Opinion of the Advocate General — ECLI:EU:C:1998:580
Date: 1998-12-01
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition;Right of establishment;Taxation;Internal taxation
Procedure: Reference for a preliminary ruling
Origin: France

Summary of the Judgment 
Freedom of movement for persons — Freedom of establishment — Equal treatment — 
Direct taxation — Special levy on turnover — Undertakings exploiting proprietary 
medicinal products granted tax rebates — Limited to expenditure on research carried out 
in the levying State — Not permissible — The general interest pleaded in justification — 
Effectiveness of fiscal supervision specifically pleaded in justification — No such 
justification 
(EC Treaty, Arts 52 (now, after amendment, Art. 43 EC) and 58 (now Art. 48 EC» 
I - 4809 
SUMMARY — CASE C-254/97 
Articles 52 of the EC Treaty (now, after 
amendment, Article 43 EC) and 58 thereof 
(now Article 48 EC) preclude national 
legislation under which undertakings estab­
lished in that State and exploiting proprie­
tary medicinal products there are charged a 
special levy on pre-tax turnover derived 
from certain of those proprietary medicinal 
products during the last tax year before 
enactment of that legislation and are 
allowed to deduct from the amount payable 
only expenditure, incurred during the same 
tax year, on research carried out in the 
levying State, when such legislation applies 
to Community undertakings operating in 
that State through a secondary place of 
business. 
The tax allowance in question seems likely 
to work more particularly to the detriment 
of undertakings of that kind, since, in most 
cases, those are the undertakings which will 
have developed their research activities 
outside the territory of the levying State. 
It thus leads to unequal treatment which 
cannot be justified by reference to the 
general interest — in the name of effective­
ness of fiscal supervision, for instance — 
where that national legislation wholly pre­
vents the taxpayer from submitting evi­
dence that expenditure relating to research 
carried out in other Member States has 
actually been incurred. 
I -4810