Opinion of the Advocate General — ECLI:EU:C:2019:1029
Date: 2019-11-28
Language of the case: Italian
Subject matter: Free movement of capital;Freedom to provide services;Anti-discrimination
Procedure: Reference for a preliminary ruling
Origin: Italy

Translation C-565/18-1 
Case C-565/18 
Request for a preliminary ruling 
Date lodged: 
6 September 2018 
Referring court: 
Commissione Tributaria Regionale per la Lombardia (Regional Tax 
Court for Lombardy, Italy) 
Date of the decision to refer: 
2 July 2018 
Appellant: 
Société Générale SA 
Respondent: 
Agenzia delle Entrate — Direzione Regionale Lombardia Ufficio 
Contenzioso 
  
THE REGIONAL TAX COURT FOR 
LOMBARDY      […]  
has issued the following 
ORDER 
- concerning Appeal No 17/2017 
- against judgment […] issued by the Commissione Tributaria Provinciale di 
MILANO (Provincial Tax Court, Milan) 
against: 
DIREZIONE REGIONALE LOMBARDIA UFFICIO CONTENZIOSO 
(LOMBARDY REGIONAL REVENUE OFFICE, LEGAL DEPARTMENT) 
brought by the appellant: 
EN 
REQUEST FOR A PRELIMINARY RULING OF 2 JULY 2018 — CASE C-565/18 
 
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SOCIETE GENERALE SA 
[…] 
[Or.2] 
[…] 
Contested measures: 
REFUSAL OF REFUND — APPLICATION OF 1 AUGUST 2014 
[Or.3] 
[…] 
BACKGROUND 
[…] 
[…] 
Facts: 
1) On 28 March 2014, Société Générale SA, foreign tax identification number 
FR 27552120222, with its registered office in Paris (France) […], through its 
Italian branch established in Milan (Italy) […], filed a tax return for financial 
transaction tax (FTT), provided for and governed under Italian law by 
Article 1(491) to (500) of Law No 228 of 24 December 2012 (2013 Stability 
Law), and by the implementing Decreto Ministeriale (Ministerial Decree) of 
21 February 2013, as amended by the Ministerial Decree of 16 September 2013. 
2) The tax return, which concerned financial transactions in derivative 
instruments carried out by the French parent company during the 2013 tax year, 
showed that the total amount of tax due under Article 1(492) of Law No 228/2012 
was EUR 55 207.00, corresponding to payments made during the reference tax 
period. 
3) On 1 August 2014, the Italian branch, on behalf of the parent company, 
applied to the Agenzia delle Entrate (Italian Revenue Agency) for a refund of the 
amount paid, claiming the constitutional illegitimacy of the rules governing 
financial transaction tax on derivatives, insofar as they provided for the 
application of the tax based on the presumption of residence in Italian territory of 
the issuer of the security underlying the derivative, on the grounds of alleged 
infringement of the principles of formal equality and taxpaying ability enshrined 
in Articles 3 and 53 of the [Or.4] Italian Constitution, respectively, and alleged 
infringement of the customary international law relevant to the Italian 
constitutional system under Article 10 of the Constitution; the company also based 
its refund application on the alleged conflict between the Italian law in question 
SOCIÉTÉ GÉNÉRALE 
 
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and EU law, and specifically Articles 18, 56 and 63 of the Treaty on the 
Functioning of the European Union. 
4) The Italian Revenue Agency did not respond to the refund application, and 
so on 28 January 2015, after the 90-day period had elapsed following the 
submission of the application, the taxpayer brought an action before the Milan 
Provincial Tax Court against the tacit refusal, requesting that the Italian Revenue 
Agency be ordered to refund the tax paid, adducing the same grounds as those on 
which the refund application was based and seeking: a) the stay of the proceedings 
with simultaneous referral to the Constitutional Court regarding the alleged 
constitutional illegitimacy of Article 1(492) of Law No 228/2012, because it was 
contrary to Articles 3 and 53 of the Constitution; b) the disapplication of Italian 
legislation held contrary to Articles 18, 56 and 63 TFEU or, in the alternative, the 
stay of the proceedings and a reference for a preliminary ruling to the Court of 
Justice of the European Union, by virtue of the principle of uniform application of 
EU law, with the question ‘should Articles 18, 56 and 63 TFEU preclude national 
legislation from imposing a financial transaction tax on the sole ground that the 
transactions concern a derivative based on a security issued by a company resident 
in the State?’; c) the suspension on the ground of [translator’s note: word missing 
from source] with simultaneous referral to the Constitutional Court regarding the 
alleged constitutional illegitimacy of Article 1(492) of Law No 228/2012, as it 
was contrary to the principles of sovereignty and tax territoriality inherent in 
international and EU law, and therefore relevant to Italian constitutional law 
pursuant to Article 10(1) of the Constitution. 
5) The Italian Revenue Agency — Lombardy Regional Office entered an 
appearance, requesting that the action be dismissed, contesting the applicant’s 
arguments and insisting on the legitimacy of the refusal and of the legislation 
establishing the tax in question, pointing to the existence of an effective and 
objective link between the taxable derivative securities and the Italian legal 
system, if, as in the present case, the underlying security of the derivative had 
been issued by a company resident in Italy. 
[Or.5] 
6) The Milan Provincial Tax Court, by means of judgment No 4334/16 handed 
down on 17 May 2016, dismissed the action, finding that — contrary to the 
arguments put forward by the taxpayer — it was entirely legitimate to tax 
derivative transactions where the underlying was a security issued by a company 
resident in Italy, since, in the opinion of the Provincial Tax Court, the legislative 
reference to the residence of the issuer of the underlying security was sufficient to 
establish a genuine, effective and objective economic link between the taxable 
event and the expression of taxpaying ability referred to in Article 53 of the 
Constitution — namely, the trading of a derivative — and the Italian State. 
7) According to the Provincial Tax Court, there was no substantive violation of 
the principle of equality enshrined in Article 3 of the Constitution, owing to the 
REQUEST FOR A PRELIMINARY RULING OF 2 JULY 2018 — CASE C-565/18 
 
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indissoluble correlation between the value of the underlying security and the value 
of the derivative, expressed by the pay-off of the derivative itself — a correlation 
that, as noted by the Department and commented on by the Court, involves the 
possibility of using derivatives to place substitute trades in the underlying 
securities, such that to exclude the derivatives from the taxation of financial 
transactions (despite being an expression of taxpaying ability and objectively 
linked to the Italian legal system) would amount to tax evasion by financial 
market participants, to the clear detriment of the Revenue Agency. 
8) The Provincial Tax Court did not consider there to have been an 
infringement of EU legislation, in the absence of differentiated tax regimes 
between taxable persons in Italy and in other Member States, nor of the 
international principle of territoriality and fiscal sovereignty of other States, since 
the above-mentioned link existed between the taxable economic event and the 
Italian State, and since the legislative power of other legal systems had not been 
undermined. 
9) The taxpayer appealed the decision of the Provincial Tax Court, reiterating 
the arguments and grounds adduced at first instance and entering the same form of 
order, requesting that the contested judgment be set aside and seeking, in its 
principal action, the reimbursement of the financial transaction tax paid, based on 
an interpretation of Article 1(492) of Law No 228/2012 in line with the 
Constitution, and in the alternative, the stay of the proceedings and reference for a 
preliminary ruling on constitutional illegitimacy, since the provision in question 
was contrary to Articles 3 and 53 of the Constitution and the international 
principle of State territoriality and sovereignty [Or.6], relevant to the national 
legal system pursuant to Article 10 of the Constitution; the appellant further 
requested a reference for a preliminary ruling to the Court of Justice of the 
European Union for the infringement of Articles 18, 56 and 63 TFEU. 
10) The Italian Revenue Agency — Lombardy Regional Office responded with 
counter-arguments, contesting the other party’s submissions and requesting 
confirmation of the judgment under appeal. 
[national procedure] 
[…] 
EXPLANATORY STATEMENT 
Brief description of the factual and legal grounds of the decision pursuant to 
Article 36(2)(4) of Legislative Decree No 546/92 
The Court […] withdrew to deliberate in chambers as per the operative part. 
Law: 
SOCIÉTÉ GÉNÉRALE 
 
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11) This Court notes that the financial transaction tax referred to in 
Article 1(491) to (500) of Law No 228/2012 was introduced to ensure that persons 
who carry out transactions in financial instruments in the relevant markets and 
who have a link to the territory of the Italian State contribute to public 
expenditure. 
12) Under paragraph 491 of the above Article, together with the relevant 
definitions in Article 1 of the Ministerial Decree of 21 February 2013 and the 
subsequent [Or.7] paragraph 494, the beneficiary of the transfer of the title to 
shares and other equity securities issued by companies resident in Italy, and of 
securities representing those instruments, is liable to financial transaction tax, 
regardless of the State of residence of the issuer of the representing security, 
provided that the represented security is issued by a company resident in Italian 
territory; the tax is calculated in proportion to the value of the transaction at a 
differential rate depending on the type of market where the trading takes place. 
13) The above-mentioned provision is further supplemented by Article 2 of the 
Ministerial Decree of 21 February 2013, whereby ‘residence shall be determined 
on the basis of its registered office. The tax shall also apply to the transfer of 
ownership of the representative securities, irrespective of the place of residence of 
the issuer of the certificate and the place of conclusion of the contract’. 
14) Even if calculated differently — namely, with a fixed amount which rises 
incrementally in ranges of trading values and which varies according to the type 
of instrument traded and the value of the contract — the tax is due, under 
paragraphs 492 and 494 of the above-mentioned Article, from each of the 
counterparties to ‘transactions in derivative financial instruments referred to in 
Article 1(3) of decreto legislativo 24 febbraio 1998, n. 58 (Legislative Decree 
No 58 of 24 February 1998), as amended, which mainly have as their underlying 
one or more of the financial instruments referred to in paragraph 491, or whose 
value mainly depends on one or more of the financial instruments referred to in 
that paragraph, and the securities transactions referred to in Article 1(1-bis)(c) and 
(d) of said Legislative Decree, mainly allowing one or more financial instruments 
referred to in paragraph 491 to be bought or sold, or involving a cash settlement 
determined mainly by reference to one or more of the financial instruments 
referred to in the preceding paragraph, including warrants, covered warrants and 
certificates’ (see Article 1(492) of Law No 228/2012). 
15) The above-mentioned provision, which is the subject of the grievances 
addressed in this judgment, states that: ‘The tax is due regardless of the place of 
conclusion of the transaction and the State of residence of the contracting parties’ 
(see Article 1(492) of Law No 228/2012), confirming the legislative intention to 
subject the transfer to tax. 
16) Moreover, a similar parenthetical element can also be found in the previous 
paragraph 491, such that the legislative parallel between the two tax situations is 
clear.  
REQUEST FOR A PRELIMINARY RULING OF 2 JULY 2018 — CASE C-565/18 
 
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[Or.8] 
17) In the interests of completeness, it should be noted that in paragraph 495, the 
legislation in question also provides for a third type of tax situation subject to 
financial transaction tax, [stating that] ‘transactions carried out in the Italian 
financial market are subject to a tax on high-frequency trading in relation to the 
financial instruments referred to in paragraphs 491 and 492’. 
17a) However, the situation provided for in Article 1(495) of Law No 228/2012 is 
not directly within the scope of this judgment. 
17b) The taxpayer’s grievances concern the situations referred to in 
paragraphs 491 and 492, owing to the symmetry that exists between them, both 
being characterised by a link with the Italian legal system (the residence in Italy of 
the issuers of the financial instruments referred to in paragraph 491) and the 
irrelevance, for tax purposes, of the State of residence of the parties to the 
transaction. 
18) Specifically, the taxpayer considers the link with the Italian legal system 
provided for by Article 1(492) of Law No 228/2012, which subjects derivative 
transactions to taxation, to be contrary to the constitutional principle enshrined in 
Article 53 of the Constitution, according to which the payment of taxes in Italy 
must take place on the basis of the taxpaying ability expressed within the State, 
since persons who are foreign nationals cannot be involved in the tax system. 
19) The taxpayer asks what taxpaying ability could be expressed, as in the 
present case, by a non-resident trading in a foreign market a derivative issued by 
another non-resident and having as an underlying a security issued by an Italian 
company: no wealth would be expressed in Italy in transactions such as the one in 
the present case […]. 
18) The appellant, alleging the lack of manifestation of taxpaying ability in 
relation to derivative transactions similar to those carried out by the appellant, 
argues that the legislator, with reference to Article 1(491) and (492) of Law 
No 228/2012, has subjected different situations to the same ‘tax mechanism’ (page 
16 of the appeal), contrary to the principle of formal equality enshrined in 
Article 3 of the Constitution. 
[Or.9] 
19) However, the taxpayer’s argument concerning the alleged manifest 
constitutional illegitimacy of the legislation in question in the light of Articles 3 
and 53 of the Constitution must be refuted. 
20) On this point, it is observed that Article 53 of the Constitution permits the 
legislator to tax economic transactions — and thus direct or indirect expressions 
of wealth — that have a link with the territory and/or with the Italian legal system: 
the existence of such a link gives rise to a civic duty for the person (even if not 
SOCIÉTÉ GÉNÉRALE 
 
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resident) to contribute to national public expenditure on account of the taxpaying 
ability thus expressed. 
21) Indeed, in the present case and in the situations governed by Article 1(492) 
of Law No 228/2012, the chargeable event that expresses taxpaying ability can be 
identified effectively in derivative transactions where the underlying is a security 
issued by a person resident in Italy. 
22) Such transactions have a link with Italian territory and/or with the Italian 
legal system which is entirely consistent with the situations referred to in 
paragraph 491 of the above-mentioned Article: like those who, regardless of their 
place of residence, whether in or outside Italian territory, trade in the securities 
referred to in Article 1(491) of Law No 228/2012 and benefit from a value that 
arises only to the extent that the Italian legal system exists and is operational as 
the issuing State of the securities traded (or represented by the securities traded), 
likewise anyone who engages in derivative transactions where the underlying 
assets are securities issued by Italian companies profits from a value that 
necessarily and closely depends on a security whose existence is based on the 
existence of the Italian legal system, which governs its issue. 
23) In other words, there can be no question that the derivative, even if it can be 
traded separately from the underlying security, exists and is appreciable to the 
extent that the securities traded (or represented by the securities traded) are 
recognised by the Italian legal system as the issuing State, and that the value of the 
derivative necessarily depends on this, on the basis of a mathematical relationship. 
24) It can therefore be concluded that with regard to trading in the derivative 
financial instruments referred to in Article 1(492) of Law No 228/2012, and in the 
securities referred to in Article 1(491) of Law No 228/2012, there is also [Or.10] 
an indissoluble, concrete and verifiable economic link between the financial 
instrument and the Italian legal system, and therefore between the transaction — 
considered a chargeable event to the extent that it is an expression of taxpaying 
ability — and the Italian legal system, regardless of the place of execution of the 
transaction and the place of residence of the parties to the transaction; therefore, 
the transaction cannot be considered ‘foreign’, even if it is carried out by persons 
not resident in Italy and outside Italian territory. 
25) In this respect, it is consistent with Article 3 of the Constitution, there being 
no intrinsic difference — in terms of manifestation of taxpaying ability — 
between the transactions referred to in Article 1(491) of Law No 228/2012 and 
those referred to in Article 1(492) of the same Law. 
26) The appellant submits, however, that the legislation in question undermines 
the functioning of the European internal market since a tax mechanism that, 
according to the appellant, appears to be the same for resident and non-resident 
taxable persons is in fact discriminatory, thus infringing Article 1(492) of Law 
REQUEST FOR A PRELIMINARY RULING OF 2 JULY 2018 — CASE C-565/18 
 
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No 221/2012 and Article 18 TFEU, according to which ‘any discrimination on 
grounds of nationality shall be prohibited’. 
27) The application of the financial transaction tax to transactions carried out by 
non-residents, through persons who are also non-residents, even if the trading 
concerns derivatives where the underlying is a security issued by an Italian 
company, would entail, in the opinion of the taxpayer, a restriction on the freedom 
to provide services within the EU. This is contrary to the first paragraph of 
Article 56 TFEU, which states: ‘Within the framework of the provisions set out 
below, restrictions on freedom to provide services within the Union shall be 
prohibited in respect of nationals of Member States who are established in a 
Member State other than that of the person for whom the services are intended.’ 
28) In other words, both the application of the tax and the laying down of 
additional administrative and declaratory requirements to settle the tax (namely, 
keeping records, filing returns and extrapolating from the amount of transactions 
carried out the individual derivative transactions where the underlying assets are 
securities issued by Italian residents) allegedly hinder the activity of derivatives 
intermediation and make it less attractive for non-resident intermediaries [Or.11] 
than for residents, creating a de facto restriction on the freedom to provide 
services, which is prohibited under TFEU; this is even more evident in the case of 
an intermediary established in a different State from the recipient of the service. 
29) In the applicant’s opinion, the tax in question, applied to derivatives 
transfers, together with the related administrative and declaratory requirements, 
impedes access to the market for derivatives where the underlying assets are 
securities issued by an Italian company, and by making the intermediation of such 
derivatives less attractive, is a deterrent both to the supply of and demand for such 
products. 
30) In support of its arguments, the appellant refers to the following case-law of 
the Court of Justice of the European Union: judgments of 26 June 2003, Skandia 
and Ramstedt, C-422/01, paragraph 28; of 5 July 2012, SIAT, C-318/10, 
paragraphs 19 and 28; of 15 May 1997, Futura, C-250/95; regarding the existence 
of an infringement of the Treaty even if the restriction of a fundamental freedom 
is of limited scope or minor importance, judgments of 18 October 2012, X NV, 
C-498/10, paragraph 30; of 1 July 2010, Dijkman, C-233/09, paragraph 42; of 
14 December 2006, Dehkavit International, C-170/15, paragraph 50; of 11 March 
2004, De Lasteryrie du Saillant, C-9/02, paragraph 43; of 15 February 2000, 
Commission v France, C-34/98, paragraph 49. 
31) The appellant further claims that subjecting derivative transactions where 
the underlying assets are Italian securities to the tax referred to in Article 1(492) 
of Law No 228/2012 is clearly contrary to Article 63 TFEU on capital and 
payments, according to which ‘… all restrictions on the movement of capital 
between Member States …’ and ‘all restrictions on payments between Member 
States … shall be prohibited’. 
SOCIÉTÉ GÉNÉRALE 
 
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32) The infringement of the above-mentioned Treaty provision is supposedly 
confirmed by the fact that the tax referred to in Article 1(492) of Law 
No 228/2012 has the effect of discouraging operators in States other than Italy 
from investing in derivative instruments where the underlying assets are Italian 
securities, regardless of where they are issued and traded. 
33) On this point, the appellant cites the Court of Justice judgment of 13 March 
2014, Bouanich, C-375/12, paragraph 43, which upheld the prohibition on 
adopting national measures ‘which are such as to discourage non-residents from 
making investments [Or.12] in a Member State or to discourage that Member 
State’s residents from doing so in other States’. 
34) This Court therefore wonders whether — with regard to the specific case at 
hand of financial transactions carried out between non-residents through persons 
who are also non-residents and concerning derivatives where the underlying is a 
security issued by an Italian company — the presumption of taxing those 
transactions and imposing the administrative and declaratory requirements 
necessary for payment of the tax by the contractual counterparties involved in the 
transactions is consistent with EU principles, given that financial transactions 
involving securities issued by Italian companies and carried out by Italian or 
foreign persons, regardless of the State of residence of the intermediary, are also 
subjected to a similar tax, imposed on the beneficiary of the transfer of title to the 
financial instruments. 
35) Although it appears that there is no discrimination between the tax 
treatments referred to in Article 1(491) and (492) of Law No 228/2012, and while 
refuting the appellant’s argument as to the absence of a territorial link between the 
tax pursuant to Article 1(492) of Law No 228/2012, to which the taxpayer was 
liable, and the Italian legal system, this Court finds it necessary to refer to the 
Court of Justice of the European Union for a preliminary ruling, having doubts as 
to the correct interpretation of EU law, and specifically the compatibility of the 
legislation introducing the financial transaction tax with Articles 18, 56 and 63 
TFEU on the grounds argued by the taxpayer, as described and illustrated above. 
FOR THESE REASONS 
Having regard to Article 267 of the Treaty on the Functioning of the European 
Union (TFEU), Section 1 of the Regional Tax Court for Lombardy hereby issues 
an 
[Or.13] 
ORDER 
for a reference for a preliminary ruling 
REQUEST FOR A PRELIMINARY RULING OF 2 JULY 2018 — CASE C-565/18 
 
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to be submitted to the Court of Justice of the European Union, pursuant to and for 
the purposes of Article 19(3)(b) of the Treaty on European Union and Article 267 
of the Treaty on the Functioning of the European Union, the following question: 
‘Should Articles 18, 56 and 63 TFEU preclude national legislation from 
charging a tax on financial transactions — irrespective of the State of 
residence of the financial market participants and the intermediary — which 
is payable by the counterparties to the transaction and consists of a fixed 
amount which rises incrementally in ranges of trading values and which 
varies according to the type of instrument traded and the value of the 
contract, and which is due by virtue of the fact that the taxable transactions 
concern the trading of a derivative based on a security issued by a company 
resident in the State imposing that tax?’ 
[…], 
stays 
these proceedings pending the ruling of the Court of Justice; 
orders 
the transmission of this order to the Registry of the Court of Justice, […] 
[…] Milan, […] 2 July 2018