ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(74)255
Vol.1974/0050

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(74)255Final
Brussels .14March1974
Propose!foraDirective oftheCouncilamendingArticle5(2)
oftheDirective of17July1969concerning indirect
•♦axesontheraisingofcapital
(submittedtotheCouncilbytheCommission )
COM(74)255Final

EXPLANATORY II^/IORAUJUTl
1.Article5(l)(a)and(b)oftheDirectiveof17JulyI9.691concerning
indirecttaxesontheraisingofcapitalprovides ,thatcapitalduty
shallbechargedontheactualvalueoftheassets -"beingcontributed ,
(inthecaseofformation ofacapitalcompany,ofanincreaseinits
capitalorassets)orontheactualvalueoftheassetsbelongingto
thecompany(inthecaseofconversion ofacompanyintoacapital
companyorofthetransfer oftheeffective centreofmanagement or
oftheregistered officeofacapitalcompany).
Moreover ,paragraph (l)(c)providesthatincaseof.anincreaseinthe
capitalofacompanybycapitalization ofprofits,reservesor
provisions ,thedutyshallbecharged onthenominalamountofsuch
increase . ■
However ,paragraph 2ofthesameArticlestipulates thatinthecases
referred toabovetheamountonwhichthe.dutyischargedshallnotbe
lessthantheactual .valueofthesharesinthecompanyallotted or
,belonging toeachmemberorthenominal amountofsuchsharesifthe
latterexceedstheiractualvalue.-
2.WhenthisDirective wasimplemented bytheMemberStatesitwasfound
thatstrictapplication ofArticle5(2)could,insomeofthe
aforementioned cases,leadtotoohighataxbeinglevied,inviewof
theprinciples onwhichtheharmonized capital cLutyisbasedandwhich
areaimedattheintroduction ofasystemwherebycapitaldutyisto
; " . . (
bechargedonlyonoperations which,fromthelegalpointofview,
constitute araisingofcapitalandonlyinsofarassuchoperations
helptoincrease theeconomic potential ofthecompany.
OJHoL249,3October1969.

Suchasituation couldariseespecially incasesofanincreasein
thecapitalofacompany "bymeansofanissueofnewsharesforcash
totheexisting shareholders# Inthiscasethecontribution incash
ma.debytheexisting shareholders isoftenconsiderably lowerthan
theactualvalueofthenewsharesissuedtothoseshareholders .To
charge'capitaldutyonthebasisofthelattervaluewouldleadtotoo
highataxbeinglevied,takingintoaccountthefactthatafterthis
operation theeconomicpotential ofthecompanyhatsbeenincreased
onlybytheamountofthecontribution incashandthattheshare­
holder'sassetsinshareshavebeenincreased onlybyavaluewhich
isequaltothepricepaidfortheshares.
Thissituation maybeexplained bythefollowing example:
Company Ahasbeenformedwithacapitalof10000000F,represented
by1000shares,eachof10000P,subscribed incash.
Sevenyearslaterthecompany'snetassetsincreaseto20000P,as
aresultoftheprofitsretained.
Thecompanythendecidestoincreaseitscapitalby10000000F(to•
bringitupto20000000P)byissuingtotheexistingshareholders
1000sharesOfanominalvalueof10000Peach,payable *incashat
par.
Theholderofanexistingshare(worth20000000F»20000P),who
1000
purchases anewshareat10000P,becomestheownerof2shares,each
worth30000000F.i.e.15000P.totalling 30000F(or20000+
2000
10000=>30000).Eyhiscontribution of10000Fhisassotsin
sharesthusincreaseinvalueby10000P,i.e.theamountofhis
contribution .Whenhereceiveshissecondshareworth15000P,that
sharerepresents asto5000"Pmerelyaredistribution ofvaluewhich
formerlyattachedtohisfirstshare,andasto10000Phis
contribution incash. " """"

TH.lS6XaiDpl6 ShOWS "fcllQ,"fc ~tll© sllcl3?^ilJD3j'3j©3 ?. pha-W^ "VqIhq
forhiscontribution incash corresponds totheamount contributed ;
this sum i3atthesame tine theamount "bywhich theeconomic
potential ofthecompany increases after this contribution hasbeen
wade .Itistherefore clear that tocharge capital duty onthebasis
Cxthoactual value oftheshare ,i.e. 15000F,asprovided forin
Article 5(2)oftheDirective of17July I969 ifthis Article is
interpreted literally ,instead ofonthebasis oftheactual value
ofthecontribution ,i.e. 10000F,would lead toataxbeing levied ,
which isnot justifiable inanywaywithin theframework ofthe
harmonized capital duty .Furthermore ,such ahigh taxwould notbe
desirable from ,theeconomic point ofView asitwould beliable to
create serious obstacles toincreases inthe capital ofcompanies
andthus totheir development .
Forthese reasons ,theCommission considers itdesirable that the
Member States should notregard theactual value ofthecompany shares
allotted toorbelonging toeach shareholder astheminimum basis for
theapplication ofthe capital duty inthe cases mentioned in
Article 5(l)(a)>(b)and (c).However ,itappears necessary to
leave toMember States thepossibility ofresort totheactual value
ofthese shares asthe criterion forfixing theactual value ofthe
contribution ,inthose cases inwhich thecontribution ismade inany
forra other than cash .
This isthepurpose ofthepresent proposal .

Proposal foraDirective oftheCouncil amending •
Article 5(2)oftheDirective of17July 1909
concerning indirect taxes ontheraising ofcapital
TElJOCUITCIL OPTHEEUROPEAN COMMUNITIES ,
Having regard totheTreaty establishing theEuxoperm Economic Comuunii-.y ,
andinparticular Articles 99 100thereof ;
Having regard totheproposal from theCommission ;
Having regard totheOpinion oftheEuropean Parliament ;
Having regard totheOpinion ofthe "Economic andSocial Committee ;
Whereas Article 5(2)oftheCouncil Directive of17July1969^concerning
indirect taxes ontheraising ofcapital provides ,inthe cases referred
toinparagraph 1(a),("b)and (c)ofthat article ,that thevalue on
t;hich the capital duty shall "becharged cannot beless than theactual
value ofthe shares allotted orbelonging toeach member ,orthenominal
value ofthese shares ,ifthelatter isgreater than their actual value ;
VJhereas insome ofthese cases the adoption ofthe actual value ofthe
shares asaminimum basis oftaxation ,does notconform totheprinciples
onwhich theharmonized capital duty isbased andwhich areaimed atthe
introduction ofasystem whereby capital dirty istobecharged only on
operations which ,from thelegal point ofview ,constitute araising of
capital andonly insofar assuch operations help toincrease theeconomic
potential ofthe company ;
HAS ADOPTED THIS DIRECTIVE :
0JKoL249 ,3October 1969

Article 1
Article 5(2)oftheDirective of17July 19^9 isreplaced bythefollowing
"2.Inthecases referred toinparagraph l(a)and (b),theamount on
which theduty ischarged shall notbeless than thenominal amount
oftheshares inthecompany allotted toorbelonging toeach member .
Inthecase ofcontributions inanyform other than cash ,theMember
States may usetheactual value oftheshares allotted toor
belonging toeach member inorder todetermine theactual value of
these assets ."
Article 2
This Directive isaddressed totheMember States .