Keywords

Summary



Keywords

Free movement of capital – Restrictions – Fiscal legislation

(Art. 56 EC)

Summary

Article 56 EC precludes legislation of a Member State under which taxpayers resident in that Member State who receive interest or dividends from investments made in another Member State are subject to a supplementary municipal tax when they have not elected for that income from moveable assets to be paid to them by an intermediary established in their Member State of residence, whereas income of the same type from investments made in their Member State of residence, because it is subject to withholding tax at source, need not be declared and, in that case, is not subject to the supplementary municipal tax.

The introduction by a Member State of a difference in treatment on the basis of the place of investment of capital thus has the effect of discouraging residents of that Member State from investing their capital in a company established in another Member State and also has a restrictive effect on companies established in other Member States in that it constitutes an obstacle to their raising capital in the first Member State. In that regard, the situation of a taxpayer who has made investments in the Member State does not differ from that of a taxpayer who has made investments in another Member State. In the context of such legislation, a resident taxpayer who has received income from investments made in another Member State is just as liable to pay tax on that income in his Member State of residence as a resident taxpayer who has received income from investments made in that latter Member State. Therefore, in such a situation, the fact that that income is subject to different taxation arrangements is precisely what gives rise to the difference in treatment which results in only income received from investments made in another Member State being necessarily subject to the supplementary municipal tax, but it does not reflect a different situation on the part of the taxpayers concerned with regard to that tax. Concerning such a tax, established by the conurbations and municipalities for all the taxpayers of the same conurbation or municipality and the basis of assessment of which is personal income tax, a resident taxpayer who receives income from investments made in another Member State is not in a situation which is objectively different from that of a resident taxpayer who receives income from investments made in his Member State of residence. In those circumstances, such legislation constitutes a restriction on the free movement of capital.

Such a restriction is not justified by the need to maintain the coherence of the national tax system since it not shown that there is any particular tax levy offsetting the advantage represented by the exemption of the supplementary municipal tax for income from an investment made in the taxpayer’s Member State of residence. Moreover, although the need to maintain the effectiveness of fiscal supervision may support the claim that the levying of tax at source can be effected only by intermediaries established in the national territory, it cannot justify the fact that income subject to that levy and income not so subject are treated differently for the purposes of the supplementary municipal tax.

(see paras 31, 45-48, 57, 59, 62, operative part)