Judgment — ECLI:EU:C:2009:614
Date: 2009-10-06
Language of the case: Spanish
Court formation: First Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Free movement of workers
Concepts: General;Free movement of capital and freedom of payments;Defences
Procedure: Action for failure to fulfil obligations - successful
Origin: Spain

Summary of the Judgment 1. Member States – Obligations – Failure to fulfil obligations – Justification – Principle of the protection of legitimate expectations – Duty of cooperation in good faith (Art. 226 EC) 2. Actions for failure to fulfil obligations – Pre-litigation procedure – Excessive duration (Art. 226 EC) 3. Actions for failure to fulfil obligations – Examination of the merits by the Court – Situation to be taken into consideration – Situation on expiry of the period laid down in the reasoned opinion (Art. 226 EC) 4. Actions for failure to fulfil obligations – Period given the Member State in the reasoned opinion – Default subsequently remedied – Interest in continuing the proceedings (Art. 226 EC) 5. Actions for failure to fulfil obligations – Right of the Commission to bring judicial proceedings (Art. 226 EC) 6. Free movement of capital – Restrictions – Tax legislation – Income tax (Arts 56 EC and 58(1); EEA Agreement, Art. 40) 1. The procedure for a declaration of failure to fulfil obligations is based on the objective finding that a Member State has failed to fulfil its obligations under Community law. The principles of protection of legitimate expectations and cooperation in good faith cannot be relied on by a Member State in order to preclude an objective finding of a failure on its part to fulfil its obligations under the EC Treaty, since to admit that justification runs counter to the aim pursued by the procedure under Article 226 EC. The fact that the Commission may have decided not to bring an action seeking a declaration that a Member State has failed to fulfil obligations when that Member State had put an end to the alleged failure after the expiry of the time prescribed in the reasoned opinion cannot, therefore, cause either that Member State or other Member States to have a legitimate expectation which may affect the admissibility of an action brought by the Commission. Further, the fact that the Commission does not bring an action under Article 226 EC immediately after the expiry of the time prescribed in the reasoned opinion can also not cause the Member State concerned to have a legitimate expectation that the infringement proceedings have been closed. (see paras 18-20) 2. Admittedly, the excessive duration of the pre-litigation procedure is capable of constituting a defect rendering an action for failure to fulfil obligations inadmissible. However, such a conclusion is inevitable only where the conduct of the Commission has made it difficult to refute its arguments, thus infringing the rights of defence of the Member State concerned, and it is for that Member State to provide evidence of such a difficulty. (see para. 21) 3. In an action under Article 226 EC, the question whether there has been a failure to fulfil obligations must be examined on the basis of the position in which the Member State found itself at the end of the period specified in the reasoned opinion. (see para. 23) 4. The Commission still has an interest in bringing an action under Article 226 EC even when the alleged infringement has been remedied after the expiry of the period prescribed in the reasoned opinion. It follows that, where a Member State was informed through the pre‑litigation procedure that the Commission alleged that it had failed to fulfil its obligations under the Treaty, the Member State cannot, in the absence of any explicit statement of position by the Commission indicating that it was going to close the ongoing infringement proceedings, validly contend that the Commission has infringed the principle of legal certainty. (see paras 23-24) 5. The Commission does not have to show an interest to bring proceedings or to state the reasons why it is bringing an action for failure to fulfil obligations. Since the subject-matter of the action as it is to be found in the application corresponds to the subject‑matter of the dispute as stated in the letter of formal notice and in the reasoned opinion, it cannot validly be maintained that the Commission has misused its powers. (see para. 25) 6. Where a Member State taxes differently capital gains realised in that Member State according to whether they were made by residents or by non‑residents, although those taxpayers are in an objectively comparable situation with regard to that taxation, that Member State has failed to fulfil its obligations under Article 56 EC and Article 40 of the Agreement on the European Economic Area. Legislation which targets only capital gains accruing on the disposal of assets owned in the Member State concerned, which does not pursue, by means of granting an advantageous tax treatment to residents, a social purpose and which is not demonstrated to be intended to take account of the personal situation of the taxpayer in respect of payment of the tax, does not correspond to any difference in situation, for the purposes of Article 58(1) EC, based on the taxpayers’ place of residence. The existence of double taxation agreements cannot affect that conclusion where such agreements cancel out only in part the tax liability of non‑residents in the Member State concerned. Further, the existence of a double taxation agreement does not mean that the income which a taxpayer receives in a State where he is not resident and which is exclusively liable to tax in that State may not nevertheless be taken into consideration by the State of residence when calculating the amount of the tax on the remaining income of that taxpayer in order, in particular, to reflect the principle that taxes should be applied progressively. The fact that a taxpayer is non‑resident does not enable him to escape the application of that rule. It follows that, in such circumstances, the two categories of taxpayers are in a comparable situation with regard to that rule. The restriction stemming from such legislation cannot be justified by the need to safeguard the cohesion of the national tax system where there is no direct link between the advantages granted to resident taxpayers and any offsetting as a result of a particular tax levy. (see paras 50-59, 65-66, 69, operative part)