Judgment — ECLI:EU:C:2008:685
Date: 2008-12-04
Language of the case: German
Court formation: Third Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Right of establishment
Concepts: The various services
Procedure: Reference for a preliminary ruling
Origin: Austria

Summary of the Judgment 1. Freedom to provide services – Restrictions – Tax legislation – Justification – Prevention of abuse – Conditions (Art. 49 EC) 2. Freedom to provide services – Restrictions – Tax legislation (Art. 49 EC) 1. A national measure restricting the freedom to provide services can be justified where it specifically targets wholly artificial arrangements which do not reflect economic reality and whose only purpose is to obtain a tax advantage. However, it does not actually constitute abuse for an undertaking that can claim the investment premium to hire out assets for remuneration to another undertaking which uses them primarily in other Member States. Such hiring out cannot be the basis of a general presumption of abusive practice and justify a measure which compromises the exercise of a fundamental freedom guaranteed by the Treaty. (see paras 35-37) 2. Article 49 EC precludes Member State legislation pursuant to which undertakings which acquire tangible assets are refused the benefit of an investment premium solely because the assets in respect of which that premium is claimed, which are hired out for remuneration, are used primarily in other Member States. Such legislation, which applies a less favourable tax regime to investments in assets which, once they have been hired out for remuneration, are used in other Member States, than to investments in such assets that are used domestically, constitutes, in principle, a restriction on the freedom to provide services inasmuch as it is likely to discourage undertakings that would be eligible for that tax advantage from providing rental services to economic operators that carry out their activities in other Member States; in a situation in which an undertaking hires out assets for remuneration to another undertaking to which it has close economic ties, that legislation is also likely to discourage the undertaking that has leased the assets from carrying out cross-border activities. Such legislation cannot be justified by the need for a balanced allocation of the power to impose taxes between the Member States inasmuch as the rental income generated by hiring out the tangible assets for which the investment premium is claimed is taxable in the Member State which granted the premium and since, consequently, without the legislation at issue, the right of that Member State to exercise its taxing powers in relation to activities carried on in its territory would not be jeopardised. In addition, such legislation cannot be justified by the need to safeguard the coherence of the national tax system because there is no direct link between, on the one hand, the investment premium granted to the lessor for tangible goods it has acquired and, on the other hand, subsequent taxation of the income of the lessee, generated through use of those assets hired out to it for remuneration. Moreover, since it does not make it possible to limit the refusal to grant the investment premium to cases involving wholly artificial arrangements but affects every lessor eligible for the investment premium which hires out assets for remuneration to undertakings carrying out cross-border activities, and does so even where nothing points towards the existence of such an artificial arrangement, the legislation cannot be justified by the need to prevent abuse. (see paras 24-26, 32-35, 38-41, operative part)