is 
based on the finding that companies actually engaged in a business activity 
continually achieve a minimum revenue threshold. Moreover, Article 30(1) allows 
the taxpayer to prove that the company was not set up for tax avoidance purposes. 
The provision in question reflects the tendency of Italian law to limit the use of 
corporate structures to genuine business activities. 
However, the same Article 30(1) provides that certain categories of taxpayer are 
excluded from these rules. 
In particular, the version of Article 1 applicable to the tax period in question 
(2005, prior to the entry into force of Law No 296/2006) excluded various 
categories of taxpayer, including ‘companies and entities whose securities are 
traded on Italian regulated markets’. 
In the version of Article 30(1) currently in force – following the amendments 
introduced by Article 1(109)(d) of legge 27 dicembre 2006 n. 296 – Disposizioni 
per la formazione del bilancio annuale e pluriennale dello Stato (legge finanziaria 
2007) (Law No 296 of 27 December 2006 on the provisions for drawing up the 
annual and multiannual budget of the Italian State (Finance Law 2007)), this 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-433/21 
 
4  
category of listed companies was extended to include ‘companies and entities that 
control companies and entities whose securities are traded on Italian and foreign 
regulated markets, as well as those listed companies and entities and the 
companies they control, even indirectly’. 
The referring court explains that, in both those versions of Article 30(1), the 
exclusion of listed companies (on Italian regulated markets or on Italian and 
foreign regulated markets) from the rules on shell companies is justified by the 
fact that those companies are subject to control by public authorities responsible 
for protecting investors and guaranteeing market efficiency. 
Succinct presentation of the facts and procedure in the main proceedings 
1 In the 2005 tax year, the company Borgo Supermercati srl, controlled by a 
company listed on the German stock exchange, was the sole shareholder of the 
company Mika srl. The Agenzia delle Entrate (the Italian Revenue Agency) issued 
Borgo Supermercati srl with a notice of assessment in which it determined that 
company’s minimum taxable income for corporate income tax purposes as being 
greater than the amount declared by Borgo Supermercati srl. 
2 Borgo Supermercati srl brought an action before the Commissione tributaria 
provinciale di Genova (Genoa Provincial Tax Court) (the court of first instance in 
tax matters) against the decision adopted by the Italian Revenue Agency. The 
action was dismissed in its entirety. 
3 Borgo Supermercati srl appealed against the judgment at first instance before the 
Liguria Regional Tax Court (the court of second instance in tax matters). The 
appeal by Borgo Supermercati srl was upheld in part. According to the judgment 
at second instance, the version of Article 30 prior to the amendments introduced 
by Law No 296/2006 was applicable to the tax period in question. In that version, 
only companies listed on Italian markets were excluded from the rules on shell 
companies. Nevertheless, the court of second instance held that, in accordance 
with the principle of reasonableness, Borgo Supermercati srl, as a subsidiary of a 
company listed on the German stock exchange, should also be excluded from the 
application of the rules on shell companies. It was also reasonable that the 
applicant’s taxable income should be reduced from the amount determined in the 
notice of assessment, since according to the ‘participation exemption’ criterion 
(95% exemption) in Article 89 of decreto del Presidente della Repubblica del 22 
dicembre 1986 n. 917 (Presidential Decree No 917 of 22 December 1986), a 
percentage of the dividends from the shares held by Borgo Supermercati srl were 
excluded from the latter’s taxable income. 
4 The Italian Revenue Agency appealed against the judgment of the Liguria 
Regional Tax Court. Contship Italia SpA, which in the meantime had taken over 
Borgo Supermercati srl, entered a defence and lodged a cross-appeal. 
CONTSHIP ITALIA 
 
5 
The essential arguments of the parties in the main proceedings 
5 The Italian Revenue Agency, the appellant in the main action, contests only the 
reduction of the amount of taxable income of Borgo Supermercati srl. 
6 However, the referring court takes the view that it should give priority to 
examining the pleas in law raised in the cross-appeal brought by Contship Italia 
SpA since, before examining the main appeal, the question must be settled of the 
applicability of the rules on shell companies to the situation of Borgo 
Supermercati srl. 
7 In support of its defence, Contship Italia SpA relies on eight pleas in law, of 
which only the first four are directly related to the question referred for a 
preliminary ruling. 
8 The first plea concerns the infringement of Article 30 of Law No 724/1994, and 
alleges that the version of that article resulting from the amendments introduced 
by Law No 296/2006 had to be applied ‘seamlessly’ with the previous version. 
The respondent and cross-appellant submits that the exclusion from the rules on 
shell companies had to apply to companies listed on regulated markets in the 
European Union even prior to the amendments to Article 30 introduced by Law 
No 296/2006, since otherwise this would be discriminatory in terms of freedom of 
establishment, economic freedom and freedom to conduct business in the EU. 
9 The second plea also alleges the infringement of Article 30 of Law No 724/1994. 
Contship Italia SpA contends that the judgment under appeal reassessed the 
amount of taxable income by a process of induction, which is inconsistent with 
that judgment’s reasoning according to which the taxable income of Borgo 
Supermercati srl was subject to ‘participation exemption’ rules. 
10 Regarding the first two pleas, the respondent and cross-appellant submits that 
there is a need for ‘an interpretation consistent with the rules’ enshrined in 
Article 30, according to which companies listed on the German stock exchange – 
such as the company that exercised 100% control over Borgo Supermercati srl in 
2005 – had to be treated in the same way as companies listed on Italian financial 
markets, even under the version of Article 30 prior to the amendments introduced 
by Law No 296/2006. In that regard, Contship Italia SpA submits that Law 
No 296/2006, in expanding the category of excluded parties to include ‘companies 
and entities that control companies and entities whose securities are traded on 
Italian and foreign regulated markets, as well as those listed companies and 
entities and the companies they control, even indirectly’, simply transposed a 
principle that already existed in EU law. Any other interpretation of the version of 
Article 30 prior to the amendments introduced by Law No 296/2006 would be 
contrary to the principles of EU law, since tantamount to discrimination on the 
ground of the parent company’s nationality and an infringement of the freedom of 
establishment and economic initiative. In the light of those considerations, the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-433/21 
 
6  
respondent and cross-appellant requests, in the alternative, that the matter be 
referred to the Court of Justice of the European Union. 
11 The third plea alleges the infringement of Article 30 of Law No 724/1994 in 
conjunction with Articles 85 and 87 of Presidential Decree No 917 of 
22 December 1986 (adoption of the codified law on income tax). The plea 
specifically concerns the question whether the measures to prevent tax avoidance 
provided in Article 30 apply to ‘pure holding companies’ – that is to say, 
companies that, like Borgo Supermercati srl, are not engaged in the economic 
activities of manufacturing or trade, but are set up solely to coordinate and 
manage the companies they control. 
12 The fourth plea concerns the provision of Article 30(1) which allows the taxpayer 
to prove that the company was not set up for tax avoidance purposes. In that 
regard, the respondent and cross-appellant alleges the failure to examine an 
essential fact of the case, since no consideration was given to the evidence to the 
contrary it adduced, concerning an objective and extraordinary situation that 
prevented revenue from being generated, thereby precluding the application of the 
rules on shell companies. 
Succinct presentation of the reasoning in the reference for a preliminary 
ruling 
13 The referring court has doubts as to the compatibility of Article 30(1), in the 
version applicable to the tax period concerned (in other words, the version prior to 
the amendments introduced by Law No 296/2006), with the prohibition of 
discrimination laid down in Article 18 TFEU and the principle of freedom of 
establishment enshrined in Article 49 TFEU. Such doubts cannot be dispelled by 
interpreting the national provision in conformity with EU law, for three reasons. 
In the first place, the inflexible wording of the provision at issue expressly 
excludes only companies listed on Italian markets from the rules on shell 
companies. The conditions laid down in the case-law of the Court of Justice for a 
national provision to be interpreted in conformity with EU law are not, therefore, 
met (judgments of 9 March 1978, Simmenthal, 106/77, EU:C:1978:49, and of 
19 June 1990, Factortame and Others, C-213/89, EU:C:1990:257). 
14 In the second place, interpretation in conformity with EU law is not possible, 
since there is no clear solution to the problem of the compatibility of 
Article 30(1), in the version applicable to the tax period in question, with 
Articles 18 and 49 TFEU. The conditions laid down in the case-law of the Court 
of Justice for making the reference for a preliminary ruling are, therefore, fulfilled 
(judgments of 27 March 1980, Denkavit italiana, 61/79, EU:C:1980:100, 
paragraphs 15 and 16; of 6 October 1982, Cilfit and Others, C-283/81, 
EU:C:1982:335, paragraph 16; of 16 July 1992, Meilicke, C-83/91, 
EU:C:1992:332, paragraphs 23 to 25; of 12 February 2008, Kempter, C-2/06, 
CONTSHIP ITALIA 
 
7 
EU:C:2008:78, paragraph 42; and of 21 July 2011, Kelly, C-104/10, 
EU:C:2011:506, paragraphs 60 to 64).  
15 In the third place, only the version of Article 30 amended by Law No 296/2006 
includes among the companies excluded from the rules on shell companies the 
parent companies of listed companies and the companies controlled by those listed 
companies. Also in this case, the inflexible wording of the previous version of 
Article 30, which expressly excludes only companies listed on Italian markets 
from the rules on shell companies, prevents the referring court from extending that 
exclusion to the parent companies of listed companies or to the companies 
controlled by those listed companies, given that under Italian law, the companies 
retain their separate legal personality even if they control or are controlled by 
another company. 
16 According to the referring court, the version of Article 30 prior to the amendments 
introduced by Law No 296/2006 seems incompatible with the freedom of 
establishment, since it does not include, among the persons excluded from the 
rules on shell companies, neither companies listed on regulated markets outside 
Italy, the parent companies of listed companies nor companies controlled by listed 
companies. That provision could dissuade companies not covered by that version 
of Article 30 from exercising their freedom of establishment in Italy by 
controlling companies resident there. The principle of freedom of establishment 
prohibits the Member State of origin from hindering, making less attractive or 
otherwise imposing restrictions on the establishment of one of its nationals or of a 
company incorporated under its legislation (judgments of 15 May 1997, Futura 
Participations and Singer, C-250/95, EU:C:1997:239, paragraph 19; of 16 July 
1998, ICI, C-264/96, EU:C:1998:370, paragraphs 20 and 21; and of 12 September 
2006, Cadbury Schweppes and Cadbury Schweppes Overseas, C-196/04, 
EU:C:2006:544, paragraph 42). 
17 The referring court also emphasises the direct effect of Article 49 TFEU, which 
recognises and guarantees freedom of establishment (judgment of 21 June 1974, 
Reyners, 2/74, paragraphs 15 to 17).