Order — ECLI:EU:C:2025:208
Date: 2025-03-20
Language of the case: French
Court formation: Sixth Chamber
Subject matter: Free movement of capital
Procedure: Reference for a preliminary ruling - inadmissible
Origin: France

SUMMARY OF THE DISPUTE 
1 By letter dated 19 December 2019, the Direction régionale des finances publiques 
d’Ile-de-France et de Paris (Regional Directorate of Public Finances for Paris and 
Ile-de-France) sent TJ, pursuant to Article L.23 C of the Livre des Procédures 
Fiscales (Book on Tax Procedures), a request for information and evidence 
concerning assets held abroad in two bank accounts … opened with UBS bank in 
Luxembourg, concerning the years 2010 to 2014. 
TJ responded by letter dated 20 February 2020, providing information on his 
situation. 
2 By letter of 13 March 2020, the Direction régionale des finances publiques d’Ile-
de-France et de Paris, considering that response to be insufficient, gave formal 
notice to the applicant to provide the requested details within thirty days of the 
date of receipt of that letter … [irrelevant detail]. 
3 By letter dated 5 October 2020, the Direction régionale des finances publiques 
d’Ile-de-France et de Paris issued a proposed correction involving the taxation at 
60% of the sum of EUR 1 147 856, the total and maximum balance of the assets 
held in the two aforementioned bank accounts opened with UBS Luxembourg 
between 2010 and 2014, specifically on 31 December 2010, in accordance with 
Article 755 of the Code général des impôts (General Tax Code). 
By letter dated 13 October 2020, TJ provided various documents and statements 
from UBS Luxembourg in an attempt to establish that the sums in question were 
acquired during a time-barred period. 
4 In its reply dated 12 November 2020, the Direction régionale des finances 
publiques d’Ile-de-France et de Paris confirmed the notified assessment, taking 
the view that, although the sums may have been acquired during a time-barred 
period, the origin of the sums had to be established. 
On 15 December 2020, the additional tax was assessed for a principal amount of 
inheritance tax of EUR 688 714. 
5 TJ lodged a complaint on 30 December 2020, which was rejected by the tax 
authorities on 30 June 2020. 
6 A new demand for payment dated 26 July 2021 was issued for the same principal 
amount of inheritance tax (EUR 688 714). 
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7 By instrument of a judicial officer of 9 August 2021, TJ summoned the Direction 
régionale des finances publiques d’Ile-de-France et de Paris to appear before the 
Court of Nanterre, in proceedings for annulment of the decision to reject the 
complaint of 30 June 2020 and for full relief in respect of the inheritance tax of 
EUR 688 714 demanded and any default interest, surcharges and ancillary 
penalties. 
8 In the final form of order sought, served on the Direction régionale des 
finances publiques d’Ile-de-France et de Paris on 10 October 2022, TJ claims 
that the Court should: 
- annul the decision rejecting the claim made against the Direction régionale 
des finances publiques d’Ile-de-France et de Paris dated 30 June 2020; 
- order full relief in respect of the inheritance tax of EUR 688 714 demanded 
and any default interest, surcharges and ancillary penalties; 
In the alternative, in the event that there is any doubt as to the compatibility with 
European law of Article L.23 C of the Livre des Procédures Fiscales and 
Article 755 of the Code général des impôts, 
- … [request to make a reference for a preliminary ruling to the Court of 
Justice of the European Union, worded in a similar manner to the first question set 
out in the operative part]; 
- order provisional enforcement; 
In the further alternative, in the event that the Court confirms all or part of the 
taxation at issue, 
- rule out the provisional enforcement of the decision to be delivered pursuant 
to Article 514-1 of the Code of Civil Procedure, in order to avoid causing serious 
and irremediable harm to the applicant pending a final decision on the question of 
law which he raises; 
In any event, 
- order the Direction régionale des finances publiques d’Ile-de-France et de 
Paris to pay EUR 10 000 under Article 700 of the Code of Civil Procedure and to 
pay all the costs. 
9 TJ submits that the tax authorities’ decision to reject his claim constitutes an 
infringement of the freedom of movement of capital guaranteed by Article 63(1) 
of the Treaty on the Functioning of the European Union and should be annulled on 
that ground alone. 
In support of that claim, he refers to a judgment of the Court of Justice of the 
European Union of 27 January 2022 (CJEU, 27 Jan. 2022, Case C-788/19), which 
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held to be contrary to the free movement of capital a Spanish tax provision which 
he considers to be similar to those set out in Article L.23 C of the Livre des 
Procédures Fiscales and Article 755 of the Code général des impôts, on the ground 
that they de facto extend indefinitely the limitation period on action by the tax 
authorities in relation to sums held in an undeclared foreign bank account. 
He argues that the position of the tax authorities, which consists in applying 
‘punitive taxation’ at a rate of 60% on assets acquired more than ten years before 
it carried out its inspection, on the grounds that those authorities are not satisfied 
with the evidence provided as to the origin of those assets and the manner in 
which they were acquired, results in the tax authorities no longer having to 
comply with the ten-year limitation period provided for under Article L.181-0 A 
of the Livre des Procédures Fiscales, which already derogates from the general 
limitation period of three years as from registration of the instrument, although 
neither Article L.23 C of the Livre des Procédures Fiscales nor Article 755 of the 
Code général des impôts provides that the specific case of taxation under Article 
L.23 C of the Livre des Procédures Fiscales is an exception to the rules on 
limitation periods. 
Lastly, he explained that, in this particular case, he acquired the assets in question 
30 years ago, when he was living in Georgia, and that it was clearly impossible at 
present to find any banking records of his activities in Georgia before 1991, given 
the length of time since the events in question, on the one hand, and the political 
and administrative chaos which Georgia has experienced since the fall of the 
Berlin Wall in 1989, on the other. In those circumstances, the requirement to 
prove the origin of sums acquired more than thirty years ago is tantamount, in his 
view, to an outright denial of the rights of defence of a taxpayer. 
Consequently, TJ considers it necessary, in the event that any doubt remains on 
the part of the Court as to the compatibility with European law of Article L.23 C 
of the Livre des Procédures Fiscales and Article 755 of the Code général des 
impôts, to make a reference to the Court of Justice of the European Union for a 
preliminary ruling on this point. 
10 In the final form of order sought, served on TJ on 3 February 2023, the 
Direction régionale des finances publiques d’Ile-de-France et de Paris 
contends that the Court should: 
– dismiss all TJ’s claims; 
– confirm the additional taxes; 
– confirm the rejection decision of 30 June 2021; 
– order TJ to pay all the costs of the proceedings. 
11 In the first place, the tax authorities state that the procedure provided for in Article 
L.23 C of the Livre des Procédures Fiscales forms part of the fight against tax 
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evasion, an objective of general interest recognised as having a constitutional 
nature by the Conseil constitutionnel (Constitutional Council). It therefore aims to 
encourage taxpayers to comply with their tax declaration obligations and to 
demonstrate transparency towards the administration, in order to contribute to 
better citizenship in tax matters. They also explain that that procedure does not 
constitute a sanction or penalty but is intended solely to establish and assess tax. 
In the second place, the tax authorities argue that it follows from the combined 
provisions of Article 755 of the Code général des impôts and Article 71 of the 
Livre des Procédures Fiscales that the chargeable event for duties on donation and 
succession referred to in the first of those provisions is the absence of a response 
or a failure to provide a sufficient response to the requests for information or 
evidence provided for in Article L.23 C of the Livre des Procédures Fiscales 
within the periods prescribed in that article, so that in this case, in so far as the 
request for information was made on 19 December 2019 and the period for 
recalculation by the authorities began on 24 September 2020, their action was not 
time-barred on that date under Article L.181-0 A of the Livre des Procédures 
Fiscales. 
Finally, the tax authorities state that, in the judgment cited by the claimant, the 
Court of Justice of the European Union criticised the absence of a limitation 
period arising from the mechanism laid down, as well as the fact that the penalties 
and fines were disproportionate to those imposed for similar infringements. 
According to those authorities, on the one hand, failure to fulfil the legal 
obligations laid down in Articles 1649 A, 1649 AA and 1649 AB of the Code 
général des impôts, which leads to application of the disputed taxation scheme, is 
subject to rules on limitation periods and, on the other hand, failure to fulfil the 
legal obligations laid down in Articles 1649 A, 1649 AA and 1649 AB of the 
Code général des impôts does not give rise to any penalty in this case, since the 
mechanism provided for seeks only to establish the basis of assessment for a tax, 
while the 60% taxation imposed pursuant to Article 755 of the Code général des 
impôts is not subject to default interest or to tax penalties. It concludes from this 
that the French scheme for taxing foreign assets therefore strikes a fair balance 
between compliance with the obligations under Community law and the public 
interest objective of combating international tax evasion. 
12 … 
13 … [procedural details] 
STATEMENT OF REASONS 
A) European Union law 
14 According to Article 63(1) of the Treaty on the Functioning of the European 
Union: ‘Within the framework of the provisions set out in this Chapter, all 
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restrictions on the movement of capital between Member States and between 
Member States and third countries shall be prohibited’. 
Article 65 of the Treaty on the Functioning of the European Union also provides 
that: 
(1) The provisions of Article 63 shall be without prejudice to the right of Member 
States: 
(a) to apply the relevant provisions of their tax law which distinguish between 
taxpayers who are not in the same situation with regard to their place of residence 
or with regard to the place where their capital is invested; 
(b) to take all requisite measures to prevent infringements of national law and 
regulations, in particular in the field of taxation and the prudential supervision of 
financial institutions, or to lay down procedures for the declaration of capital 
movements for purposes of administrative or statistical information, or to take 
measures which are justified on grounds of public policy or public security. 
… 
3. The measures and procedures referred to in paragraphs 1 and 2 shall not 
constitute a means of arbitrary discrimination or a disguised restriction on the 
free movement of capital and payments as defined in Article 63.’ 
15 According to the settled case-law of the Court of Justice of the European Union, 
measures imposed by a Member State which are such as to discourage, prevent or 
limit the opportunities of investors from that State to invest in other States 
constitute restrictions on the movement of capital within the meaning of 
Article 63(1) of the Treaty on the Functioning of the European Union (CJEU, 
26 September 2000, Commission v Belgium, C-478/98, paragraph 18; CJEU, 
23 October 2007, Commission v Germany, C-112/05, paragraph 19; CJEU, 
26 May 2016, NN (L) International, C-48/15, paragraph 44). 
16 On 23 October 2019, the European Commission brought before the Court of 
Justice of the European Union an action for a declaration that the Kingdom of 
Spain had failed to fulfil its obligations in providing for consequences of failure to 
comply with an obligation to declare overseas assets or rights by means of ‘Form 
720’ which were disproportionate in the light of the objective pursued by the 
Spanish legislation. 
The European Commission argued that the system established in the Kingdom of 
Spain: 
- provided that failure to comply with the obligation to provide information in 
respect of overseas assets and rights or the late submission of ‘Form 720’ resulted 
in the classification of those assets as ‘unjustified capital gains’ without the 
possibility of pleading expiry of the limitation period; 
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- automatically imposed a proportional fine of 150% in the event of failure to 
fulfil the obligation to provide information in respect of overseas assets and rights 
or late submission of ‘Form 720’, in addition to flat-rate fines which are more 
severe than the penalties laid down by the general rules on penalties for similar 
infringements. 
17 In its judgment of 27 January 2022 (CJEU, 27 Jan. 2022, Case C-788/19), the 
Court of Justice of the European Union states that: 
– the need to guarantee the effectiveness of fiscal supervision and the 
objective of preventing tax evasion and avoidance are among the overriding 
reasons in the public interest capable of justifying the imposition of a restriction 
on the freedoms of movement (see, inter alia, CJEU, 11 June 2009, X and 
Passenheim-van Schoot, C-155/08 and C-157/08, paragraphs 45 and 46; CJEU, 
15 September 2011, Halley, C-132/10, paragraph 30); 
– with regard to capital movements, Article 65(1)(b) of the Treaty on the 
Functioning of the European Union provides moreover that Article 63 of the 
Treaty on the Functioning of the European Union is to be without prejudice to the 
right of Member States to take all requisite measures to prevent infringements of 
national law and regulations, in particular in the field of taxation; 
– the mere fact that a resident taxpayer has assets or rights outside the territory 
of a Member State cannot give rise to a general presumption of tax evasion and 
avoidance (see, in particular, CJEU, 11 March 2004, de Lasteyrie du Saillant, 
C-9/02, paragraph 51; CJEU, 7 November 2013, K, C-322/11, paragraph 60), so 
that a provision which presumes the existence of fraudulent behaviour on the sole 
ground that the conditions laid down therein are satisfied, without giving the 
taxpayer any opportunity to rebut that presumption, goes, in principle, beyond 
what is necessary in order to achieve the objective of combating tax evasion and 
avoidance (see, in particular CJEU, 3 October 2013, Itelcar, C-282/12, 
paragraph 37 and the case-law cited); 
– although it is for the Member States, in the absence of harmonisation in EU 
law, to choose the penalties which appear to them to be appropriate for failure to 
comply with the obligations laid down by their national legislation in the field of 
direct taxation, they are, however, required to exercise that power in accordance 
with EU law and its general principles, and, consequently, in accordance with the 
principle of proportionality (see, in particular CJEU, 12 July 2001, Louloudakis, 
C-262/99, paragraph 67 and the case-law cited); 
– the fundamental requirement of legal certainty precludes, in principle, public 
authorities from being able to make indefinite use of their powers to put an end to 
an unlawful situation (see, by analogy in the field of competition, judgment of 
14 July 1972, Geigy v Commission, 52/69, paragraph 21); 
– whilst the national legislature may introduce an extended limitation period 
with the aim of ensuring the effectiveness of fiscal supervision and combating tax 
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evasion and avoidance connected with the concealment of overseas assets, 
provided that that period does not go beyond what is necessary to attain those 
objectives, having regard, inter alia, to the mechanisms for the exchange of 
information and administrative assistance between Member States (see judgment 
of 11 June 2009, X and Passenheim-van Schoot, C-155/08 and C-157/08, 
EU:C:2009:368, paragraphs 66, 72 and 73), the same is not true concerning the 
introduction of mechanisms amounting, in practice, to extending indefinitely the 
period during which taxation may take place or reversing a limitation period 
which has already expired. 
18 The Court of Justice of the European Union therefore requires compliance with 
the principle of proportionality between the need to guarantee the free movement 
of capital between Member States and between Member States and third 
countries, as provided for by Article 63 of the Treaty on the Functioning of the 
European Union, and the need to guarantee the effectiveness of fiscal supervision 
and the objective of preventing tax evasion and avoidance. 
19 In that particular case, the Court of Justice of the European Union held that: 
– by providing that the failure to comply with or the partial or late compliance 
with the obligation to provide information concerning assets and rights located 
abroad entails the taxation of undeclared income corresponding to the value of 
those assets as ‘unjustified capital gains’, with no possibility, in practice, of 
benefiting from limitation; 
– by subjecting the failure to comply with or the partial or late compliance 
with the obligation to provide information concerning assets or rights located 
abroad to a proportional fine of 150% of the tax calculated on amounts 
corresponding to the value of those assets or those rights, which may be applied 
concurrently with flat-rate fines, and 
– by subjecting the failure to comply with or the partial or late compliance 
with the obligation to provide information concerning assets or rights located 
abroad to flat-rate fines the amount of which is disproportionate to the penalties 
imposed in respect of similar infringements in a purely national context and the 
total amount of which is not capped, 
the Kingdom of Spain failed to fulfil its obligations under Article 63 of the Treaty 
on the Functioning of the European Union and Article 40 of the EEA Agreement. 
B) National law and case-law 
20 Under the second paragraph of Article 1649 A of the Code général des impôts, 
natural persons, associations and non-commercial companies domiciled or 
established in France are required to declare, together with their income tax return, 
details of any accounts opened, held, used or closed abroad. 
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Article L.23 C of the Livre des Procédures Fiscales provides that where the 
obligation laid down in the second paragraph of Article 1649 A of the Code 
général des impôts has not been complied with at least once in the preceding ten 
years, the tax authorities may, independently of a procedure for the review of an 
individual’s tax affairs, ask the natural person subject to that obligation to provide, 
within a period of sixty days, any information or evidence as to the origin and 
manner of acquisition of the assets held in the account or life insurance policy. 
If the person concerned does not provide an adequate response to the requests for 
information or evidence, the authorities give that person formal notice to complete 
his or her response within thirty days and specify the additional information 
required. 
According to Article L.71 of the Livre des Procédures Fiscales, if the person 
concerned does not respond or fails to provide an adequate response to the 
requests for information or evidence provided for in Article L.23 C within the 
periods prescribed in that article, he or she is to be automatically taxed as 
provided for in Article 755 of the Code général des impôts, which provides that 
assets in an account held abroad, within the meaning of the second paragraph of 
Article 1649 A, or held in an endowment contract or a similar type of investment 
entered into abroad, within the meaning of Article 1649 AA, and the origin and 
manner of acquisition of which have not been established under the procedure laid 
down in Article L.23 C of the Livre des Procédures Fiscales are to be deemed to 
constitute, in the absence of proof to the contrary, assets acquired by donation or 
succession which are subject, on the date of expiry of the periods provided for in 
Article L.23 C., to duties on donation and succession at the highest rate set out in 
table 111 of Article 777, that is to say at the rate of 60% applicable to gifts made 
between relatives beyond the 4th degree and between non-relatives. 
Those taxes are calculated on the basis of the highest value, to the knowledge of 
the tax authorities, of the assets held in the account or contract over the ten years 
preceding the request for information or evidence provided for in Article L.23 C 
of the Livre des Procédures Fiscales, less the value of the assets for which 
evidence of origin and manner of acquisition have been provided. 
Article L.181-0 A of the Livre des Procédures Fiscales provides that, by way of 
exception to the first paragraph of Article L.180 and Article L.181, the authorities’ 
right to recalculate the taxes and duties referred to therein may be exercised until 
the end of the tenth year following the year in which the chargeable event for 
those taxes or duties occurred where they are based on the assets or rights referred 
to in Articles 1649 A, 1649 AA and 1649 AB of the Code général des impôts, 
unless the date when the taxes or duties relating to the corresponding assets or 
rights becomes chargeable has been adequately indicated in the document 
registered or submitted for formal purposes or, with respect to the tax on real 
property wealth, by the declaration and schedules referred to in Article 982 of that 
code. 
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21 In a judgment of 16 December 2020, the Commercial Chamber of the Court of 
Cassation stated that the chargeable event corresponds to the date of expiry of the 
periods provided for in Article L.23 C of the Livre des Procédures Fiscales and 
constitutes the starting point for the ten-year limitation period set out in Article 
L.181-0 A of the Livre des Procédures Fiscales (Com., 16 Dec. 2020, No 18-
16.801). 
22 … 
23 … [national case-law on the constitutionality of the combined provisions of 
Article L.23 C of the Livre des Procédures Fiscales and Article 755 of the Code 
général des impôts] 
C) Questions referred for a preliminary ruling which are necessary to 
resolve the dispute 
24 It is apparent from the foregoing that the aforementioned provisions allow the 
taxpayer to rebut the presumption that assets held abroad, which have not been 
declared in accordance with the procedure set out in Article L.23 C of the Livre 
des Procédures Fiscales, and the origin and manner of acquisition of which have 
not been established, at the end of a procedure of prescribed exchanges with the 
tax authorities, [constitute assets acquired by donation or succession which are 
subject to duties on donation and succession at the highest rate] and, in addition, 
that the authorities’ assessment of the evidence submitted to them is subject to 
judicial review in the event of a challenge by the taxpayer. 
25 Moreover, the scheme provided for in Article L.23 C of the Livre des Procédures 
Fiscales and Article 755 of the Code général des impôts is intended not to penalise 
a taxpayer domiciled in France for tax purposes and holding assets abroad, who 
has failed to fulfil his obligation to declare information, by applying a punitive 
rate but to establish the basis of assessment for a tax and to settle the tax by 
applying to him or her, in the absence of satisfactory evidence as to the origin and 
manner of acquisition of the disputed assets, the highest rate, under the general 
law, of the scale of duties on donation and succession. 
26 Furthermore, failure to comply with the declaratory obligation is punishable by 
the imposition of the fine provided for Article 1736(IV) of the Code général des 
impôts or in Article 1766 thereof (a fine of EUR 1 500 per undeclared account or 
advance, increased to EUR 10 000 if the account is located in a State or territory 
that has not entered into an administrative assistance agreement with France to 
combat tax evasion and avoidance, which allows access to banking information). 
27 In those various respects, the French scheme does not give rise to the objections 
raised against the system established in the Kingdom of Spain, which was the 
subject matter of the judgment of the Court of Justice of the European Union of 
27 January 2022 (CJEU, 27 Jan. 2022, Case C-788/19), brought by the European 
Commission. 
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28 However, the Court observes that the legislature introduced an extended limitation 
period of ten years, derogating from the ordinary law, which, although it does not 
appear, by virtue of its duration, to go beyond what is necessary to achieve the 
intended objectives, nevertheless allows the authorities, in that it has as its starting 
point the date of expiry of the periods provided for in Article L.23 C of the Livre 
des Procédures Fiscales, in other words a starting point which is unrelated to the 
date of acquisition of the assets held abroad and the years in respect of which the 
taxation of those amounts was normally due, to ask the taxpayer to provide 
evidence as to the origin and manner of acquisition of those assets, including 
where he or she acquired them more than ten years before implementation of the 
procedure provided for in Article L.23 C of the Livre des Procédures Fiscales, that 
is to say during a time-barred period and without any time limit. 
It therefore raises the issue of the impact which the non-applicability of limitation 
periods resulting from that scheme has on the principle of free movement of 
capital guaranteed by Article 63 of the Treaty on the Functioning of the European 
Union, as interpreted by the Court of Justice of the European Union, in particular 
in its judgment of 27 January 2022 (CJEU, 27 Jan. 2022, Case C-788/19). 
29 The Court is therefore required to refer the following questions to the Court of 
Justice of the European Union for a preliminary ruling: 
… [wording of the questions, reproduced in the operative part] 
ON THOSE GROUNDS 
The Court, … [procedural details] 
Having regard to Article 267 of the Treaty on the Functioning of the European 
Union, 
Asks the Court of Justice of the European Union to give a preliminary ruling on 
the following questions: 
Question No 1: Must the principle of the free movement of capital 
guaranteed by Article 63 of the Treaty on the Functioning of the European 
Union be interpreted as meaning that it permits the automatic taxation, as 
provided for in Article 755 of the Code général des impôts, of assets held 
abroad which have not been declared in accordance with the procedure 
provided for in Article L.23 C of the Livre des Procédures Fiscales, and the 
origin and manner of acquisition of which have not been established, 
although it results in the non-applicability of limitation periods where the 
taxpayer establishes that he or she acquired those assets during a time-barred 
period? 
Question No 2: If the answer to that question is in the negative, must it be 
inferred from this that any correction procedure based on the aforementioned 
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provisions must be annulled, even if, in the case under review by the tax 
authorities, the non-applicability of limitation periods does not arise? 
… [stay of proceedings, procedural details]