Case C-203/05: Reference for a preliminary ruling from the Special Commissioners by order of that court of 3 May 2005 in Vodafone 2 v Her Majesty's Revenue and Customs
Date: 2005-07-23
Institutions: Court of Justice
Subjects: corporation tax, interpretation of the law, tax exemption, tax on profits of self-employment

23.7.2005

EN

Official Journal of the European Union

C 182/29

Reference for a preliminary ruling from the Special
Commissioners by order of that court of 3 May 2005 in
Vodafone 2 v Her Majesty's Revenue and Customs

(Case C-203/05)

(2005/C 182/51)

(Language of the case: English)

Reference has been made to the Court of Justice of the Euro-
pean Communities by direction of the the Special Commis-
sioners of 3 May 2005, received at the Court Registry on 9
May 2005, for a preliminary ruling in the proceedings between
Vodafone 2 and Her Majesty's Revenue and Customs on the
following questions:

1. Do Articles 43, 49 and/or 56 of the EC Treaty preclude
national tax legislation such as that at issue in the main
proceedings which provides in specified circumstances for
the imposition of a charge to tax upon a company resident
in that Member State (‘the Resident Company’) in respect of
the profits of a company controlled by it (‘the Controlled
Company’) which is resident in another Member State and
subject to a lower level of taxation, and in particular:

1.1 imposes such a charge unless the Resigent Company is
able to establish that an exemption from that legisla-
tion applies to the Controlled Company;

1.2 provides for exemptions from the imposition of such a
charge but in terms which give scope for uncertainty
as to the availability in practice of an exemption upon
the establishment of the Controlled Company or there-
after;

1.3 imposes certain compliance requirements, where the
Resident Company does not seek or is not able to
claim any such exemption and pays tax in respect of
the profits of that Controlled Company;

1.4 imposes compliance requirements where the Resident
Company seeks to obtain exemption from that charge
to tax which may include the obligation to review and
consider the application of the legislation in respect of
all of its Controlled Companies and thereafter in each
year to monitor the activities of each of its Controlled
Companies
to ensure qualification for exemption
continues;

1.5 imposes in all cases administrative and cost burdens
considerable) on the Resident

be

(which may
Company,

and in each case, the consequences referred to do not apply
in respect of any company established in the Member State
in which the Resident Company is established?

2. Would the answer to the Question put at 1 be different if:

2.1 the Controlled Company carried out only minimal
activities in the Member State in which it is resident; or

2.2 only a minimal part of the profits of the Controlled
Company are subject to tax in the Member State in
which it is resident; or

2.3 the Controlled Company was established as part of an
artificial scheme to avoid tax, and, if so, what are the
indicia of such an artificial scheme?

3. Are there circumstances in which:

3.1 the Resident Company may not rely on rights derived

from Article 43 and/or Article 56 EC; or

3.2 no rights derived from Article 43 and/or Article 56 EC

accrue to the Resident Company;

on the ground that such reliance or the accrual of such
rights would be an abuse of those rights? If there are such
circumstances, what guidance does the Court of
Justice
consider it appropriate to give as to how the Special
Commissioners should determine, in the factual context of
this case, whether there are such circumstances or whether
there is such an abuse?

4. Do Articles 56 and 58(1 )(a) of the EC Treaty and Declara-
tion No. 7 of the Maastricht Treaty preclude national tax
legislation of a Member State such as that at issue in the
main proceedings where one or more exemptions to the
application of that legislation would be available but for an
amendment to such legislation having effect after 1 January
1994?

5. Do Articles 43, 49 and/or 56 of the EC Treaty preclude
national tax legislation such as that at issue in the main
proceedings where that legislation would not apply if the
Resident Company capitalised the Controlled Company with
debt rather than equity?

6. Do Articles 43, 49 and/or 56 of the EC Treaty preclude
national tax legislation such as that at issue in the main
proceedings where one or more exemptions to the applica-
tion of that legislation would be available if the Controlled
Company's income in the other Member State either:

6.1 comprised income from sources within that Member
State and not from another Member State or other
jurisdictions; or

6.2 comprised dividend income instead of interest income

from the same company?