Opinion of the Advocate General — ECLI:EU:C:2015:571
Date: 2015-09-10
Language of the case: Swedish
Subject matter: Free movement of capital
Procedure: Reference for a preliminary ruling
Origin: Sweden

Summary — Judgment of the Court (First Chamber), 2 June 2016 1. Free movement of capital and freedom of payments — Restrictions — Tax legislation — Taxation of dividends — National legislation subjecting dividends distributed to non-resident pension funds to a different treatment than that afforded to dividends distributed to resident pension funds —Criteria for comparing the situation of residents and non-residents in order to ascertain the existence of a restriction (Art. 63 TFEU) 2. Free movement of capital and freedom of payments — Restrictions — Prohibition — Exceptions — Restrictive interpretation — Scope (Arts 63 TFEU and 65(1) and (3) TFEU) 3. Free movement of capital and freedom of payments — Restrictions — Tax legislation — Taxation of dividends — National legislation subjecting dividends distributed to non-resident pension funds to a different treatment than that afforded to dividends distributed to resident pension funds — Lawfulness — Conditions — Possibility to take into account, in the calculation of the financial base, professional expenses linked to the receipt of dividends, limited to resident pension funds only — Not permissible (Art. 63 TFEU) 1. To ascertain whether a difference in treatment of the taxation of dividends paid to pension funds dependent on their status as residents or not leads to less favourable treatment of non-resident pension funds compared to resident pension funds and therefore, amounts to, a restriction on the free movement of capital, the relevant period, for the purposes of comparing tax burdens on dividends paid to residents and non-residents, is the period taken into account for dividends paid to residents. In that respect, a potentially less favourable treatment of dividends distributed to non-resident pension funds during one tax year cannot be compensated by their potentially favourable treatment during other tax years. It follows that the assessment of whether there exists a potentially detrimental treatment of the dividends paid to non-resident funds must be undertaken for each tax year, taken individually. (see paras 33, 37, 39, 41) 2. See the text of the decision. (see paras 45-49) 3. Article 63 TFEU must be interpreted as not precluding national legislation under which the dividends distributed by a resident company are subject to a tax levied at source where those dividends are paid to a non-resident pension fund and, where those dividends are paid to a resident pension fund, to a tax calculated as a definitive lump sum and on a notional yield, which, over time, is intended to correspond to the normal taxation of all yields on capital under the general law regime. Nevertheless, it precludes non-resident pension funds being prevented from taking into account any professional expenses directly linked to the receipt of dividends, where the calculation method for the tax base of resident pension funds allows them to be taken into account, that being a matter for the national courts to determine. In that respect, the taxation affecting resident pension funds has a different purpose from that applied to non-resident pension funds. Thus, whereas the former are taxed on the basis of their total income, calculated on the basis of their assets reduced by their liabilities, to which a standard yield rate is applied, irrespective of the actual receipt of dividends in the course of the tax year at issue, the latter are taxed on the dividends received in the Member State of the company distributing the dividends in that tax year. In the context of occupational pension schemes, of which pension funds form part, the national legislation on the taxation of those funds means to introduce neutral taxation independent of the economic climate surrounding various kinds of assets and all of the kinds of pension products concerned. In order to achieve such an objective, all the assets of a resident pension fund are subject to yearly lump sum taxation, reflecting the yield of those assets, irrespective of the receipt of income generated by those assets, in particular the receipt of dividends. Such taxation of resident pension funds is levied by the Member State concerned, in its capacity as the State of residence of those pension funds, having by virtue of that capacity taxation powers over their total income. By contrast, as regards pension funds not resident in that Member State, the latter has, in accordance with a bilateral double taxation agreement, only the power to tax income from the assets of those funds which are situated on its territory. Because of that limited power of taxation regarding non-resident pension funds, the Member State concerned may not tax all the assets of those pension funds. In those circumstances, the aim pursued by such a national legislation, that is to say, the application of neutral taxation independent of the economic climate surrounding various kinds of assets as well as all the kinds of pension products concerned, which presupposes that pensions funds are taxed on the whole of the assets, cannot be attained in respect of non-resident pension funds. Nor can that object, which also presupposes that pensions funds are taxed annually and irrespective of the distribution of dividends, be achieved through the taxation of dividends received by non-resident pension funds in accordance with the lump sum method, using as a basis, to calculate the tax due, the value of the underlying assets, since non-resident pension funds may, in any event, be taxed only when dividends are distributed to them. It follows that, in the light of the aim pursued by that national legislation, and of its purpose and content too, a non-resident pension fund is not in a situation comparable to that of a resident pension fund. Nevertheless, in relation to professional expenses directly linked to an activity that has generated taxable income in a Member State, residents and non-residents of that State are in a comparable situation. In that respect, it is for the national courts to determine whether the taxation method applied to resident pension funds, by means of the calculation of the tax base of those funds and, in particular, the inclusion of their liabilities in the calculation of the capital base, allows for the taking into account of any professional expenses directly connected to the receipt of dividends. If that were the case, it should also be admissible to take into consideration such expenses in respect of non-resident pension funds. (see paras 52-56, 58-60, 63-66, operative part)