Opinion of the Advocate General — ECLI:EU:C:2000:431
Date: 2000-09-12
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Anti-discrimination;Non-discrimination on grounds of nationality
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

Summary of the Judgment 
1. Freedom of movement for persons — Freedom of establishment — Tax legislation — 
Corporation tax — National legislation reserving to resident companies that are 
subsidiaries of parent companies having their seat in the national territory the 
possibility of benefiting from a taxation regime (group income election) — Not 
permissible 
(EC Treaty, Arts 52 (now, after amendment, Art. 43 EC) and 58 (now Art 48 EC)) 
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SUMMARY — JOINED CASES C-397/98 AND C-410/98 
2. Freedom of movement for persons — Freedom of establishment — Tax legislation — 
Corporation tax — Companies resident in one Member State and which are 
subsidiaries of parent companies having their seat in another Member State required 
to make advance payment of that tax — Possible for resident subsidiaries of resident 
parent companies to escape that requirement — Breach of Community law — 
Obligation to make good the loss caused by advance payment — Reimbursement or 
reparation of the financial loss suffered — Payment of interest — Detailed procedural 
rules governing reimbursement or reparation — Application of national law — 
Condition — Observance of the principle of the effectiveness of Community law 
(EC Treaty, Arts 52 (now, after amendment, Art. 43 EC) and 58 (now Art. 48 EC)) 
3. Community law — Rights conferred on individuals — Infringement by a Member 
State — Obligation to make good the damage caused to individuals — Action for 
reimbursement or reparation — Detailed procedural rules — Application of national 
law — Limits — Circumstances of the case 
1. It is contrary to Article 52 of the Treaty 
(now, after amendment, Article 43 EC) 
for the tax legislation of a Member 
State to afford subsidiary companies 
resident in that Member State the 
possibility of benefiting from a taxa­
tion regime (group income election) 
allowing them to pay dividends to their 
parent company without having to pay 
advance corporation tax where their 
parent company is also resident in that 
Member State but to deny them that 
possibility where their parent company 
has its seat in another Member State. 
(see para. 76 and operative part 1) 
2. Where a subsidiary resident in one 
Member State has been obliged to pay 
advance corporation tax in respect of 
dividends paid to its parent company 
having its seat in another Member 
State even though, in similar circum­
stances, the subsidiaries of parent com­
panies resident in the first Member 
State were entitled to opt for a taxation 
regime that allowed them to avoid that 
obligation, Article 52 of the Treaty 
(now, after amendment, Article 43 
EC) requires that resident subsidiaries 
and their non-resident parent compa­
nies should have an effective legal 
remedy in order to obtain reimburse­
ment or reparation of the financial loss 
which they have sustained and from 
which the authorities of the Member 
State concerned have benefited as a 
result of the advance payment of tax by 
the subsidiaries. 
The mere fact that the sole object of 
such an action is the payment of 
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METALLGESELLSCHAFT AND OTHERS 
interest equivalent to the financial loss 
suffered as a result of the loss of use of 
the sums paid prematurely does not 
constitute a ground for dismissing such 
an action, for the award of interest 
represents the 'reimbursement' of that 
which was improperly paid and would 
appear to be essential in restoring the 
equal treatment guaranteed by Arti­
cle 52 of the Treaty. 
While, in the absence of Community 
rules, it is for the domestic legal system 
of the Member State concerned to lay 
down the detailed procedural rules 
governing actions for repayment of 
taxes levied in breach of Community 
law or for reparation of loss caused by 
breach of Community law, including 
ancillary questions such as the payment 
of interest, those rules must not render 
practically impossible or excessively 
difficult the exercise of rights conferred 
by Community law. 
(see paras 87, 96 and 
operative part 2) 
3. Actions brought by individuals before 
the courts of a Member State for 
repayment of national taxes levied in 
breach of Community law or for 
reparation of the loss caused in breach 
of Community law are subject to 
national rules of procedure which may, 
in particular, require applicants to act 
with reasonable diligence in order to 
avoid loss or damage or to limit its 
extent. 
It is, however, contrary to Community 
law for a national court to refuse or 
reduce a claim brought before it by a 
subsidiary resident in that Member 
State and its non-resident parent com­
pany for reimbursement or reparation 
of the financial loss which they have 
suffered as a consequence of the 
advance payment of corporation tax 
by the subsidiary, on the sole ground 
that they did not apply to the tax 
authorities in order to benefit from the 
taxation regime which would have 
exempted the subsidiary from making 
payments in advance and that they 
therefore did not make use of the legal 
remedies available to them to challenge 
the refusals of the tax authorities, by 
invoking the primacy and direct effect 
of the provisions of Community law, 
where upon any view national law 
denied resident subsidiaries and their 
non-resident parent companies the ben­
efit of that taxation regime. 
(see paras 102, 107 
and operative part 3) 
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