Opinion of the Advocate General — ECLI:EU:C:2008:60
Date: 2008-01-31
Language of the case: German
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary of the Judgment 1. Procedure – Oral procedure – Reopening (Art. 234 EC; Rules of Procedure of the Court, Art. 61) 2. Approximation of laws – Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States – Directive 90/435 (Council Directive 90/435, Art. 5(1)) 3. Freedom of movement for persons – Freedom of establishment – Tax legislation – Corporation tax (EC Treaty, Art. 52 (now, after amendment, Art. 43 EC); Council Directive 90/435, Art. 4) 1. The Court may of its own motion, or on a proposal from the Advocate General, or at the request of the parties, order the reopening of the oral procedure in accordance with Article 61 of the Rules of Procedure if it considers that it lacks sufficient information, or that the case must be dealt with on the basis of an argument which has not been debated between the parties. However, the argument that the Advocate General did not take account in his Opinion of the provisions of certain provisions of national law not mentioned by the national court in its order for reference cannot justify the reopening of the oral procedure, having regard to the requirements laid down in that article. In proceedings brought under Article 234 EC, it is not for the Court to specify the relevant provisions of national law applicable to the main proceedings. That is the prerogative of the court making the reference which, while drawing up the internal legal framework, leaves it open to the Court to provide all the criteria of interpretation of Community law so as to permit the court making the reference to assess the compatibility of national legislation with the Community rules. Moreover, neither the Statute of the Court of Justice nor the Rules of Procedure make provision for the parties to submit observations in response to the Advocate General’s Opinion. Similarly, only the court making the reference may define the factual context in which the questions which it asks arise or, at very least, explain the factual assumptions on which the questions are based. Consequently, when certain facts are not set out by the national court in the order for reference, a party cannot argue that certain factual premises on which the Advocate General’s analysis is based are incorrect or incomplete so as to justify the reopening of the oral procedure, having regard to the requirements laid down in Article 61 of the Rules of Procedure of the Court. (see paras 37-40, 42, 44-47) 2. A provision of national law which, in relation to cases where profits are distributed by a subsidiary to its parent company, provides for the taxation of income and asset increases of the subsidiary which would not have been taxed if they had remained with the subsidiary and had not been distributed to the parent company does not constitute a withholding tax within the meaning of Article 5(1) of Directive 90/435 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States. Any tax on income received in the State in which dividends are distributed is a withholding tax on distributed profits where the chargeable event for the tax is the payment of dividends or of any other income from shares, the taxable amount is the income from those shares and the taxable person is the holder of the shares. It follows that three conditions must be cumulatively fulfilled for the application of the abovementioned provision. Since the third condition, namely that the taxable person is the holder of the shares, is not fulfilled, Article 5(1) of Directive 90/435 does not preclude a corrective accounting mechanism such as that laid down in the abovementioned provision of national law. (see paras 52-53, 61, 63-64, operative part 1) 3. Article 52 of the Treaty (now, after amendment, Article 43 EC) must be interpreted as not precluding the application of a national measure under which the taxation of profits distributed by a subsidiary resident in a Member State to its parent company is subject to the same corrective mechanism regardless of whether the parent company is resident in the same Member State or in another Member State even though – unlike a resident parent company – a non-resident parent company is not granted a tax credit by the Member State in which the subsidiary is resident. Where application of the corrective mechanism at issue does not alter the tax burden of the resident subsidiary on the basis of whether its parent company is resident in the same Member State or in another Member State, so that the subsidiary’s situation in regard to the legislation of its Member State of residence is not different according to whether it distributes its profits to a non-resident parent company or to a resident one, application of the mechanism in question does not cause, in regard to the subsidiary, different situations to receive identical treatment, constituting discriminatory fiscal treatment which is prohibited in principle by Article 52 of the Treaty. That assessment is not weakened by the fact that, for non-resident shareholders, the tax levied on the company making the distribution becomes definitive in the sense that the increase in the tax burden imposed on the company making the distribution is not compensated for by the allocation of a corresponding tax credit. In the absence of any unifying or harmonising Community measures, Member States retain the power to define, by treaty or unilaterally, the criteria for allocating their powers of taxation, particularly with a view to eliminating double taxation. On that basis, the tax credit granted to the resident parent company under such national legislation is intended to prevent economic double taxation of profits distributed by a resident subsidiary which have already been taxed in the latter’s hands. In the case of cross-border distribution of profits, it is, in principle, not for the Member State in which the subsidiary is resident to prevent economic double taxation but for the Member State in whose territory the parent company is resident, as is clear from Article 4 of Directive 90/435 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States. Consequently, the Member State in which the parent company is resident is required to accord fiscal treatment which is designed to achieve the same result as the tax credit granted by the Member State in which the subsidiary is resident to parent companies established there, with the effect that economic double taxation of profits distributed in the form of dividends is also avoided. Thus, just as the resident parent company of a resident subsidiary is granted a tax credit by its Member State of residence, acting also in its capacity as the Member State in which the subsidiary is resident, the non-resident parent company of a resident subsidiary is protected against the risk of economic double taxation of profits distributed in the form of dividends, but by the Member State in which it is resident. The fact that the Member State in which the subsidiary is resident does not grant a tax credit to a non-resident parent company does not therefore distinguish the situation of the resident subsidiary of a resident parent company from that of the resident subsidiary of a non-resident parent company. (see paras 82-85, 87-92, 94-96, operative part 2)