Case C-201/05: Reference for a preliminary ruling from the High Court of Justice (England and Wales), Chancery Division, by order of that court of 18 March 2005 in The Test Claimants in the CFC and Dividend Group Litigation v Commissioners of Inland Revenue
Date: 2005-07-23
Institutions: Court of Justice
Subjects: corporation tax, insurance company, interpretation of the law, redemption, tax on profits of self-employment

23.7.2005

EN

Official Journal of the European Union

C 182/27

2. Must the third paragraph of Article 3 of the Protocol on the
Privileges and Immunities of the European Communities,
which provides that no exemption shall be granted in
respect of a mere charge for a public utility service, be inter-
preted as meaning that the tax charged at the outcome of
proceedings to the losing party, who is ordered to pay a
specified amount, constitutes a mere charge for a public
utility service?

(i) certain dividends received by an insurance company
resident in a Member State from a company resident in
another Member State (‘the non-resident company’)
were chargeable to corporation tax; but

(ii) the resident insurance company was allowed to elect
that corresponding dividends received from a company
resident
in the same Member State should not be
chargeable to corporation tax, with the further conse-
quence that a company which had made the election
to
was unable to claim payment of
which it would otherwise have been entitled?

the tax credit

Reference for a preliminary ruling from the High Court of
Justice (England and Wales), Chancery Division, by order
of that court of 18 March 2005 in The Test Claimants in
the CFC and Dividend Group Litigation v Commissioners
of Inland Revenue

3. Do Articles 43, 49 or 56 of

the EC Treaty preclude
national tax legislation in a Member State such as that in
issue in the main proceedings which:

(Case C-201/05)

(2005/C 182/50)

(Language of the case: English)

Reference has been made to the Court of Justice of the Euro-
pean Communities by order of
Justice
(England and Wales), Chancery Division of 18 March 2005,
received at the Court Registry on 6 May 2005, for a preli-
minary ruling in the proceedings between The Test Claimants
in the CFC and Dividend Group Litigation and Commissioners
of Inland Revenue on the following questions:

the High Court of

1. Is it contrary to Articles 43 or 56 of the EC Treaty for a
Member State to keep in force and apply measures which:

(i) exempt from corporation tax dividends received by a
company resident in that Member State (‘the resident
company’) from other resident companies; but which

(ii) subject to corporation tax dividends received by the
resident company from a company resident in another
Member State and in particular a company controlled
by it resident in another Member State and subject to a
lower level of taxation there (‘the controlled company’),
after giving double taxation relief for any withholding
tax payable on the dividend and for the underlying tax
paid by the controlled company on its profits?

a) provides in specified circumstances for the imposition
of a charge to tax upon the resident company in
respect of the profits of a controlled company being a
company resident in another Member State as defined
in Question 1 (ii) above; and

b) imposes certain compliance requirements where the
resident company does not seek or is not able to claim
any exemption and pays tax in respect of the profits of
that controlled company; and

c) imposes further compliance requirements where the
resident company seeks to obtain exemption from that
tax?

4. Would the answer to Questions 1, 2 or 3 be different if
the controlled company (in Questions 1 and 3) or the non-
resident company (in Question 2) was resident in a third
country?

5. Where, prior to 31 December 1993, a Member State
adopted the measures outlined in Questions 1, 2 and 3,
and after that date amended those measures in the manner
described in Part C of this Schedule, and if those measures
as amended constitute restrictions prohibited by Article 56
of the EC Treaty, are those restrictions to be taken to be
restrictions which did not exist on the 31 December 1993
for the purposes of Article 57 EC?

2. Do Articles 43, 49 or 56 of

the EC Treaty preclude
national tax legislation such as that in issue in the main
proceedings under which, prior to 1st July 1997:

6. In the event that any of the measures referred to in Ques-
tions 1, 2 and 3 are contrary to the Community provisions
referred to,
then in circumstances where the resident
company and/or the controlled company make any of the
following claims:

C 182/28

EN

Official Journal of the European Union

23.7.2005

(i) a claim for repayment of (or the loss of use of money
paid as) corporation tax unlawfully levied on the resi-
dent company in the circumstances referred to in
Questions 1, 2 or 3 above;

b) must some or all of the conditions for recovery laid
down in Joined Cases C-46/93 and C-48/93 Brasserie du
Pecheur and Factortame be satisfied; or

(ii) a claim for restitution and/or compensation in respect
of losses, reliefs and expenses that were used by the
resident company (or surrendered to the resident
company by other companies in the same group resi-
dent in the same Member State) to eliminate or reduce
taxation charges incurred by virtue of the measures
referred to in Questions 1, 2 and 3 above where such
losses, reliefs and expenses would have been available
for alternative use or could have been carried forward;

(iii) a claim for compensation for costs, losses, expenses
and liabilities incurred in complying with the domestic
legislation referred to in Question 3 above;

(iv) where a controlled company has distributed reserves
to the resident company to meet the requirements of
the national legislation as an alternative to the resident
company incurring the charge referred to in Question
3, and the controlled company has incurred costs,
expenses and liabilities in doing so which it could
have avoided had it been able to put those reserves to
alternative use, a claim for compensation for those
costs, expenses and liabilities.

are such claims to be regarded as:

a claim for repayment of sums unduly levied which arise
as a consequence of, and adjunct to, the breach of the
abovementioned Community provisions; or

a claim for compensation or damages such that the condi-
tions set out in Joined Cases C-46/93 and C-48/93 Brasserie
du Pecheur and Factortame must be satisfied; or

a claim for payment of an amount representing a benefit
unduly denied?

c) must some other conditions be met?

8. Does it make any difference whether as a matter of
domestic law the claims referred to in Question 6 are
brought as restitutionary claims or are brought, or have to
be brought, as claims for damages?

9. What guidance, if any, does the Court of Justice think it
appropriate to provide in the present cases as to which
circumstances the national court ought to take into consid-
eration when it comes to determine whether there is a
sufficiently serious breach within the meaning of the judg-
ment in Joined Cases C-46/93 and C-48/93 Brasserie du
Pecheur and Factortame, in particular as to whether, given
the state of the case law on the interpretation of the rele-
vant Community provisions, the breach was excusable?

10. As a matter of principle, can there be a direct causal link
(within the meaning of the judgment in Joined Cases C-46/
93 and C-48/93 Brasserie du Pecheur and Factortame)
between any breach of Articles 43, 49 and 56 EC and the
losses falling into the categories identified in Question 6 (i)
to (iv) above that are claimed to flow from it? If so, what
guidance, if any, does the Court of Justice think it appro-
priate to provide as to the circumstances which the
national court should take into account in determining
whether such a direct causal link exists?

11. In determining the loss or damage for which reparation
may be granted, is it open to the national court to have
regard to the question of whether injured persons showed
reasonable diligence in order to avoid or limit their loss, in
particular by availing themselves of legal remedies which
could have established that the national provisions did not
[by reason of the application of double taxation conven-
tions) have the effect of imposing the obligations set out in
Questions 1, 2 and 3 above?

7. In the event that the answer to any part of Question 6 is
that the claim is a claim for payment of an amount repre-
senting a benefit unduly denied:

12. Is the answer to Question 11 above affected by the beliefs
of the parties at the relevant times as to the effect of the
double taxation conventions?

a) are such claims a consequence of, and an adjunct to,
the right conferred by the abovementioned Community
provisions; or