Opinion of Mr Advocate General La Pergola delivered on 24 June 1999. - Staatssecretaris van Financiën v B.G.M. Verkooijen. - Reference for a preliminary ruling: Hoge Raad - Netherlands. - Free movement of capital - Direct taxation of share dividends - Exemption - Limitation to shares in companies whose seat is within national territory. - Case C-35/98.



European Court reports 2000 Page I-04071



Opinion of the Advocate-General

I - Subject-matter of the questions referred for a preliminary ruling

1 The three questions referred to the Court for a preliminary ruling in the present case concern the interpretation of Directive 88/361/EEC (1) and of Articles 6 and 52 of the EC Treaty (now, after amendment by the Treaty of Amsterdam, Articles 12 EC and 43 EC respectively). In particular, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands; hereinafter `the Hoge Raad') is asking the Court to determine whether a tax provision making the grant of an exemption (up to a certain amount) from income tax to natural persons in respect of dividends distributed to shareholders subject to the condition that those dividends are paid by a company whose seat is in the Member State where the taxpayer is resident is compatible with the rules guaranteeing free movement of capital, non-discrimination on the ground of nationality and freedom of establishment. The questions referred by the national court are the following:

(1) Is Article 1(1) of Directive 88/361/EEC in conjunction with Heading I(2) in Annex I to that directive to be interpreted as meaning that a restriction arising from a provision of the income tax legislation of a Member State which exempts shareholders, up to a certain amount, from liability to income tax on dividends, but restricts that exemption to dividends paid in respect of shares in companies established in that Member State, has been prohibited since 1 July 1990 pursuant to Article 6(1) of that directive?

(2) If the answer to Question 1 is in the negative, are Articles 6 and/or 52 of the EC Treaty to be interpreted as meaning that a restriction of the kind referred to in that question is incompatible with one or both of those articles?

(3) Do the answers to the questions set out above differ depending on whether the person seeking the benefit of such an exemption is an ordinary shareholder or an employee (of a subsidiary company) who holds the shares in question in the context of an employees' savings plan (`werknemersspaarplan')?

II - The relevant Community legislation

2 Article 1(1) of the Directive provides that: `[w]ithout prejudice to the following provisions, Member States shall abolish restrictions on movements of capital taking place between persons resident in Member States. To facilitate application of this directive, capital movements shall be classified in accordance with the Nomenclature in Annex I'. (2) Heading I(2) of Annex I, entitled `Nomenclature of the capital movements referred to in Article 1 of the directive' (hereinafter `the Nomenclature'), specifies, amongst `direct investments', `participation in new or existing undertakings with a view to establishing or maintaining lasting economic links'. Pursuant to Article 6(1), the Directive entered into force on 1 July 1990. Lastly, I would recall that Article 6 of the Treaty lays down a general prohibition on discrimination on grounds of nationality, whereas Article 52 of the Treaty, in conjunction with Article 58 of the EC Treaty (now Article 48 EC) guarantees freedom of establishment for companies or firms, ensuring them the benefit of `national treatment', in other words the application by the host Member State of the legislation in force for its own nationals.

II - The national legislative framework

3 It appears from the case file that under Article 47b of the Wet op de Inkomstenbelasting 1964 (`the Income Tax Law') (3) natural persons are exempted, up to a specified amount, from income tax on dividends in respect of shares. (4) Article 47b(1) provides that: `[t]he dividend exemption shall apply to income from shares in companies treated as income for the purpose of determining aggregate income from which a deduction for dividend tax has been made ...'. (5) Pursuant to Article 1(1) of the Wet op de Dividendbeslasting 1965 (6) (`the Dividend Tax Law'), the tax is charged, by deduction at source, only on dividends distributed by companies established in the Netherlands. Accordingly, the exemption provided for under Article 47b applies only to dividends distributed by companies established in the Netherlands. There is no indication whatsoever in the case file that the sum paid by way of dividend tax is deductible when income tax is assessed. The provision at issue does not distinguish between ordinary shareholders and shareholders who are employees of the company and acquired the shares in respect of which the dividend is paid in the context of an employees' savings plan.

4 It appears from the preparatory work for the introduction of Article 47b into the Netherlands legal system that that article was part of a series of measures which were `intended to raise the level of undertakings' equity capital and to stimulate interest on the part of private individuals in Netherlands shares'. (7) A second justification came to light only at the last stage of the preparatory work, when the draft legislation was before the first chamber of Parliament (Eerste Kamer): the `compensating' effect of the dividend exemption in respect of what essentially constitutes double taxation was also taken into consideration. As I have just pointed out, the Netherlands tax system provides for both a withholding tax on dividends and a tax on the income of natural persons in receipt of those dividends. (8)

IV - The facts and the main proceedings

5 In 1991, Mr Verkooijen resided in the Netherlands where he was employed by Fina Nederland BV, a Netherlands company indirectly controlled by Petrofina NV (hereinafter `Petrofina'), a public limited liability company established in Belgium and quoted on the Brussels and Antwerp stock exchanges. Mr Verkooijen acquired shares in the Petrofina group in the context of a company savings plan open to all employees of that group. In 1991, those shares yielded dividends in the sum of approximately NLG 2 337. (9) It appears from the case file that those dividends were subject in Belgium to a deduction at source, but that no taxes were levied in the Netherlands other than, as we will see below, that assessed against Mr Verkooijen himself. Mr Verkooijen had included the dividends in question in his statement of income for the 1991 tax year. In assessing Mr Verkooijen's income tax, the tax office assessed his taxable income without applying the exemption under Article 47b in respect of the dividends paid by Petrofina. The tax authorities considered that Mr Verkooijen was not entitled to the benefit of that exemption inasmuch as it relates only to share dividends in respect of which the (Netherlands) dividend tax has already been levied. In substance, instead of assessing Mr Verkooijen on the basis of a taxable income of NLG 164 697, the tax authorities raised that amount to NLG 166 697. (10)

6 After unsuccessfully objecting to the assessment, Mr Verkooijen challenged before the Gerechtshof te 's-Gravenhage the tax authorities' decision confirming that assessment. By judgment of 10 April 1996, the Gerechtshof found in favour of Mr Verkooijen, reducing his taxable income by the sum of NLG 2 000 on the ground that the Netherlands tax legislation restricted the movement of capital and freedom of establishment. The Staatssecretaris van Financiën (11) applied for review of the judgment of the Gerechtshof to the Hoge Raad which referred the abovementioned questions to the Court for a preliminary ruling. I shall examine the substance of those questions by reference to the national legal framework outlined above. Where necessary, I will set out the arguments put forward in these proceedings by the defendant and by the governments of the Member States which have submitted observations in this case.

V - The substance

A - Question 1

7 By its first question, the national court is essentially asking whether a national provision which partially exempts natural persons from income tax on share dividends provided the dividends are paid in respect of a company established in the Member State concerned is compatible with the Directive.

(1) The Community legal order and direct taxation

8 Contrary to the position adopted by Mr Verkooijen, the United Kingdom Government and the Commission, the Italian Government submits by way of introduction that the provision in question does not restrict free movement of capital since direct taxation has not been harmonised at Community level: therefore, each Member State is free to determine its own arrangements for taxing income. I cannot share that view. The Court has consistently held that `although direct taxation falls within their competence, the Member States must none the less exercise that competence consistently with Community law'. (12)

9 Following essentially the same argument as the Italian Government, the Netherlands Government points out that, in 1975, the Commission had submitted a proposal for a Council directive concerning the harmonisation of systems of company taxation and of withholding taxes on dividends, (13) only to withdraw it in 1990. (14) The Commission justified the withdrawal of that proposal on the ground that the measures it proposed were outdated both in terms of general concept (15) and of specific detail. (16) Unlike the Netherlands Government, I believe that the very existence of that proposal and the concerns reiterated by the Commission when it was withdrawn in 1990 show the significance at Community level of the effects of direct taxation of the movement of capital. It is not by chance that, in withdrawing the proposal, the Commission acknowledged the need for the Council to adopt without delay two proposals for directives (already before it for examination) designed to harmonise certain aspects of the national taxation systems. (17)

10 According to the Netherlands Government, it is, moreover, legitimate for Member States to regard provisions such as those at issue as compatible with Article 1(1) of the Directive. When the Directive came into force, the Commission did not warn the Netherlands Government that the provisions at issue might be inconsistent with Community law. That is all the more significant because the Kingdom of the Netherlands is not the only Member State to provide in its tax system for a mechanism mitigating the effects of double taxation, which is limited to `internal relationships' in order to encourage investment in national securities. (18) However, that observation of the Kingdom of the Netherlands is irrelevant in the context of proceedings brought before the Court pursuant to subparagraph (a) of the first paragraph of Article 177 of the EC Treaty (now subparagraph (a) of the first paragraph of Article 234 EC) which relates exclusively to the interpretation of Community law. Decisions handed down by the Court pursuant to Article 177 of the Treaty are based on an `objective' jurisdiction and it is not necessary to take into consideration the subjective circumstances (for example, good faith) of the subject required to apply the rule to be interpreted. The subjective element can, if need be, enter into account in proceedings brought before the Court for non-compliance with the Treaty or secondary legislation. (19)

(2) Does the possible restriction concern the movement of capital?

11 Referring to the rule in Bachmann, (20) the United Kingdom and French Governments argue that Article 67 of the Treaty is not relevant since it is secondary to the provisions guaranteeing other fundamental freedoms. In Bachmann, the Court stated that `Article 67 does not prohibit restrictions which do not relate to the movement of capital but which result indirectly from restrictions on other fundamental freedoms'. (21) In other words, Article 67 comes into play only where a transfer of assets does not constitute a payment connected with trade in goods or services. (22) However, the Governments which have submitted observations in this case have not indicated which other fundamental freedoms are more directly restricted by the provision at issue. That aside, reasoning in accordance with the aforecited case-law, I believe that this is clearly a case where Article 67 is not of a residual nature. In acquiring the Petrofina shares, (23) Mr Verkooijen certainly did not effect a payment in consideration for a service. It was a genuine financial transaction undertaken for the purpose of investing a specific sum in the shares of a company established in another Member State: namely, a genuine cross-border movement of capital. In Veronica Omroep Organisatie, (24) where the national measure at issue restricted the participation, permitted under national legislation, by a broadcasting station in the capital of another broadcasting station established, or to be established, in another Member State, the Court considered as already decided the question whether the purchase of such participations constituted a movement of capital within the meaning of Article 67 and proceeded directly to examining the merits. The Court thus clearly established the relevance of that article for the purposes of the case before it. In any event, in the present case, it is for the national court to assess the relevance of the question referred for a preliminary ruling in connection with capital movements. (25)

(3) Does the national measure restrict the movement of capital?

12 All the governments which submitted observations deny the existence of any restriction whatsoever contrary to Article 1(1) of the Directive, essentially on the basis of two types of considerations:

(a) the link between the provision at issue (which only affects dividends) and free movement of capital is too tenuous and indirect for Article 47b to fall within the scope of the Directive;

(b) neither the acquisition of shares in companies established in a Member State other than the Netherlands nor the distribution of dividends as a result of participations in foreign companies is, as such and per se, hindered or restricted in the present case.

13 As regards point (a), there is a link between the Netherlands measure and movement of capital and that link is not so indirect as to exclude this case from the scope of the Directive. It is true that dividend payments are not directly classified as `capital movements' under the Nomenclature. (26) However, the accrual of a dividend necessarily presupposes `participation in undertakings' or the `acquisition of securities' and these most certainly are capital movements within the meaning of Article 67. (27) That is sufficient, in my view, to bring the provision at issue within the scope of the Directive. What is more, the movement of capital consisting in investment in shares in companies is often prompted by the intention of collecting the dividends to which the shareholder is entitled on the ground of that participation. The Court recently stated that, for a restriction or an obstacle to a particular transaction to be covered by Article 73b of the EC Treaty (now Article 56 EC), that transaction need only be `inextricably linked' to a movement of capital, (28) that is to say constitute a prerequisite thereof. (29) The Court has also for a long time held that the concept of capital movement restrictions must be interpreted broadly. (30) Therefore, neither the nature nor the subject-matter of the national measure at issue is decisive for the purpose of applying Article 67. What is decisive is its possible effect on capital movements. I believe that such an approach is fully consistent with the wording of Article 1(1) of the Directive (in force at the material time) and of Article 73b of the Treaty (currently in force) which, by prohibiting without reserve all restrictions on the free movement of capital, `enshrines' and, as it were, `constitutionalises' the principle already laid down in the Directive. (31)

14 As regards the contention that capital movements are neither hindered nor restricted (see paragraph 12(b) above), I would observe that, as the corresponding legislative history clearly shows, the purpose of Article 47b was to introduce `preferential' tax treatment for those looking to the Netherlands stock market, thus encouraging them to invest their capital in the Netherlands. Considering its wording, the provision at issue is certainly direct and suitable for the required purpose. Not even the Netherlands Government denies that. If that is indeed the case, I would be inclined to define it as a measure based on a `protectionist' policy. It can be argued that - insofar as it applies to the dividends distributed by Netherlands companies to taxpayers resident in the Netherlands - Article 47b does not ipso facto prohibit either investment in shares in companies established in another Member State or the distribution of dividends on such shares. I believe, however, that the possibility cannot be ruled out that such a measure is at least liable to deter or discourage taxpayers resident in the Netherlands from investing their capital abroad. Indeed, depending on where the capital is invested, the provision at issue can have a distorting effect on the relationship between the economic profitability of an investment and its return after tax to the investor. Contrary to the view of the governments which have submitted observations, that distorting effect is not so secondary as to have no impact on the legal analysis. (32) As the Commission observed a few years ago, (33) with the completion of the single market, the physical and technical obstacles to the exercise of the fundamental freedoms have been eliminated. As a result, differences between the taxation systems of the Member States are accentuated and exert considerable influence precisely on investment decisions. Moreover, I must add that dividend taxation is becoming an increasingly important factor in investment decisions as a result of the implementation of economic and monetary union (the next stage after 1992 in the progress towards a fully-integrated single market) and with the disappearance from 1 January 1999 of exchange risks within eleven Member States. It follows that the obstacle in the form of tax treatment differences must be considered from that point of view. The shares of a growing number of large European companies are quoted on the stock exchange and can even be purchased via internet, regardless of the Member State in which the issuing company is established. In such a context, obstacles to free movement are greatly diminished and taxation differences based on the `nationality' of the securities, which cannot fail to influence investment decisions, must be strictly controlled in the light of Community law.

15 Again on the basis of the elements of the national legislation emerging from the case file, there is a second aspect of Article 47b which is relevant for the purposes of Article 67 and Article 1(1) of the Directive. The `geographical' limit of the exemption certainly has a restrictive and dissuasive effect even on companies established in other Member States in that it constitutes an obstacle to the raising of capital: those companies are dissuaded from placing their own shares in the Netherlands since their shares are less attractive to investors in view of the fact that the dividends paid to the shareholders of such companies receive less favourable tax treatment than dividends distributed by companies established in the Member State concerned. (34)

16 In view of the foregoing, I consider that Article 47b constitutes a restriction within the meaning of Article 1(1) of the Directive introduced by the Community legislature to ensure the full liberalisation of capital movements. (35) Moreover, the Court has consistently held that for a national measure to qualify as a restriction or an obstacle to a fundamental freedom it suffices that it `discourage' or `dissuade' the persons concerned from exercising a right or an option which is a component of such a freedom. (36)

17 According to the governments which have submitted observations, and the United Kingdom Government in particular, the provision at issue complies with Article 1(1) of the Directive by virtue of a sort of de minimis rule: those governments contend that the measure in question has too tenuous an effect on capital movements. (37) I would like to make a few comments in that regard. The allegedly tenuous nature of the effects of the provision at issue clearly depends on the sum to be invested and on the resources of the investor. For a small investor who necessarily invests only limited sums, the exemption under Article 47b probably constitutes, contrary to the view of the United Kingdom Government, a significant factor in the decision as to where to invest his capital. (38) In any event, the argument put forward by the governments which submitted observations runs counter to the case-law since the Court has ruled that even national rules which merely constitute a `hindrance' to capital movements are contrary to the directives for the implementation of Article 67. (39) I believe that that case-law can be placed on a par with the case-law concerning free movement of goods, (40) in which the Court has ruled that `a national measure does not fall outside the scope of the prohibition in Article 30 merely because the hindrance to imports which it creates is slight'. (41) (42) There is similar case-law with regard to freedom of movement for persons (43) and freedom to provide services: (44) `[a]s the Court has decided on various occasions, the articles of the EEC Treaty concerning the free movement of goods, persons, services and capital are fundamental Community provisions and any restriction, even minor, of that freedom is prohibited'. (45)

(4) Is the national measure applicable in a discriminatory manner?

18 The parties which submitted observations in this case focused their attention on whether or not free movement of capital is restricted. However, consideration must also be given to the compatibility of Article 47b with Community provisions on free movement of capital. That observation is inspired by the wording of Article 67(1) (fully implemented by Article 1(1) of the Directive) which requires Member States to abolish any `discrimination based on ... the place where such capital is invested'. The Directive brought about the `maturity' of the single market in respect of capital movements as well. The very notion of fully-guaranteed free movement should mean that the national legislature cannot consider the place of origin or of destination of the capital - namely, the place where the capital is invested - as being a legitimate basis for distinction for the purposes of legislation in that area. More specifically: a rule of national law treating capital movements differently solely on the ground of the place where they are located should, I believe, be regarded as incompatible with the Treaty even without assessing how far the national measure restricts the freedom concerned. (46) Any discrimination automatically entails a restriction, unless of course the measures adopted by the national legislature are justified by a relevant ground for intervention under Community law. (47) In Svensson and Gustavsson, (48) the Court held that a national measure concerning tax credits on mortgage interest which introduced a distinction according to the Member State in which the lending bank was located was discriminatory (and, what is more, unjustified). That case concerns the movement of capital and is clearly similar to the case at hand. It makes no difference that in Svensson and Gustavsson the national measure provided for different treatment depending on the Member State from which the capital originated (restriction on imports) rather than the Member State to which the capital was transferred (restriction on exports) as in the present case. In view of the foregoing, there is no doubt that Article 47b constitutes a measure which is applicable in a discriminatory manner according to the place where the capital yielding a return for taxpayers of the Member State in question is invested and that, as a consequence, and on the same ground, the contested provision is incompatible with Article 1(1) of the Directive. That has significant consequences as regards the permissible justifications in this case: it is not possible to rely upon an imperative requirement in the general interest not contemplated by the Treaty in order to justify a difference in treatment that is in principle incompatible with Article 1(1) of the Directive (and with Article 67(1)). It is settled case-law that only express derogations (such as Articles 36, 48(3) and 56(1) of the EC Treaty (now, after amendment, Articles 30 EC, 39(3) EC and 46(1) EC respectively) and Article 66 of the EC Treaty (now Article 55 EC)) can bring such discrimination into line with Community law. (49)

(5) Is the national measure justified?

19 It must now be determined whether, in the light of the foregoing, Article 47b runs counter to the criteria set out in the case-law according to which, in order not to be contrary to Community law, in addition to being suitable and proportionate to the objective pursued by the authority which adopts them, measures of this type must be justified by express derogations, if they are applicable in a discriminatory manner, and also by overriding reasons in the general interest, if they are applicable in a non-discriminatory manner. (50)

20 Firstly, I would observe that none of the governments which submitted observations, much less the Netherlands Government, relied upon the derogating provisions set out in the Directive - the only ones in force at the material time (51) - to justify the difference of treatment introduced by the legislation in question. Strictly speaking, therefore, the obstacle to capital movements created by Article 47b should be regarded as neither justified nor justifiable tout court. The governments which submitted observations nevertheless maintain that the provision at issue warrants an exception for two sets of reasons, the first based on the Court's case-law on overriding reasons in the general interest and the second on a specific derogating provision which was expressly introduced into the EC Treaty by the EU Treaty and came into force after the facts in the main proceedings, namely Article 73d(1)(a) of the EC Treaty (now, after amendment, Article 58(1)(a) EC).

(6) Overriding reasons in the general interest

21 The Member States which have submitted observations in these proceedings contend that the provision at issue must be regarded as objectively justified for two reasons: the intention to promote the economy of the country by encouraging investment of savings in shares of companies established in the Member State concerned, and the intention of mitigating the effects of the double taxation of share dividends distributed by Netherlands companies resulting from the levying both of dividend tax and of income tax borne by natural persons receiving the dividends. The second reason, they maintain, is strictly connected with the aim of preserving the cohesion of the Netherlands tax system. The exemption is limited to `national' dividends because only the dividends distributed by companies established in the Netherlands are subject to the corresponding tax in that country. If the exemption were extended to the dividends distributed by companies established in other Member States, which are therefore not required to make a deduction at source on dividends for the Netherlands tax authorities, the cohesion of the tax system would be undermined and the Netherlands Government would be obliged to forego tax entirely on part of the dividends (of foreign origin) paid to shareholders resident for tax purposes in the Netherlands. `Extending' the application of the exemption would mean foregoing all taxation on a portion of the income of natural persons and, the governments which have submitted observations maintain, there is no provision of Community law imposing such a result. In short, they rely on the strict correlation between the possibility of exempting dividends from income tax levied on natural persons and the application of dividend tax to those dividends.

22 The Court has repeatedly stated that aims of a purely economic nature, such as, certainly, the intention to promote the economy of a country, cannot constitute an overriding reason in the general interest justifying a restriction of a fundamental freedom guaranteed by the Treaty. (52) Nor, in the absence of an express derogating provision, can such an aim justify a national measure which is applicable in a discriminatory manner. What is more, as Advocate General Elmer observed in Svensson and Gustavsson, `[n]ational provisions of law may give the immediate appearance of being justified from the strict point of view of the national economy but nevertheless be contrary to Community rules'. (53) Moreover, a national measure that is inspired by such an aim and simultaneously has the effect of restricting free movement must certainly be characterised as protectionist and is, therefore, contrary to the fundamental requirement of bringing about a single market. The Court has consistently held that protectionist measures are incompatible with the Treaty. (54) For the foregoing reasons, I am confident that the first justification put forward in connection with Article 47b by the governments which have submitted observations must be rejected as inadmissible.

23 It must now be determined whether the national governments were justified in putting forward the need to preserve the cohesion of the tax system concerned. Despite the discriminatory nature of the provision at issue (see paragraph 18 above), the substance of that justification must be examined in the light of certain case-law of the Court according to which even national measures applicable in a discriminatory manner (in this case, based on the place where the capital is invested) can be excepted - solely on the basis of that overriding reason in the general interest - on grounds not provided for in an express derogating clause. In two judgments of the same date concerning one and the same national measure which was found to be contrary to Articles 48 and 59 of the Treaty (now, after amendment, Articles 39 EC and 49 EC), the Court for the first time - in the case of a measure applicable in a discriminatory manner - accepted the justification, not contemplated by the Treaty, of the need to ensure the cohesion of the tax system. (55) That case-law, which because of its obscure reasoning runs counter to the line of decided cases concerning the four fundamental freedoms, seems to have been confirmed in other judgments of the Court concerning the fundamental freedoms. In Svensson and Gustavsson (56) and in ICI, (57) for example, the Court examined, ruling that they were contrary to the Treaty, national measures (in ICI, of a fiscal nature) applicable in a discriminatory manner (58) where a company's place of business (or rather, the Member State in which a company was established) was the discretionary criterion for the grant or withholding of advantages to certain parties. (59) In considering national measures of that kind the Court explicitly confirmed the general principle that overriding reasons in the general interest which are not recognised by the Treaty (60) cannot be relied upon to justify a difference in treatment that is in principle contrary to Articles 52 and 59 of the Treaty (61) and cited on each occasion the rules in Bachmann and Commission v Belgium, but it nonetheless examined the substance - instead of dismissing it as inadmissible - of the justification based on the need to preserve the cohesion of the tax system in question. (62) The Court thus seems to have confirmed - once again with very succinct reasons - that the overriding reasons in the general interest which could be relied upon to justify national measures restricting the fundamental freedoms included one which was more `overriding', so to speak, than the others because it could be validly relied upon even in the case of national legislation applicable in a discriminatory manner. (63)

24 In this case, the United Kingdom and Netherlands Governments are relying on the requirement based on the need to ensure the cohesion of the tax system concerned, less with reference to the `positive' material scope of the disputed measure (namely, the cases to which that measure applies) than with reference to its `negative' material scope (namely, the cases to which it cannot apply). In other words, it is precisely on the ground of the need to safeguard fiscal cohesion that, having provided for the exemption at issue, (64) the Netherlands legislature did not extend it to cover dividends distributed by a company established in another Member State.

25 According to the case-law of the Court, the need to preserve the cohesion of the tax system can only justify a restriction of a fundamental freedom where there is a direct link between tax relief (namely, a loss of tax revenue for the administration) and a tax levy. (65) Such a link exists, for example, where the deductibility of insurance contributions from taxable income is made subject to the condition that the insurer is also established in the Member State concerned so as to ensure that that Member State can effectively tax the capital paid out when the risk is realised, namely when the insurance policy is redeemed. (66) Such a tax system allows one and the same individual to defer, but not to avoid, taxation. Where, by contrast, policyholders are allowed to deduct contributions paid to a company established in another Member State, the tax authority of the Member State concerned would suffer a loss of revenue if the policyholder had returned to his Member State of origin at the time of repayment or settlement. The Court has held, therefore, that in such a tax system there is a link between the deductibility and the subsequent taxation, and that that link is direct since the two measures concern one and the same taxpayer at different moments in his life. By contrast, it cannot be maintained that there is a direct link between the grant of an interest rate subsidy to borrowers, on the one hand, and its financing by means of the profit tax on financial establishments, on the other, (67) since `it is by no means certain that the credit ... institutions will generate taxable funds as a result of the interest rate subsidy scheme. There is in fact a basis of assessment only if the operations of the relevant credit institution as a whole produce a surplus, which is not necessarily the case since the result of operations may be negatively affected by other factors, for example losses on loans or exchange losses on holdings of securities'. (68)

26 According to the principles which can be inferred from the case-law of the Court, extending the exemption of dividends referred to in Article 47b to Mr Verkooijen would, I believe, have the effect of damaging the link between the possibility of exempting dividends from income tax and their subjection to dividend tax. The Kingdom of the Netherlands introduced the tax relief at issue solely on the premiss that its tax system could in any event have an impact on the income concerned by the exemption. That is true for dividends distributed by Netherlands companies, which are the only dividend subject to Netherlands dividend tax, the very premiss of the exemption. Applying the exemption to dividends distributed by a company established in another Member State would have an adverse effect on the revenue from the tax in question: on the one hand, the Member State which has adopted the system concerned would be unable to levy dividend tax while, on the other hand, it would be obliged to grant the taxpayer an exemption (even only partial) from the tax on income which is subject only to that tax, the only tax that can be levied in connection with one component of his income, namely dividends originating from abroad.

27 Moreover, in my view, the link between the exemption referred to in Article 47b and the levy of the dividend tax is direct. As is clear from the legislative history of the provision at issue by which the Netherlands legislature sought to mitigate the effects of double taxation, (69) from the economic point of view, the dividend tax and the income tax payable by natural persons referred to in the order for reference affect one and the same taxpayer (the recipient of the dividends). By contrast, in Svensson and Gustavsson, where the Court held that the cohesion of the Luxembourg tax system was not at risk, the tax credit and the tax (which were allegedly linked) did not concern one and the same taxpayer but different taxpayers, (70) namely borrowers and financial establishments. (71) That is not all. Whereas in circumstances such as those in Bachmann, several years can lapse between the deductibility of contributions and the levy of tax on social security benefits, in the present case, by contrast, the levy of dividend tax and the application of the exemption take place practically simultaneously, when taxable income is assessed for a given tax year. (72)

(7) Is the national measure suitable and proportionate?

28 According to case-law, for national measures which are liable to restrict or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty to qualify as being effectively justified by overriding reasons in the general interest, they must be suitable for securing the attainment of the objective which they pursue and they must not go beyond what is necessary in order to attain it. (73)

29 I do not believe that there are any doubts concerning the suitability of the provision at issue for mitigating, at least partially, the effects on the recipient shareholder of the double taxation of dividends in the Netherlands, and none of the parties which have submitted observations in this case has raised any in that regard. As regards the proportionality of the provision at issue to the aim pursued by the Netherlands legislature, it is for the national court, by reason of the division of jurisdiction provided for in Article 177 of the Treaty, to determine whether or not the restriction of a fundamental freedom arising from a national measure could have been avoided or reduced without jeopardising the aims pursued by that measure. (74) In this regard, the only alternative put forward in the course of these proceedings (by the Commission during the oral procedure because of its supposedly less restrictive effects on capital movements), namely the application of an exemption or tax credit in respect of dividends originating in another Member State, is not consistent - in this case and considering the relevant national provisions described in points 3 and 4 above - with the aim of preserving fiscal cohesion since, in the absence of any agreements with other States for that purpose, (75) such a measure clearly cannot fail to affect the Netherlands tax revenue without any consideration or readjustment.

(8) The derogation under Article 73d(1)(a)

30 Apart from the justifications based on overriding reasons in the general interest that emerge from the case-law of the Court, all the governments which have submitted observations argue that Article 47b must in any event be excepted under the derogation in Article 73d(1)(a) of the Treaty (76) since, even though that provision came into force only in 1994 (subsequent to the facts of this case), it essentially reproduces the earlier legislation. (77)

31 Although the questions referred for a preliminary ruling do not in this case concern the provisions introduced by the EU Treaty, the above-mentioned line of reasoning is nonetheless clearly relevant. Its interest derives from the fact that the governments which have submitted observations are not claiming that it is a `new' derogation valid retroactively, but merely that it `constitutionalises' in the Treaty a principle that was previously in force and which therefore applies to the facts of the main proceedings. The national court itself dwelt at some length on this point in the findings section of the order for reference. The derogation is thus relied on to demonstrate that under the provisions previously in force, the Member States already had the power to apply tax rules discriminating between taxpayers in different situations based on the place where their capital was invested. Moreover, it would seem that the governments which have submitted observations rely on the specificity of tax legislation: in view of the nature of the subject matter concerned, that power is virtually unconditional. As a result, according to those governments, the derogation is not subject to the limitations laid down in Article 73d(3) of the Treaty, corresponding to the last sentence of Article 36 of the Treaty. That conclusion is essentially based on a literal interpretation of the article itself. (78) Thus, the power in question is unconditional: it is not subject to judicial review either as regards the merits of the overriding reasons in the general interest that purportedly justify different treatment based on the place where the capital is invested, or as regards the proportionality of the measure to the objectives pursued.

32 I can agree with that reasoning up to a point. On the one hand, I am convinced that the derogation does not constitute a step backwards in the acquis communautaire. It can reasonably be said to antedate the provisions in force before 1 January 1994. (79) It is true that, in its case-law, the Court has allowed Member States to maintain certain distinctions (based, for example, on the taxpayers' place of residence) in their taxation rules, provided such distinctions are based on situations that are not objectively comparable (80) or, in the case of rules applicable in a discriminatory manner, that they are justified by overriding reasons in the general interest. (81)

33 On the other hand, I reject the argument that different tax treatment based on the place where capital is invested - which is permitted since the Treaty provides for the possibility of a derogation - must always be regarded as justified. Firstly, according to the case-law of the Court itself - to which I have just referred - any distinction (82) rooted in the tax legislation of a Member State must be based on objective factors (83), or in any event be justified, and must thus pass the proportionality test; otherwise, the assertion - which I believe constitutes the cornerstone of the observations submitted by the governments and which I support - that the derogation must be understood and applied in accordance with the case-law of the Court would be deprived of all meaning. It follows that the limitations set out in Article 73d(3) of the Treaty also apply to the derogation referred to in paragraph 1(a) of the same article which, contrary to the opinion of the governments which have submitted observations, must be read as a whole. (84) Secondly, to consider - as an absolute presumption - that all the situations covered by the derogation are justified per se would mean attributing to the derogation itself the specific capacity, not contemplated by the Treaty, of distinguishing - for reasons I cannot see - the cases concerned by this derogation from all other exceptional cases - set out expressis verbis in the Treaty - which are such as to justify restrictions of the fundamental freedoms.

34 If we apply to the present case the derogation set out in Article 73d(1)(a) of the Treaty and adopt the above-mentioned criteria for interpretation, the result is substantially comparable to the result obtained on the basis of the provisions previously in force. Considered as such, Article 47b provides for differentiated treatment based solely on the place where the Dutch taxpayer's capital is invested, and that provision does not avoid the prohibition under Article 73b of the Treaty. The fact that such difference in treatment, set out in a provision of tax law, may be justified by an overriding reason in the general interest recognised by the Court simply means that the national measure in question is liable - again, in principle, since it is not arbitrarily discriminatory in nature - to fall within the scope of the derogation. The discrimination introduced by the Netherlands tax legislation can be regarded as justified and effectively covered by the derogation only if it has satisfied in concreto the requirement of proportionality according to the canons of interpretation traditionally applied by the Court even before the new rules on the movement of capital came into force. (85)

35 In conclusion, a measure limiting the benefit of an exemption from income tax solely to dividends distributed by companies established in the Member State concerned constitutes an obstacle contrary to Article 1(1) of the Directive. However, the refusal to apply that exemption also to dividends distributed by companies established in other Member States is in principle justified by the need to preserve the cohesion of the tax system in question. My opinion, based on the provisions of Community law in force at the material time, is not affected by the derogation contained in Article 73d(1)(a) of the Treaty. In adopting the derogating provision in question, the Community legislature was not introducing a new principle into the provisions on capital movements; on the contrary, it merely made explicit in the text of the Treaty a pre-existing rule which is thus part of the system I described in my analysis of the provision at issue.

B - Question 2

36 If the first question is answered in the negative, the Hoge Raad asks the Court whether Articles 6 and/or 52 of the Treaty preclude a national measure such as Article 47b.

37 I agree with the governments which have submitted observations. Article 6 of the Treaty, which enshrines the principle prohibiting discrimination on the ground of nationality, is not relevant here since it is a general rule designed to apply to situations governed by Community law which are not covered by any specific non-discrimination rules (86) such as, precisely, Article 52 of the Treaty which, in the case of undertakings, must be read in conjunction with Article 58. That provision grants freedom of establishment to nationals of another Member State, allowing them to set up and manage undertakings and companies under the conditions laid down for its own nationals by the law of the Member State of establishment.

38 As a preliminary point, the United Kingdom and Netherlands Governments submitted that Article 52 of the Treaty is not applicable to the present case since it is a general provision as opposed to the more specific rules on free movement of capital which must be applied by way of exception. As we have seen, those governments defend the provision at issue, maintaining that it is compatible with Community rules guaranteeing free movement of capital. If my understanding is correct, those governments argue that Article 52 of the Treaty does not preclude the provision at issue which is consistent with Article 1(1) of the Directive. In my view, that argument is not relevant here. It is admittedly true that the second paragraph of Article 52 of the Treaty enshrines the principle of national treatment with regard to the establishment of undertakings in another Member State `subject to the provisions of the chapter relating to capital'; (87) however, that provision merely expresses the concern of the draftsmen of the Treaty not to superimpose provisions on freedom of establishment and free movement of capital, in other words, to avoid applying two sets of provisions to one and the same restriction. On the other hand, it is quite possible for one and the same provision of a Member State's legislation to contain several distinct aspects, all of which are relevant to the Treaty, as in the case of a national measure restricting more than one fundamental freedom simultaneously and to an equal degree. In Svensson and Gustavsson, the Court held that one and the same measure was contrary to both Article 59 and Article 67 of the Treaty. More recently, Advocate General Tesauro acknowledged that, in principle, `it would ... be possible for [two] sets of provisions to apply together, but only in relation to the provisions restricting simultaneously, although from different angles, [two distinct fundamental freedoms]', including movement of capital. (88) In that regard, I would point out that in Veronica Omroep Organisatie, where the Court held that the national measure at issue (see point 11 above) was compatible with both the provisions on freedom to provide services and those on free movement of capital, it simultaneously examined the case in the light of two distinct sets of rules and did not at all rule out the relevance of the `services' aspect, despite the fact that the national measure was compatible with the Treaty from the `capital' angle.

39 As regards the substance of Article 47b, I must first observe that, even from the - different - perspective of the provisions on freedom of establishment (for undertakings), that provision is applicable in a discriminatory manner (as Mr Verkooijen did not fail to point out), since it distinguishes between dividends distributed by Netherlands companies and those distributed by companies established in other Member States. Unless the distinction under Netherlands tax legislation is based on situations that are objectively not comparable or is justified by a relevant overriding reason in the general interest (see the end of point 32 above), this observation alone is sufficient for Article 47b to be regarded as contrary to Article 52 of the Treaty: `Article 52 prohibits all discrimination, even if only of a limited nature'. (89)

40 Moreover, as for whether or not there is a restriction under Article 52 of the Treaty, it may seem, at first sight, that the provision at issue only `indirectly' concerns the issuing companies: Article 47b is not, strictly speaking, part of the tax system for companies, since it affects the benefits enjoyed by shareholders who are natural persons (the exemption applies only in respect of income tax on natural persons, see point 3 above) after corporation tax has been assessed on the profit from company activities (which has given rise to the dividends distributed). However, as we shall see below, the tax regime applicable to dividends originating in another Member State cannot - under aspects other than those examined in the section on Question 1 - fail to influence (90) certain decisions which companies established on Community territory (including in the Netherlands, therefore) must take as regards their principal or secondary place of business.

41 There are many situations in which a national measure such as Article 47b restricts - to a greater or lesser extent - freedom of establishment:

(a) as Mr Verkooijen has observed, a company that has its principal place of business in another Member State and plans to set up a secondary place of business (91) in the Netherlands will be dissuaded from doing so in any form other than a company if it intends to turn to the capital market in that Member State in order to raise the capital needed to manage an undertaking. (92) The provision at issue essentially encourages preference to be given to establishment in the form of a subsidiary, which is legally independent of the parent company by which it is controlled, rather than the alternative of a branch, defined as part of a de facto whole or simply as a limb of the company, allowing a measure of decentralisation. (93) In Centros, the Court recently confirmed that freedom of establishment includes the right for a company to set up a secondary place of business in another Member State and to carry on its business in the form it considers most appropriate: (94) all restrictions on that freedom of choice must thus be regarded as contrary to Article 52 of the Treaty.

(b) a company established in the Netherlands whose shareholders (though not necessarily all of them) are natural persons resident there for tax purposes and which intends to set up a principal place of business in another Member State (by transferring its registered office and thus acquiring the status of a company of the host Member State) (95) will be dissuaded from doing so, since its Netherlands shareholders would automatically forgo the advantage provided for in Article 47b because their dividends would no longer be distributed by a `Netherlands' company.

(c) I believe that Article 47b also plays a role in the case of a merger involving a company established in the Netherlands whose shareholders are natural persons resident in the Netherlands. As in the case under (b) above, those shareholders lose the advantage under the provision at issue (i) in the case of a merger by incorporation, where the incorporating company does not have its registered office in the Netherlands, and (ii) in the case of a true merger, where the ensuing, newly-formed company does not have its registered office in the Netherlands. (96) In both cases, the dividends paid to Netherlands taxpayers following such mergers will no longer originate from a company established in the Netherlands.

42 The aspects I have just indicated by way of example specifically concern Article 52 of the Treaty. In (a), (b) and (c), the exercise of the freedom of establishment which is restricted (discouraged or influenced) by the provision at issue concerns certain management decisions concerning undertakings in the form of a company (the form of the decentralisation of activities, the location of the registered office, merger with other undertakings, respectively) that do not involve (directly at least) capital movements within the meaning of Article 67 of the Directive, such as that effected by Mr Verkooijen when he acquired the Petrofina shares.

43 Moreover, as regards the view of the governments which have submitted observations that the effects of Article 47b on freedom of establishment are too tenuous, I would point out that the Court has consistently held that Article 52 of the Treaty prohibits `any restriction, even minor, of that freedom' (see the end of point 17). (97)

44 Assuming that, under certain aspects, the provision at issue is inconsistent with Article 52 of the Treaty, we must now determine whether it can be regarded as justified, suitable for attaining the objective pursued by the legislature, and proportionate. Despite the various aspects under which Article 47b can be deemed incompatible with Treaty provisions on freedom of establishment, I believe that - as regards the determination and existence of a justification and the appropriateness and proportionality of the national measure - the line of reasoning followed in the section on Question 1 (see points 19 to 29) also applies here : the provision at issue is the same (within the same tax system) and the fact that it is also applicable in a discriminatory manner from the `exercise of freedom of establishment' point of view has the consequences already described (see point 23) in respect of the determination of the causes which may justify that measure.

45 To conclude, I believe that a national measure such as the one at issue here is inconsistent with Article 52 of the Treaty under several aspects but that, in principle, it must nevertheless be regarded as justified by the need to ensure the cohesion of the tax system of the Member State concerned.

C - Questions 1 and 2: a comprehensive approach

46 In the foregoing examination of the first two questions referred for a preliminary ruling, I have concentrated on the elements that emerge clearly from the case file. I believe it is now worthwhile considering certain other elements which are relevant, in my view, for the purpose of giving a proper answer to the questions referred, namely, for the reasons set out below, the provisions of the bilateral Double-Taxation Convention concluded between the Kingdom of Belgium and the Kingdom of the Netherlands (98) (that is, the Member State where Petrofina has its registered office and the dividends at issue in the main proceedings originated, and the Member State where Mr Verkooijen is resident, respectively). Admittedly, the fact that both the order for reference and the observations submitted in the course of the proceedings before the Court (99) barely refer to the Convention could at once raise doubts on the proper formulation of the question referred by the Hoge Raad: by failing to consider the Convention (even if only to dismiss it as irrelevant to the proceedings), the order for reference does not appear to provide a sufficiently precise description of the legal background to the questions at issue. Moreover, as Advocate General Léger rightly observed in Wielockx, (100) `double-taxation conventions ... are an integral part of national tax law', and they must therefore be duly taken into account, in any event, in order to have a complete picture of the ins and outs in tax cases involving a cross-border element.

47 Nevertheless, to fulfil the obligations of judicial cooperation under Article 177 of the Treaty, I believe that it is for the Court to take into consideration all relevant elements of which it is aware, in order to provide the national court with a useful answer. In that regard, I would recall that the Court has already had several occasions to dwell (more or less at length) on these conventions, even where they were not the object of the questions referred for a preliminary ruling. (101) Therefore, it is necessary (or at least appropriate) here not to disregard (102) the provisions of a bilateral convention, such as that concluded between the Kingdom of Belgium and the Kingdom of the Netherlands, which the Court has already considered at length (103) and which contains provisions that specifically and directly concern the case at issue. (104)

48 By way of a further preliminary comment, I would observe that in preliminary rulings the Court has already had occasion to rely upon ambivalent wording in order to cover all possible alternative legal frameworks. In Naranjo Arjona and Others, (105) the Court interpreted Community law by referring first to the provisions of national law indicated by the national court (paragraphs 15 to 24 and the operative part of the judgment) and then broadening its analysis to encompass an international convention (cited by the Commission but not mentioned in the order for reference), in the event that that convention were to be deemed applicable `in practice' (paragraphs 25 to 29 and the operative part of the judgment). In that case, the Court stated that `[i]t is therefore for the national court to verify whether application of that convention would in practice be [relevant]' (paragraph 29) before indicating in the operative part of the judgment the solution to the questions raised by the national court both for the case where only the national law of the Member State concerned was applicable and for the case where the national court considered it more appropriate to rule on the basis of the international convention. (106) Similarly, for the reasons already indicated, I believe that in the case at issue in the main proceedings before the Hoge Raad, it is necessary to consider, in the alternative, a legal framework incorporating the Convention, in addition to the rules of national law indicated in the order for reference.

(1) The Double-Taxation Convention between Belgium and the Netherlands

49 Let me now consider specifically this convention, but only in so far as it has a bearing on this case. My comments may, however, also apply in cases other than this one, since the provisions on `cross-border' dividends between Belgium and the Netherlands are modelled (like practically all comparable conventions concluded between the Member States of the Community) (107) on the Model Double-Taxation Convention proposed by the OECD. (108) I would also point out that my Opinion based solely on the national legislation of the Netherlands remains unchanged in the non-hypothetical (109) case where national legislation is not coupled with a double-taxation convention containing provisions such as those examined below.

50 Article 10(1) of the Convention establishes the basic principle that the Contracting State where the shareholder is resident is entitled to charge tax on dividends originating in the other Contracting State. (110) Article 10(2) of the Convention also entitles the State of origin of the dividends (namely, the country where the distributing company is established) to charge tax on them (as a rule, by deduction at source, in addition to tax on company profits) below a maximum limit. (111) Moreover, under Article 24 of the Convention, (112) the Netherlands must award a tax credit in order to avoid double taxation of the dividends paid to its taxpayers holding shares in companies established in Belgium, provided that, and to the extent that, a deduction at source such as that provided for in Article 10(2) of the Convention has already been made from those dividends in Belgium. (113) In essence, in the case of a Netherlands taxpayer receiving dividends from a Belgian company, the Convention provides for a mechanism which is quite common in practice and is designed less to mitigate than to avoid the effects of double taxation.

51 Considering the whole framework of relevant provisions - both national and international - the Netherlands tax system - which seeks to eliminate, or at least mitigate, the effects of double taxation both in purely `internal' cases and in `cross-border' cases - is therefore characterised by the consistent nature of the treatment applied to different circumstances. I would observe, moreover, that by applying a tax credit to dividends distributed by Belgian companies, the Netherlands apparently achieves a more effective result than that attained - in respect of dividends distributed by Netherlands companies - by means of the partial exemption granted under Article 47b. As I have just pointed out, in the case of `cross-border' dividends, it is more appropriate to speak of the elimination rather than the mitigation of double taxation.

(2) Capital movements

52 That being said, let us now consider the circumstances underlying the first question. Take the case of a Netherlands taxpayer who, like Mr Verkooijen, has invested in shares of a company established in Belgium and has thus received a tax credit in accordance with Article 24(1) of the Convention. What if that taxpayer also asks to benefit from the exemption under Article 47b? Although he may justify his request on the ground of the principle of equal treatment of capital invested in different places, not only is that taxpayer actually seeking more favourable treatment than those who are resident for tax purposes in the Netherlands and have invested in Netherlands shares, he is essentially seeking - despite the fact that he is in principle entitled to a tax credit under the Convention (thus already avoiding the effects of double taxation) - to avoid income tax, at least in respect of a taxable income of NLG 2000. Such a result is inconsistent with the aims of the Treaty (and of the Directive) and unjustifiably interferes with the taxation power of the Member State concerned. Community rules on capital movements are not designed to create incentives for those movements but to remove all obstacles by requiring Member States to treat Community situations no less favourably than purely internal situations. In this case we are dealing with a Member State that has already concluded and implemented in its national legal system a convention designed to avoid double taxation of `cross-border' dividends, a convention which certainly does not hinder free movement of capital according to Article 1(1) of the Directive (or Article 73b of the Treaty). I do not see on what basis Community law could require that Member State also to apply to those dividends the tax treatment reserved for `national' dividends. That obligation would be tantamount to forgoing tax revenue and, what is more, it would be purely unilateral since there is no reciprocal obligation on the part of another Member State. Therefore, in my view, the national provisions are not open to criticism since they generally display a form of cohesion which goes beyond the purely national level. That point is important and warrants two additional observations.

53 Firstly, the foregoing observations do not refer to cohesion as a means for offsetting the disadvantage arising from the national measure (namely, the fact that the taxpayer does not benefit from a certain tax exemption) with an advantage of another kind, in another Member State: in its case-law, the Court has held that such broad cohesion cannot effectively justify taxation. (114) The case at issue is different. Cross-border investment and domestic investment are subject to different rules and regulations of the national legislature, some deriving from conventions, some arising autonomously from the national legal system. The distinguishing feature in the present case is the linkage between the fiscal advantages and disadvantages provided for in the legal system, considered as a whole, of one and the same Member State. The Netherlands does not extend the exemption provided for in Article 47b to dividends originating from Belgium because in the Netherlands those dividends have the advantage of a tax credit in accordance with Article 24(1) of the Convention.

54 I would observe, moreover, that the fact that the Netherlands grants a tax credit corresponding to the deduction at source made in Belgium does not adversely affect the cohesion of the tax system concerned. From that point of view, fiscal cohesion is no longer claimed within the system of taxation itself, or on the basis of a strict correlation between the exemption from income tax and the subjection of the dividends to a corresponding tax, but rather by virtue of a different macro-economic balance, which is international and results from the bilateral regulation of the interests of the Contracting States as governed by conventions: `[f]iscal cohesion ... is shifted to another level, that of the reciprocity of the rules applicable in the Contracting States'. (115) Although it is true that the obligation to grant a tax credit in respect of the deduction at source made by the other contracting State (Article 24(1) of the Convention) reduces the tax revenue of the Netherlands, it is equally true that that State is entitled to made a deduction at source from the dividends paid by Netherlands companies to shareholders residing in Belgium (Article 10(2) of the Convention).

55 That being said, it is now easier to see - taking into consideration all relevant provisions of the legal system in question, including the provisions of the aforesaid bilateral convention - how to classify the provision at issue in the main proceedings. I have already stated that Article 47b constitutes an obstacle to capital movements and is contrary to Article 1(1) of the Directive. However, that conclusion was based solely on the provisions of national law indicated by the Hoge Raad in its order for reference to the Court and the arguments submitted by the parties in the present proceedings. If, however, we take into consideration the conventions which specifically concern the circumstances in Mr Verkooijen's case, the national measure limiting the exemption under Article 47b to dividends distributed by Netherlands companies is no longer, in the eyes of Community law, a measure having the effect of dissuading Netherlands taxpayers from investing their capital in Belgium. For those who invest in shares in companies established in that State, the tax system of the Netherlands, considered as a whole, provides an even more effective solution than that introduced (ten years after the Convention was concluded) in the `internal' case; moreover, Community law does not prohibit Member States from treating purely internal situations less favourably. (116) The Netherlands taxpayer wishing to invest his capital in shares with a view to collecting the corresponding dividends may thus choose between shares in companies established in Belgium (in which case he is assured so-called fiscal neutrality under the Convention, avoiding double taxation entirely) and shares in companies established in the Netherlands (in which case the effects of double taxation are simply mitigated, to a limited degree). In essence, therefore, the tax system of the Netherlands is distinguished by a sort of fiscal neutrality as regards investments in shares in Belgian and Netherlands companies. Considering the relevant legal framework in its entirety, I believe we can also rule out the aspect of discrimination referred to in point 18 above. The fact that the advantage provided for in Article 47b does not apply in respect of dividends distributed by companies established in another Member State is accounted for by the fact that the Convention establishes a particular system for that category of dividends: the two categories of dividends (`national' and `cross-border') are not, therefore, in a comparable situation and the two advantages, concerning different situations, cannot be aggregated. (117)

(3) Freedom of establishment

56 In points 36 to 45, I explained the reasons why, in my view, in the light of national provisions alone, the provision at issue must be regarded as compatible with Article 52 of the Treaty. As for capital movements, however, a more comprehensive analysis encompassing the provisions of conventions described above leads me to reconsider my opinion on freedom of establishment. As I said, the `cohesion' distinguishing the Netherlands tax system as a whole makes it `neutral' in respect of the taxation of dividends for shareholders who are natural persons. It follows that such cohesion, or neutrality, also rules out the existence of any discrimination or restriction from the angle of freedom of establishment. Moreover, the fact that, as we have seen, `cross-border' dividends enjoy truly privileged treatment compared with `national' dividends has the effect of encouraging both capital movements between Member States and the exercise, in certain cases at least (see point 41(b) and (c)), of the right of establishment.

D - Question 3

57 By its third and last question, the Hoge Raad asks whether the answers to the first two questions are likely to differ if the investor is an employee of a company controlled by the issuing company, who holds the shares giving rise to the dividends in the context of an employees' savings plan.

58 The parties which have submitted observations in these proceedings generally agree that that question must be answered in the negative, considering also that Article 47b does not lay down different rules depending on the type of taxpayer holding shares. That article does not distinguish between third-party investors and investors holding shares in the context of an employees' savings plan. As regards the first question for a preliminary ruling, which I have already considered, I share the position of the parties: the Treaty and the Directive guarantee the widest possible freedom as regards capital movements, (118) without any other conditions or distinctions based on the nature or characteristics of the person undertaking such a movement. The freedom in question must be understood as being guaranteed to all persons under the same conditions.

59 However, Mr Verkooijen submits an additional line of reasoning, concerning more specifically the object of the second question. He essentially takes the view that the limit introduced by Article 47b for the cases subject to the exemption has a negative influence on the professional mobility of employees, precisely because that provision excludes the application of the exemption to dividends distributed by the foreign companies employing them. That makes it more difficult for foreign companies to attract employees to the Netherlands. Foreign companies would be obliged to set up employees' participation schemes or employees' savings plans comparable to those which only companies established in the Netherlands can offer, and this would contribute to increasing the costs for a foreign company establishing a place of business in the Netherlands. While it is not my purpose to ignore the case-law of the Court according to which all restrictions, even minor, on freedom of establishment are contrary to Article 52 of the Treaty, (119) I believe, however, that the link between the provision at issue and the exercise of freedom of establishment in the Netherlands of companies with employees' savings plans comparable to that of Petrofina is too tenuous and indirect to have any intrinsic importance for the purposes of Article 52 of the Treaty. Even assuming it were sufficient to qualify as a restriction contrary to the article concerned, that link is not such as to alter my opinion on the second question, particularly as regards the existence of a valid justification for the restriction. Moreover, any restriction would disappear in any event if the overall legal framework of reference also included provisions of conventions such as Articles 10 and 24 of the Double-Taxation Convention between Belgium and the Netherlands.

VI - Conclusion

60 In the light of the foregoing, I propose that the Court give the following answers to the questions submitted by the Hoge Raad:

(1) Article 1(1) of Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty and Article 52 of the EC Treaty (now, after amendment, Article 43 EC) must be interpreted as precluding the legislation of a Member State which makes the grant of an exemption from the income tax payable on dividends from shares subject to the condition that those dividends are paid by a company established in that Member State, unless the legislation in question is necessary to ensure the cohesion of the tax system. It is for the national court to establish whether that legislation goes further than is necessary to ensure the cohesion of the tax system.

However, where the Member State concerned has concluded a double-taxation convention containing provisions such as those in Articles 10 and 24 of the Convention concluded on 19 October 1990 between the Kingdom of Belgium and the Kingdom of the Netherlands, Article 1(1) of Directive 88/361 and Article 52 of the Treaty must be interpreted, solely as regards capital movements and the exercise of freedom of establishment between contracting Member States, as not precluding national legislation such as that presently at issue.

(2) The answer under (1) is not affected by the fact that the recipient of the dividends is an employee of a company controlled by the issuing company, who acquired the shares in question in the context of an employees' savings plan set up by the company controlling the subsidiary.

1 The present case was referred by the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) under Article 177 of the EC Treaty (now Article 234 EC) which has asked the Court to determine whether tax legislation granting to natural persons an exemption, up to a certain amount, from income tax on dividends paid to shareholders, on condition that the companies to which the dividends relate are established in the Member State where the taxpayer is resident, is compatible with the rules of Community law guaranteeing free movement of capital and freedom of establishment. The main proceedings arise because the tax authorities in the Netherlands did not grant Mr Verkooijen the exemption in respect of dividends he received in 1991 from a company established in Belgium.

2. By order of 17 September 1999 the Court reopened the oral stage of the proceedings which had been closed with my Opinion of 24 June 1999, being of the view that it was appropriate to clarify certain elements of the Netherlands tax system that had been raised by Mr Verkooijen and the Netherlands Government in letters received at the Court Registry on 29 and 30 June 1999. I had not considered these matters beforehand as there was no reference to them in the case file. I had given my Opinion at the time on the premiss that at the point at which the income tax of natural persons was assessed, there was in the Netherlands no provision for the deduction of the amount of the dividend tax levied at source on dividends paid by companies established in that Member State (see point 3). While I recognised that there was in this case an obstacle to free movement of capital and freedom of establishment, I had concluded that restricting the exemption to natural persons who received dividends from companies established in the Netherlands did not infringe Community law. In my opinion it was a solution justified by the necessity of preserving the cohesion of the Netherlands tax system (see points 23 to 27 and 44 of my Opinion, as well as point 1 of the conclusions thereto).

3. On the basis of the information given by Mr Verkooijen and the Netherlands Government following the reading of my Opinion it appears that the tax legislation of the Netherlands provides that, when income tax on the aggregate income of natural persons is assessed, the amount deducted from dividends when the dividend tax was levied is taken into account. I have now taken account of this and I believe that my earlier Opinion still applies as regards the existence of an obstacle to free movement of capital and freedom of establishment. (120) However, now that the description of the legal framework is complete, I must reconsider whether, in relation to the first two questions referred, the justification based on the need to preserve the cohesion of the Netherlands tax system is still valid.

4. First of all, the underlying objective of the exemption designed to reduce the weight of double taxation cannot be understood as meaning that the Netherlands legislature took account of the fact that in our case two taxes (dividend tax and tax on the income of natural persons) are charged on one and the same dividend, as income accruing to one and the same taxpayer (see points 4 and 21 of the Opinion of 24 June 1999). In fact, by virtue of the mechanism outlined in the preceding paragraph, the dividend tax constitutes simply a payment on account, withheld at source by the company distributing the dividends, of part of the tax on aggregate income to which a shareholder is subject. The double taxation referred to by the Netherlands Government does not therefore exist other than in an economic sense, that is, resulting from a first levy of the tax on profits accruing to the companies distributing dividends and a second levy - when the income tax of natural persons is assessed - on the same profits when they are distributed in the form of dividends to the shareholder.

5. According to all the governments present at this stage of the proceedings the extension of the exemption to dividends received by shareholders resident in the Netherlands from companies established in other Member States would undermine the cohesion of the Netherlands tax system. These governments assert that to grant an exemption (albeit partial) from income tax to natural persons in respect of dividends distributed by companies established in Member States other than the Netherlands would mean that the Netherlands had to exempt a part of the income of the shareholder resident there for tax purposes without being able to render the distributing company liable to a tax on profits.

6. The justification based on the need to preserve the cohesion of a Member State's tax system has been argued before the Court on a number of occasions (121) but accepted only in Bachmann. (122) That case concerned Belgian legislation which granted a tax deduction in respect of pension and life assurance contributions on condition that the premiums had been paid to insurance companies established in Belgium. In Bachmann the Court acknowledged that there was a direct link between the right to deduct contributions and the taxation of sums payable by the insurers under pension and life assurance contracts. In that case, the Court later observed in Asscher, (123) `[t]axpayers had a choice between being able to deduct the assurance premiums but being taxed on the capital and pensions received when the contract matured and not being able to deduct the premiums but in that case not being taxed on the capital and pensions received at maturity' (paragraph 58). The Court justified the national legislation at issue in Bachmann specifically on the ground that the Belgian legislature would have been able to compensate for the possible deduction from income tax of insurance premiums paid in another Member State by taxing pensions, annuities or capital sums only, clearly, where the insurers paying them were established in Belgium. In the Court's view, the cohesion of the system required that the tax-deductible premium be paid in Belgium precisely because only in that case could the taxpayer who enjoyed the benefit of the deduction be subject to the other levy on income, capital or pensions. Essentially, as the Commission noted at the hearing of 30 November 1999, Bachmann concerned one and the same taxpayer being subject to a single levy on income, which might or might not be deferred. (124)

7. The present proceedings, however, involve two separate taxes - one on company profits, the other on the income of natural persons, to which the exemption applies - concerning two separate persons, the company distributing dividends and the recipient shareholder (see above, point 4). Anyone seeking to discern a link between the tax on companies, which affects the profits of the company distributing dividends, and the exemption from which the shareholder benefits would, in my view, have to recognise that such a link is only indirect. Here, therefore, the direct link identified by the Court in Bachmann on the basis of strict, but in my view sound, criteria does not apply. Those criteria prescribe that the legislature concerned must establish a specific link between the exemption, the tax deduction, and the subjection to tax, offsetting one of these fiscal choices against the other so that the tax authorities can tax one and the same person at different times or in different ways, but always in respect of the same taxable assets or income and always in order to ensure that each taxpayer is treated in a consistent manner. Hitherto, justifications, on the ground of the cohesion of the tax system, for tax provisions which constitute an obstacle to one or more of the fundamental freedoms but which lack this essential link, which must be direct purely in the sense set out above, between the different components of the tax system, have been rejected. (125) I see no reason here to depart from this clear and settled case-law.

8. In the light of the foregoing, and with the answer to the third question submitted by the Hoge Raad remaining as indicated in point 2 of the conclusions to my Opinion of 24 June 1999, I propose that the Court give the following answer to the first two questions:

Article 1(1) of Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty and Article 52 of the EC Treaty (now, after amendment, Article 43 EC) must be interpreted as precluding legislation of a Member State which grants an exemption from the income tax payable on share dividends subject to the condition that those dividends are paid by a company established in that Member State.

(1) - Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (OJ 1988 L 178, p. 5; hereinafter: `the Directive'). When the Treaty of Amsterdam came into force on 1 May 1999, Article 67 of the EC Treaty was repealed and Chapter 4 of Title III of Part Three of the EC Treaty on the movement of capital (which had been entirely revised following the insertion of Articles 73a to 73h by the Treaty on European Union, which entered into force on 1 January 1994 pursuant to Article 73a) was entirely re-numbered (now Articles 56 EC to 70 EC given that Articles 73a, 73e and 73h were repealed).

(2) - Since the Directive was adopted `for the implementation of Article 67 of the Treaty', it is worthwhile recalling that paragraph 1 of that article (abolished by the Treaty of Amsterdam, see footnote 1) provided that: `[d]uring the transitional period and to the extent necessary to ensure the proper functioning of the common market, Member States shall progressively abolish between themselves all restrictions on the movement of capital belonging to persons resident in Member States and any discrimination based on the nationality or on the place of residence of the parties or on the place where such capital is invested'.

(3) - Hereinafter `Article 47b' or `the provision at issue'; that article was introduced by the Wet van 24 juni 1981 tot invoering van een voorraad-aftrek en vermogensaftrek in de inkomstenbelasting en de vennootschapsbelasting alsmede invoering van een beperkte rentevrijstelling en een beperkte dividenvrijstelling in de inkomstenbelasting (Law of 24 June 1981 on the introduction of a deduction in respect of stocks and of a deduction in respect of capital on income tax and on company tax as well as a partial interest exemption and a partial dividend exemption from income tax; Staatsblad 387).

(4) - In the version in force before 1997, at the time of the facts in the main proceedings.

(5) - The italics are mine.

(6) - Staatsblad 621.

(7) - Parliamentary documents II, 1980-1981, 16539, p. 10, paragraph 1. The legislative history shows, in particular, that the second chamber of Parliament (Tweede Kamer) took into consideration the fact that the `exemption in respect of dividends makes it more attractive to invest in Netherlands stock. As a result of this measure in particular, the (share) issuing possibilities of Netherlands' companies will increase. Thanks to the exemption in respect of dividends, this measure will, moreover, deter investors from turning away from shares or not investing in shares'.

(8) - In this regard, the Netherlands Staatssecretaris van Financiën had occasion to observe that `the exemption in respect of dividends functions, for the benefit of small investors in particular, as a measure compensating for double taxation' (parliamentary documents I, 1981, 16539, No 3, p. 5, last sentence). The solution, consisting in a partial exemption from income tax, adopted by the Netherlands for resolving the economic effects of double taxation is just one of the methods applied in practice by the various tax systems for resolving the same problem. There are two general categories of such methods, depending on the tax (or the tax `bracket') against which the `compensation' is applied: corporation tax or the deduction at source which affects the dividends and income tax payable by shareholders on the dividends concerned. In the United Kingdom, for example, British taxpayers are granted - under certain conditions - tax credits in connection with dividends received from companies established in the same Member State (see Case C-397/98 Metallgesellschaft and Others, pending before the Court, OJ 1999 C 1, p. 7, and Case C-410/98, Hoechst and Others, pending before the Court, OJ 1999 C 1, p. 11). For a summary of the solutions adopted for mitigating the effects of double taxation and an examination of the issues involved, see S.-O. Lodin, The imputation systems and cross-border dividends - the need for new solutions, in EC Tax Review, 1998, p. 229, and K. Ståhl, Dividend taxation in a free capital market, in EC Tax Review, 1997, p. 227.

(9) - Equivalent to approximately 1 060 euros.

(10) - For married persons like Mr Verkooijen, the exemption in question is limited to an amount of NLG 2 000 (about 910 euros) in taxable income. Originally, the exemption in respect of dividends applied to an amount of NLG 500 (about 227 euros); by law of 6 September 1985 (Staatsblad 504) that amount was increased to NLG 1 000 (about 454 euros), or to NLG 2 000 in the case of married couples taxed jointly.

(11) - The State Secretary for Finance (hereinafter `the State Secretary').

(12) - Case C-246/89 Commission v United Kingdom [1991] ECR I-4585, paragraph 12; Case C-279/93 Schumacker [1995] ECR I-225, paragraph 21; Case C-80/94 Wielockx [1995] ECR I-2493, paragraph 16; Case C-107/94 Asscher [1996] ECR I-3089, paragraph 36; Case C-250/95 Futura Participations and Singer [1997] ECR I-2471, paragraph 19; Case C-118/96 Safir [1998] ECR I-1897, paragraph 21; see also Case C-264/96 ICI [1998] (ECR I-4695, paragraph 19; and Case C-311/97 Royal Bank of Scotland [1999] ECR I-2651, paragraph 19.

(13) - OJ 1975 C 253, p. 2 (hereinafter `the proposal').

(14) - See Notice of the Commission to the Parliament and the Council, document SEC(90) 601 final of 20 April-18 May 1990 (hereinafter `the Notice').

(15) - Namely, a centralised concept of fiscal harmonisation and of economic and monetary union, rather than an approach emphasising the coordination and approximation of national policies, taking into account also the principle of subsidiarity (see the Notice, p. 10).

(16) - The 1975 proposal, which the Council and the European Parliament had not debated further, no longer satisfied the requirements of the Community in the nineties (ibidem).

(17) - Those proposals are now Council Directives 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States (OJ 1990 L 225, p. 1) and 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ 1990 L 255, p. 6); see the Notice, p. 13.

(18) - See to that effect D. Servais, Un espace financier européen, Office for Official Publications of the European Communities, Luxembourg, 1995, 3rd Edition, p. 57, point 3.1.3.; see also Lodin, cited above, and Ståhl, cited above.

(19) - See Case 26/69 Commission v France [1970] ECR 565, in which the Court rejected as not sufficiently well-founded the Commission's infringement claim in proceedings under Article 169 of the EC Treaty (now Article 226 EC), holding that the error on the part of the Member State concerned was excusable in view of the `equivocal nature' of the legal situation (paragraph 32).

(20) - Case C-204/90 Bachmann [1992] ECR I-249.

(21) - Paragraph 34 of the judgment (the italics are mine).

(22) - See Joined Cases C-358/93 and C-416/93 Bordessa and Others [1995] ECR I-361, paragraphs 13 and 14. Also see Joined Cases 286/82 and 26/83 Luisi and Carbone [1984] ECR 377 in which the Court held in interpreting Article 67 that `movements of capital are financial operations essentially concerned with the investment of the funds in question rather than remuneration for a service' (paragraph 21). Concerning the notion of subsidiarity under Article 67 as applied in the case-law of the Court, see the Opinion of Advocate General Tesauro in Safir (points 9 to 18).

(23) - This transaction constitutes the very premiss for the receipt by Mr Verkooijen of the dividends at issue here (on this point, see point 13 below).

(24) - Case C-148/91 Veronica Omroep Organisatie [1993] ECR I-487.

(25) - See Case 53/79 Damiani [1980] ECR 273, paragraph 5, in which the Court stated that `it is not for this Court to pronounce on the expediency of the request for a preliminary ruling. As regards the division of jurisdiction between national courts and the Court of Justice under Article 177 of the Treaty it is for the national court, which is alone in having a direct knowledge of the facts of the case and of the arguments put forward by the parties, and which will have to give judgment in the case, to appreciate, with full knowledge of the matter before it, the relevance of the question of law raised by the dispute before it and the necessity for a preliminary ruling so as to enable it to give judgment'. See also, inter alia, Case 86/78 Peureux [1979] ECR 897, paragraph 6; C-127/92 Enderby [1993] ECR I-5535, paragraph 10; Case 125/94 Aprile [1995] ECR I-2919, paragraph 16; Joined Cases C-320/94, C-328/94, C-329/94 and C-337/94 to C-339/94 RTI and Others [1996] ECR I-6471, paragraphs 20 and 21.

(26) - I do not believe that omission justifies the conclusions drawn by the Governments concerned. The Nomenclature is merely illustrative, not exhaustive: see Case C-222/97 Trummer and Mayer [1999] ECR I-1661, paragraph 21, as well as the introduction to the Nomenclature itself (`[t]his Nomenclature is not an exhaustive list for the notion of capital movements').

(27) - The Nomenclature provides for the case of `[p]articipation in new or existing undertakings with a view to establishing or maintaining lasting economic links' (Heading I(2), referred to in the first question) and `[a]cquisition by residents of foreign securities dealt in on a stock exchange' (Heading III(A)(2); Petrofina is a company quoted on the Brussels and Antwerp stock exchanges). Also see Veronica, referred to in paragraph 11 of this Opinion.

(28) - See Trummer and Mayer, paragraph 24.

(29) - See point 9 of my Opinion in Trummer and Mayer. Whereas that case related to a national measure concerning the prerequisite (the creation of a mortgage) of a capital movement (the liquidation of a real estate investment), in this case Article 47b involves the product of such a movement. In any event, in both cases the national measure in question concerns an operation (the creation of a mortgage) or a payment (the dividends) which is inextricably linked to a movement of capital.

(30) - As long ago as Case 157/85 Brugnoni and Ruffinengo [1986] ECR 2013, the Court stated that, although not taking the form of exchange authorisations or affecting the acquisition of foreign securities, administrative obstacles such as the compulsory deposit of foreign securities with a bank nonetheless constitute a hindrance to the `widest liberalisation' of capital movements (see paragraph 22). In Case C-484/93 Svensson and Gustavsson [1995] ECR I-3955, the Court ruled that a national provision requiring a bank to be established in a Member State in order for recipients of loans residing in the same Member State to obtain an interest rate subsidy from the State out of public funds was incompatible with Article 67 (see paragraph 10 of the judgment), underscoring the fact that, for Article 67 to apply, it is not necessary for a national rule directly to concern a capital movement as such and per se (in our case an investment in shares, in Svensson a bank loan) but that it need only involve one element having a close link to such a movement (in our case the dividends, in Svensson the bank, or rather the `nationality' of the bank granting the loan).

(31) - In the text I indicate the reasons, drawn from the Court's case-law, why I consider that the provision at issue produces a sufficiently direct effect on capital movements. It must be observed - using the analogies between the fundamental freedoms outlined in point 17, the list of which is certainly not exhaustive (see, for example, footnote 84, in fine) - that applying to capital movements the principles enunciated in Case 8/74 Dassonville [1974] ECR 837, paragraph 5, in respect of free movement of goods leads to the conclusion that even an indirect obstacle to capital movements as such is incompatible (see, a contrario, Bachmann, paragraph 34, and supra, point 11 of the Opinion) with Article 1(1) of the Directive (and, today, with Article 56 EC). Moreover, the Court held that a national rule limiting the grant of a tax benefit to publishers who have their books printed in the Member State concerned is incompatible with Article 30 of the EC Treaty (now, after amendment, Article 28 EC) (Case 18/84 Commission v France [1985] ECR 1339). See also the Opinion of Advocate General Cosmas (Case C-412/97 ED [1999] ECR I-3845), where it is stated that `indirect' restrictions on free movement of goods and capital are in principle permissible (points 23 and 24).

(32) - `The link between free movement of capital and taxation is clear. Capital moves in response to two elements: the rate of remuneration and the rate of taxation', P. Julliard, Lecture critique des articles 73 B, 73 C et 73 D du traité de la Communauté européene, in A. Weber (ed.), Währung und Wirtschaft, Festschrift für Prof. Dr. Hugo J. Hahn zum 70. Geburtstag, Nomos Verlagsgesellschaft, Baden-Baden, 1997, p. 177, in particular p. 184 (the translation is my own). Also see the conclusions of the Report of the Committee of independent experts on company taxation, issued by the Commission on 18 March 1992, Office for Official Publications of the European Communities, Luxembourg, 1992 (hereinafter the `Ruding Report'), also published in European Taxation, 1992, p. 105.

(33) - See the Notice, p. 10.

(34) - According to Servais, op. cit. `fiscal regimes designed to develop certain forms of investment, [inducing] the acquisition of national securities ... are discriminatory vis à vis foreign securities' (see p. 57). The Court has already had occasion to consider a restriction producing restrictive effects on two levels: see Case C-410/96 Ambry [1998] ECR I-7875, paragraphs 28 and 29, concerning a national rule requiring a guarantor providing financial guarantees in favour of a bank or insurance company established in another Member State to enter into an additional agreement with a bank or an insurance company established on national territory. The Court observed that such a rule has a restrictive or dissuasive effect (a) on financial institutions established in other Member States since it prevents them from offering the required guarantees directly to residents of the Member State concerned in the same way as a guarantor established on national territory and (b) on residents of the Member State concerned who are discouraged from turning to financial institutions established in another Member State since the obligation for such financial institutions to enter into another guarantee agreement with a bank or an insurance company established in that Member State is likely to entail additional costs which are normally passed on to the consumer in the fee charged for issuing the guarantee.

(35) - See Bordessa, paragraph 17. Chronologically, it must be observed that the facts of the case, involving a tax declaration for the 1991 fiscal year, are subsequent to the date of full liberalisation provided for in Article 6(1) of the Directive, namely 1 July 1990.

(36) - See, for example, Trummer and Mayer, paragraph 26; Ambry, paragraphs 28 and 29; Safir, paragraph 30; Case C-19/92 Kraus [1993] ECR I-1663, paragraph 32; Svensson, paragraph 10; Case C-55/94 Gebhard [1995] ECR I-4165, paragraph 37; Bachmann, paragraph 31.

(37) - The United Kingdom Government stressed the following elements: (i) t