Provisional text
OPINION OF ADVOCATE GENERAL
KOKOTT
delivered on 22 May 2025 (1)
Case C‑524/23
European Commission
v
Kingdom of Belgium
( Action for failure to fulfil an obligation – Transposition of Directive (EU) 2016/1164 – Rules against tax avoidance practices that directly affect the functioning of the internal market – Legislative competence of the European Union – Article 115 TFEU – Non-transposition of Article 8(7) of that directive – Minimum harmonisation – Scope of the obligation to transpose )
I.      Introduction
1.        This action for failure to fulfil an obligation is in the field of rules against tax avoidance practices. Direct taxation, such as the corporate tax concerned in the present case, is in principle subject to the fiscal and tax sovereignty of the Member States. However, it appeared appropriate to the Council to lay down rules against tax avoidance practices at EU level in order to prevent a fragmentation of the internal market and put an end to mismatches and market distortions. To that end, it created a minimum level of protection for national corporate tax systems against tax avoidance practices across the European Union with Directive (EU) 2016/1164 of 12 July 2016 (2) (‘the Anti-Tax Avoidance Directive’, or ‘the ATAD’).
2.        As well as a general anti-abuse rule, the ATAD also contains a specific rule directed against tax advantages through transferring profits to a foreign subsidiary. The classic case is the establishment of a subsidiary in a low-taxed foreign country, which is provided with capital and then provides a loan to the parent company. The interest income is subject to low tax abroad and is deductible as operating expenses in the higher-tax home country. Thus, the profits are transferred to the foreign country with low taxes. The ATAD now places Belgium under an obligation to implement so-called controlled foreign corporation rules. This involves the income earned by the subsidiary abroad being classified as income of the parent company at home (added to its income at home) and subject to the (higher) Belgian tax rate. Article 8(7) of the ATAD limits this legal consequence, however. It provides for the subsidiary’s (lower) tax paid abroad to be deducted from the parent company’s (higher) domestic tax debt.
3.        In the interest of stronger protection of its tax base, however, the Kingdom of Belgium did not want to allow any such deduction, relying on the fact that the ATAD provides only for minimum harmonisation. The Commission considered this to be a failure to fulfil an obligation.
4.        The action for failure to fulfil an obligation brought as a result is particularly controversial, first because it is not certain that the European Union has competence with respect to this directive. Even if all Member States have approved a directive, that cannot give grounds for or replace a Union competence not provided for in the Treaties. Second, a general question of EU law arises as to the leeway enjoyed by the Member States when transposing minimum harmonisation directives which also include detailed rules for exceptional circumstances.
II.    Legal framework
A.      European Union law
5.        According to its title, the Anti-Tax Avoidance Directive lays down rules against tax avoidance practices that directly affect the functioning of the internal market.
6.        Recitals 1, 2, 3, 5, 11, 12, 14 and 16 of that directive explain the background to its adoption:
‘(1) The current political priorities in international taxation highlight the need for ensuring that tax is paid where profits and value are generated. It is thus imperative to restore trust in the fairness of tax systems and allow governments to effectively exercise their tax sovereignty. …
(2) … It is essential for the good functioning of the internal market that, as a minimum, Member States implement their commitments under BEPS [(3)] and more broadly, take action to discourage tax avoidance practices and ensure fair and effective taxation in the Union in a sufficiently coherent and coordinated fashion. …
(3) It is necessary to lay down rules in order to strengthen the average level of protection against aggressive tax planning in the internal market. …
…
(5) It is necessary to lay down rules against the erosion of tax bases in the internal market and the shifting of profits out of the internal market. Rules in the following areas are necessary in order to contribute to achieving that objective: limitations to the deductibility of interest, exit taxation, a general anti-abuse rule, controlled foreign company rules and rules to tackle hybrid mismatches. Where the application of those rules gives rise to double taxation, taxpayers should receive relief through a deduction for the tax paid in another Member State or third country, as the case may be. Thus, the rules should not only aim to counter tax avoidance practices but also avoid creating other obstacles to the market, such as double taxation.
…
(11) General anti-abuse rules (GAARs) feature in tax systems to tackle abusive tax practices that have not yet been dealt with through specifically targeted provisions. GAARs have therefore a function aimed to fill in gaps, which should not affect the applicability of specific anti-abuse rules. …
(12) Controlled foreign company (CFC) rules have the effect of re-attributing the income of a low-taxed controlled subsidiary to its parent company. Then, the parent company becomes taxable on this attributed income in the State where it is resident for tax purposes. … In order to ensure a higher level of protection, Member States could reduce the control threshold, or employ a higher threshold in comparing the actual corporate tax paid with the corporate tax that would have been charged in the Member State of the taxpayer. …
…
(16) Considering that a key objective of this Directive is to improve the resilience of the internal market as a whole against cross-border tax avoidance practices, this cannot be sufficiently achieved by the Member States acting individually. … Rather, by reason of the fact that much inefficiency in the internal market primarily gives rise to problems of a cross-border nature, remedial measures should be adopted at Union level. … In accordance with the principle of proportionality, … this Directive does not go beyond what is necessary in order to achieve that objective. By setting a minimum level of protection for the internal market, this Directive only aims to achieve the essential minimum degree of coordination within the Union for the purpose of materialising its objectives.’
7.        Article 3 of the ATAD (‘Minimum level of protection’) provides:
‘This Directive shall not preclude the application of domestic or agreement-based provisions aimed at safeguarding a higher level of protection for domestic corporate tax bases.’
8.        Article 6 of the ATAD, entitled ‘General anti-abuse rule’, provides, in paragraphs 1 and 2 thereof:
‘1. For the purposes of calculating the corporate tax liability, a Member State shall ignore an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, are not genuine having regard to all relevant facts and circumstances. An arrangement may comprise more than one step or part.
2. For the purposes of paragraph 1, an arrangement or a series thereof shall be regarded as non-genuine to the extent that they are not put into place for valid commercial reasons which reflect economic reality.’
9.        Article 7 of the ATAD contains rules on the inclusion of the controlled foreign companies’ income in the taxpayer’s tax base. Paragraph 1 of that article defines the term ‘controlled foreign company’; inter alia, the taxpayer must hold more than 50 percent of the voting rights, of capital or of the right to receive profit. Paragraph 2 of that article allows Member States to choose between two options set out in points (a) and (b) of that paragraph for controlled foreign corporation rules:
‘Where an entity or permanent establishment is treated as a controlled foreign company under paragraph 1, the Member State of the taxpayer shall include in the tax base:
(a)      the non-distributed income of the entity or the income of the permanent establishment which is derived from the following categories: …
or
(b)      the non-distributed income of the entity or permanent establishment arising from non-genuine arrangements which have been put in place for the essential purpose of obtaining a tax advantage.
For the purposes of this point, an arrangement or a series thereof shall be regarded as non-genuine to the extent that the entity or permanent establishment would not own the assets or would not have undertaken the risks which generate all, or part of, its income if it were not controlled by a company where the significant people functions, which are relevant to those assets and risks, are carried out and are instrumental in generating the controlled company’s income.’
10.      Article 8(2) of that directive (‘Computation of controlled foreign company income’) provides the following:
‘Where point (b) of Article 7(2) applies, the income to be included in the tax base of the taxpayer shall be limited to amounts generated through assets and risks which are linked to significant people functions carried out by the controlling company. The attribution of controlled foreign company income shall be calculated in accordance with the arm’s length principle.’
11.      In this respect, Article 8(7) of the ATAD provides as follows:
‘The Member State of the taxpayer shall allow a deduction of the tax paid by the entity or permanent establishment from the tax liability of the taxpayer in its state of tax residence or location. The deduction shall be calculated in accordance with national law.’
B.      Belgian law
12.      The Kingdom of Belgium transposed the ATAD into national law through the Loi portant réforme de l’impôt de societés of 25 December 2017 (Law on the Reform of Corporation Tax) (Moniteur Belge, 29.12.2017, p. 116422). This law, in particular, introduced a new Article 185/2 into the Code des impôts sur les revenus 1992 (Income Tax Code 1992), which – in accordance with the option set out in Article 7(2)(b) of the ATAD – provided for controlled foreign corporation rules only in respect of non-genuine arrangements. The possibility under Article 8(7) of the ATAD of deducting the tax paid was not transposed.
III. Background to the dispute
13.      Following the expiry of the period for transposition of the Directive on 31 December 2018 (Article 11(1) of the ATAD), the Kingdom of Belgium communicated the provisions adopted for transposition of the Directive to the Commission. The correlation table transmitted in this connection indicated, with regard to Article 8(7) of the ATAD, that this option was not selected on account of Article 3 of the ATAD (minimum level of protection). By letter of 2 July 2020, in accordance with Article 258 TFEU, the Commission called upon the Kingdom of Belgium to give its opinion on the fact that the communicated measures did not contain any provisions for the transposition of Article 4(4)(b), Article 4(7) and Article 8(7) of that directive. In view of Article 4, the Kingdom of Belgium announced in its reply of 24 November 2020 that it would make the required amendments and communicated these to the Commission on 9 March 2021. The Kingdom of Belgium refused to transpose Article 8(7), however.
14.      On 2 December 2021, the Commission, in a reasoned opinion, called on the Kingdom of Belgium to take the measures required to transpose Article 8(7) within two months. In its reply of 2 February 2022, the Kingdom of Belgium announced that it would issue the measures required to transpose Article 8(7) in the first half of 2022. On 10 January 2023, the Belgian authorities notified the Commission that the Belgian government had been unable to reach a political consensus on the acceptance of the measures to transpose Article 8(7) and that the Kingdom of Belgium would therefore maintain its position with regard to the non-transposition of Article 8(7). They stated that the Belgian provision would only be applied in cases of tax abuse; in that case, the deterrent character was of major significance and it was inappropriate to allow a deduction of foreign taxes. Such income had previously not been taxed in any case, with the result that no company had yet suffered any disadvantages due to the application of this provision.
IV.    Forms of order sought and proceedings before the Court
15.      By document of 11 August 2023, the Commission brought an action before the Court of Justice against the Kingdom of Belgium pursuant to Article 258(2) TFEU, claiming that the Court should:
–        declare that the Kingdom of Belgium has failed to fulfil its obligations under the Directive by failing to bring into force the laws, regulations and administrative provisions necessary to comply with Article 8(7) of that directive;
–        order the Kingdom of Belgium to pay the costs.
16.      The Kingdom of Belgium contends that the Court should:
–        dismiss the Commission’s action as inadmissible or, in the alternative, as unfounded;
–        order the Commission to pay the costs.
17.      The Kingdom of the Netherlands, as intervener, supports the form of order sought by the Kingdom of Belgium.
18.      The parties have made statements in writing and – with the exception of the Kingdom of the Netherlands – orally at the hearing on 21 October 2024.
V.      Legal assessment
A.      Admissibility of the action
19.      The Kingdom of Belgium contends that the action is inadmissible since the Commission has not presented pleas in law in a sufficiently clear and precise way in its reasoned opinion and application. That argument should be rejected.
20.      The application, in accordance with the second sentence of the first paragraph of Article 21 of the Statute of the Court of Justice of the European Union and Article 120(c) of the Rules of Procedure of the Court of Justice of the European Union, must state the subject matter of the proceedings and a summary of the pleas in law relied on; this information must be so clear and precise as to enable the defendant to prepare a defence and the Court to rule on the application. (4)
21.      In accordance with settled case-law, the subject matter of an action under Article 258 TFEU for failure to fulfil obligations is determined by the European Commission’s reasoned opinion, so that the application must be based on the same grounds and pleas as that reasoned opinion. (5) However, that does not mean that the form of order sought in the application must be exactly the same as the statement of the reasoned opinion provided that the application does not extend or alter the subject matter of the proceedings as defined in the reasoned opinion. (6)
22.      In its application of 11 August 2023, the Commission claims that the Court should declare that the Kingdom of Belgium has failed to fulfil its obligations deriving from the ATAD by failing to transpose Article 8(7) thereof correctly. The fact that the Commission, in its application, speaks of a failure to transpose Article 8(7) of the ATAD correctly, whereas its reasoned opinion was still speaking of non-transposition, does not constitute an alteration of the subject matter of the dispute. Failure to transpose correctly also includes the subcategory of complete lack of transposition, which explains the Commission’s terminology. In the application, the Commission continues to criticise, in substance, the non-transposition of Article 8(7) of the ATAD. In this respect, the application was based on the same grounds and pleas as the reasoned opinion. It follows that the action is admissible.
B.      The merits of the action
23.      It must be clarified whether, in deciding in favour of controlled foreign corporation rules only in cases of non-genuine arrangements under Article 7(2)(b) of the ATAD, the Kingdom of Belgium has failed to fulfil its transposition obligation deriving from the Directive by not transposing the option of tax deduction under Article 8(7) of the ATAD.
24.      This assumes in the first place that the Kingdom of Belgium was under an obligation to transpose. In principle, that is only the case if the Union legal act to be transposed was effectively adopted. Thus, I will first discuss whether the European Union was competent to adopt the ATAD and whether the Court even has the power to examine this question in the context of an action for failure to fulfil an obligation, independently of any complaint made by the parties to this effect (see section 1.). I will then discuss the defence presented by the Kingdom of Belgium. This relies first on the fact that the second sentence of Article 8(7) of the ATAD refers to national law for the calculation of the tax deduction (see section 2.). Furthermore, it argues that Article 8(7) of the ATAD is not applicable to the controlled foreign corporation rules under Article 7(2)(b) of the ATAD, which raises questions regarding the relationship to the general abuse avoidance provision of Article 6 of the ATAD (see section 3.). Finally, it maintains that the Directive does not prevent Member States under Article 3 of the ATAD from guaranteeing a higher protection of domestic corporation tax bases (on this subject, see section 4.).
1.      Union competence to adopt the ATAD
25.      Considerable doubts are raised in the academic literature as to whether the adoption of the ATAD is covered by the European Union’s legislative competences. (7) In the legislative procedure, Malta (8) and Sweden (9) also expressed reservations by means of reasoned opinions with regard to legislative competence. Indeed, these doubts appear to be justified (see (a)). However, the EU’s competence for the adoption of the ATAD cannot be clarified in the present action for failure to fulfil an obligation (see (b)).
(a)    Doubts concerning the competence of the European Union to adopt the ATAD
26.      In accordance with the principle of conferral (first sentence of Article 5(1) and Article 5(2) TEU), the European Union is competent only to the extent that it has been assigned legislative competence by a specific rule governing competence. The European Union based the ATAD on Article 115 TFEU, which gives the Council legislative competence to issue ‘directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market’. A direct effect on the functioning of the internal market could be derived from a restriction of fundamental freedoms (10) or from an appreciable distortion of competition between the undertakings concerned. (11)
27.      The EU legislature appears to see the effect of promoting the internal market primarily in combating tax-avoidance practices. (12) By so doing, the ATAD does not remove restrictions of fundamental freedoms arising from existing national provisions, however. On the contrary, by placing Member States under an obligation to observe a uniform minimum protection of national corporate tax systems against tax avoidance practices, it limits the companies’ possibilities for cross-border activities. It thereby hinders the exercise of fundamental freedoms instead of promoting it. (13)
28.      To date, the Court has always seen measures against tax-avoidance practices as restrictions of fundamental freedoms, usually of freedom of establishment and freedom of capital, requiring justification. In particular, exit taxation, (14) but also controlled foreign corporation rules (15) have, in this respect, already been the subject of the Court’s case-law. Since upholding the fundamental freedoms of economic operators in particular serves the functioning of the internal market, it seems contradictory to assume that a restriction of those very same fundamental freedoms could promote the same objective. (16)
29.      In so far as the EU legislature sees the effect of promoting the internal market in the approximation of laws and the associated removal of market distortions, (17) that alone is not sufficient in principle to substantiate competence under Article 115 TFEU. Harmonisation is not an end in itself. The principle of conferral would have no effect if the European Union were permitted to have unlimited powers to harmonise laws on the grounds that this would per se promote the functioning of the internal market. The requirement of direct effects on the functioning of the internal market would thus be obsolete. Accordingly, the Court limited the legal basis of Article 100a TEC (now Article 114 TFEU) to eliminating appreciable distortions of competition. (18)
30.      In this respect, the Court stated the following on Article 114 TFEU (then still Article 100a TEC), which allows the approximation of Member States’ legislation that has as its subject the functioning of the internal market, with regard to the required appreciability of that effect: (19)
‘In examining the lawfulness of a directive adopted on the basis of Article 100a of the Treaty, the Court is required to verify whether the distortion of competition which the measure purports to eliminate is appreciable [reference]. In the absence of such a requirement, the powers of the Community legislature would be practically unlimited. National laws often differ regarding the conditions under which the activities they regulate may be carried on, and this impacts directly or indirectly on the conditions of competition for the undertakings concerned. It follows that to interpret Articles 100a, 57(2) and 66 of the Treaty as meaning that the Community legislature may rely on those articles with a view to eliminating the smallest distortions of competition would be incompatible with the principle … that the powers of the Community are those specifically conferred on it.’
31.      In my view, that statement also applies to the examination of the lawfulness of a directive adopted on the basis of Article 115 TFEU. From a comparison of the bases of competence in the field of indirect taxation (Article 113 TFEU, ‘is necessary’ to ensure the functioning of the internal market) and direct taxation (Article 115 TFEU, ‘as directly affect the … functioning of the internal market’), it also follows that a direct effect on the functioning of the internal market requires greater effort of justification in the case of direct taxation than in the case of indirect taxation, the harmonisation of which must only be ‘necessary’. In any event, it is not immediately obvious how this is thought to be the case with respect to the ATAD provisions. To that extent, it appears doubtful whether the ATAD can rely on the legal basis of Article 115 TFEU.
(b)    The examination of competence in the action for failure to fulfil an obligation
32.      However, in accordance with the settled case-law of the Court, there is also an assumption of the lawfulness of the European Union’s actions in the context of an action for failure to fulfil an obligation. (20) In an action for failure to transpose a directive, a Member State cannot, therefore, normally plead the unlawfulness of the directive as a defence. (21) On the contrary, it must rely on the legal remedy of an action for annulment to question the lawfulness of a measure adopted by the European Union. (22)
33.      It also follows from the case-law of the Court, however, that a different conclusion could be drawn in the case of acts tainted by an irregularity the gravity of which is so obvious that they could be regarded as legally non-existent. (23) To date, the Court has left open the question of whether a lack of legislative competence is a particularly serious and manifest defect of this kind. (24)
34.      That question is closely connected with the question of whether the Court may, of its own motion, review legislative competence with regard to the legal act at all. None of the parties have alleged that the European Union lacked competence. Nor did any of the Member States doubt the competence of the European Union to adopt the directive (25) by the possible means of an action for annulment.
35.      An argument in favour of the existence of a power to perform an ex officio review, however, is the special constitutional significance of the distribution of competence in the European Union in view of the principle of conferral (first sentence of Article 5(1) and Article 5(2) TEU). (26) Since neither this principle nor the legislative competences are questioned by the majority, the unanimity reached in the course of the legislative procedure can also do nothing to change this result. Only an amendment to the Treaty can give the European Union new competences in accordance with the principle of conferral. However, since this always requires ratification by the national parliaments, the principle of democracy (first sentence of Article 2 TEU) is also an argument against maintaining a legal act of the European Union that is contrary to its competence. There are also indications in the case-law that, in the absence of a sufficient legal basis, the Court is allowed to review lawfulness of its own motion. (27)
36.      The decision as to whether the European Union’s legislative competence must always also be reviewed ex officio in actions for failure to fulfil an obligation should be taken by the Grand Chamber of the Court of Justice, however. The Court deliberately decided beforehand against transferring the present case to the Grand Chamber. This question must therefore remain unanswered in the present proceedings.
(c)    Interim conclusion
37.      Despite reservations regarding the European Union’s legislative competence for the ATAD, this question must remain open in the present action for failure to fulfil an obligation. At the present time, the issue of competence could probably be clarified only by means of preliminary ruling proceedings that call into question the validity of the ATAD.
2.      Significance of the reference to national law for the calculation of the tax deduction in the second sentence of Article 8(7) of the ATAD
38.      As to the merits, the Kingdom of Belgium argues in its defence that the second sentence of Article 8(7) of the ATAD, which refers to national law for the calculation of the tax deduction provided for in the first sentence of Article 8(7) of the ATAD, already gives Member States the possibility to refrain entirely from tax deduction. After all, according to the second sentence of Article 8(7) of the ATAD, the deduction is to be calculated ‘in accordance with national law’.
39.      That argument cannot be accepted, since the second sentence of Article 8(7) of the ATAD has a different function. If only part of the income of a subsidiary abroad arises from non-genuine arrangements within the meaning of Article 7(2)(b) of the ATAD, Article 8(2) of the ATAD provides that also only this income is to be included in the tax base of the domestic resident taxpayer (in this example, the parent company) and thus in its state of residence (in this case, Belgium). The remaining income will then continue to be taxed abroad. However, that does not yet clarify how to calculate the amount of tax paid by the controlled foreign company in its state of residence that is accounted for by the non-genuine arrangement and that must therefore be deducted from the tax debt of the domestic taxpayer.
40.      The second sentence of Article 8(7) of the ATAD clarifies this question and, in that regard, avoids requiring the national tax authorities in the controlling taxpayer’s state of residence to perform a hypothetical examination of the tax burden that would arise without the non-genuine arrangement according to the law of the controlled foreign company’s state of residence. In this respect, it allows a calculation in accordance with national legislation.
41.      As the Commission correctly states, the second sentence of Article 8(7) of the ATAD only authorises the Member States to lay down the calculation method for the tax deduction, but not to refrain from deducting taxes altogether. This also follows from the wording of that paragraph, which speaks of ‘calculated’ and thus only addresses the question of ‘how (much)’ the deduction should be, while already assuming an (affirmative) answer to the question of ‘whether’ there should be a deduction. It was not, therefore, already possible on the basis of the second sentence of Article 8(7) to refrain from the possibility of deducting tax paid abroad.
3.      Application of Article 8(7) of the ATAD to Article 7(2)(b) of the ATAD
42.      The Kingdom of Belgium also maintains that transposition of Article 8(7) of the ATAD is not necessary when applying Article 7(2)(b) of the ATAD. Article 7(2)(b) of the ATAD concerns only non-genuine arrangements which have been put in place for the essential purpose of obtaining a tax advantage, and therefore only artificial constructions which have been put in place for tax reasons. In these cases, there is already no real movement of goods, services, capital and people in the internal market. Thus, it argues, non-deduction does not constitute an obstacle to the market in these cases.
43.      The Member States are obliged to transpose directives correctly and fully. (28) In principle, that means transposing all the provisions of the directive. (29) In so far as Article 8(7) of the ATAD is not applicable to Article 7(2)(b) of the ATAD from the outset, the Member States would be exempt from the obligation of transposing Article 8(7) of the ATAD when transposing the last-mentioned option. This is to be established by means of interpreting (30) that provision.
44.      As the Commission correctly notes, the wording of Article 8(7) of the ATAD, unlike Article 8(1) and (2) thereof, is not limited to one of the two points of Article 7(2) of the ATAD. This would appear to indicate that the deduction option provided for in Article 8(7) of the ATAD should, in accordance with the intention of the EU legislature, also be applied to the non-genuine arrangements provided for in Article 7(2)(b) of the ATAD and thus, must also be transposed into national law.
45.      At the same time, I consider Article 8(7) of the ATAD, on a systematic and teleological basis, not to be applicable to Article 7(2)(b) of the ATAD. This is because, as a general rule, there is no double taxation in the case of non-genuine arrangements, such that the provision would be rendered ineffective (see (a) below). To the extent that both a residual risk and increased effort to avoid double taxation remain in practice, this serves to deter non-genuine arrangements aimed at transferring profits to the lower-taxed foreign country (see (b) below).
(a)    The possibility of deduction under Article 8(7) is regularly ineffective in cases under Article 7(2)(b)
46.      It must be clarified whether Article 8(7) of the ATAD (tax deduction) can be applied to Article 7(2)(b) of the ATAD (non-genuine arrangements that transfer profits to low-tax countries) at all, or whether this should be foregone for systematic and teleological reasons.
47.      The ATAD, in Article 7(2)(b) thereof, lays down the principle that a controlled foreign company’s income arising from non-genuine arrangements is to be included in the domestic taxpayer’s tax base. This rule is intended to ensure that the taxpayer is taxed as if the non-genuine arrangement had not been made. Therefore, the income of the controlled foreign company, to the extent that it arises from non-genuine arrangements, is to be added to the income of the controlling taxpayer. Article 8(7) of the ATAD derogates from this principle to the extent that, due to the tax deduction for which it provides, it is no longer the full amount of the controlled foreign company’s income that is taxed in the domestic territory, but only the amount of the difference between the two corporate tax rates in the domestic territory and abroad.
(1)    Contradictory findings regarding the general legal consequence of a non-genuine arrangement
48.      The ATAD’s rules against abuse, however, are based on the general notion that artificial company structures which serve essentially to obtain tax advantages are not taken into consideration at all under tax law. Tax law in respect of tax calculation is then based on the economic situation, not on company law or contractual arrangements. This is very clear in Article 6(1) of the ATAD, which contains the general anti-abuse criteria. It provides: ‘For the purposes of calculating the corporate tax liability, a Member State shall ignore an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, are not genuine having regard to all relevant facts and circumstances.’
49.      The legal consequence of a non-genuine arrangement is therefore its negation. The situation that would have prevailed in the absence of the transactions constituting the abusive practice must be re-established, as the Court has found on a number of occasions, also outside the scope of the ATAD. (31)
50.      That applies both to the Member State in which the controlling taxpayer is resident and to the Member State in which the controlled company is resident, also in accordance with the wording of the German and French language versions of Article 6(1) of the ATAD (‘berücksichtigen die Mitgliedstaaten diese … nicht’; ‘les États membres ne prennent pas en compte …’ (‘the Member States shall not take into account …’)). In the final analysis, Article 6 of the ATAD divides the powers of taxation regarding cross-border situations between the Member States concerned by determining who is competent for the taxation of income deriving from non-genuine arrangements. The same income may not be taxed a second time by the other Member State (in this case, the state of residence of the controlled company).
51.      The principle of ignoring non-genuine arrangements expressed in Article 6 of the ATAD is also of significance for the non-genuine arrangements covered by Article 7(2)(b) of the ATAD. It is true that non-genuine arrangements are defined somewhat more generally in Article 6(2) of the ATAD (32) as arrangements that are not put into place for valid commercial reasons which reflect economic reality. In the final analysis, however, the definition in Article 7(2)(b) of the ATAD only makes this general definition more concrete for the case of controlled foreign companies.
52.      In this respect, Article 7(2)(b) of the ATAD is a specific case of application of Article 6 of the ATAD. On the one hand, the first subparagraph of Article 7(2)(b) of the ATAD expressly refers to ‘non-genuine arrangements which have been put in place for the essential purpose of obtaining a tax advantage’. On the other hand, the second subparagraph of Article 7(2)(b) of the ATAD is based on the special situation in the context of a controlling relationship. The fact that the controlled company would not own the assets or would not have undertaken the risks which generate its income if key functions were not carried out by decision-makers of the controlling company is precisely a case of an arrangement that was not put in place for valid commercial reasons which reflect economic reality.
53.      The proximity of Article 7(2)(b) of the ATAD to Article 6 of the ATAD in terms of content is thus clearly recognisable. Therefore, the legal consequences must also be consistent. However, the legal consequence of Article 6 of the ATAD is that the non-genuine arrangement is ignored by both Member States and instead the genuine arrangement is taxed. The state of residence of the controlled company that obtains income from a non-genuine arrangement must, therefore, also treat that income as if it had been obtained only in the controlling taxpayer’s state of residence from the outset.
54.      At a factual level, Article 7(2)(b) of the ATAD, as a lex specialis, may take precedence over the general abuse avoidance provision of Article 6 of the ATAD (see recital 11). At the level of legal consequences, however, Article 8(7) of the ATAD cannot be applied indiscriminately to Article 7(2)(b) of the ATAD. Otherwise, the result would be a finding contradictory to the legal consequence, provided for in Article 6, of completely ignoring a non-genuine arrangement.
(2)    Is double taxation conceivable in the case of non-genuine arrangements?
55.      In this respect, the question also arises as to whether double taxation is even conceivable in the case of non-genuine arrangements within the meaning of Article 7(2)(b) of the ATAD. The Kingdom of the Netherlands also argues along these lines when it states that the income of the controlled foreign company is already taxed only once, either abroad or in the domestic territory, in accordance with the mechanisms provided for in the directive.
56.      The interpretation and application of the abuse avoidance provisions across the European Union, and therefore also of the controlled foreign corporation rules set out in Article 7 of the ATAD, is ultimately guaranteed by the Court. Thus, double taxation cannot occur. In such case as non-genuine arrangements exist when income is transferred abroad, Belgium taxes this income, since it would have arisen in Belgium in the absence of non-genuine arrangements. If there is no non-genuine arrangement, there is also no addition of income in Belgium and it is taxed abroad.
57.      Should any divergence arise between Member States regarding the existence of a non-genuine arrangement, they are probably required to resolve it pursuant to the principle of sincere cooperation (first subparagraph of Article 4(3) TEU) by means of the principles laid down in the Dispute Resolution Mechanism. (33)
58.      As a result, the non-genuine arrangements for tax deduction set out in Article 7(2)(b) of the ATAD pursuant to Article 8(7) of the ATAD are superfluous if profits are transferred between two Member States. In the case of profits transferred to third countries, however, double-taxation agreements generally contain provisions on relevant methods for reaching agreement (see, for example, Article 25 of the OECD Model Tax Convention on Income and Capital).
59.      As a result, no double taxation arises if the concept of non-genuine arrangement is applied uniformly. Thus, deduction of the tax paid abroad – in that case, incorrectly – is not necessary.
(3)    Tax deduction in the case of non-genuine arrangements is counterproductive
60.      The Directive’s objective of effectively combating non-genuine arrangements supports the argument that Article 8(7) of the ATAD (that is, tax deduction) is not applicable to the non-genuine arrangements covered by Article 7(2)(b) of the ATAD.
61.      The following example is intended to clarify that. It is – also according to the Commission – compatible with the objective of minimum harmonisation to provide for controlled foreign companies rules when there is a slight difference in tax rates, required pursuant to point (b) of the first subparagraph of Article 7(1) of the ATAD for qualification as a controlled foreign company. Thus, a non-genuine arrangement could already be assumed if a tax rate difference of 5%, for example, is exploited. If the controlled foreign company has already paid corporate tax, for example at a rate of 15%, but only 20% in corporate tax must also be paid in the state of residence of the controlling taxpayer, then the incentive to take action against non-genuine arrangements is rather small because that state’s own tax revenue is then limited to only the difference (in this example, 5%). The tax deduction would simply reduce the incentive to combat non-genuine arrangements and would thus be counterproductive.
62.      Moreover, applying Article 8(7) of the ATAD to Article 7(2)(b) of the ATAD would run counter to the tax sovereignty of the controlling taxpayer’s state of residence in that it would be forced to forego its existing right to the amount of tax paid abroad, even though the taxpayer had chosen non-genuine arrangements. Normally, it is not incumbent on taxpayers to decide by means of non-genuine arrangements who is entitled to receive the tax revenues.
63.      Application of Article 8(7) of the ATAD is therefore not necessary in cases of non-genuine arrangements under Article 7(2)(b) of the ATAD and is also not appropriate. It would also contradict the settled case-law of the Court, according to which individuals may not rely on EU rules for abusive ends. (34) Since the addition on the basis of a non-genuine arrangement under Article 7(2)(b) of the ATAD constitutes a special case of Article 6 of the ATAD (which, according to its heading, aims to prevent abuse and concerns non-genuine arrangements), no taxpayer choosing a non-genuine arrangement according to this case-law could rely on obtaining an advantage from the deduction option under Article 8(7) of the ATAD.
64.      If that is the case, however, the Member State need not provide for such a possibility in national law in the first place. This is because – as the Court has expressly stated (35) – this general principle (according to which individuals may not rely on EU rules for abusive ends) is mandatory. As a mandatory general principle of EU legislation, it can hardly be overridden by secondary legislation.
(4)    The real significance of Article 8(7) of the ATAD
65.      This systematic and teleological interpretation does not make the provision of Article 8(7) of the ATAD superfluous, however. The fact is that the tax deduction provided for in Article 8(7) is necessary when transposing the option set out in Article 7(2)(a) of the ATAD. In such a case, passive income of the controlled foreign company is subject to general taxation by the taxpayer’s state of residence without the need to demonstrate that a main purpose of the arrangement is to obtain an economic advantage.
66.      These profits are not subject to the tax sovereignty of the taxpayer’s state of residence merely on account of the principle of ignoring non-genuine arrangements, as expressed in Article 6 of the ATAD. Thus, the starting point is that there is no reason for the controlled foreign company’s state of residence to refrain from taxing the same income. Without the application of Article 8(7) of the ATAD, the application of Article 7(2)(a) of the ATAD could lead to double taxation. The provision of Article 8(7) of the ATAD therefore has its independent purpose, albeit one that must be systematically and teleologically reduced.
(b)    Factual risks remaining are in the interest of combating non-genuine arrangements
67.      Although, according to the above, no double taxation can occur in cases of non-genuine arrangements – at least between Member States – it must be admitted that, in practice, there is the risk that greater effort will be required to deal both with the state of residence of the controlled foreign company and with the state of residence of the controlling taxpayer. This is because, while the state of residence of the controlling taxpayer has an interest in a broad understanding of non-genuine arrangements which result in it receiving tax revenue, the state of residence of the controlled foreign company has an interest in a narrow understanding of non-genuine arrangements, since otherwise income liable to tax would be removed from its tax jurisdiction.
68.      These factual risks do not contradict the basic idea of the Directive, however. The opposite is the case. This is because, if the deduction option pursuant to Article 8(7) is applied to cases under Article 7(2)(b) of the ATAD, the controlling taxpayer, if non-genuine arrangements are discovered, would only be required to bear the tax burden in its own state of residence, less the tax burden in the state of residence of the controlled foreign company.
69.      In the worst case, the controlling taxpayer would have to pay the same amount of taxes as it would have had to pay without the non-genuine arrangement; in the best case, the non-genuine arrangement is never discovered and the profits have been successfully transferred to a low-tax country. This is an explicit invitation ‘to have a go’ at non-genuine arrangements because there is nothing to lose but something to gain. This is prevented by the deterrent effect of the practical risks just outlined.
(c)    Interim conclusion
70.      The deduction option under Article 8(7) of the ATAD is therefore not applicable to Article 7(2)(b) thereof. Rather, Article 8(7) of the ATAD is to be teleologically reduced in scope, since the rule’s purpose – avoiding double taxation – is not effective here. Moreover, there would otherwise be a finding contrary to the legal consequence of Article 6 of the ATAD (ignoring a non-genuine arrangement) and also contrary to the case-law of the Court itself, according to which individuals may not rely on EU rules for abusive ends. The application of Article 8(7) of the ATAD is thus limited to the inclusion of controlled foreign corporation rules in accordance with Article 7(2)(a) thereof.
71.      The Kingdom of Belgium, which, in relation to the provisions on controlled foreign companies, had decided in favour of the option of Article 7(2)(b) of the ATAD, was already for that reason not obliged to transpose Article 8(7) of the ATAD. For that reason alone, the Commission’s action is unfounded.
4.      Minimum harmonisation
72.      In its defence, the Kingdom of Belgium further contends that the ATAD, pursuant to Article 3 thereof, aimed only to achieve a minimum harmonisation of the provisions for the protection of the domestic corporate tax base. The fact that it does not provide for tax deduction under Article 8(7) of the ATAD in cases of abuse merely guarantees a strong measure of protection of domestic corporate tax bases.
73.      In response, the Commission argues that proper transposition of the ATAD into national law also requires transposition of Article 8(7) thereof. Minimum harmonisation only allows the measures provided for in the Directive to be supplemented or tightened, for example by lowering thresholds for control within the meaning of point (a) of the first subparagraph of Article 7(1) of the ATAD (see recital 12 thereof), but does not allow their complete non-transposition.
74.      Under the third paragraph of Article 288 TFEU, directives are binding, as to the result to be achieved, but leave to the national authorities the choice of form and methods. As stated above, the Member States are obliged to transpose directives correctly and fully, (36) that is to say, in principle, to transpose all the provisions of the directive. (37)
75.      In the case of minimum harmonisation directives, the EU legislature deliberately grants the Member States the possibility to retain or adopt stricter measures. Adopting or retaining more stringent measures is subject to the proviso that the latter are not liable seriously to compromise achievement of the result prescribed by the directive in question and that, in all other respects, they comply with primary law. (38) The restrictions on fundamental freedoms arising from this may, in the field of minimum harmonisation, be justified by the directive’s objectives by reason of public order (39) provided they do not go beyond what is necessary in order to attain the objective which they pursue. (40)
76.      As a rule, this concerns cases where Member States transpose a generally formulated provision of a directive by issuing a more specific, stricter provision or, for example, amend a threshold laid down in the directive as a minimum standard in transposing it, thereby tightening the legal requirements.
77.      The present case differs from such cases in that the Kingdom of Belgium has not merely transposed a provision of a directive more strictly, but has not transposed a specific provision of the ATAD at all, namely Article 8(7) thereof. In this respect, the Kingdom of Belgium relies on the fact that only Article 7 and Article 8(1) to (4) of the ATAD contained the minimum standard for the protection of domestic corporate tax bases to be mandatorily transposed by the Member States. The exceptions to inclusion in the tax base laid down in Article 8(5) to (7) of the ATAD, intended to prevent double taxation, restricted the attainment of this objective, however, and are therefore not to be mandatorily transposed by the Member States. This is because if a Member State does not provide for tax deduction under Article 8(7) of the ATAD, for example in cases of non-genuine arrangements, this merely guarantees a higher measure of protection of domestic corporate tax bases.
78.      The Court has already dealt with directives that provided only for minimum harmonisation, albeit in consumer protection law. In those cases too, the national transposition act aimed to attain the objective of the directive to a greater degree and therefore – as in this case – did not transpose an exception provided for in the directive.
79.      The Court had to rule on this, for example, in Caja de Ahorros y Monte de Piedad de Madrid. (41) That case concerned Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, (42) Article 4(2) of which determines that the unfair nature of a term may relate neither to the definition of the main subject matter of the contract nor to the relationship between the performance and the consideration, provided the terms are in plain intelligible language. Under Article 8 of that directive, Member States may adopt or retain the most stringent provisions compatible with the Treaty in the area covered by this directive, to ensure a maximum degree of protection for the consumer. The Spanish provision transposing Directive 93/13 into national law did not take over the exceptions provided for in Article 4(2) of that directive. On the contrary, on its basis, even a term in plain intelligible language may be judged to be unfair on account of its main subject matter or its price/quality ratio. The Court evaluated this non-transposition of the exception, following the Opinion of Advocate General Trstenjak, (43) as being permissible since, in accordance with the objective of minimum harmonisation, (44) the Spanish provision was designed to afford consumers a higher level of protection. (45)
80.      This allows the conclusion to be drawn that Member States’ obligation to transpose the directive in the case of mere minimum harmonisation does not cover such derogating provisions the non-transposition of which attains the objective of the directive to a greater degree than would be the case if they were transposed. In other words, in the case of a minimum harmonisation directive, it is not mandatory to transpose an exception which limits the attainment of the objective of the directive.
81.      Just as Directive 93/13 allowed Member States the option of adopting more stringent provisions in Caja de Ahorros y Monte de Piedad de Madrid  ‘to ensure a maximum degree of protection for the consumer’, (46) Article 3 of the ATAD in the present case allows the option of ‘the application of domestic or agreement-based provisions aimed at safeguarding a higher level of protection for domestic corporate tax bases’. Thus, the ATAD, too, provides only for minimum harmonisation.
82.      In order to identify whether the non-transposed Article 8(7) of the ATAD is an exception that limits the attainment of the objective of the Directive, the mechanism of the provision must be considered. The ATAD, in Article 7(2)(b) thereof, lays down the principle that a controlled foreign company’s income deriving from non-genuine arrangements is to be included in the domestic taxpayer’s tax base. This rule is intended to ensure that, as a result, the taxpayer is taxed as if the non-genuine arrangement had not been made. Therefore, the income of the controlled foreign company, to the extent that it arises from non-genuine arrangements, is to be added to the income of the controlling taxpayer. Article 8(7) of the ATAD derogates from that principle to the extent that, due to the tax deduction for which it provides, it is no longer the full amount of the controlled foreign company’s income that is taxed in the domestic territory. The objective of the legislation (to protect the domestic corporate tax base) is thereby restricted. The ‘victim’ of a non-genuine arrangement receives less tax revenue than if a genuine tax arrangement had been chosen.
83.      In this respect, the above-cited principle, which may be inferred from
Caja de Ahorros y Monte de Piedad de Madrid, is applicable to the present case. According to that principle, non-transposition of Article 8(7) of the ATAD would not constitute failure to fulfil an obligation by the Kingdom of Belgium in so far as it contributes to a further-reaching attainment of the objective of the directive (see (a) below), and does not exceed what is necessary in order to achieve its pursued objective (see (b) below).
(a)    Further-reaching attainment of the objective of the Directive through non-transposition of Article 8(7)
84.      Non-transposition of Article 8(7) should contribute in the first place to a further-reaching attainment of the objective of the ATAD. It must therefore be decided on what basis to infer the objective of the ATAD.
85.      In this respect, Caja de Ahorros y Monte de Piedad de Madrid, cited above, relied solely on the consumer protection referred to in Article 8 of Directive 93/13/EEC, which lays down only the minimum harmonisation standard. In this respect, one would have to rely on Article 3 of the ATAD in the present case.
86.      The ‘protection for domestic corporate tax bases’ referred to in Article 3 of the ATAD is attained to a greater degree through non-transposition of the possibility of tax deduction under Article 8(7). Above all, however, the risk of having to defend oneself against additional taxation by the state of residence of the controlled company acts as a deterrent to transferring income abroad and thereby additionally protects the domestic corporate tax base.
87.      Contrary to the Commission’s argument, which refers only to recital 5 in this respect, simultaneously avoiding creating other obstacles to the market, such as double taxation, cited in that recital, cannot be regarded as an independent objective of the directive. In particular, double taxation results only from the directive itself, namely from the obligation to implement controlled foreign corporation rules, and that is the case only if it is assumed that the low-tax state is entitled to its own tax base on account of the non-genuine arrangement. It would therefore be incoherent to allege that the objective of the Directive is to avoid double taxation if the risk results only from the Directive itself (in the present case, through the obligation to implement controlled foreign corporation rules).
88.      That is confirmed by deeper consideration of the ATAD. According to its title, the Anti-Tax Avoidance Directive lays down ‘rules against tax avoidance practices that directly affect the functioning of the internal market’. Of this, ‘against tax avoidance practices’ alone describes the objective of the Directive. The addition ‘that directly affect the functioning of the internal market’ limits the tax avoidance practices covered in view of the legal basis of Article 115 TFEU (see section 1. above), without defining a separate objective.
89.      Recital 1 already notes that it is imperative to restore ‘trust in the fairness of tax systems’ and allow ‘governments to effectively exercise their tax sovereignty.’ Recitals 2, 3, 5, 14 and 16 also refer to combating tax avoidance as an objective of the Directive.
90.      Moreover, the Directive sees the market obstacle primarily in the tax avoidance practices themselves. That is already set out in the name of the Directive (‘tax avoidance practices that directly affect the functioning of the internal market’) and is confirmed by recital 2 thereof, which reads: ‘It is essential for the good functioning of the internal market that, as a minimum, Member States implement their commitments under BEPS and more broadly, take action to discourage tax avoidance practices and ensure fair and effective taxation in the Union …’. Recital 16 also goes in this direction when it states: ‘a key objective of this Directive is to improve the resilience of the internal market as a whole against cross-border tax avoidance practices …’.
91.      Reference is made to avoiding ‘obstacles to the market, such as double taxation’ only in recital 5. It would exaggerate the significance of one single recital, however, if one were to infer from it another independent objective of the Directive whereas the undisputed main objective of the Directive is expressed in at least five recitals, in the title and in the provision itself (see Article 3 of the ATAD). None of the ATAD’s substantive provisions addresses in any detail the problem of double taxation between the Member States except Article 8(7), which concerns ‘only’ self-created double taxation. A more obvious conclusion would be to regard the avoidance of double taxation, in cases where it could occur as a result of the Directive, as an expression of the principle of proportionality.
92.      The third sentence of recital 5 reads as follows: ‘Where the application of those rules gives rise to double taxation, taxpayers should receive relief through a deduction for the tax paid in another Member State or third country, as the case may be.’ In relation to the controlled foreign corporation rules provided for in Article 7(2) of the ATAD, that only addresses the option of point (a), however, in which double taxation by two Member States can arise at all. In cases under point (b), on the other hand, no double taxation between Member States can arise in any case, in accordance with the statements above (point 46 et seq.).
93.      The question as to whether the European Union has any competence at all to adopt a directive for the general elimination of double taxation in Member States’ direct tax legislation may therefore remain unanswered. Double taxation results from the exercise of tax sovereignty by Member States. In that respect, the Court has previously emphasised on several occasions that the disadvantages which could arise from the parallel exercise of powers of taxation by different Member States, to the extent that such exercise of tax sovereignty is not discriminatory, do not constitute restrictions prohibited by the Treaties. (47)
94.      Non-transposition of Article 8(7) of the ATAD results in a further-reaching attainment of the objective of the Directive – defined by Article 3 thereof – of protection for domestic corporate tax bases than would be the case if it were to be transposed.
(b)    Maintenance of the requirement of necessity
95.      Non-transposition is also necessary, since, as a general rule, in cases under Article 7(2)(b) of the ATAD, there is already no risk of double taxation (see point 46 et seq. above). For the companies concerned which have chosen a relevant non-genuine arrangement, non-transposition of Article 8(7) of the ATAD results in an additional burden with regard to practical difficulties (see point 67 et seq. above). In that regard, this additional cost serves the purpose of deterrence by turning the economic incentive to transfer profits to other States with lower corporate tax rates into its opposite. Thus, the measure does not exceed what is necessary in order to achieve its pursued objective.
(c)    Interim conclusion
96.      The deduction of tax paid abroad by the controlled foreign company, as provided for in Article 8(7), was therefore – as an exception which restricts the attainment of precisely this objective of the Directive – not covered by the transposition obligation of the ATAD laying down minimum harmonisation. The Kingdom of Belgium therefore did not infringe its transposition obligation by not transposing Article 8(7). For this reason too, the Commission’s action is unfounded.
C.      Summary
97.      Thus, the allegation of failure to fulfil an obligation through non-transposition of Article 8(7) of the ATAD when implementing controlled foreign corporation rules under Article 7(2)(b) of the ATAD is unfounded already on the basis of a teleological interpretation of that provision, but in any event on the basis of the mere minimum harmonisation laid down by that directive under Article 3 thereof.
VI.    Costs
98.      Under Article 138(1) of the Rules of Procedure of the Court of Justice, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has been unsuccessful, it is to be ordered to pay the costs in accordance with the form of order sought by the Kingdom of Belgium.
99.      Under Article 140(1) of the Rules of Procedure, the Member States and institutions which have intervened in the proceedings are to bear their own costs. In accordance with that provision, the Kingdom of the Netherlands is to bear its own costs.
VII. Conclusion
100. In the light of the foregoing considerations, I propose that the Court should:
(1) Dismiss the action;
(2) Order the European Commission to pay the costs;
(3) Order the Kingdom of the Netherlands to bear its own costs.
1      Original language: German.
2      Council Directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market (OJ 2016 L 193, p. 1) as amended by Council Directive (EU) 2017/952 of 29 May 2017 amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries (OJ 2017 L 144, p. 1). The amendments do not affect any of the provisions that are relevant in the present case, however.
3      Organisation for Economic Co-operation and Development (OECD) Action Plan on Base Erosion and Profit Shifting (BEPS).
4      Judgments of 10 May 2012, Commission v Estonia, C‑39/10, EU:C:2012:282, paragraph 24; of 24 March 2011, Commission v Spain (C‑375/10, not published, EU:C:2011:184, paragraph 10), of 12 February 2009, Commission v Poland (C‑475/07, not published, EU:C:2009:86, paragraph 43).
5      See judgment of 8 December 2005, Commission v Luxembourg (C‑33/04, EU:C:2005:750, paragraph 36 and the case-law cited there).
6      Judgments of 7 September 2006, Commission v United Kingdom (C‑484/04, EU:C:2006:526, paragraph 25), and of 14 July 2005, Commission v Germany (C‑433/03, EU:C:2005:462, paragraph 28).
7      See, for example, de Graaf, A./Visser, K. J., ‘ATAD Directive: Some Observations Regarding Formal Aspects’, EC Tax Review 25 (2016), p. 199 (204); Traversa, E./Possoz M., ‘L’équilibre délicat entre la lutte contre l’évasion fiscale internationale et l’achèvement du marché intérieur: réflexion sur la mise en œuvre du plan BEPS de l’OCDE au sein de l’Union européenne’, in: Revue des affaires européennes 2018, p. 611 (624 and 625); Brokelind C., ‘The Anti-Tax Avoidance Directive under Scrutiny: A Matter of Competence?’, in: Monsénégo, J./Bjuvberg, J. (Eds.), International Taxation in a Changing Landscape – Liber Amicorum in Honour of Bertil Wiman, Alphen aan den Rijn, 2019, p. 45 (48 and 49); Haslehner, W., ‘The General Scope of the ATAD and its Position in the EU Legal Order’, in: Haslehner, W. et al (Eds.), A Guide to the Anti-Tax Avoidance Directive, Cheltenham, 2020, p. 32 (38 and 39); Hey, J.,  ‘Harmonisierung der Missbrauchsabwehr durch die Anti-Tax-Avoidance-Directive (ATAD)’, in: Steuer und Wirtschaft 2017, p. 248 (254, 262); Oppel, F., BEPS in Europa: (Schein-) Harmonisierung der Missbrauchsabwehr durch neue Richtlinie 2016/1164 mit Nebenwirkungen’, in: Internationales Steuerrecht 2016, p. 797 (798 and 799).
8      European Parliament – Committee on Legal Affairs, 5.9.2016, Reasoned opinion of the Maltese Parliament on the proposal for a directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market (COM(2016)0026 – C8-0031/2016 – 2016/0011(CNS)).
9      European Parliament – Committee on Legal Affairs, 25.4.2016, Reasoned opinion of the Swedish Parliament (Riksdag) concerning the proposal for a Council Directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market (COM(2016)0026 – C8-0031/2016 – 2016/0011(CNS)).
10      Along these lines – but not regarding Article 115 TFEU – judgment of 5 October 2000, Germany v Parliament and Council (C‑376/98, EU:C:2000:544, paragraph 95); similarly on Article 115 TFEU, parts of German commentaries: Korte, S., in: Calliess/Ruffert, EUV/AEUV, 6th edition 2022, AEUV Art. 115 para. 9; Tietje, C., in: Grabitz/Hilf/Nettesheim, Das Recht der Europäischen Union, 83rd Supplement, July 2024, AEUV Art. 115 para. 22 et seq.; Herrnfeld, H.-H., in: Schwarze/Becker/Hatje/Schoo, EU-Kommentar, 4th edition, 2019, AEUV Art. 115 para. 4.
11      Judgment of 18 March 1980, Commission v Italy (91/79, EU:C:1980:85, paragraph 8).
12      See for example recital 2: ‘… It is essential for the good functioning of the internal market that, as a minimum, Member States implement their commitments under BEPS and more broadly, take action to discourage tax avoidance practices and ensure fair and effective taxation in the Union in a sufficiently coherent and coordinated fashion. …’ and recital 16: ‘a key objective of this Directive is to improve the resilience of the internal market as a whole against cross-border tax avoidance practices, …’.
13      Haslehner, W., ‘The General Scope of the ATAD and its Position in the EU Legal Order’, in: Haslehner, W. et al. (Ed.), A Guide to the Anti-Tax Avoidance Directive, Cheltenham, 2020, p. 32 (39); de Graaf, A./Visser, K. J., ‘ATAD Directive: Some Observations Regarding Formal Aspects‘, EC Tax Review 25 (2016), p. 199 (202); Schönfeld, J./Ellenrieder, B., ‘Das Verhältnis von Primär- und Sekundärrecht – oder: Gibt es ‘gegen Primärrecht immunisiertes Recht’?‘, in: Steuer und Wirtschaft 2019, p. 253 (261 et seq.).
14      Judgments of 21 May 2015, Verder LabTec (C‑657/13, EU:C:2015:331, paragraph 36); of 23 January 2014, DMC (C‑164/12, EU:C:2014:20, paragraph 43); of 29 November 2011, National Grid Indus (C‑371/10, EU:C:2011:785, paragraph 41); and of 7 September 2006, N (C‑470/04, EU:C:2006:525, paragraphs 32 to 39).
15      Judgments of 26 February 2019, X (Controlled companies established in third countries) (C‑135/17, EU:C:2019:136, paragraphs 55 to 58); and of 12 September 2006, Cadbury Schweppes and Cadbury Schweppes Overseas (C‑196/04, EU:C:2006:544, paragraph 46).
16      A similar argument is presented with regard to the newly introduced obligatory correspondence rule in the Parent-Subsidiary Directive in Desens, M., ‘Ist die neue Korrespondenzregel in der Mutter-Tochter-Richtlinie mit dem primären Unionsrecht vereinbar?’ in: Internationales Steuerrecht 2014, p. 825 (828).
17      See recital 2: ‘Furthermore, only a common framework could prevent a fragmentation of the market and put an end to currently existing mismatches and market distortions. …’.
18      Judgment of 11 June 1991, Commission v Council (C‑300/89, EU:C:1991:244, paragraph 23, where they are only accepted if the provisions lead to different production costs). See also judgment of 5 October 2000, Germany v Parliament and Council (C‑376/98, EU:C:2000:544, paragraph 106 et seq.).
19      Judgment of 5 October 2000, Germany v Parliament and Council
(C‑376/98, EU:C:2000:544, paragraphs 106 and 107).
20      Judgment of 15 June 1994, Commission v BASF and Others (C‑137/92 P, EU:C:1994:247, paragraphs 48 to 50 and the case-law cited).
21      Judgment of 5 March 2015, Commission v Luxembourg (C‑502/13, EU:C:2015:143, paragraph 56 and the case-law cited).
22      Judgment of 26 June 2003, Commission v Spain (C‑404/00, EU:C:2003:373, paragraph 40 and the case-law cited).
23      Judgment of 6 March 2008, Commission v Spain (C‑196/07, not published, EU:C:2008:146, paragraph 35 and the case-law cited).
24      Judgment of 11 October 2016, Commission v Italy (C‑601/14, EU:C:2016:759, paragraph 33 et seq.).
25      However, regarding the statements of the Swedish and Maltese Parliaments during the legislative procedure under Article 6 of Protocol (No 2) TFEU on the application of the principles of subsidiarity and proportionality (OJ 2008 C 115, p. 206), see: European Parliament – Committee on Legal Affairs, 25.4.2016, Reasoned opinion of the Swedish Parliament (Riksdag) concerning the proposal for a Council Directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market (COM(2016)0026 – C8-0031/2016 – 2016/0011(CNS)); European Parliament – Committee on Legal Affairs, 5.9.2016, Reasoned opinion of the Maltese Parliament on the proposal for a directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market (COM(2016)0026 – C8-0031/2016 – 2016/0011(CNS)).
26      Judgment of 14 June 2016, Parliament v Council (C‑263/14, EU:C:2016:435, paragraph 42); cf. also Opinion 2/00 (Cartagena Protocol on Biosafety to the Convention on Biological Diversity) of 6 December 2001 (EU:C:2001:664, paragraph 5).
27      On this subject, see my Opinion in the joined cases ECB v Corneli and Commission v ECB (C‑777/22 P and C‑789/22 P, EU:C:2024:973, point 130 with reference to the judgment of the General Court of 12 June 2019, RV v Commission, T‑167/17, EU:T:2019:404, paragraphs 59 to 61, and to the Opinion of Advocate General Pikamäe in EUIPO v Neoperl, C‑93/23 P, EU:C:2024:751, points 72 et seq.).
28      Judgments of 22 December 2010, Gavieiro Gavieiro and Iglesias Torres (C‑444/09 and C‑456/09, EU:C:2010:819, paragraph 64), and of 27 October 2011, Commission v Poland (C‑311/10, not published, EU:C:2011:702, paragraph 59).
29      Judgment of 14 January 2010, Commission v Czech Republic (C‑343/08, EU:C:2010:14, paragraphs 39 to 42).
30      For interpretation on the basis of the provision’s wording, context and objectives, see judgment of 4 May 2010, TNT Express Nederland (C‑533/08, EU:C:2010:243, paragraph 44 and the case-law cited).
31      Judgments of 4 October 2024, UP CAFFE (C‑171/23, EU:C:2024:840, paragraph 40); of 22 November 2017, Cussens and Others (C‑251/16, EU:C:2017:881, paragraph 46); of 22 December 2010, Weald Leasing (C‑103/09, EU:C:2010:804, paragraph 48); and of 21 February 2006, Halifax and Others (C‑255/02, EU:C:2006:121, paragraph 94). A different conclusion may be drawn from the judgment of 26 February 2019, T Danmark and Y Denmark (C‑116/16 and C‑117/16, EU:C:2019:135, paragraph 107 et seq.).
32      The differences are emphasised by Böhmer, J./Gebhardt, R./Krüger, S./Orlet, P./Pinetz, E., in: Hagemann, T./Kahlenberg, C. (Eds.), ATAD Kommentar, 2019, Article 7 para. 198.
33      Council Directive (EU) 2017/1852 of 10 October 2017 on tax dispute resolution mechanisms in the European Union (OJ 2017 L 265, p. 1).
34      Judgments of 4 October 2024, UP CAFFE (C‑171/23, EU:C:2024:840, paragraph 36); of 26 February 2019, T Danmark and Y Denmark (C‑116/16 and C‑117/16, EU:C:2019:135, paragraph 70); of 11 July 2018, Commission v Belgium (C‑356/15, EU:C:2018:555, paragraph 99); and of 12 September 2006, Cadbury Schweppes and Cadbury Schweppes Overseas (C‑196/04, EU:C:2006:544, paragraph 35).
35      Judgment of 26 February 2019, T Danmark and Y Denmark (C‑116/16 and C‑117/16, EU:C:2019:135, paragraph 71) with reference to judgments of 11 July 2018, Commission v Belgium (C‑356/15, EU:C:2018:555, paragraph 99); of 22 November 2017, Cussens and Others (C‑251/16, EU:C:2017:881, paragraph 27); and of 5 July 2007, Kofoed (C‑321/05, EU:C:2007:408, paragraph 38).
36      Judgments of 27 October 2011, Commission v Poland (C‑311/10, not published, EU:C:2011:702, paragraph 59), and of 22 December 2010, Gavieiro Gavieiro and Iglesias Torres (C‑444/09 and C‑456/09, EU:C:2010:819, paragraph 64).
37      Judgment of 14 January 2010, Commission v Czech Republic (C‑343/08, EU:C:2010:14, paragraphs 39 to 42).
38      Judgment of 7 July 2016, Muladi (C‑447/15, EU:C:2016:533, paragraph 43 and the case-law cited).
39      For restrictions on free movement of capital, see judgments of 2 March 2023, PrivatBank and Others (C‑78/21, EU:C:2023:137, paragraph 63), and of 18 June 2020, Commission v Hungary (Transparency of associations) (C‑78/18, EU:C:2020:476, paragraph 89).
40      Judgments of 18 January 2024, Regionalna direktsia ‘Avtomobilna administratsia’ Pleven (C‑227/22, EU:C:2024:57, paragraph 35), and of 7 July 2016, Muladi (C‑447/15, EU:C:2016:533, paragraph 44).
41      Judgment of 3 June 2010 (C‑484/08, EU:C:2010:309).
42      Council Directive of 5 April 1993 (OJ 1993 L 95, p. 29) in its original version. The amendments effected by Directive 2011/83/EC of the European Parliament and of the Council of 25 October 2011 on consumer rights (OJ 2011 L 304, p. 64) and Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 (OJ 2019 L 328, p. 7) were not yet relevant for Case C‑484/08.
43      In Caja de Ahorros y Monte de Piedad de Madrid (C‑484/08, EU:C:2009:682, point 87).
44      Judgment of 3 June 2010, Caja de Ahorros y Monte de Piedad de Madrid (C‑484/08, EU:C:2010:309, paragraph 28 et seq.).
45      Judgment of 3 June 2010, Caja de Ahorros y Monte de Piedad de Madrid (C‑484/08, EU:C:2010:309, paragraph 40).
46      Article 8 of Directive 93/13.
47      Judgment of 3 June 2010, Commission v Spain (C‑487/08, EU:C:2010:310, paragraph 56); see, to that effect, judgments of 16 July 2009, Damseaux (C‑128/08, EU:C:2009:471, paragraph 27); of 20 May 2008, Orange European Smallcap Fund (C‑194/06, EU:C:2008:289, paragraphs 41, 42 and 47); and of 14 November 2006, Kerckhaert and Morres (C‑513/04, EU:C:2006:713, paragraphs 19, 20 and 24).