Keywords

Summary



Keywords

1. Questions referred for a preliminary ruling — Admissibility — Limits — Clearly irrelevant questions and hypothetical questions put in a context not permitting a useful answer

(Art. 267 TFEU)

2. Freedom of establishment — Free movement of capital — Scope — Tax legislation — Corporation tax — Taxation of dividends — Tax treatment of dividends distributed to residents, from shareholdings in the capital of a company having its principle place of business in another Member State and not granting a decisive influence over it –Inapplicability of provisions relating to freedom of establishment — Applicability of provisions relating to the free movement of capital

(Arts 49 TFEU and 63 TFEU)

3. Free movement of capital — Restrictions — National legislation concerning the calculation of the maximum amount of foreign withholding tax deductible against national income tax — Failure to take account of personal costs relating to lifestyle — Not permissible — Justification — None

(Art. 63 TFEU)

Summary

1. See the text of the decision.

(see para. 19)

2. See the text of the decision.

(see paras 26-31)

3. Article 63 TFEU must be interpreted as precluding rules of a Member State under which, in the context of a system aimed at limiting double taxation, where persons subject to unlimited tax liability pay on foreign income, in the State where that income originates, a tax equivalent to the income tax levied by the said Member State, the offsetting of that foreign tax against the amount of income tax levied in the said Member State is carried out by multiplying the amount of the tax due in respect of taxable income in the same Member State, including foreign income, by the proportion that that foreign income bears to total income, that latter sum not taking into account special expenditure or extraordinary costs such as costs relating to lifestyle or to personal and family circumstances.

On the one hand, although it is true that such rules take into account allowances corresponding to special costs and extraordinary charges such as costs relating to lifestyle or to personal and family circumstances to calculate the theoretical amount of tax levied on all of the taxpayer’s income, such rules lead in practice to taxpayers resident in that Member State who received one part of their income abroad benefiting from the allowances corresponding to those special costs and extraordinary charges only up to the amount of their income received in their Member State of residence. A proportion of those allowances is thus not taken into account by that Member State in calculating those taxpayers’ income tax. It follows that, taxpayers resident in one Member State who have received one part of their revenue abroad are at a disadvantage compared with taxpayers resident in the same Member State who received all of their revenue in that Member State and who therefore benefit from all allowances corresponding to special costs and extraordinary charges such as costs relating to lifestyle or to personal and family circumstances.

On the other, although the preservation of the allocation of the power to impose taxes between Member States is admittedly likely to constitute an overriding reason relating to the public interest justifying a restriction on the exercise of freedom of movement within the European Union, such a justification cannot be invoked by a taxpayer’s State of residence in order to evade its responsibility in principle to grant to the taxpayer the personal and family allowances to which he is entitled, unless, of their own accord or as a consequence of specific international agreements, the States in which one part of the income is received grant such allowances. Those allowances must, in principle, be taken into account in full by the State of residence. It follows that they must in principle be applied in full to the part of the taxpayer’s income received in that State.

(see paras 41, 42, 51, 53, 56, 60, 63)