Judgment;Summary — ECLI:EU:C:2019:750
Date: 2019-09-18
Language of the case: French
Court formation: Eighth Chamber
Subject matter: Taxation;Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: France

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Translation C-662/18 - 1 
Case C-662/18 
Request for a preliminary ruling 
Date lodged: 
23 October 2018 
Referring court: 
Conseil d’État (Council of State, France) 
Date of the decision to refer: 
12 October 2018 
Applicant: 
AQ 
Defendant: 
Ministre de l’Action et des Comptes publics (French Minister for 
the Public Sector and Public Accounts) 
  
CONSEIL D’ETAT (COUNCIL OF STATE) 
ruling in proceedings brought before it 
[…]      FRENCH REPUBLIC  
IN THE NAME OF THE FRENCH PEOPLE 
[…] 
By an application, registered on 12 August 2018 at the secretariat for contentious 
proceedings of the Council of State, AQ asks the Council of State: 
(1) to annul on grounds misuse of powers paragraph 130 of the administrative 
commentary published in the Bulletin officiel des finances publiques (BOFiP) — 
Impôts under reference […]on 24 July 2017, in so far as it precludes application of 
EN 
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holding period relief under Article 150-0 D of the code général des impôts 
(General Tax Code, ‘CGI’) to capital gains arising before 1 January 2013 on 
which tax has been deferred under Article 150-0 B ter of the CGI instead of 
applying a global relief, calculated according to the holding period running from 
acquisition of the securities given in exchange until transfer of the securities 
resulting from the exchange, computed on the sum total of the capital gain 
deferred at the time of the exchange and of the capital gain on the transfer of the 
securities resulting from the exchange; 
(2) to refer a question to the Court of Justice of the European Union for a 
preliminary ruling on whether Article 17(III) of the loi du 29 décembre 2013 de 
finances pour 2014 (Finance Act 2014 of 29 December 2013) and Article 34(II) 5 
of the loi du 29 décembre 2016 de finances rectificative pour 2016 (Finance 
amendment Act 2016 of 29 December 2016) on the detailed rules for the taxation 
of capital gains on which tax has been deferred, are compatible with Article 8 of 
Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation 
applicable to mergers, divisions, transfers of assets and exchanges of shares 
concerning companies of different Member States; 
[…]. 
It contends that the administrative commentary at issue: 
- is vitiated by illegality in so far as it reiterates the provisions of Article 17(III) of 
the 2014 Finance Act of 29 December 2013 and of Article 34(II) 5 of the 2016 
Finance amendment Act, which misconstrue Article 8(2) of the ‘Merger 
Directive’ of 23 July 1990 by denying the holding period relief under Article 150-
0 D of the CGI to capital gains arising on exchanges of securities before 1 January 
2013; 
- is vitiated by illegality in so far as it reiterates a legislative provision that, 
because it is incompatible with Article 8 of the Merger Directive within the scope 
of that directive, sets up ‘reverse’ discrimination between situations that fall 
within that scope and purely internal situations, contrary to the principle of 
equality before the law as enshrined in Article 6 of the Declaration of Human and 
Citizen’s Rights of 1789. 
By a defence lodged on 25 September 2018, the Minister for Finance and Public 
Accounts seeks an order dismissing the application. The Minister argues that the 
applicant’s pleas in law are unfounded. 
Pursuant to the provisions of Article R. 611-7 of the code de justice administrative 
(Administrative Justice Code) the parties were informed that the decision of the 
Council of State was likely to be founded on a plea, raised of the Council’s own 
motion, that the action for misuse of powers brought by AQ challenging the  
commentary at issue is admissible, in light of the interest which it pleads, only in 
so far as the commentary concerns the taxation of the capital gains arising from 
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the transactions for the exchange of securities between companies established in 
France, which do not fall within the scope of the Merger Directive. 
[…] 
Having regard to the other documents in the file; 
Having regard to: 
- […] 
- the Treaty on the Functioning of the European Union, in particular 
Article 267 ; 
- Council Directive 90/434/EEC of 23 July 1990; 
- Council Directive 2009/133/EC of 19 October 2009; 
- the General Tax Code and the livre des procédures fiscales (Manual of Tax 
Procedures); 
- […] 
- […]; 
- […] 
- judgment of 22 March 2018, Jacob and Lassus (C-327/16 and C-421/16); 
- Administrative Justice Code; 
[…] 
Whereas: 
1. AQ seeks annulment of paragraph 130 of the administrative commentary 
published in the Bulletin officiel des finances publiques (BOFiP) — Impôts on 
24 July 2017 […] on grounds of misuse of powers, inasmuch as it precludes 
application of holding period relief under Article 150-0 D of the code général des 
impôts (General Tax Code, ‘CGI’) to capital gains arising before 1 January 2013 
on which tax has been deferred under Article 150-0 ter of the CGI, instead of 
applying a global relief, calculated according to the holding period running from 
acquisition of the securities given in exchange until transfer of the securities 
resulting from the exchange, computed on the sum total of the capital gain 
deferred at the time of the exchange and of the capital gain on the transfer of the 
securities resulting from the exchange. 
2. According to paragraph 130 of the administrative comments published on 24 July 
2017 […] : ‘... holding period relief does not apply ... to the net gains from an 
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assignment, exchange or transfer that arose before 1 January 2013 and on which 
tax has been deferred under the conditions set out in (...) and Article 150-0 B ter 
of the CGI (...) ’. 
3. The interest on which AQ relies in support of its application relates to a securities 
exchange transaction between the companies VH and BR, which it controls, 
governed by the provisions of Article 150-0 ter of the CGI. As both those 
companies are established in France, that interest gives it standing to seek 
annulment of the administrative commentary it is challenging only to the extent 
that the commentary relates to internal situations, to the exclusion of transactions 
concerning companies in different Member States, which are the only transactions 
that can fall within the scope of the directive on which it relies. 
4. […] 
5. […]AQ asserts that the statements it is challenging reproduce provisions which, 
by allowing tax to be levied on the whole of the capital gain arising from the 
securities exchange whereas the capital gain on a transfer of the securities 
received in exchange, for its part, depending on the circumstances, enjoys holding 
period relief, and are therefore, by failing to subject both those capital gains to the 
same taxation regime, incompatible with the objectives of Article 8(1) of 
Directive 2009/133/EC of 19 October 2009. 
The first plea in law: 
On the legal context: 
6. […]. 
7. […] 
8. According to Article 267 of the Treaty on the Functioning of the European Union: 
‘The Court of Justice of the European Union shall have jurisdiction to give 
preliminary rulings concerning: (a)the interpretation of the Treaties; (b)the 
validity and interpretation of acts of the institutions, bodies, offices or agencies of 
the Union; Where such a question is raised before any court or tribunal of a 
Member State, that court or tribunal may, if it considers that a decision on the 
question is necessary to enable it to give judgment, request the Court to give a 
ruling thereon. Where any such question is raised in a case pending before a 
court or tribunal of a Member State against whose decisions there is no judicial 
remedy under national law, that court or tribunal shall bring the matter before the 
Court.’ 
9. The provisions […] of the ordonnance du 7 novembre 1958 portant loi organique 
sur le Conseil constitutionnel (Order of 7 November 1958 concerning the organic 
law on the Constitutional Council) do not preclude an administrative court, a court 
with general jurisdiction to apply EU law, from ensuring its effectiveness, either 
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without a prior question of constitutionality, or at the end of a procedure 
examining that question, or at any moment in that procedure, where urgency so 
requires, in order to put an immediate end to any effect of the law that is contrary 
to EU law. The administrative court may, at any time, as soon as it is appropriate 
to do so, make a reference for a preliminary ruling to the Court of Justice under 
Article 267 TFEU. Where the interpretation or assessment of the validity of a 
provision of EU law determines the reply to the prior question of constitutionality, 
the Council of State must seise the Court of Justice of the European Union without 
delay. 
Interpretation of the provisions invoked in this dispute: 
10. According to Article 8 of Council Directive 2009/133/EC of 19 October 2009 on 
the common system of taxation applicable to mergers, divisions, partial divisions, 
transfers of assets and exchanges of shares concerning companies of different 
Member States and to the transfer of the registered office of an SE or SCE 
between Member States, which reproduces the provisions of Article 8 of Council 
Directive 90/434/EEC of 23 July 1990 on the common system of taxation 
applicable to mergers, divisions, partial divisions, transfers of assets and 
exchanges of shares concerning companies of different Member States:  
‘1. On a merger, division or exchange of shares, the allotment of securities 
representing the capital of the receiving or acquiring company to a shareholder of 
the transferring or acquired company in exchange for securities representing the 
capital of the latter company shall not, of itself, give rise to any taxation of the 
income, profits or capital gains of that shareholder. 
… 
6. The application of paragraphs 1, 2 and 3 shall not prevent the Member States 
from taxing the gain arising out of the subsequent transfer of securities received 
in the same way as the gain arising out of the transfer of securities existing before 
the acquisition.’ 
11. Under Article 150-0 (I) ter of the CGI, in the version of Article 18 of the loi du 29 
décembre 2012 de finances rectificative pour 2012 (Finance amendment Act 2012 
of 29 December 2012) applicable to capital gains obtained after 14 November 
2012: ‘Taxation of capital gains obtained, directly or by an intercalated person, in 
the course of a contribution of transferable securities, share rights, securities or 
rights relating thereto, as defined in Article 150-0 A, to a company subject to 
corporation tax or to an equivalent tax shall be carried over if the conditions laid 
down in III of this article are satisfied …’. 
12. It follows from those provisions of the CGI, as consistently interpreted by the 
Council of State, that their only effect is — by way of derogation from the rule 
that the chargeable event for the purposes of capital gains tax occurs during the 
year in which the gain arises — to allow the capital gain on the exchange to be 
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established and settled in the year in which it arises, and to be taxed in the year in 
which the event putting an end to the deferred taxation occurs, which may, for 
instance, be the transfer of the shares received at the time of the exchange. The 
capital gain is therefore calculated applying the basis of assessment rules in force 
in the year in which it arises. In addition, in accordance with reservation in terms 
of interpretation formulated by the Constitutional Council […], capital gains 
whose taxation is deferred automatically pursuant to Article 150-B ter shall be 
taxed according to the rate rules applicable at the date of the chargeable event for 
taxation of capital gains. 
13. Under Article 200 A of the CGI, in the wording applicable to the dispute, in the 
version resulting from Article 34 of the loi du 29 décembre 2016 de finances 
rectificative pour 2016 (Finance amendment Act 2016  of 29 December 2016): 
‘the net gains obtained under the conditions set out in Article 150-0 A shall be 
taken into account for the determination of the overall net revenue defined in 
Article 158./ 2 ter (a). The capital gains referred to in Article 150-0 B ter (1) shall 
be subject to income tax at a rate equal to the relationship between the two 
following figures: -- the numerator constituted by the result of the difference 
between, on the one hand, the amount of tax that would have been due, in the year 
of the contribution, from the application of Article 197 to the sum of the whole of 
the capital gains mentioned in the first indent of the this paragraph (a) and the 
income taxed for the same year under the conditions of Article 197 and, on the 
other hand, the amount of the tax due for that same year and established under the 
conditions of Article 197; / -- the denominator constituted by the total of the 
capital gains mentioned in the first indent of this paragraph (a) retained in the 
second indent of this paragraph (a). / For the determination of the rate mentioned 
in the first indent of this paragraph (a), the capital gains mentioned in that same 
first indent shall, as appropriate, be reduced by the single reduction mentioned in 
Article 150-0 D(1). / By derogation, the rate applicable to the capital gains 
resulting from contributions realised  between 14 November and 31 December 
2012 shall be determined in accordance with Article 10 IV A of loi ° 2012-1509 
du 29 décembre 2012 de finances pour 2013 (Finance Act 2013 No 2012-1509 of 
29 December 2012).’ 
14. By virtue of Article 17 III of the loi du 29 décembre 2013 de finances pour 2014 
(Finance Act 2014 of 29 December 2013), the reductions for the holding period 
provided for in Article 150-0 D1 ter and 1 quater of the CGI, applicable to the net 
gains obtained under the conditions laid down in Article 150-0 A CGI and taken 
into account for determining net overall revenue subject to the progressive scale of 
income tax under Article 200 A (2), apply to gains realised with effect from 1 
January 2013. 
15. By virtue of Article 10 IV A of the loi du 29 décembre 2012 de finances pour 
2013 (Finance Act 2013 of 29 December 2012), the capital gains mentioned in 
Article 150-0 B ter I resulting from contributions realised between 14 November 
and 31 December 2012 are taxable at the flat rate of 24% or, where all the 
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conditions laid down in Article 200 A 2 bis, in the version resulting from that 
same law, are fulfilled, at the flat rate of 19%  fixed by that same 2 bis.  
16. How the national provisions should be interpreted and whether or not they are 
compatible with the Directive of 19 October 2009 depends on the answer to 
questions concerning whether the foregoing provisions of Article 8 of the 
directive must be interpreted as meaning that they preclude different bases of 
assessment and rate rules being used to tax the capital gain arising on the transfer 
of securities received in exchange and the deferred capital gain and, in particular, 
on whether those provisions preclude a situation in which reductions of the basis 
of assessment intended to take into account the period for which securities have 
been held do not apply to the deferred capital gain, having regard to the fact that 
the basis of assessment rule in question did not apply on the date on which the 
capital gain arose, but they do apply to the capital gain on a transfer of the 
securities received in exchange, taking into account the date of the exchange 
instead of the date on which the securities given in exchange were acquired. 
17. The questions set out in paragraph 16 present a serious difficulty of interpretation 
of EU law that justifies their referral to the Court of Justice of the European 
Union. 
[…] 
18. […] 
19. […] 
The second plea in law: 
20. In support of the form of order that it has locus standi, as set out in paragraph 3, 
AQ cannot meaningfully rely on the fact that the provisions of the legislation, as 
reiterated in the contested statements, are incompatible with the objectives of 
Article 8(2) of Council Directive 90/434/EC of 23 July 1990, reproduced in 
Article 8(1) of Directive 2009/133/EC. 
21. It is apparent from the foregoing that it is appropriate to refer the questions 
mentioned in paragraph 16 to the Court of Justice of the European Union and to 
stay the proceedings relating to AQ’s application. 
HEREBY ORDERS: 
[…] The following questions are referred to the Court of Justice of the European 
Union: 
- must the provisions of Article 8 of the Directive of 19 October 2009 be 
interpreted as precluding different bases of assessment and rate rules being used to 
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tax the capital gain arising on a transfer of securities received in exchange and the 
deferred capital gain? 
- must those provisions be interpreted in particular as precluding a situation in 
which reductions of the basis of assessment intended to take into account the 
period for which securities have been held do not apply to the deferred capital 
gain, having regard to the fact that that basis of assessment rule did not apply on 
the date on which the capital gain arose, but they do apply to the capital gain on a 
transfer of the securities received in exchange, taking into account the date of the 
exchange instead of the date on which the securities given in exchange were 
acquired? 
[…] proceedings on the AQ’s application are stayed until the Court of Justice has 
given a preliminary ruling on the questions set out. […]. 
[…]