CELEX: 62005CC0451
Language: en
Date: 2007-04-26 00:00:00
Title: Opinion of Mr Advocate General Mazák delivered on 26 April 2007.#Européenne et Luxembourgeoise d’investissements SA (ELISA) v Directeur général des impôts and Ministère public.#Reference for a preliminary ruling: Cour de cassation - France.#Direct taxation - Tax on the commercial value of immovable property in France owned by legal persons - Holding companies under Luxembourg law - Refusal of exemption - Directive 77/799/EEC - Non-exhaustive list of specified taxes and duties - Tax similar in nature - Limits to exchange of information - Bilateral convention - Article 73b of the EC Treaty (now Article 56 EC) - Free movement of capital - Combating tax evasion.#Case C-451/05.

OPINION OF ADVOCATE GENERAL
      Mazák
      delivered on 26 April 2007 (1)
      
      Case C-451/05
      Européenne et Luxembourgeoise d’investissements SA (Elisa)
      v
      Directeur général des impôts
      and
      Ministère public
      (Reference for a preliminary ruling from the Cour de Cassation (France))
      (Direct taxation – Tax on the commercial value of immovable property owned in France – Free movement of capital – Justification – Effectiveness of fiscal supervision – Counteraction of tax avoidance and evasion)1.     The main purpose of these preliminary ruling proceedings is to determine whether national legislation such as the French legislation
         providing for a tax of 3% on the commercial value of immovable property (‘the disputed tax’) is compatible with Community
         law, in particular the provisions of the EC Treaty on freedom of establishment and the free movement of capital, and to settle
         certain other issues of interpretation which arise in that context.
      
      2.     For foreign legal persons, the national legislation makes the granting of an exemption from the tax of 3% conditional upon
         the existence of a conventional provision on administrative cooperation or on non-discrimination as regards tax matters with
         the Member State where the legal person has its effective centre of management. (2) The stated purpose of the national legislation is to ensure effective fiscal supervision and to combat tax avoidance and
         evasion as regards wealth tax levied in France (‘impôt de solidarité sur la fortune’). 
      
      I –  The relevant legislation
      A –    Community legislation
      3.     Article 1 of Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of
         the Member States in the field of direct taxation (3) (‘Directive 77/799’ or ‘the Directive’) provides as follows:
      
      ‘General provisions 
      1. In accordance with the provisions of this Directive the competent authorities of the Member States shall exchange any information
         that may enable them to effect a correct assessment of taxes on income and on capital. 
      
      2. There shall be regarded as taxes on income and on capital, irrespective of the manner in which they are levied, all taxes
         imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the disposal
         of movable or immovable property, taxes on the amounts of wages or salaries paid by enterprises, as well as taxes on capital
         appreciation. 
      
      3. The taxes referred to in paragraph 2 are at present, in particular: … in France: Impôt sur le revenu, Impôt sur les sociétés,
         Taxe professionnelle, Taxe foncière sur les propriétés bâties, Taxe foncière sur les propriétés non bâties. …
      
      4. Paragraph 1 shall also apply to any identical or similar taxes imposed subsequently, whether in addition to or in place
         of the taxes listed in paragraph 3. The competent authorities of the Member States shall inform one another and the Commission
         of the date of entry into force of such taxes.
      
      …’
      4.     Article 8 of Directive 77/799 states:
      ‘Limits to exchange of information 
      1. This Directive shall impose no obligation to have enquiries carried out or to provide information if the Member State,
         which should furnish the information, would be prevented by its laws or administrative practices from carrying out these enquiries
         or from collecting or using this information for its own purposes. 
      
      2. The provision of information may be refused where it would lead to the disclosure of a commercial, industrial or professional
         secret or of a commercial process, or of information whose disclosure would be contrary to public policy. 
      
      3. The competent authority of a Member State may refuse to provide information where the State concerned is unable, for practical
         or legal reasons, to provide similar information.’
      
      5.     Article 11 of Directive 77/799 states:
      ‘Applicability of wider-ranging provisions of assistance 
      The foregoing provisions shall not impede the fulfilment of any wider obligations to exchange information which might flow
         from other legal acts.’
      
      B –    National legislation
      1.      The tax of 3% on immovable property held by legal persons
      6.     According to Article 990D(1) of the Code general des impôts (French General Tax Code) (‘the CGI’), legal persons which, directly
         or through an intermediary, own one or more properties situated in France or are the holders of rights in rem over such property are liable to pay an annual tax of 3% of the commercial value of these properties or rights.
      
      7.     This tax is applicable to any form of legal persons, including companies, foundations, and associations, but companies the
         shares of which are traded on a regulated market are exempted. (4)
      
      8.     The tax is levied on immovable property owned on 1 January of a given tax year.
      9.     Exemptions from that tax are set out in Article 990E of the CGI, which provides:
      ‘… (2) The tax referred to in Article 990D is not applicable to legal persons which, having their seat in a country or territory
         which has concluded with France a convention on administrative assistance to combat tax evasion and avoidance, declare each
         year, by 15 May at the latest, at the place established by the Order referred to in Article 990F, the location, description
         and value of the properties in their possession as at 1 January, the identity and the address of their members at the same
         date and the number of shares held by each of them; 
      
      (3) The tax referred to in Article 990D is not applicable to legal persons which have their effective centre of management
         in France or to other legal persons which, by virtue of a Treaty, must not be subject to a heavier tax burden, when they communicate
         each year, or take on and respect the obligation to communicate to the tax authority, at its request, the location and description
         of the properties owned as at 1 January, the identity and the address of their shareholders, partners or other members, the
         numbers of shares or other rights held by each of them and evidence of their residence for tax purposes …’
      
      10.   According to Article 990E(1), an exemption is also granted to legal persons whose immovable assets located in France represent
         less than 50% of their total assets located in France (i.e. companies which are not so-called ‘sociétés à prépondérance immobilière’). (5)
      
      2.      Wealth tax (‘impôt de solidarité sur la fortune’) (6)
      
      11.   According to the documents in the case and the observations of the French Government, the tax imposed by the national legislation
         at issue is aimed at ensuring effective fiscal supervision and preventing tax avoidance and evasion with respect to wealth
         tax. 
      
      12.   The concept of wealth tax is known to the Court, which has described it as a direct tax based on the taxpayer’s ability to
         pay, like income tax, and stated that wealth tax is often regarded as a complement to income tax, relating to capital in particular. (7)
      
      13.   The relevant provisions of the ‘impôt de solidarité sur la fortune’ (also referred to hereafter as ‘wealth tax’) are Article
         885A et seq. of the CGI. It is an annual tax, levied on natural persons whose tax domicile is in France (on 1 January of a
         given year), provided their property is worth more than a certain threshold (EUR 750 000 in 2006). It is levied according
         to an increasing schedule applying to the part of the property which is above the threshold. 
      
      14.   As regards the territorial scope of the tax, it is due on all the property of the individuals concerned, including property
         located abroad (in the absence of a tax treaty providing otherwise). Persons whose tax domicile is outside France (i.e. non-residents)
         are subject to wealth tax only on their property located in France, provided the value of such property located in France
         exceeds the threshold. (8) Here again, a tax treaty can provide otherwise, in particular by splitting the right to tax between the two States concerned.
         Furthermore, investments are exempted for non-residents, but not when they relate to immovable property (for example shares
         in companies with a focus on immovable property (‘sociétés à prépondérance immobilière’)).
      
      15.   Unless expressly exempted by law, all property belonging to individuals is taxable, including immovable property (land, houses,
         flats) unincorporated businesses, bonds and shares, debt claims, cars, gold and currency. Immovable property is to be valued
         at market value, i.e. the price at which the property could normally have been sold at the beginning of the year.
      
      C –    International law
      16.   Article 21(1) of the Convention concluded on 1 April 1958 between France and the Grand Duchy of Luxembourg for the avoidance
         of double taxation and establishing rules for mutual administrative assistance in the matter of taxes on income and on capital
         (‘the Convention’) provides that the nationals, companies or groups of one of the contracting States will not be subject in
         the other State to any other or higher taxes than those imposed on the nationals, companies or groups of the latter State.
      
      17.   According to Article 22(1) of the Convention, the higher administrative authorities of the two States can, for the purposes
         of the proper application of the Convention, exchange, upon request, such information which the tax laws of the two States
         allow to be obtained through normal administrative practices.
      
      18.   The two States have, by exchange of letters of 8 September 1970, excluded from the scope of the Convention holding companies,
         as defined for the purposes of Luxembourg law relating to such companies (for the purpose of the present proceedings, the
         Law of 31 July 1929 and Decree-law of 27 December 1937) as well as any income which a person resident for tax purposes in
         France derives from such companies or any interests of such a person in such holding companies. 
      
      II –  Factual background, procedure and the questions referred
      19.   Société Européenne et Luxembourgeoise d’Investissements SA (‘Elisa’) is a holding company incorporated under Luxembourg law
         under the Law of 31 July 1929 on the tax regime applying to holding companies.
      
      20.   According to the order for reference, Elisa owns indirectly immovable property on French territory and is therefore subject
         to the provisions of Article 990D of the CGI imposing a tax on the commercial value of immovable property owned in France
         by legal persons.
      
      21.   The order for reference goes on to state that Elisa completed the tax returns required by law but did not pay the corresponding
         tax. After tax penalties were notified on 18 December 1997, the tax authorities proceeded to the collection of those penalties
         on 10 June 1998. Its complaint having been rejected, Elisa summoned the Director-General of Taxes to appear before the Tribunal
         de grande instance (Regional Court) of Paris, with a view to obtaining a discharge from the disputed tax.
      
      22.   After two negative decisions, one by the Tribunal de grande instance and the other by the Cour d’Appel (Court of Appeal) of
         Paris, which both held that Elisa did not fulfil the conditions laid down in Article 990E(2) and (3) of the CGI providing
         for exemption from the disputed tax, Elisa appealed before the Cour de Cassation (Court of Cassation).
      
      23.   By order of 13 December 2005, received at the Court Registry on 19 December 2005, the Cour de Cassation decided to stay the
         proceedings and to make a reference to the Court of Justice of the European Communities for a preliminary ruling on the following
         questions:
      
      ‘1.      Do Articles 52 et seq. and 73b et seq. of the EC Treaty preclude legislation such as that laid down by Article 990D et seq.
         of the General Tax Code which grants legal persons having their effective centre of management in France entitlement to exemption
         from the tax on the commercial value of properties owned in France and which, as regards legal persons having their effective
         centre of management in the territory of another country, even if it is a Member State of the European Union, makes that entitlement
         conditional on the existence of a convention on administrative assistance to combat tax evasion and avoidance concluded between
         France and that State or on there being a requirement, under a treaty including a clause prohibiting discrimination on grounds
         of nationality, that those legal persons are not to be taxed more heavily than legal persons having their effective centre
         of management in France?
      
      2.      Does a tax such as the tax at issue constitute a tax on capital within the meaning of Article 1 of the Council Directive of
         19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct and
         indirect taxation?
      
      3.      If so, do the obligations imposed on Member States concerning mutual assistance in the field of taxation by the Directive
         of 19 December 1977, cited above, preclude the implementation by the Member States, under a bilateral convention on administrative
         assistance in the field of taxation, of obligations of the same kind excluding a category of taxpayers such as Luxembourg
         holding companies?
      
      4.      Do Articles 52 et seq. and 73b et seq. of the EC Treaty oblige a Member State which has concluded with another country, whether
         or not a member of the European Union, a convention including a clause prohibiting discrimination in the field of taxation
         to accord a legal person having its effective centre of management in the territory of another Member State the same benefits
         as those provided for by that clause, when that legal person owns one or several properties in the territory of the first
         Member State and the second Member State is not linked to the first by an equivalent clause?’
      
      III –  Procedure before the Court
      24.   Written observations were submitted in compliance with Article 20 of the Statute of the Court by Elisa, the Commission, and
         the Dutch, French, Greek and Italian Governments.
      
      25.   A hearing was held on 24 January 2007, at which the representatives of Elisa, as well as the agents of the French, Greek,
         Dutch and United Kingdom Governments, presented their oral observations.
      
      IV –  Preliminary remarks
      A –    Order of the answers to the questions referred
      26.   In order to understand the content and the order of the questions put by the Cour de Cassation, it may be useful to note that
         the French tax administration and the lower courts held that the conditions laid down under Articles 990D and 990E were not
         fulfilled. In that regard, it was held that Directive 77/799 was not relevant, in particular because of the existence of an
         agreement on administrative cooperation between France and Luxembourg, which explicitly excluded so-called 1929 holdings from
         its scope. 
      
      27.   Against this background, the Cour de Cassation asks whether the provisions of the Treaty relating to the right of establishment
         (Article 43 et seq. EC) and the free movement of capital (Article 56 et seq. EC) preclude a Member State from maintaining
         a tax on the commercial value of immovable property from which legal persons resident for tax purposes in France are exempted,
         whereas the exemption of legal persons resident in another Member State is subject to the existence of a bilateral convention
         containing either a clause providing for administrative assistance to combat tax evasion and avoidance or a clause prohibiting
         discrimination on grounds of nationality, by which non-resident legal persons may not be taxed more heavily than legal persons
         having their effective centre of management in France.
      
      28.   The second and third questions are aimed at determining whether a clause providing for administrative assistance to combat
         tax evasion and avoidance is capable of being applicable in the present case. Both Directive 77/799 and the Convention between
         France and Luxembourg make provision for administrative assistance. 
      
      29.   Since, in order to justify the disputed tax, the French Government invokes the absence of appropriate administrative assistance
         between France and Luxembourg as far as 1929 holdings are concerned, it will be useful to clarify the question whether an
         instrument of administrative cooperation is applicable – whether in the form of Directive 77/799 or the Convention between
         Luxembourg and France – before answering the more general question of the compatibility of the disputed tax mechanism with
         the fundamental freedoms. Therefore, the second and third questions will be addressed before the first question.
      
      V –  The second question 
      30.   By its second question, the Cour the Cassation wants to know, in essence, whether the disputed tax falls within the scope
         of Directive 77/799, as defined in Article 1 of the Directive.
      
      A –    Main submissions of the parties
      31.   According to Elisa, the Greek Government and the Commission, the disputed tax falls within the scope of the taxes covered by Directive 77/799. 
      
      32.   The French Government is of the opposite view. It contends in particular that the tax is not mentioned in Article 1(3) of the Directive as being
         included in the national taxes falling within the material scope of the Directive. Furthermore, it is levied on legal persons
         and not natural persons on the immovable property which they own. Lastly, its aim is to prevent tax avoidance and evasion
         and not to tax capital in order to increase the tax revenue of the State.
      
      B –    Legal assessment
      33.   By way of background, it may be useful to point out that Directive 77/799 concerning mutual assistance in the field of direct
         taxation was adopted in order to combat tax evasion and tax avoidance. (9) It establishes a mechanism of strengthened collaboration between the tax administrations of the Member States and facilitates
         the exchange of information which may be relevant for the correct assessment of taxes on income and on capital. (10)
      
      34.   According to Article 1(1) of the Directive, the exchange of information which is relevant for the purposes of the Directive
         is that relating to ‘taxes on income and on capital’. Article 1(2) of the Directive states that taxes on income and on capital
         are, ‘irrespective of the manner in which they are levied, all taxes imposed on total income, on total capital, or on elements
         of income or of capital, including taxes on gains from the disposal of movable or immovable property, taxes on the amounts
         of wages or salaries paid by enterprises, as well as taxes on capital appreciation’. Given the use of the term ‘including’,
         it is clear that the list set out is not meant to be exhaustive. 
      
      35.   It follows from Article 1(4), which states that ‘paragraph 1 shall also apply to any identical or similar taxes imposed subsequently,
         whether in addition to or in place of the taxes listed in paragraph 3’, that the list set out in Article 1(3) of national
         taxes which fall within the scope of the directive is also not meant to be exhaustive. In this respect, it should be noted
         that the disputed tax is not mentioned among the French taxes which are listed, but, according to the French Government, the
         ‘impôt de solidarité sur la fortune’, which did not exist at the time of the adoption of the Directive, was added later.
      
      36.   In this connection, it should be pointed out that the disputed tax is closely linked to the French wealth tax. Indeed, the
         disputed tax was introduced with the aim of combating avoidance and evasion of the French wealth tax, which, as such, falls
         within the scope of Directive 77/799. The objective of the disputed tax, according to the French Government, is to induce
         those legal persons who hold ownership and other rights in rem over immovable property in France but who are not resident for tax purposes in France to provide information on the identity
         of their shareholders and thereby remove the incentive for natural persons to hide behind such legal persons in order to avoid
         wealth tax. This means that the existence of wealth tax and the aim of ensuring that it is collected correctly and in full
         are the raison d’être of the disputed tax.
      
      37.   Moreover, the tax can be seen, in fact, as a type of lump-sum compensation for the wealth tax revenue of the French State
         which is lost as a result of tax avoidance and evasion. Thus, although, according to the observations of the French Government,
         the tax is not primarily aimed at raising tax revenue for the State but at preventing tax avoidance and evasion, the French
         State, by levying the disputed tax, none the less compensates, to some extent, for lost wealth tax revenue and hopes thereby
         to remove any incentive for natural persons to pursue strategies of tax avoidance and evasion.
      
      38.   It follows that the disputed tax can be regarded as an ancillary to French wealth tax and, as such, it would be illogical
         to exclude the former from the scope of the Directive when the latter remains subject to it.
      
      39.   It may also be added that the disputed tax is clearly levied on an element of capital, namely immovable property. It appears
         from the Court’s judgment in Halliburton that, at least as far as taxes on immovable property are concerned, it adopts a relatively broad approach to the notion of
         a tax on capital when defining the material scope of Directive 77/799. (11)
      
      40.   Moreover, the principle of uniform interpretation of Community law (12) implies that the name given to a particular tax under national law cannot be regarded as significant for the purpose of determining
         whether a particular tax should be considered a tax on capital within the meaning of Article 1(1) of the Directive. 
      
      41.   Lastly, it follows from Article 1(2) that the manner in which taxes are levied is also not relevant for that purpose. Therefore,
         the fact that the disputed tax is levied on a legal person is in my view not a point of great significance. 
      
      42.   In those circumstances, the answer to the second question should be that a tax such as the tax at issue constitutes a tax
         on capital within the meaning of Article 1 of Directive 77/799.
      
      VI –  The third question
      43.   By its third question, the Cour de Cassation asks, in essence, whether the obligations imposed on Member States concerning
         mutual assistance in the field of taxation under Directive 77/799 preclude the implementation by the Member States, under
         a bilateral convention on administrative assistance in the field of taxation, of obligations of the same kind excluding a
         category of taxpayers such as Luxembourg holding companies.
      
      44.   In the present case, as is shown by the answer to the second question, the disputed tax falls within the scope of Directive
         77/799, which lays down harmonised procedures for administrative cooperation as regards the correct assessment of taxes on
         income and on capital between all Member States. The provisions concerning administrative cooperation laid down under that
         directive are therefore applicable. 
      
      45.   At the same time, a bilateral Convention between Luxembourg and France provides for administrative assistance but excludes
         certain categories of taxpayers, namely 1929 holdings, from its scope and thus from the benefit of the clause on administrative
         cooperation. 
      
      46.   In the light of the foregoing, I shall answer the third question by determining the relationship between Directive 77/799,
         which is applicable in the present case, and the provisions of a bilateral Convention between Luxembourg and France, which
         provides in principle for administrative assistance but excludes certain categories of taxpayers, namely 1929 holdings.
      
      A –    Main submissions by the parties
      47.   The Commission is of the view that Directive 77/799 can, according to the established case-law of the Court, be invoked by a Member State
         in order to obtain from the competent authorities of another Member State all the information it deems necessary to determine
         the exact amount of income tax for which a taxpayer is liable. As this directive has been implemented in all Member States,
         a system for the exchange of information is operational between France and Luxembourg. 
      
      48.   The principle of primacy of Community law also requires that the provisions of Directive 77/799 be applied rather than the
         provisions of a bilateral convention concluded with another Member State. Indeed, in accordance with the case-law of the Court,
         a Member State may not disregard the requirements of a directive, or any other binding Community measure, on the ground that
         the provisions of an agreement or convention concluded with another State state otherwise. 
      
      49.   Elisa considers that obligations imposed on Member States under Directive 77/799 preclude the implementation by the Member States,
         under a bilateral Convention on administrative assistance in the field of taxation, of obligations of the same kind excluding
         a category of taxpayers such as Luxembourg holding companies. The Directive permits the implementation of the Convention only
         as long as the application of the Convention does not reduce the effect of the Directive.
      
      50.   The French Government considers that the obligations contained in Directive 77/799 do not prevent a Member State from concluding a convention on
         the same subject-matter which excludes a certain category of taxpayers, such as 1929 holdings, from its scope. In support
         of this view, the French Government refers in particular to the fact that, in accordance with Article 8 of Directive 77/799
         in combination with the applicable laws of Luxembourg, Luxembourg is entitled to refuse requests for information from other
         tax authorities in relation to information that would be needed for the taxation of 1929 holdings. Thus, neither Directive
         77/799 nor the Convention between France and Luxembourg can oblige the Luxembourg authorities to provide information on 1929
         holdings to other Member States. The French Government is therefore justified in not giving such companies the benefit of
         the exemption which is subject to the condition that there is a convention on administrative cooperation, since the laws of
         Luxembourg deprive Directive 77/799 of its effectiveness in this respect as far as 1929 holdings are concerned. 
      
      B –    Legal assessment
      51.   Directive 77/799 is a form of Community-wide instrument, which ensures that a minimum level of harmonisation of administrative
         assistance and cooperation exists between all Member States. As such, it must receive full effect and must be interpreted
         and applied in a uniform way throughout the Community. (13)
      
      52.   Article 11 of Directive 77/799 lays down express provisions governing the relationship of the Directive with other legal instruments
         which contain ‘wider obligations to exchange information’. By such a provision, the objective of the Community legislature
         was to clarify the legal effects of any bilateral conventions that Member States had concluded or would conclude having the
         same subject-matter as the Directive. This was particularly important, since the Directive was added to a network of already
         existing bilateral (and multilateral) conventions providing for administrative cooperation in tax matters, (14) and the rationale of the Directive was not to limit any existing mutual assistance obligations or possibilities, but rather
         to create such obligations and possibilities. (15)
      
      53.   In this context, a provision such as Article 11 of the Directive ensures that Member States can maintain or conclude, in particular
         bilateral agreements having the same subject-matter as that covered by the Directive and thus maintain or establish a form
         of cooperation which goes beyond that established by the Directive. In the light of the principles of effectiveness and uniform
         application of Community law, it follows from Article 11 of the Directive that a bilateral tax treaty can apply only insofar
         as it contains wider obligations to exchange information than those established by the Directive.
      
      54.   In this respect, it cannot reasonably be argued that a provision from which a certain category of taxpayers is excluded, in
         the present case, 1929 holdings, could be regarded, at least as far as the excluded taxpayers are concerned, as a wider-ranging
         obligation than the provisions of the Directive, which has no similar exclusions in its scope. Therefore, the provisions of
         a bilateral convention between Luxembourg and France, which provides in principle for administrative assistance but excludes
         certain categories of taxpayers, namely 1929 holdings, cannot be applicable in the present case.
      
      55.   The finding that the Convention can only be implemented insofar as it does not limit in any way the applicability of Directive
         77/799, including its application to 1929 holdings, is confirmed by the case-law of the Court, according to which Member States
         cannot rely on a bilateral tax convention in order to avoid the obligations imposed on them by the Treaty. (16) Thus, it would for instance not be possible to exclude certain taxpayers from the scope of the directive by means of the
         application of a bilateral tax treaty.
      
      56.   It follows from the above that the answer to the third question should be that the obligations imposed on Member States concerning
         mutual assistance in the field of taxation by Directive 77/799 preclude the implementation by the Member States, under a bilateral
         convention on administrative assistance in the field of taxation, of obligations of the same kind excluding a category of
         taxpayers such as Luxembourg 1929 holding companies only in so far as giving effect to the bilateral convention would prevent
         the applicability of the Directive to these taxpayers.
      
      VII –  The first question
      57.   By its first question, the Cour de Cassation asks, in essence, whether the provisions of the Treaty relating to the right
         of establishment (Article 43 et seq. EC) and the free movement of capital (Article 56 et seq. EC) preclude a Member State
         from maintaining a tax on the commercial value of immovable property from which legal persons resident in France are exempted,
         whereas the exemption of legal persons resident in another Member State is subject to the existence of a bilateral convention
         containing either a clause providing for administrative assistance to combat tax evasion and avoidance or a clause prohibiting
         discrimination on grounds of nationality for tax purposes, meaning that companies resident in a Member State other than France
         cannot be taxed more heavily than legal persons resident in France.
      
      A –    Main submissions of the parties
      58.   According to the French, Greek, Italian and United Kingdom Governments, Articles 43 EC and 56 EC must be construed in such a way that they do not preclude the existence of legislation such as
         the French legislation at issue.
      
      59.   The Commission and Elisa are of the opposite view. In particular, the Commission considers that only the provisions relating to the free movement of capital (Article 56 et seq. EC) are relevant to the present
         case. It submits that Article 56 EC precludes the existence of national legislation such as Articles 990D and 990E of the
         CGI. Elisa considers that both Articles 43 EC and 56 EC preclude the existence of national legislation such as Articles 990D and 990E
         of the CGI.
      
      B –    Which fundamental freedom(s) are/is concerned?
      60.   As a preliminary point, it should be noted that, although direct taxation falls within the competence of the Member States,
         the latter must nonetheless exercise that competence consistently with Community law, (17) including the provisions which lay down the principles of freedom of establishment and the free movement of capital.
      
      61.   In the present case, the questions put by the national court refer both to freedom of establishment (Article 43 EC) and the
         free movement of capital (Article 56 et seq. EC). In its written observations, the Commission has questioned this approach and raised the question whether freedom of establishment truly has a bearing on the present
         dispute. It appears to be supported in this view by the Italian Government. Accordingly, it is necessary to examine whether,
         in the light of the facts of the case, Elisa may rely on the rules relating to the right of establishment and/or the rules
         governing the free movement of capital.
      
      62.   Freedom of establishment, which Article 43 EC confers on Community nationals and which includes the right to take up and pursue
         activities as self-employed persons and to set up and manage undertakings, under the conditions laid down for its own nationals
         by the law of the Member State where such establishment is effected, entails, in accordance with Article 48 EC, for companies
         or firms formed in accordance with the law of a Member State and having their registered office, central administration or
         principal place of business within the European Community, the right to exercise their activity in the Member State concerned
         through a subsidiary, a branch or an agency. (18)
      
      63.   According to the case-law of the Court, the concept of establishment within the meaning of the Treaty is a very broad one,
         allowing a Community national to participate, on a stable and continuous basis, in the economic life of a Member State other
         than his State of origin and to profit therefrom, so contributing to economic and social interpenetration within the Community
         in the sphere of activities as self-employed persons. (19) However, in order for the provisions relating to freedom of establishment to apply, it is generally necessary to have secured
         a permanent presence in the host Member State and, where immovable property is purchased and held, that property should be
         actively managed. (20)
      
      64.   It appears that Elisa, as a holding company, does not have any other commercial activity besides the holding of ownership
         rights over immovable property in France, but the account of the referring court and the information provided by the parties
         to the proceedings before the Court are not entirely conclusive in this respect. 
      
      65.   In any event, it should be noted that the Court has consistently considered provisions relating to the acquisition and or
         exploitation of immovable property in the context of the free movement of capital, even if the referring court, as, for instance,
         in Konle, (21) Centro di Musicologia Stauffer, (22) and Festersen (23) also referred to freedom of establishment. (24)
      
      66.   In that context, the Court has held that the exercise of the right to acquire immovable property in the territory of another
         Member State, to use it and to dispose of it represents a necessary corollary of freedom of establishment. (25)
      
      67.   As is clear from the nomenclature of capital movements set out in Annex I to Council Directive 88/361/EEC of 24 June 1988
         for the implementation of Article 67 of the Treaty (article repealed by the Treaty of Amsterdam), (26) capital movements include investments in real estate on the territory of a Member State by non-residents. That nomenclature
         still has the same indicative value for the purposes of defining the notion of capital movements. (27)
      
      68.   It follows that the free movement of capital covers both the ownership and administration of immovable property. It is not
         disputed that Elisa, whose seat is located in Luxembourg, owns such property in France. Therefore, the situation at issue
         falls under the provisions of the Treaty governing the free movement of capital and Elisa may rely in any event on those provisions
         for the purposes of the present proceedings.
      
      69.   Furthermore, the very aim of the provision in question, as will be explained below, is to prevent tax avoidance and evasion
         by natural persons who are resident for tax purposes in France, where they would normally have to pay wealth tax in relation
         to immovable property in France if they owned such property in their own name, as natural persons. Thus, the disputed tax
         is targeted in particular at cross-border investment in immovable property, which does not necessarily involve any establishment
         on French territory. It is therefore the cross-border character of the investment which may be affected by the national legislation
         at issue. Any restrictive effects on freedom of establishment are merely an inevitable consequence of the restriction imposed
         on the free movement of capital. (28)
      
      70.   Thus, I am of the opinion that the free movement of capital should be the primary criterion for the assessment of the present
         case.
      
      71.   In any event, should the referring court, having regard to the factual circumstances of the case before it, reach the conclusion
         that the provisions on freedom of establishment are also applicable, it should be borne in mind that the considerations set
         out below, and in particular the review of the principle of proportionality, would also apply in relation to freedom of establishment. (29)
      
      C –    The principle of the free movement of capital
      72.   Before determining whether national legislation such as the legislation at issue complies with the principle of the free movement
         of capital, it may be useful to recall the characteristics of this fundamental freedom, which may be the least known of the
         fundamental freedoms laid down under the EC Treaty.
      
      73.   To start with, it should be noted that the free movement of capital differs from the other fundamental freedoms in terms of
         its formulation, which may raise the question whether that formulation gives rise to any practical consequences. 
      
      74.   While Article 56 EC contains a general prohibition of restrictions on the movement of capital, Article 58(1)(a) EC makes it
         clear that that prohibition is without prejudice to the right of the Member States to apply relevant provisions of their tax
         law which distinguish between taxpayers with regard to their place of residence or with regard to the place where capital
         is invested. This right is, however, limited in itself by Article 58(3) EC, which specifies that the distinctions that Member
         States make between taxpayers with regard to their place of residence or the place where their capital is invested may not
         constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital. (30)
      
      75.   It was in Manninen that the Court first (31) had the opportunity to consider the Member States’ power to legislate in the area of direct taxation in the light of the
         principle of the free movement of capital under Articles 56 EC and 58 EC. One of the core principles which the Court set out
         in that judgment was that for national tax legislation which distinguishes between taxpayers according to the place where
         their capital is invested to be regarded as compatible with the Treaty provisions on the free movement of capital, the difference
         in treatment must concern situations which are not objectively comparable or be justified by overriding reasons in the general
         interest, such as the need to safeguard the coherence of the tax system or effective fiscal supervision. (32)
      
      76.   Moreover, in order to be justified, the difference in treatment between legal persons with their seat in France and legal
         persons with their seat in other Member States must not go beyond what is necessary in order to attain the objective of the
         legislation in question. (33)
      
      77.   It appears from the above that the concept of ‘restriction’ within the scope of the free movement of capital corresponds to
         the concept of ‘restriction’ that the Court has developed in connection with the other fundamental freedoms. Thus, any measure
         that makes the cross-border transfer of capital more difficult or less attractive and is capable of deterring investors from
         making such a transfer constitutes a restriction on capital movements. (34)
      
      78.   Furthermore, although it is true that a prohibition on discrimination cannot be found in the wording of Article 56(1) EC and
         that, at best, it can be deduced indirectly from Article 58(3) EC, (35) the free movement of capital also encompasses a prohibition on discrimination, as do all fundamental freedoms. This implies
         a prohibition on differences of treatment between operators on financial markets on the basis of their nationality, place
         of residence or the place where such capital is invested, where such differences are not objectively justified. 
      
      D –    The legal characterisation of the disputed tax
      79.   In order to answer the first question, it follows from the above that it must be ascertained at the outset whether the disputed
         French tax mechanism constitutes a restriction on capital movements. 
      
      80.   Under the disputed legislation, the situation which gives rise to the obligation to pay the tax is the holding of ownership
         rights or certain other rights in rem over immovable property in France on 1 January of a given year. 
      
      81.   Legal persons with their effective centre of management in France (hereafter also referred to as ‘resident’) are exempted
         from the disputed tax. Legal persons which do not have their effective centre of management in France (hereafter also referred
         to as ‘non-resident’) are assimilated to resident legal persons if, by virtue of a treaty, they may not be subject to a higher
         tax burden. It appears from the order for reference that this condition refers to a situation where France has concluded with
         the country where the non-resident legal person has its effective centre of management a convention containing a clause of
         non-discrimination as regards tax matters. Resident legal persons and assimilated non-resident legal persons are exempted
         provided they fulfil certain obligations to make declarations to the tax authority. In particular, they must communicate each
         year, or take on and respect the obligation to communicate to the tax authority, at its request, the location and description
         of the properties owned on 1 January of a given year, the identity and the address of their shareholders, partners or other
         members, the numbers of shares or other rights held by each of them and evidence of their residence for tax purposes.
      
      82.   Furthermore, non-resident legal persons can be exempted where they satisfy the condition that the country or territory in
         which they have their seat has concluded with France a convention on administrative assistance to combat tax evasion and avoidance.
         Such legal persons must declare each year, by 15 May at the latest, the location, description and value of the properties
         in their possession as at 1 January, the identity and the address of their members at the same date and the number of shares
         held by each of them.
      
      83.   It follows from the above that, while a resident legal person is in principle exempted from the tax, a non-resident legal
         person must have its centre of effective management in a country which has concluded with France either a convention containing
         a clause of non-discrimination as regards tax matters or a convention containing a clause on administrative assistance to
         combat tax evasion and avoidance. This constitutes a difference in treatment between legal persons subject to the disputed
         tax according to the location of their centre of effective management. 
      
      84.   At the same time, the disputed tax mechanism may have the effect of rendering it less attractive for non-resident legal persons
         to invest in immovable property in France. When a non-resident legal person has its effective centre of management in a Member
         State which has not concluded with France a convention containing a clause of non-discrimination as regards tax matters or
         a convention on administrative assistance to combat tax evasion and avoidance, the immovable property held directly or indirectly
         by a non-resident legal person in France may be subject to the disputed tax. This also applies to legal persons who have been
         excluded from the benefit of such clauses, as is the case with 1929 holdings which were excluded from the scope of the Convention
         concluded between France and Luxembourg.
      
      85.   The disputed tax therefore constitutes a restriction on the free movement of capital which is, in principle, prohibited by
         Article 56 EC. 
      
      E –    Is the situation of residents and non-residents objectively comparable?
      86.   As mentioned above, the Court’s case-law provides that national tax legislation such as the legislation at issue in the main
         proceedings may be regarded as compatible with the Treaty provisions on the free movement of capital, if the difference in
         treatment concerns situations which are not objectively comparable.
      
      87.   The Commission submits that the situations of residents and non-residents could be regarded as different when, in the case
         of certain countries, there are no means of obtaining appropriate information as to the holders of interests in certain legal
         persons owning immovable property. In the Commission’s view, such a difference does not exist as regards EU Member States,
         because measures aimed at improving cooperation, such as Directive 77/799, ensure a minimum level of exchange of information.
      
      88.   The Court appears, however, to assess the objective situation of taxpayers in the face of a tax rule, (36) rather than on the basis of the aims such a rule may seek to pursue by means of its exemptions. 
      
      89.   In the present case, it appears that as regards the situation which gives rise to the obligation to pay tax, namely the direct
         or indirect ownership or the holding of rights in rem over immovable property in France by legal persons on 1 January of a given year, legal persons having their effective centre
         of management in France and legal persons having their centre of effective management outside France are on the same footing
         in relation to the taxation of immovable property. 
      
      90.   Those rules cannot, without giving rise to discrimination, treat such persons differently as regards the grant of an advantage
         in respect of the same tax, such as an exemption. By treating the two types of legal persons in the same way for the purposes
         of taxing their immovable property, the French legislature has in fact acknowledged that there is no objective difference
         between their positions as regards the detailed rules and conditions relating to that taxation which could justify different
         treatment. (37)
      
      91.   Accordingly, in circumstances such as those in the main proceedings, the effect of the national legislation at issue is to
         treat legal persons in objectively comparable situations differently. 
      
      92.   It follows that such a fiscal measure cannot, in principle, constitute unequal treatment permitted under Article 58(1)(a)
         EC, unless it can be justified by overriding reasons in the general interest. (38)
      
      F –    Justification by overriding reasons in the general interest
      93.   The French Government relies on justifications relating to the effectiveness of fiscal supervision and the prevention of tax
         avoidance and evasion in order to justify the disputed tax. 
      
      94.   The Court has consistently held that the prevention of tax avoidance and evasion (39) and the effectiveness of fiscal supervision (40) are among the overriding reasons in the public interest which can justify a restriction on the exercise of the fundamental
         freedoms. (41)
      
      95.   In the light of the objective pursued by the national provision at issue in this case, those justifications overlap to a certain
         extent, because the provision in question seeks to ensure the collection of the information necessary for the levying of wealth
         tax and thereby to prevent tax avoidance and evasion with respect to this tax.
      
      96.   It must be noted at the outset that, while the Court has repeatedly held that effectiveness of fiscal supervision constitutes
         an overriding requirement of general interest capable of justifying a restriction on the exercise of fundamental freedoms
         guaranteed by the Treaty, (42) it has been relatively reluctant to accept such a justification in practice, since it has been successfully invoked by a
         Member State in only one case concerning direct taxation, namely Futura Participations and Singer. (43) It appears from the case-law of the Court that a Member State may apply only such measures which enable the Member State
         in question to ascertain clearly and precisely the taxpayers subject to a given tax and the amount to be paid by them. (44)
      
      97.   The same restraint may be observed in relation to justifications based on the counteraction of tax avoidance and evasion.
         While recognising that the counteraction of tax avoidance represents an overriding reason in the public interest which can
         justify a restriction on the exercise of the fundamental freedoms, (45) the Court has, in practice, confined the possibility of establishing a justification based on tax combating avoidance and
         evasion within relatively strict limits. (46)
      
      98.   Indeed, according to a phrase commonly used in the case-law, an obstacle to a freedom guaranteed by the Treaty can be justified
         only on the basis of the counteraction of tax avoidance if the legislation in question is specifically designed to exclude
         from a tax advantage wholly artificial arrangements aimed at circumventing national law. (47)
      
      99.   It follows that, in order to be proportionate, the effective scope of a measure aimed at counteracting tax avoidance and evasion
         should be limited, as far as possible, only to those cases which present a real risk of tax avoidance by recourse to wholly
         artificial arrangements (48) and must be designed, in view of all of its conditions for application and exemption, to apply only in very specific circumstances
         which correspond to cases in which the probability of the risk of tax avoidance is highest. (49)
      
      100. According to the case-law of the Court, ‘wholly artificial arrangements’ are those which do not reflect economic reality. (50) In the case of freedom of establishment, the Court has held that economic reality presupposes actual establishment of the
         company concerned in the host State and the pursuit of genuine economic activity there. (51)
      
      101. If we apply this reasoning to the free movement of capital, this appears to suggest that a restrictive measure should not
         go beyond taxing effectively the immovable property of those legal persons which are formally established in another Member
         State, where the establishment in that other Member State has no economic reality.
      
      102. As far as the burden of proof is concerned, the Court’s case-law provides that it is in principle for the tax authorities
         of the Member State concerned to prove a risk of tax avoidance or evasion in each case. (52) It cannot be inferred from the fact that a taxpayer uses his fundamental freedoms to establish his residence in another Member
         State that such a taxpayer pursues a fraudulent objective. (53) A general presumption of tax evasion or tax avoidance cannot justify a fiscal measure which compromises the objectives of
         Treaty. (54) The Court has gone as far to consider that the laying down of a general rule automatically excluding certain categories of
         operations from a tax advantage, whether or not there is actually tax evasion or tax avoidance, cannot be considered as proportionate. (55)
      
      103. More recently, the Court seems to have refined its approach to general presumptions of tax avoidance and evasion in the area
         of direct taxation. In Cadbury Schweppes, it held that such a presumption could be acceptable, provided that it is designed, by the precise conditions it establishes,
         to apply only in very specific circumstances which correspond to cases in which the probability of the risk of tax avoidance
         is highest. In that case, the burden of proof will lie with the non-resident taxpayer, which is best placed for that purpose,
         to prove the reality of its activities which allows it to claim the benefit of the fundamental freedoms. (56)
      
      104. In the light of these considerations, I shall consider whether the national measure at issue is suitable for the purpose of
         ensuring fiscal supervision and counteracting tax avoidance and evasion and does not go beyond what is necessary to achieve
         these objectives.
      
      105. The intention of the legislature in imposing the disputed tax was to dissuade taxpayers subject to the French wealth tax from
         avoiding their liability to it by creating, in States which have not concluded a tax convention with France including an administrative
         assistance clause to combat tax evasion and tax avoidance, companies which become the owners of immovable property situated
         in France. (57)
      
      106. Thus the disputed tax mechanism appears to target, in particular, those practices which aim to avoid the wealth tax that would
         normally be due on immovable property. More precisely, according to the written and oral observations of the French Government,
         the practice to be counteracted consists in the creation by natural persons who are resident in France for tax purposes and
         whose immovable property would normally be subject to wealth tax, of legal persons which are resident for tax purposes outside
         France for no other purpose than to avoid the payment of such wealth tax. It appears that natural persons, resident in France,
         then transfer ownership or other rights in rem over immovable property in France to legal persons which are, as such, not subject to French wealth tax. 
      
      107. The cases which appear to give rise to difficulty are those where the French tax authorities cannot verify the identity and
         the holdings of natural persons who may be the shareholders of such legal persons. According to the French Government, this
         is the case when such legal persons have their effective centre of management in a country with which France has not concluded
         a convention containing a clause on administrative cooperation. In such a case, it is submitted that the French tax authorities
         face difficulties in the cross-checking of declarations filled by legal persons concerning, in particular, the identity and
         the holdings of their shareholders and the wealth tax returns of natural persons resident in France, who are under a duty
         to declare any holdings they have in companies in France and abroad, such as 1929 holdings. In these circumstances, natural
         persons can successfully hide behind legal persons to avoid the payment of wealth tax on immovable property which they would
         otherwise have to pay if they owned it in their own name.
      
      108. In order to prevent such practices, the tax provided for under Articles 990D and 990E of the CGI targets in particular those
         legal persons which have their main centre of management in countries from which France cannot obtain appropriate information
         on the natural persons who hold shares in legal persons. Thus, the French legislation at issue makes exemption from the tax
         for non-resident legal persons dependent on the existence of a treaty provision on administrative cooperation or on non-discrimination
         for tax purposes. With respect to the latter clause, the French Government has pointed out that any tax treaty containing
         a non-discrimination clause will a fortiori imply the existence of administrative cooperation.
      
      109. It appears, therefore, that the essential criterion for exemption is in fact the ensuring, by means of a bilateral tax treaty,
         that the French tax administration can request directly from foreign tax authorities all the information necessary to cross-check
         declarations made by legal persons holding ownership and other rights inrem over immovable property in France in accordance with Article 990E of the CGI, as well as declarations made by natural persons
         resident for tax purposes in France regarding their property subject to wealth tax.
      
      110. By taxing all legal persons which do not fulfil this requirement, the French legislation at issue has the effect of taxing
         the immovable property held by legal persons used as a ‘screen’ by natural persons who would otherwise be subject to wealth
         tax. Thus, the disputed tax makes it possible to combat, or at least to render less attractive, such practices, which pursue
         no other purpose than to avoid the payment of wealth tax that would otherwise be due by natural persons in France. It is therefore
         suitable for the purpose of ensuring effective fiscal supervision and counteracting tax avoidance and evasion.
      
      111. It remains, however, to be determined whether the disputed tax goes beyond what is necessary to achieve this purpose.
      112. The national legislation at issue appears to proceed from the assumption that all of those countries with which France has
         not concluded a bilateral tax treaty containing either a clause providing for administrative assistance or for non-discrimination
         on tax matters are likely to host legal persons used as a vehicle to avoid the payment of wealth tax by natural persons. The
         same assumption applies to those corporate entities, such as 1929 holdings, which have been excluded from the scope of the
         bilateral tax treaties. 
      
      113. The French Government appears to justify this assumption in particular by invoking generally the harmfulness of 1929 holdings.
      114. In this respect, it should be observed that the harmfulness of this legal regime has been indeed recognised by the OECD (58) as well as by the Economic Affairs and Finance Council (Ecofin Council) in the course of the adoption of a code of conduct
         for business taxation. (59) Luxembourg’s legal regime applicable to 1929 holdings was cited in the report of the ‘Code of Conduct’ group, responsible
         for evaluating national measures which may come within the scope of the code, as being a harmful measure. That tax regime
         therefore is required to be progressively abolished. (60)
      
      115. However, those factors cannot influence the scope of the rights conferred on economic operators by the fundamental freedoms.
         According to its preamble, the Code of Conduct is a political commitment and does not affect the Member States’ rights and
         obligations or the respective spheres of competence of the Member States and the Community resulting from the Treaty. (61) The reference to 1929 holdings among those tax measures which are harmful to the single market cannot limit the right conferred
         on an investor by the Treaty under Article 56 EC to make investments in a particular Member State while having its effective
         centre of management in another Member State, even if that investor has a corporate structure subject to a tax system that
         is viewed as harmful to the single market.
      
      116. The fact that 1929 holdings have been classified as a State aid scheme incompatible with the common market (62) does not alter that analysis. Indeed, the Treaty contains specific provisions, in Articles 87 EC and 88 EC, designed to assess
         the compatibility of such a measure with the common market and to eliminate its harmful effects on that market. The fact that
         such a corporate structure and its tax system do not comply with the rules of the Treaty cannot therefore entitle a Member
         State to take unilateral measures intended to counter its effects by limiting freedom of movement. (63)
      
      117. As a result, an argument that relies on the harmfulness of a specific national tax regime or corporate structure can certainly
         not be accepted, as such, to justify the general denial of a tax advantage in the form of an exemption to an entire category
         of legal persons resident in another Member State.
      
      118. In order to justify the national legislation at issue, the French Government also invokes difficulties in obtaining information
         from countries with which no effective administrative cooperation exists. 
      
      119. In particular, the French Government, supported in its view by the Dutch, Italian, United Kingdom and Greek Governments, contends
         that a restrictive approach to exemption from the disputed tax is made necessary by the difficulty which the French tax authorities
         have in proving tax avoidance or evasion in the absence of reliable information to cross-check the information provided by
         taxpayers in their tax returns. The difficulty consists in the fact that the onus is normally on the tax authorities to prove
         tax avoidance. In the absence of the ability to cross-check information with information that the French authorities are able
         to obtain by their own means, which may involve the provision of administrative cooperation by foreign tax authorities, the
         existing presumption of tax avoidance is justified.
      
      120. This argument raises the question of the effectiveness of the administrative cooperation which is available between Member
         States under Directive 77/799. 
      
      121. It follows from my response to the second and third questions that the disputed tax falls within the scope of Directive 77/799,
         which is applicable to the factual situation underlying the dispute brought before the referring court. 
      
      122. According to the Commission and Elisa, the Directive enables the French tax authorities to obtain all the necessary information
         for the collection of wealth tax.
      
      123. However, in the view of the French Government and all other Member States which took part in the proceedings, in the particular
         case of 1929 holdings, the efficiency of Directive 77/799 is questionable because of the terms of Article 8(1). According
         to Article 8 of the Directive, a Member State which is requested to provide information is not obliged to do so if the Member
         State which should furnish the information would be prevented by its laws or administrative practices from collecting or using
         this information for its own purposes. In this connection, the French Government refers to the applicable laws of Luxembourg, (64) which require such holdings to provide only information concerning their legislative status and which provide that no information
         can be requested from 1929 holdings for taxation purposes.
      
      124. In response to this argument, it must be pointed out that the Court has consistently held that Directive 77/799 may be relied
         on by a Member State in order to obtain from the competent authorities of another Member State all the information necessary
         to enable it to ascertain the correct amount of the taxes covered by the Directive. (65)
      
      125. In the present case, it cannot be ruled out that, having regard to Article 8 of Directive 77/799, the national legislation
         of Luxembourg may make it difficult for the French authorities to obtain directly from the Luxembourg authorities certain
         kinds of information necessary in order to prevent tax avoidance or evasion, particularly in relation to the legal structure
         and the identity of the shareholders of 1929 holdings. 
      
      126. It should, however, be noted that in similar cases in which Member States have claimed that the Directive was ineffective
         vis-à-vis Member States which practice banking secrecy, the Court has in the past rejected such an argument. It held that, while Article
         8(1) of the directive imposes no obligation on the tax authorities of Member States to collaborate where their laws or administrative
         practices prevent the competent authorities from carrying out enquiries or from collecting or using information for those
         States’ own purposes, the inability to request such collaboration cannot justify the refusal of a tax advantage. Nothing prevents
         the tax authorities concerned from demanding from the person involved such proof as they consider necessary and, where appropriate,
         from refusing a tax advantage, including an exemption, where such proof is not forthcoming. (66) Indeed, the possibility cannot be excluded a priori that the taxpayer will be able to provide relevant documentary evidence enabling the tax authorities of the Member State of
         taxation to ascertain, clearly and precisely, that he is not attempting to avoid or circumvent the payment of taxes. (67)
      
      127. In the context of the present case, this appears to suggest that, while a ‘legal obstacle’ of this kind, which has the result
         that it is impossible to request cooperation from the Luxembourg tax authorities directly, may make the verification of information
         more difficult, it does not justify the outright refusal to make available a tax advantage in respect of investments made
         by investors from that Member State. Indeed, where 1929 holdings seek exemption from the disputed tax, the French tax authorities
         could request from those holdings themselves the proof the authorities deem necessary to ensure full transparency of their
         ownership and shareholder structure. (68) The French authorities could, for example, request appropriate official evidence in order to pierce the veil of anonymity
         behind which some natural persons attempt to hide their property rights.
      
      128. It may be added in this respect that it must be ensured that the requirements as to the documentary evidence which is demanded
         do not exceed what is necessary in order to attain the objective of securing the information sought. (69)
      
      129. In the present case, it appears that these requirements are not fulfilled because the French legislation at issue does not
         allow legal persons which do not fall under the scope of a tax treaty providing for administrative assistance, but which invest
         in immovable property in France, to provide documentary evidence to prove the identity of the shareholders of those legal
         persons and any other information the French tax authorities deem necessary. As a result they appear to be prevented, in all
         circumstances, from proving that they are not pursuing a fraudulent objective. (70)
      
      130. The legislation at issue may thus lead to substantial ‘collateral’ damage because, while it may well penalise those 1929 holdings
         which have been established by natural persons who are resident for tax purposes in France in order to enable them to avoid
         the payment of French wealth tax on immovable property in France, it will also penalise other 1929 holdings which own immovable
         property in France. 
      
      131. As a result, the group of legal persons which will have to pay the disputed tax is likely to exceed the group of those natural
         persons who attempt to avoid the payment of wealth tax by remaining the anonymous shareholders of legal persons which have
         their seat in a country with which France has not concluded a treaty containing a clause on administrative cooperation, or
         which have been excluded conventionally from the benefit of such a clause, such as 1929 holdings.
      
      132. It follows that the French Government could have adopted less restrictive measures in order to achieve the objective of ensuring
         effective fiscal supervision and counteracting tax avoidance and evasion. The difference in treatment which exists under the
         national legislation at issue between resident and non-resident legal persons is therefore not proportionate to the aim it
         pursues.
      
      133. Thus, the answer to the first question should be that the provisions of the Treaty concerning the free movement of capital
         (Article 56 et seq. EC) preclude a Member State from maintaining a tax on the commercial value of immovable property from
         which legal persons resident for tax purposes in France are exempted, whereas the exemption of non-resident legal persons
         is subject to the existence of a bilateral convention containing either a clause providing for administrative assistance to
         combat tax evasion and avoidance or a clause prohibiting discrimination on grounds of nationality, according to which non-resident
         legal persons may not be taxed more heavily than resident legal persons.
      
      VIII –  Fourth question
      134. By the fourth question, the national court essentially asks whether France, having concluded with a State a convention containing
         a non-discrimination clause allowing legal persons established in that State successfully to claim the benefit of the exemption
         provided for in Article 990E(3) of the CGI, must, pursuant to Articles 56 EC and 43 EC, extend that tax benefit so as to include
         legal persons established in another Member State, such as Luxembourg, which is not linked to France by a convention containing
         such a non-discrimination clause, when those legal persons own immovable property in France. Put differently, the question
         seeks to determine whether Articles 56 EC and 43 EC have the effect of extending to legal persons which are resident for tax
         purposes in any other Member States and own immovable property in France the benefits of a non-discrimination clause concluded
         between France and another Member State or a third country.
      
      135. In the light of my answers to the previous questions, I consider that an answer to the fourth question is not required.
      IX –  Conclusion
      136. In the light of the foregoing, I propose that the Court should answer the questions referred as follows:
      (1)      The provisions of the Treaty concerning the free movement of capital (Article 56 et seq. EC) preclude a Member State from
         maintaining a tax on the commercial value of immovable property from which companies resident for tax purposes in France are
         exempted, whereas the exemption of companies having their tax residence in another Member State is subject to the existence
         of a bilateral convention containing either a clause providing for administrative assistance to combat tax evasion and avoidance
         or a clause prohibiting discrimination on grounds of nationality, when companies having their tax residence in a Member State
         other than France are taxed more heavily than legal persons having their effective centre of management in France.
      
      (2)      A tax such as the tax at issue constitutes a tax on capital within the meaning of Article 1 of Council Directive 77/799/EEC
         of 19 December 1977, concerning mutual assistance by the competent authorities of the Member States in the field of direct
         taxation.
      
      (3)      The obligations imposed on Member States concerning mutual assistance in the field of taxation by Directive 77/799 preclude
         the implementation by the Member States, under a bilateral convention on administrative assistance in the field of taxation,
         of obligations of the same kind excluding a category of taxpayers such as Luxembourg holding companies only in so far as giving
         effect to the bilateral convention would prevent the applicability of the directive to these taxpayers.
      
      1 –	Original language: English.
      
      2 –	The relevant provisions use the terms ‘seat’ and ‘effective centre of management’. It appears, in particular, from clarifications
         provided orally by the French Government that these terms can be used as synonyms for the purpose of the present proceedings.
      
      3 –	OJ 1977 L 336, p. 15.
      
      4 –	For the latter exemption, see Article 990E(4) of the CGI.
      
      5 –	Any immovable property which is allocated by the legal person to its own business purposes, other than a purpose related
         to real estate, is not included for the purposes of the calculation of the threshold of 50%.
      
      6 –	See, for further detail, Mémento pratique Francis Lefebvre, 2006, p. 989 et seq., and Lamy fiscal, 2006, vol. 2, p. 1255 et seq.
      
      7 –	See Case C‑251/98 Baars [2000] ECR I‑2787, paragraph 4 et seq., and Case C‑376/03 D. [2005] ECR I‑5821, paragraph 32.
      
      8 –	See, for a similar system, the example of the Dutch wealth tax: ‘non-residents’ liability to wealth tax is limited, that
         is to say they are liable only in respect of that part of their wealth situated in the Netherlands’, D., cited in footnote 7, paragraph 21.
      
      9 –	Opinion of Advocate General Alber in Case C‑420/98 W.N. [2000] ECR I‑2847, point 7. 
      
      10 –	According to Council Directive 2004/106/EC of 16 November 2004 (OJ 2004 L 359, p. 30), the Directive also applies to any
         information relating to the establishment of taxes on insurance premiums. 
      
      11 –	See Case C‑1/93 Halliburton [1994] ECR I‑1137, paragraph 22. In that case, the Court held that Directive 77/799 was applicable to taxes on transfers
         of immovable property. Such a tax is levied on the acquirer at the occasion of an acquisition of immovable property. It is
         not levied on the holding of such property or the gains it may produce for the owner. 
      
      12 –	See to this effect, inter alia, Case 314/85 Foto-Frost [1987] ECR 4199; Case 11/70 Internationale Handelsgesellschaft [1970] ECR 1125; and, more recently, Case C‑495/03 Intermodal Transports [2005] ECR I‑8151.
      
      13 –	See to this effect, inter alia, Foto-Frost, cited in footnote 12; Internationale Handelsgesellschaft, cited in footnote 12; and, more recently, Intermodal Transports, cited in footnote 12.
      
      14 –	See in particular the third recital of Directive 77/799, which states that ‘collaboration between administrations on the
         basis of bilateral agreements is also unable to counter new forms of tax evasion and avoidance, which are increasingly assuming
         a multinational character’. The need for such a directive stemmed from the fact that not all bilateral relations between all
         Member States were and are covered by bilateral treaties on administrative cooperation. Also, the scope and the strength of
         the obligations in the area of administrative cooperation are likely to differ from one bilateral agreement to another.
      
      15 –	See B. Terra and P. Wattel, European Tax Law, Kluwer, 2005, p. 681.
      
      16 –	Case C‑170/05 Denkavit [2006] ECR I‑0000, paragraph 53.
      
      17 –	See, inter alia, Case C‑80/94 Wielockx [1995] ECR I‑2493, paragraph 16; Case C‑39/04 Laboratoires Fournier [2005] ECR I‑2057, paragraph 14; Case C‑513/03 van Hilten-van der Heijden [2006] ECR I‑1957, paragraph 36; and Case C‑386/04 Centro di Musicologia Stauffer [2006] ECR I‑0000, paragraph 15.
      
      18 –	See Case C‑307/97 Saint-Gobain [1999] ECR I‑6161, paragraph 34; Case C‑446/03 Marks & Spencer [2005] ECR I‑10837, paragraph 30; and Centro di Musicologia Stauffer, cited in footnote 17, paragraph 17.
      
      19 –	See Centro di Musicologia Stauffer, cited in footnote 17, paragraph 18 and the case-law cited therein.
      
      20 –	See Centro di Musicologia Stauffer, cited in footnote 17, paragraph 19.
      
      21 –	Case C‑302/97 [1999] ECR I‑3099, paragraph 39 et seq.
      
      22 –	Cited in footnote 17, paragraph 16 et seq.
      
      23 –	Case C‑370/05 [2007] ECR I‑0000, paragraph 20 et seq.
      
      24 –	An exception to that approach was made in the earlier Fearon case (Case 182/83 [1984] ECR 3677), which however had a clear connection to freedom of establishment on the basis of the
         facts of the case.
      
      25 –	See Konle, cited in footnote 21, paragraph 22, and Joined Cases C‑515/99, C‑519/99 to C‑524/99 and C‑526/99 to C‑540/99 Reisch and Others [2002] ECR I‑2157, paragraphs 29 and 30.
      
      26 –	OJ 1988 L 178, p. 5.
      
      27 –	See, most recently, Centro di Musicologia Stauffer, cited in footnote 17, paragraph 22 and the case-law cited therein, and Festersen, cited in footnote 23, paragraph 23.
      
      28 –	See, by analogy, Case C‑452/04 Fidium Finanz [2006] ECR I‑0000, paragraph 49, and Case C‑196/04 Cadbury Schweppes and Cadbury Schweppes Overseas [2006] ECR I‑0000, paragraph 33.
      
      29 –	See Opinion of Advocate General Stix-Hackl in Festersen, cited in footnote 23, point 30.
      
      30 –	In relation to direct taxation, these principles have been repeated in, inter alia, Case C‑319/02 Manninen [2004] ECR I‑7477, paragraph 28, and Centro di Musicologia Stauffer, cited in footnote 17, paragraph 31.
      
      31 –	In Case C‑35/98 Verkooijen [2000] ECR I‑4071, paragraphs 43 to 45, the Court had already provided some guidance as to the meaning of these provisions,
         but that guidance concerned their immediate predecessor (Article 67 EC).
      
      32 –	See, to that effect, Verkooijen, cited in footnote 31, paragraph 43; Manninen, cited in footnote 30, paragraph 29; and Centro di Musicologia Stauffer, cited in footnote 17, paragraph 32.
      
      33 –	See, to that effect, Verkooijen, cited in footnote 31, paragraph 43; Manninen, cited in footnote 30, paragraph 29; and Centro di Musicologia Stauffer, cited in footnote 17, paragraph 32.
      
      34 –	See, to that effect, Opinion of Advocate General Kokott in Case C‑265/04 Bouanich [2006] ECR I‑923, point 30.
      
      35 –	See, to that effect, Opinion of Advocate General Kokott in Bouanich, cited in footnote 34, point 31. 
      
      36 –	See, to this effect, Manninen, cited in footnote 30, paragraph 36.
      
      37 –	See, to this effect, Case 270/83 Commission v France [1986] ECR 273, paragraph 20. See also Opinion of Advocate General Lenz in Case C‑250/95 Futura Participations and Singer [1997] ECR I‑2471, points 38 and 39.
      
      38 –	See, to that effect, Verkooijen, cited in footnote 31, paragraph 46; Manninen, cited in footnote 30, paragraph 29; Bouanich, cited in footnote 34, paragraph 38; and Centro di Musicologia Stauffer, cited in footnote 17, paragraph 32. 
      
      39 –	See, inter alia, Case C‑264/96 ICI [1998] ECR I‑4695, paragraph 26; Joined Cases C‑397/98 and C‑41 0/98 Metallgesellschaft and Others [2001] ECR I‑1727, paragraph 57; Case C‑436/00 X and Y [2002] ECR I‑10829, paragraph 61; Case C‑324/00 Lankhorst-Hohorst [2002] ECR I‑11779, paragraph 37; and Marks & Spencer, cited in footnote 18, paragraph 57.
      
      40 –	See, in particular, Futura Participations and Singer, cited in footnote 37, paragraph 31.
      
      41 –	See, for example, Case C‑334/02 Commission v France [2004] ECR I‑2229, paragraph 27. See also Opinion of Advocate General Léger in Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, point 85.
      
      42 –	See, inter alia, Case C‑334/02 Commission v France, cited in footnote 41, paragraph 27.
      
      43 –	Cited in footnote 37, paragraph 31.
      
      44 –	See, to that effect, Case C‑254/97 Baxter [1999] ECR I‑4809, paragraph 18, and Laboratoires Fournier, cited in footnote 17, paragraph 24.
      
      45 –	See, inter alia, ICI, cited in footnote 39, paragraph 26; Metallgesellschaft and Others, cited in footnote 39, paragraph 57; X and Y, cited in footnote 39, paragraph 61; Lankhorst-Hohorst, cited in footnote 39, paragraph 37; and Marks & Spencer, cited in footnote 18, paragraph 57.
      
      46 –	See Opinion of Advocate General Léger in Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, point 87.
      
      47 –	See, inter alia, ICI, cited in footnote 39, paragraph 26; X and Y, cited in footnote 39, paragraph 61; Lankhorst-Hohorst, cited in footnote 39, paragraph 37; Case C‑9/02 de Lasteyrie du Saillant [2004] ECR I‑2409, paragraph 50; and Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, paragraph 51.
      
      48 –	See to that effect, ICI, cited in footnote 39, paragraph 26; Lankhorst-Hohorst, cited in footnote 39, paragraph 37; de Lasteyrie du Saillant, cited in footnote 47, paragraph 50; Marks & Spencer, cited in footnote 18, paragraph 57; and Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, paragraph 51. 
      
      49 –	See to that effect, opinion of Advocate General Léger in Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, point 137.
      
      50 –	See to that effect, Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, paragraph 55.
      
      51 –	See Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, paragraph 54.
      
      52 –	See Opinion of Advocate General Mischo in de Lasteyrie du Saillant, cited in footnote 47, point 59.
      
      53 –	See to that effect, ICI, cited in footnote 39, paragraph 26; Metallgesellschaft, cited in footnote 39, paragraph 57; X and Y, cited in footnote 39, paragraphs 61 and 62; Lankhorst-Hohorst, cited in footnote 39, paragraph 37; de Lasteyrie du Saillant, cited in footnote 47, paragraphs 50 and 51.
      
      54 –	See, to that effect, Case C‑478/98 Commission v Belgium [2000] ECR I‑7587, paragraph 45, and Case C‑334/02 Commission v France, cited in footnote 41, paragraph 27.
      
      55 –	See, to that effect, Case C‑28/95 Leur-Bloem [1997] ECR I‑4161, paragraph 44.
      
      56 –	See, to that effect, Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, paragraph 70.
      
      57 –	According the observations of the French Government, this was stated by the Conseil constitutionnel (French Constitutional
         Council) in a decision of 29 December 1989.
      
      58 –	The legal regime of 1929 holdings has consistently been cited by the OECD as a harmful tax practice. See the 2006 update
         report of the OECD’s project on harmful tax practices, available at: http://www.oecd.org/dataoecd/1/17/37446434.pdf.
      
      59 –	Resolution of the Council and the Representatives of the Governments of the Member States, meeting within the Council of
         1 December 1997, on a code of conduct for business taxation (OJ 1998 C 2, p. 2). The latter concerns ‘those measures which
         affect, or may affect, in a significant way the location of business activity in the Community’ and contains a commitment
         by the Member States as to the standstill and rollback of such measures.
      
      60 –	That report is available on the internet at http://ec.europa.eu/taxation_customs/resources/documents/primarolo_en.pdf.
      
      61 –	See Opinion of Advocate General Léger in Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, point 57.
      
      62 –	Commission Decision of 19 July 2006 on aid scheme C 3/2006 implemented by Luxembourg for ‘1929’ holding companies and ‘billionaire’
         holding companies (OJ 2006 L 366 p. 47).
      
      63 –	See Opinion of Advocate General Léger in Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, point 58.
      
      64 –	In particular: Règlement grand-ducal du 24 mars 1989 précisant le secret bancaire en matière fiscale et délimitant le droit
         d’investigation des administrations fiscales (Grand-Ducal Regulation of 24 March 1989 providing for banking secrecy in tax
         matters and defining the scope of the investigative rights of the tax authorities) (Mém. A-15 du 28 mars 1989). Article 4
         provides that no information can be requested for the purpose of the taxation of the taxpayer from holding companies within
         the scope of the law of 31 July 1929. 
      
      	Article 5 states that with respect to such holding companies the right of supervision and investigation lies with the registration
         authority and is limited to inquiry into and examination of the facts and information regarding the fiscal status of the company
         and the information necessary to ensure and verify the proper and correct levying of taxes and duties for which the company
         is liable. 
      
      65 –	See, inter alia, Case C‑204/90 Bachmann [1992] ECR I‑249, paragraph 18; Halliburton, cited in footnote 11, paragraph 22; Case C‑136/00 Danner [2002] ECR I‑8147, paragraph 49; Case C‑422/01 Ramstedt [2003] ECR I‑6817, paragraph 42; Case C‑334/02 Commission v France, cited in footnote 41, paragraph 31; Cadbury Schweppes and Cadbury Schweppes Overseas, cited in footnote 28, paragraph 71; and Case C‑150/04 Commission v Denmark [2007] ECR I‑0000, paragraph 52. 
      
      66 –	See Bachmann, cited in footnote 65, paragraph 20; Case C‑300/90 Commission v Belgium [1992] ECR I‑305, paragraph 13; Case C‑334/02 Commission v France, cited in footnote 41, paragraph 32; and Commission v Denmark, cited in footnote 65, paragraph 54.
      67 –	See to this effect, Laboratoires Fournier, cited in footnote 17, paragraph 25, and Baxter, cited in footnote 44, paragraphs 19 and 20.
      
      68 –	See to this effect, Centro di Musicologia Stauffer, cited in footnote 17, paragraph 48.
      
      69 –	See, to this effect, Opinion of Advocate General Poiares Maduro in Marks & Spencer, cited in footnote 18, point 81.
      
      70 –	It appears to follow from the ‘Instruction administrative’ of 13 October 2000 (Bulletin officiel des impôts 7 Q‑1‑00) that
         a person will have to pay the disputed tax even when the identity of its shareholders is known to the French tax authorities.