CELEX: 62004CC0292
Language: en
Date: 2005-11-10
Title: Opinion of Mr Advocate General Tizzano delivered on 10 November 2005. # Wienand Meilicke, Heidi Christa Weyde and Marina Stöffler v Finanzamt Bonn-Innenstadt. # Reference for a preliminary ruling: Finanzgericht Köln - Germany. # Income tax - Tax credit for dividends paid by resident companies - Articles 56 EC and 58 EC - Limitation of the temporal effects of the judgment. # Case C-292/04.

OPINION OF ADVOCATE GENERAL
      TIZZANO
      delivered on 10 November 2005 1(1)
      
      Case C-292/04
      Wienand Meilicke
      Heidi Christa Weyde
      Marina Stöffler
      v
      Finanzamt Bonn-Innenstadt
      (Reference for a preliminary ruling from the Finanzgericht Köln (Germany))
      (Restrictions on the free movement of capital – Income tax – Tax credit on dividends paid by companies established in Germany – Temporal effect of a judgment delivered by the Court – Limits)1.     By order lodged on 9 July 2004, the Finanzgericht Köln (Cologne Finance Court) referred a question to the Court for a preliminary
         ruling to determine whether German legislation, under which taxpayers are granted a tax credit only on dividends paid to them
         by companies established in Germany, is compatible with Articles 56 EC and 58 EC.
      
      I –  Legal framework
      A –    The relevant Community provisions
      2.     As we know, Article 56(1) EC prohibits ‘all restrictions on the movement of capital between Member States and between Member
         States and third countries’.
      
      3.     However, Article 58 EC adds, with respect to that prohibition, that:
      ‘1. [it] shall be without prejudice to the right of Member States:
      (a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation
         with regard to their place of residence or with regard to the place where their capital is invested;
      
      (b) to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of
         taxation ... .
      
      …
      3. The [abovementioned] measures and procedures shall not constitute a means of arbitrary discrimination or a disguised restriction
         on the free movement of capital and payments as defined in Article 56.’
      
      B –    The relevant national provisions 
      4.     Under Paragraph 36(2)(3) of the Einkommensteuergesetz (Income Tax Law; ‘the EStG’), (2) in conjunction with the provisions of Paragraph 20 of that law, taxpayers may set off against income tax payable to the German
         tax authorities three sevenths of any dividends paid to them by companies established in Germany. No provision is made, however,
         for that mechanism, known as a tax credit, to apply to dividends paid by companies established in other Member States.
      
      5.     The proportion of tax which companies established in Germany are required to pay on their profits is 30%. Thus the tax credit
         prevents those profits from being taxed for a second time when they are distributed to shareholders in the form of dividends. (3)
      
      6.     It should be noted that, under Paragraph 36(2)(3) of the EStG, the tax credit on profits distributed by German companies is
         granted even if the companies have not actually paid the tax due.
      
      7.     I note, lastly, that by a law adopted in 2000 (4) and applicable from the fiscal year 2001, the Federal Republic of Germany abandoned that system in favour of the so-called
         ‘half income procedure’ (Halbeinkünfteverfahren), under which only half of the dividends received by a shareholder are subject
         to income tax. This method enables the double taxation of dividends to be avoided, or at least greatly reduced, without recourse
         to the granting of tax credits. (5)
      
      II –  Facts and procedure
      8.     Between 1995 and 1997, Mr Meilicke, a German citizen resident in Germany who had shares in Netherlands and Danish companies,
         received DEM 16 984.85 by way of dividends paid by those companies.
      
      9.     By letter of 30 October 2000, the heirs of Mr Meilicke who had died in the meantime applied to the competent tax authority
         (the Finanzamt Bonn-Innenstadt) for a tax credit amounting to three sevenths of the abovementioned figure, arguing that, although
         the national legislation on the subject relates only to dividends paid by companies established in Germany, the extension
         of that mechanism to dividends paid by companies established in other Member States is required by Community law as interpreted
         by the Court in the judgment in Verkooijen. (6)
      
      10.   The tax authority refused that request on the ground that that judgment related only to the Netherlands tax legislation and
         it had not been established that it was the same as the German legislation.
      
      11.   The heirs of Mr Meilicke then applied to the Finanzgericht Köln which, although it had serious doubts as to whether the national
         legislation is compatible with the free movement of capital, nevertheless noted that the German legislative and administrative
         authorities do not consider themselves to be bound by Community case-law that is not directly concerned with national law.
         It therefore considered it necessary to stay the proceedings and refer the following question to the Court for a preliminary
         ruling:
      
      ‘Is Paragraph 36(2)(3) of the Einkommensteuergesetz (in the version in force during the relevant years), whereby only corporation
         tax payable by a fully taxable corporation or association amounting to three sevenths of the income within the meaning of
         Paragraph 20(1)(1) or (2) of the Einkommensteuergesetz is set off against income tax, compatible with Articles 56(1) EC and
         58(1)(a) and (3) EC?’
      
      12.   In the proceedings thus instituted, written observations have been submitted by the applicants in the main proceedings, the
         German Government and the Commission. The same parties, together with the United Kingdom Government, attended the hearing
         held on 8 September 2005.
      
      III –  Assessment
      The compatibility of the contested German legislation
      13.   The national court is seeking essentially to ascertain whether the Community rules on the free movement of capital permit
         the German tax system to restrict the grant of the tax credit to taxpayers who receive dividends from companies established
         in Germany.
      
      14.   The applicants in the main proceedings and the Commission consider that the answer should be in the negative, while the German
         and United Kingdom Governments take the opposite view.
      
      15.   For my own part, I believe the answer to the question may be largely determined by the recent judgment in Manninen, (7) a judgment in which the Court ruled on an almost identical question but which the national court could not take into account
         because it was delivered after the order for reference was lodged. 
      
      16.   In that judgment, the Court, ruling on Finnish legislation very similar to the German legislation at issue in the present
         case, held that by restricting the tax credit to dividends distributed by companies established in Finland that legislation,
         on the one hand, deterred fully taxable persons in that State from investing their capital in companies established in another
         Member State (paragraph 22) and, on the other, constituted an obstacle to such companies raising capital in Finland (paragraph
         23). It followed that the legislation at issue in that case was to be regarded as incompatible with Community law inasmuch
         as it ‘constitute[d] a restriction on the free movement of capital which is, in principle, prohibited by Article 56 EC’ (paragraph
         24).
      
      17.   On the other hand, the Court did not consider that the conditions which, according to its own case-law, might justify such
         restrictions were met in that case. As we know, according to that case-law, ‘for national tax legislation … which … makes
         a distinction between revenue from national dividends and that from foreign dividends to be capable of being regarded as compatible
         with the Treaty provisions on the free movement of capital, the difference in treatment must [(i)] concern situations which
         are not objectively comparable or [(ii)] be justified by overriding reasons in the general interest, such as the need to safeguard
         the coherence of the tax system (Verkooijen, paragraph 43)’ (paragraph 29).
      
      18.   With regard to the first point, the Court noted that the Finnish legislation was designed to prevent double taxation of dividends.
         Therefore, the situation of someone who invests in ‘national’ companies may differ from that of someone who invests in companies
         established elsewhere in the Community only if the Member State in which the ‘foreign’ company is established has already
         avoided the risk of double taxation by, for example, excluding profits distributed by the company in the form of dividends
         from the basis of assessment for corporation tax. As that was not the case on that occasion, the Court held that that justification
         did not apply (paragraphs 35 to 37).
      
      19.   With regard to the second point, the Court observed that ‘the cohesion of [the national] tax system is assured as long as
         the correlation between the tax advantage granted in favour of the shareholder and the tax due by way of corporation tax is
         maintained. Therefore, … the granting to a shareholder who is fully taxable in Finland and who holds shares in a company established
         in Sweden of a tax credit calculated by reference to the corporation tax owed by that company in Sweden would not threaten the cohesion of the Finnish tax system’ (paragraph 46, emphasis added).
      
      20.   Turning now to the case at issue in the present proceedings, it seems to me, first, that by restricting the grant of the tax
         credit to dividends paid by companies established in Germany, the German legislation in question restricts the free movement
         of capital in the same way as the Finnish legislation examined in Manninen did.
      
      21.   Then, as regards the possible justifications for that restriction of which I have just spoken (see point 17 et seq. above)
         I note, first, that in the present case, too, the types of dividend which are the subject of the unequal treatment at issue
         have the same characteristics, that is to say they are ‘objectively comparable’. Indeed, since the Member States in which
         the companies which have paid dividends to Mr Meilicke are established (Netherlands and Denmark), like Sweden in the Manninen case, do not restrict the basis of assessment for corporation tax to such profits as were not distributed, it follows that
         shareholders residing in Germany are in a comparable situation, whether they receive dividends from a company established
         in that State or receive them from a company established in another Member State. That is to say, in both cases, the relevant
         income of the persons in question is subject first to corporation tax and then, if it is distributed in the form of dividends,
         to income tax payable by the recipients of the dividends.
      
      22.   Nor do I think a different conclusion can be drawn from the precedent of the judgment in D.,(8) which the United Kingdom cited at the hearing precisely in connection with the criterion of ‘objective comparability’ of
         the relevant situations. According to the United Kingdom Government, if I have understood it rightly, it follows from that
         judgment that, for the purposes of extending possible tax advantages, situations may be regarded as comparable only within
         the parameters of a definite legal framework such as (in that case) a double taxation convention.
      
      23.   I confess that I do not fully understand the reason for citing that precedent or the conclusions that are drawn from it. It
         seems to me that the situations considered in D. were very different from those in the present case, since it was concerned in particular with the extension of the benefit
         of wealth-tax allowances to non-residents and the question whether the benefits of a bilateral double taxation convention
         may be enjoyed by Community citizens who are residents of a State which is not party to that convention.
      
      24.   In any event, even supposing that judgment to be relevant for the purposes of the problem at issue in this case, the fact
         remains that it relates to a highly specific and particular case and is therefore not capable of general application. In any
         event, it certainly does not permit the conclusion that, as a general rule, the application of fundamental rules of Community
         law such as the rules on the free movement of capital may depend upon the existence of bilateral conventions between Member
         States.
      
      25.   Coming now to the other justification mentioned above, based on the need to safeguard the cohesion of the tax system, I do
         not consider that the German Government can rely on that argument either in the present case. That cohesion is in fact assured,
         according to the precepts of the judgment in Manninen, as long as ‘the correlation between the tax advantage granted in favour of the shareholder and the tax due by way of corporation
         tax is maintained’ (paragraph 46). In the present case, it is assured in particular by the fact that the calculation of the
         tax credit to be granted to the heirs of Mr Meilicke takes into account the amount that the Danish and Netherlands companies
         in which the deceased was a shareholder actually paid in Denmark and the Netherlands by way of corporation tax.
      
      26.   Nor on the other hand is it relevant, contrary to the German Government’s contention, that the German legislation at issue
         in this case, unlike the Finnish legislation, provides that the tax credit on dividends paid by German companies is to be
         granted whether or not the said companies have in fact paid tax on the profits (see point 6 above).
      
      27.   That feature of the system of granting the tax credit – so the German Government maintains – is explained by the fact that,
         in the case of companies established in Germany, the tax authorities can easily ascertain whether the tax owed by companies
         has already been paid and, if not, it is equally easy for them to collect it. As that would not be possible in the case of
         companies established in other Member States, dividends paid by those companies should not enjoy the benefit of a tax credit.
      
      28.   I note however that the judgment in Manninen requires national authorities to grant a credit corresponding to the tax actually paid by companies in the Member States in which they are established ‘as such tax arises from the general rules on calculating
         the basis of assessment and from the rate of corporation tax’ in those States. In any event, that judgment emphasises that
         ‘[p]ossible difficulties in determining the tax actually paid cannot … justify an obstacle to the free movement of capital’
         such as that which arises from the national legislation at issue (paragraph 54).
      
      29.   Lastly, I note that, to carry out the necessary investigations, the German authorities can employ the instruments for cooperation
         between tax authorities provided for in Directive 77/799/EEC, (9) which permit the exchange of any information that may enable them to effect a correct assessment of taxes on income and on
         capital of natural and legal persons. In fact, as the Court has pointed out, that directive ‘provides for ways of obtaining
         information comparable to those existing between tax authorities at national level’. (10)
      
      30.   In the light of the foregoing considerations, I therefore propose that the Court reply to the question referred for a preliminary
         ruling in the terms employed in the judgment in Manninen, that is to say that ‘Articles 56 EC and 58 EC preclude legislation whereby the entitlement of a person fully taxable in
         one Member State to a tax credit in relation to dividends paid to him by limited companies is excluded where those companies
         are not established in that State’. (11)
      
      The temporal effect of the Court’s judgment
      31.   That being said, a position must still be taken on the request, submitted by the German Government in the alternative, to
         limit the temporal effect of the final judgment in the present case, should the Court rule – as I have just proposed – that
         the contested national legislation is incompatible.
      
      32.   In this connection, it should be noted first that according to the settled case-law of the Court, ‘the interpretation the
         Court gives to a rule of Community law is limited to clarifying and defining the meaning and scope of that rule as it ought
         to have been understood and applied from the time of its coming into force. … It is only exceptionally that the Court may,
         in application of the general principle of legal certainty inherent in the Community legal order, be moved to restrict the
         possibility for any person concerned of relying on a provision it has interpreted with a view to calling in question legal
         relationships established in good faith’. (12)
      
      33.   From that point of view, the Court explains that the financial consequences which might ensue for a Member State from a preliminary
         ruling do not in themselves justify limiting the temporal effect of the ruling. (13)
      
      34.   Such a limitation may however be imposed only in exceptional circumstances, if the following conditions are met, that is:
      (i) if there is ‘a risk of serious economic repercussions owing in particular to the large number of legal relationships entered
         into in good faith on the basis of rules considered to be validly in force’. (14) And this also applies in cases where taxes collected by the competent national authorities are being called in question; (15)
      
      (ii) and if ‘both individuals and national authorities [have] been led into adopting practices which [do] not comply with
         Community legislation by reason of objective, significant uncertainty regarding the implications of Community provisions, to which the conduct of other Member States or the Commission may even
         have contributed’. (16)
      
      35.   In the present case, the first condition could be said to have been met if the official figures supplied by the German Government
         are correct. It has estimated – and the estimate has not been challenged – that the refunds to be granted in the event of
         failure to limit the effect of a ruling of incompatibility would amount to EUR 9 to 13 billion (or 0.41% to 0.59% of the national
         GDP in 2004). It is true that that figure was reduced at the hearing to EUR 5 billion (or 0.25% of the GDP in 2004) in view
         of the fact that, as a result of changes in national tax procedures, unpaid tax credits can be claimed only in respect of
         dividends paid after 1998. Even so, it seems to me that the sums involved are considerable and are in any case such as to
         entail a ‘risk of serious economic repercussions’.
      
      36.   It appears less obvious that the second of the abovementioned conditions is met. It appears from the documents in the case
         that the Commission notified the German Government, by letter of 31 October 1995, that the legislation on the tax credit was
         in breach of Community law. It can therefore be concluded that the condition in question has not been satisfied in the present
         case, since the objective, significant uncertainty required by the abovementioned case-law was lacking.
      
      37.   I must however point out that that letter of 1995 was not followed by any subsequent action on the part of the Commission.
         In the observations submitted to the Court, it stated that it had not initiated proceedings for failure to fulfil an obligation
         since the German legislation on the tax credit had by then been repealed. In fact, however, the reform by which the German
         legislature introduced a new and different tax system, which did not provide for tax credits, came in only with the abovementioned
         law of 2000 (see point 7 above). Thus the Commission took no further action for a substantial period of time after its warnings.
      
      38.   However, the Court observed in its judgment in Defrenne II that ‘[t]he fact that, in spite of the warnings given, the Commission did not initiate proceedings … on grounds of failure
         to fulfil an obligation was likely to consolidate the incorrect impression as to the effects’ of the Community rule which
         had allegedly been breached. (17)
      
      39.   It could therefore be argued by analogy that, in the present case too, the Commission may have caused objective uncertainty
         as to whether the national legislation on the tax credit was likely to restrict the free movement of capital. 
      
      40.   Especially since, as the Commission itself recognised at the hearing (although it was in fact a widely held view), (18) until the judgment in Verkooijen, the implications of the rules on the free movement of capital for tax arrangements of the kind at issue in the present case
         were not at all clear. That that uncertainty was real and not feigned appears to be further confirmed by the fact that the
         German Government immediately took steps to bring all pre-existing legislation into line with that judgment, once it had been
         delivered.
      
      41.   It therefore seems to me that there is ample reason to hold that the conditions for limiting the temporal effect of a ruling
         that the German legislation is incompatible are met. 
      
      42.   I may also add some more general remarks to the same effect which, in a sense, follow from the criteria laid down in the abovementioned
         case-law of the Court. It is true that, according to that case-law, a decision to limit the effect of a judgment may be taken
         only in exceptional circumstances. Consequently, it may also be inferred from that case-law that such a decision must take
         into account the need not to make the situation of Member States more difficult than is strictly necessary. The primary aim
         and purpose of the system are to ensure and, if possible, re-establish respect for the law. Where those aims cannot be usefully
         pursued, there is no reason to bring into play stricter criteria, which at that point would merely express punitive intentions,
         that is to say the intention to ‘punish’ the ‘offender’ for daring to breach Community law (something of the kind is to be
         found in the new Article 228 EC, but for completely different purposes and in completely different circumstances). But such
         objectives, although this is not always evident in practice, are completely foreign to the system whereas it is consistent
         with the system (and with the abovementioned case-law of the Court) to avoid adverse effects on the Member States where not
         strictly necessary. It should be noted moreover that those States, being extremely complex and highly articulated structures,
         generally have serious difficulties in coping with the incessant and not always transparent Community legislation; the efforts
         they make to comply, successfully in the great majority of cases, are therefore laudable. It is right that, when they fail,
         the Commission and the Court should not be induced by those difficulties to refrain from pursuing or, worse still, to excuse
         any breaches that may occur; however, it is not right to fail to take them into account when the aims of the system can be
         pursued without the need for attaching penalties or in any case without making the already complicated situation of the State
         more difficult unnecessarily (on the other hand, the same could be said of breaches that are purely formal or at least relatively
         insignificant).
      
      43.   If, in the light of the foregoing considerations, the Court holds that the conditions for limiting the temporal effect of
         its judgment are met, it will then remain to be determined when that effect should become operative. Moreover, I should point
         out that, in view of the particular characteristics of the present case, the task will prove to be harder than was thought.
      
      44.   I note, first, that the German Government has proposed that, in the event of the Court accepting the requested limitation,
         the effect of the judgment should become operative: (a) on the expiry of a time-limit to be set by the Court itself, to give
         the Member States time to harmonise their tax systems or to coordinate, by means of international agreements, the charging
         of corporation tax and tax on dividends in the cases at issue; (b) in the alternative, ‘in future’ without further specification,
         although at the hearing the idea was canvassed that the effect should become operative on the date of the hearing or the date
         of publication of the order for reference which gave rise to the present proceedings; (c) in the final alternative, as from
         6 June 2000, that is to say the date of the judgment in Verkooijen.
      
      45.   I must rule out from the outset any notion that the first request might be granted. Not because the Court might not, in certain
         circumstances, set a time-limit for the Member States to allow them to achieve the results indicated by the German Government.
         As we know, a similar solution was advanced in completely reasonable and convincing terms by Advocate General Jacobs in his
         Opinion in Banca popolare di Cremona. (19) However, the fact is that in the present case the outcome would be so uncertain and, on the most favourable assumption, so
         long drawn out as to render that solution scarcely credible, still less practicable.
      
      46.   But apart from that, the request is open to the same objections as the second and subordinate alternative suggested by the
         German Government, that is that the effect of the judgment in the present case should become operative on the date on which
         it is delivered (or possibly on the date of the hearing or the date of publication of the order for reference). If it is assumed
         that in fact the correct interpretation of Community law has already been given in the judgment in Verkooijen, those German requests would, in principle, entail condoning unlawful conduct on the part of a State in a situation that
         is undoubtedly contrary to Community law and would consequently authorise the unjustified refusal to refund taxes levied in error.
      
      47.   But there is a further objection. It should be noted that, with regard to a limitation on the temporal effect of a judgment,
         ‘the Court has consistently held [that] such a restriction may be allowed only in the actual judgment ruling upon the interpretation
         sought’. (20) However, that would not apply in the present case since, as I have pointed out more than once, the interpretation of the
         Community rules from which it follows that the German legislation at issue in the present case is unlawful is based essentially
         on the judgment in Verkooijen and a limitation of the temporal effect of that judgment was neither requested nor automatically granted.
      
      48.   It seems to me, therefore, that the only one of the German Government’s requests that is compatible with those principles
         is the request – made only as a final alternative – that the limit on the effect of the judgment in the present case should
         become operative as from 6 June 2000, that is to say the date of the judgment in Verkooijen.
      
      49.   It would in effect be a matter of making up for the absence of a ruling on the point in that judgment and of settling the
         problem once and for all, without however departing essentially from the principle established in the case-law of the Court,
         since the effects would still arise from the ‘actual judgment ruling upon the interpretation sought’.
      
      50.   One consequence of that solution would be that everyone receiving dividends after that date from companies not established in Germany would be entitled to the tax credit. However, again in accordance with the case-law
         of the Court, an exception should be made in the case of the rights of those who took action before the judgment in Verkooijen to claim the tax credit or to challenge a decision to refuse it. (21)
      
      51.   That being said, I should nevertheless add that there is good reason to suppose that, on this last point, the question cannot
         be held to have been entirely and equitably resolved. It is true that the proposed solution, with the substantial proviso
         mentioned, would have the merit of accurately transposing to the present case the Court’s case-law on limiting the temporal
         effect of a judgment. However, I am also convinced that, in view of the characteristics of the present case, it will have
         to be further and more precisely defined.
      
      52.   I note first that, in the terms given, that solution would not be of much practical use. Indeed, as I mentioned earlier, the
         problem of granting tax credits should no longer arise in the case of dividends maturing after the abovementioned law of 2000
         (see point 7 above), whereas it is clear from the present proceedings that it apparently persists precisely in the case of
         dividends distributed before that law was adopted.
      
      53.   Also, and in my view this is a more important argument, it should be borne in mind that the proposed solution is based on
         a temporal disjunction between the ‘judgment ruling upon the interpretation sought’ and the judgment determining the limit
         on the effect of that judgment. If, in fact, for reasons of legal consistency the effect of the interpretation sought were
         to apply retroactively from the date of the first judgment, the temporal limitation would nevertheless still have to be confirmed
         by the judgment the Court delivers in the present proceedings.
      
      54.   In that situation, therefore, to set the date of the judgment in Verkooijen as the time by which the persons entitled to a tax credit must assert their rights would, in my view, fail to take due account
         of that disjunction; and this might, in particular, penalise them by increasing the duty of diligence they are required to
         show and making that duty, in a sense, even more onerous than the duty incumbent on the Commission.
      
      55.   Therefore, to avoid that result and at the same time ensure that the judgment in the present case is of real use, I think
         the most reasonable solution would be to make an exception in the case of the rights of those who took action before the judgment
         in Verkooijen and also of those who showed due diligence at a later date, provided of course that their rights are not time-barred.
      
      56.   It is not entirely clear when that ‘later date’ might be. It is of course natural to think of the date of the judgment concluding
         the present proceedings; in my view, however, on careful consideration that solution would not be the most consistent with
         the criteria I mentioned earlier.
      
      57.   According to the information that has emerged in the course of the present proceedings, in the German system taxpayers who
         have not applied for tax credits in relation to dividends entered in their tax returns may do so, as long as the relevant
         file is still being examined by the tax authorities and is therefore not deemed to be finally closed. As that phase apparently
         lasts for seven years on average, it follows that tax credits could still be claimed today in relation to dividends declared
         in 1998.
      
      58.   As the parties, particularly (but not exclusively) the German Government, have noted, the reports of the initiation of the
         present proceedings published in specialist journals have caused a widespread revival of interest in the question. So the
         prospect of a temporal limit on the effect of the judgment in this connection, and above all the possibility of an exception
         being made for the benefit of taxpayers who took action before the judgment is delivered, has apparently already resulted
         in a substantial increase and may yet result in a further increase in applications for reimbursement from the many taxpayers
         whose rights, as I have just pointed out, are not time-barred.
      
      59.   However, such developments are likely to increase the ‘risk of serious economic repercussions’ which was the reason why I
         proposed a limit on the effect of the judgment in this case. In the light of the foregoing remarks, if the final date for
         filing applications for reimbursement were to be the date of the judgment in the present case, hardly any applications would
         be barred, either from those who received dividends after the judgment in Verkooijen or from those who received them before that date, that is to say whether the application was submitted before that judgment
         or arrived on the eve of the judgment in the present case. In short, it would come to a general reimbursement and the amounts
         paid out by the State would reach the levels that had been feared, depriving the proposed limitation of any useful effect.
      
      60.   So, what solution can be suggested in this situation that will remain within the ambit of the principles and limits defined
         earlier and hold the balance between the conflicting interests? It seems to me that the only reasonable answer to that question
         is to set the limit on applications for reimbursement with reference to the degree of diligence shown by the persons concerned
         after the judgment in Verkooijen.
      
      61.   On that criterion, the benefits conferred by the judgment in the present case should not, in my view, be extended to persons
         who for years have made no move to claim the actual tax credit or to challenge the decision to refuse it and who now, attracted
         by the promise of the judgment in the present case, are suddenly prompted to take their long dormant claims off the shelf
         and dust them down.
      
      62.   If the Court agrees with this analysis, it seems to me that the date to be taken as a reference point should be, as concluded
         in the course of the hearing, the date on which the order for reference which gave rise to the present proceedings was published
         in the Official Journal of the European Union, (22) that is to say 11 September 2004. This is because it can reasonably be supposed that that is the date on which the possibility
         of a refund first received adequate publicity and attracted the attention even of the less diligent claimants.
      
      63.   So, seeking to draw together the threads of the foregoing conclusions, I feel I may finally propose that the Court rule that
         the contested German legislation is incompatible with effect from 6 June 2000, the date on which the judgment in Verkooijen was delivered, and that it cannot be relied upon to obtain tax credits relating to dividends received before that judgment,
         except in the case of the rights of those who took action to claim the tax credit or to challenge a decision to refuse it
         before that judgment was delivered and up to 11 September 2004, the date on which the order for reference which gave rise
         to the present proceedings was published in the Official Journal of the European Union, provided that their rights are not time-barred under the national law.
      
      IV –  Conclusion
      64.   In the light of the foregoing considerations, I propose that the Court give the following answer to the question referred
         by the Finanzgericht Köln for a preliminary ruling:
      
      (1)      Articles 56 EC and 58 EC preclude legislation whereby the entitlement of a person fully taxable in one Member State to a tax
         credit in relation to dividends paid to him by limited companies is excluded where those companies are not established in
         that State.
      
      (2)      The legislation is incompatible with effect from 6 June 2000, the date on which the judgment in Case C-35/98 Verkooijen was delivered. It cannot be relied upon to obtain tax credits relating to dividends received before that judgment, except
         in the case of the rights of those who took action to claim the tax credit or to challenge a decision to refuse it before
         that judgment was delivered and up to 11 September 2004, the date on which the order for reference which gave rise to the
         present proceedings was published in the Official Journal of the European Union, provided that their rights are not time-barred under the national law.
      
      1 –	Original language: Italian.
      
      2 –	The last time the law in question was published in full was in BGBl. I 1990, p. 1898. At the material time, it had been
         amended by Paragraph 1 of the Gesetz zur Verbesserung der steuerlichen Bedingungen zur Sicherung des Wirtschaftsstandorts
         Deutschland im Europäischen Binnenmarkt (Law on the improvement of tax conditions to secure Germany’s economic position in
         the European internal market, Standortssicherungsgesetz – StandOG) (BGBl. I 1993, p. 1569) and by Paragraph 1 of the Jahressteuergesetz
         1996 (Annual Tax Law 1996, JStG 1996) (BGBl. I 1995, p. 1250).
      
      3 –	Supposing, for example, that a company makes a gross profit of EUR 100 on each share, it has to pay EUR 30 in profits tax
         on each share. If the remaining EUR 70 is distributed as dividends, the shareholders will be granted a tax credit amounting
         to three sevenths of EUR 70, that is to say EUR 30, a figure corresponding exactly to the amount already paid by the company.
      
      4 –	Gesetz zur Senkung der Steuersätze und zur Reform der Unternehmensbesteuerung (Law on the reduction of tax rates and the
         reform of corporation tax, Steuersenkungsgesetz – StSenkG) of 23 October 2000 (BGBl. I 2000, p. 1433).
      
      5 –	In a communication to the Council, the European Parliament and the European Economic and Social Committee of 19 December
         2003 – Dividend taxation of individuals in the internal market (COM(2003) 810 final), the Commission explained that this method
         could achieve the same result as the [tax credit] system for high-income taxpayers, while it would be possible to exempt more
         than half of the dividend for lower-income taxpayers (point 2.2.2).
      
      6 –	Case C-35/98 [2000] ECR I-4071.
      
      7 –	Case C-319/02 [2004] ECR I-7477.
      
      8 –	Case C-376/03 [2005] ECR I‑5821.
      
      9 –	Council directive of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in
         the field of direct taxation (OJ 1977 L 336, p. 15).
      
      10 –	Case C-279/93 Schumacker [1995] ECR I-225, paragraph 45.
      
      11 –	See the operative part of the judgment in Manninen.
      
      12 –	See, most recently, Case C-209/03 Bidar [2005] ECR I‑2119, paragraphs 66 and 67. See also the Opinion of Advocate General Jacobs in Case C-475/03 Banca popolare di Cremona [2006] ECR I-0000, point 75.
      
      13 –	Bidar, paragraph 68, and Joined Cases C-367/93 to C‑377/93 Roders and Others [1995] ECR 
         I-2229, paragraph 48, Case C-137/94 Richardson [1995] ECR I-3407, paragraph 37, Joined Cases C-197/94 and C-252/94 Bautiaa and Société française maritime [1996] ECR I‑505, paragraph 55, and Case C‑184/99 Grzelczyk [2001] ECR I-6193, paragraph 52.
      
      14 –      See Bidar, paragraph 69.
      
      15 –      See, for example, Case C-437/97 EKW and Wein & Co. [2000] ECR I-1157, paragraph 59.
      
      16 –      See Bidar, paragraph 69 (emphasis added). See also the Opinion of Advocate General Jacobs in Banca popolare di Cremona, point 75.
      
      17 –	Case 43/75 Defrenne(‘Defrenne II’) [1976] ECR 455, paragraphs 71 to 75. See also, to the same effect, Case C-163/90 Legros and Others [1992] ECR I-4625, paragraph 32, and EKW and Wein & Co., paragraph 58.
      
      18 –	See, for example, the Opinion of Advocate General Kokott in Manninen, point 36.
      
      19 –	Opinion, point 85 et seq.
      
      20 –	Case 24/86 Blaizot [1988] ECR 379, paragraph 28; Legros and Others, paragraph 30; and EKW and Wein & Co., paragraph 57. See also, to the same effect, Case C-262/88 Barber [1990] ECR I-1889, paragraph 41.
      
      21 –	See, to that effect, Case C-228/92 Roquette Frères [1994] ECR I‑1445, paragraphs 26 to 29, and Case C‑212/94 FMC and Others [1996] ECR I-389, paragraph 58.
      
      22 –		OJ 2004 C 228, p. 27.