Case C-523/04: Action brought on 23 December 2004 by the Commission of the European Communities against the Kingdom of the Netherlands
Date: 2005-03-05
Institutions: Court of Justice
Subjects: European Commission, Netherlands, United States, air freight rate, air traffic, air transport, bilateral agreement, external competence (EU), reservation

5.3.2005

EN

Official Journal of the European Union

C 57/19

Transfers under insurance contracts are to be regarded as
capital movements and any limitation on the deductibility of
employers' contributions and on tax abatements for personal
contributions, whereby only contributions paid to institutions
established in Belgium qualify, constitute discriminatory restric-
tions on the said free movement of capital.

Similarly, the provision which states that the transfer of capital
or surrender values created through employers' or personal
contributions to supplementary retirement schemes is to be
taxable when made to a pension fund or insurance institution
is not the case when the
established abroad, whereas that
transfer is made to an undertaking established in Belgium, is
likewise contrary to the free movement of capital.

(1) Council Directive 92/96/EEC of 10 November 1992 on the coordi-
nation of laws, regulations and administrative provisions relating to
direct
life assurance and amending Directives 79/267/EEC and
90/619/EEC (third life assurance directive), OJ L 360 of 9. 12.
1992, p. 1.

— concerning the computerised reservation systems offered

or in use in Netherlands territory,

— whereby the right is conferred on the United States to
withdraw, curtail or restrict transport rights where the
airline companies specified by the Kingdom of the Neth-
erlands are not in the hands of the latter or of Nether-
lands nationals,

the Kingdom of the Netherlands has failed to fulfil its obliga-
tions under Article 5 of the EC Treaty (now Article 10 EC),
Article 52 of the EC Treaty (now, after amendment, Article
43 EC) and Council Regulations (EEC) Nos 2409/92 (1) of
23 July 1992 on fares and rates for air services, and
2299/89 (2) of 24 July 1989 on a code of conduct for
computerised reservation systems, as amended by Council
Regulation (EEC) No 3089/93 (3) of 29 October 1993;

2. Order the Kingdom of the Netherlands to pay the costs.

(2) Directive 2002/83/EC of

the
Council of 5 November 2002 concerning life assurance, OJ L 345
of 19. 12. 2002, p. 1.

the European Parliament and of

Action brought on 23 December 2004 by the Commission
of the European Communities against the Kingdom of the
Netherlands

(Case C-523/04)

(2005/C 57/34)

(Language of the case: Dutch)

An action against the Kingdom of the Netherlands was brought
before the Court of Justice of the European Communities on
23 December 2004 by the Commission of
the European
Communities, represented by Mikko Huttunen and Wouter
Wils, acting as Agents.

The applicant claims that the Court should:

Pleas in law and main arguments

A. Existence of a new agreement

— The amendments made in 1992 to the 1957 agreement
created the framework for closer cooperation between the
United States and the Kingdom of the Netherlands which
entail appreciable new obligations for that country.

— In light of the 1992 amendments the 1957 agreement was
revised in its entirety. The fact that a number of provisions
of that agreement were not formally amended in 1992 or
only underwent
inessential editorial changes, does not
therefore alter the fact that the obligations flowing from
those provisions were reaffirmed on the occasion of that
review. In such a situation the Member States are not only
not authorised to assume new obligations, but moreover
may not operate such arrangements if they run counter to
Community law.

B. Infringement of an exclusive external competence of
the Community within the meaning of the AETR judg-
ment

1. Declare that, by entering into international arrangements
with the United States of America or, notwithstanding the
review of the agreement on air traffic of 3 April 1957
between the Kingdom of the Netherlands and the United
States of America, enforcing obligations

— concerning the fares of airline companies specified by

the United States on intra-Community routes;

— In 1991 the Netherlands and the United States added an
incorporating the CRS
annex to the 1957 agreement
(computerised reservation systems) principles,
including
those concerning the availability or use of the CRS in Neth-
erlands territory. On review in 1992 of the 1957 agreement
the Netherlands applied that annex. In so doing the Nether-
lands infringed the Community's exclusive external compe-
tence flowing from Regulation No 2299/89.

C 57/20

EN

Official Journal of the European Union

5.3.2005

C. Infringement of Article 52 of the Treaty

— Community airline companies in the Netherlands may
always be excluded from application of the agreement on
air traffic between the Kingdom of the Netherlands and the
United States, whereas that agreement
is automatically
applicable to Netherlands airline companies. Community
airline companies are thus discriminated against since, in
the host State, that is to say the Kingdom of the Nether-
lands, they are not accorded national treatment.

(1) OJ 1992 L 240, p. 15.
(2) OJ 1989 L 220, p. 1.
(3) OJ 1993 L 278, p. 1.

Reference for a preliminary ruling by the High Court of
Justice (England & Wales), Chancery Division, by order of
that court dated 21 December 2004, in the case of Test
Claimants in the Thin Cap Group Litigation against
Commissioners of Inland Revenue

(Case C-524/04)

(2005/C 57/35)

(Language of procedure: English)

Reference has been made to the Court of Justice of the Euro-
pean Communities by order of
Justice
(England & Wales), Chancery Division, dated 21 December
2004, which was received at
the Court Registry on 31
December 2004 for a preliminary ruling in the case of Test
Claimants in the Thin Cap Group Litigation and Commis-
sioners of Inland Revenue on the following questions:

the High Court of

1. Is it contrary to Article 43, 49 or 56 EC for a Member
State (‘the State of the borrowing company’) to keep in
force and apply provisions such as those in sections 209,
212 and schedule 28AA of the Income and Corporation
Taxes Act 1988 (‘the national provisions’) which impose
restrictions upon the ability of a company resident in that
Member State (‘the borrowing company’) to deduct for tax
purposes interest on loan finance granted by a direct or
indirect parent company resident in another Member State
in circumstances where the borrowing company would
not be subject to such restrictions if the parent company
had been resident in the State of the borrowing company?

2. What difference,
Question 1:

if any, does it make to the answer to

a) if

the loan finance is provided not by the parent
company of the borrowing company but by another
company (‘the lending company’) in the same company
group sharing a common direct or indirect parent
company with the borrowing company and both that
common parent and the lending company are resident
in Member States other than the State of the borrowing
company?

b) if the lending company is resident in a Member State
other than that of
the borrowing company but all
common direct or indirect parent companies of the
borrowing company and the lending company are resi-
dent in a third country?

c) if all the common direct or indirect parent companies
of the lending company and the borrowing company
are resident in third countries and the lending company
is resident in a Member State other than that of the
borrowing company, but advances the loan finance to
the borrowing company from a branch of the lending
company situated in a third country?

d) if the lending company and all the common direct or
indirect parent companies of the lending company and
the borrowing company are resident in third countries?

3. Would it make any difference to the answers to Questions
1 and 2 if it could be shown that the borrowing consti-
tuted an abuse of rights or was part of an artificial arrange-
ment designed to circumvent the tax law of the Member
State of the borrowing company? If so, what guidance
does the Court of Justice think it appropriate to provide as
to what constitutes such an abuse or artificial arrangement
in the context of cases such as the present?

4. If

there is a restriction on the movement of capital
between Member States and third countries within article
56 EC, did that restriction exist on 31 December 1993 for
the purposes of article 57 EC?

5. In the event that any of the matters referred to in questions
1 or 2 are contrary to Articles 43, 49 or 56 EC, then in
circumstances where the borrowing company, or other
companies in the borrowing company's group (‘the Clai-
mants’) make the following claims:

a) a claim for the repayment of the additional corporation
tax paid by the borrowing company as a result of the
disallowance, as a deduction against its profits charge-
able to corporation tax, of interest paid to the lending
company, where those interest payments would have
from the
been regarded as
borrowing company's profits if the lending company
had also been resident in the State of the borrowing
company;

allowable deductions