CELEX: 62005CC0101
Language: en
Date: 2007-09-11 00:00:00
Title: Opinion of Mr Advocate General Bot delivered on 11 September 2007. # Skatteverket v A. # Reference for a preliminary ruling: Regeringsrätten - Sweden. # Free movement of capital - Restriction on the movement of capital between the Member States and third countries -Tax on revenue from capital -Dividends received from a company established in an EEA Member State - Exemption - Dividends received from a company established in a third country - Exemption subject to the existence of a taxation convention providing for the exchange of information - Effectiveness of fiscal supervision. # Case C-101/05.

OPINION OF ADVOCATE GENERAL
      BOT
      delivered on 11 September 2007 1(1)
      
      Case C‑101/05
      Skatteverket
      v
      A
      (Reference for a preliminary ruling from the Regeringsrätten (Sweden))
      (Free movement of capital – Relations with a third country – Tax legislation – Taxation of dividends distributed in the form of shares in a subsidiary – Concept of ‘restriction on movement of capital’ – Justification – Effectiveness of fiscal supervision)1.     Free movement of capital, unlike the other freedoms of movement established by the EC Treaty, does not apply solely between
         Member States. It also prohibits restrictions on the movement of capital between Member States and third countries. In the
         current reference for a preliminary ruling, the Court is being called upon to rule on whether such freedom of movement has
         the same scope in relations between Member States and third countries as it has in intra-Community relations.
      
      2.     These proceedings are based on a dispute over the granting to a natural person living in Sweden of exemption from income tax
         in respect of dividends that were distributed to him by a company established in Switzerland in the form of shares it holds
         in a subsidiary.
      
      3.     Under the relevant Swedish legislation, that exemption is subject to a number of conditions. The Kingdom of Sweden, considering
         that it should be able to check compliance with those conditions where the distributing company is established abroad, has
         stipulated that such exemption may be granted only if the distributing company is established in a State within the European
         Economic Area (EEA) or in a State with which Sweden has concluded a taxation convention that contains a provision on exchange
         of information.
      
      4.     The point at issue is whether such legislation should be regarded as a restriction on the movement of capital within the meaning
         of Article 56(1) EC and, if so, whether that restriction may be justified.
      
      5.     In this Opinion, I shall contend that the concepts of ‘movement of capital’ and ‘restriction’ used in Article 56(1) EC should
         have the same scope in the case of transactions between Member States and third countries as in the case of relations between
         Member States. I shall conclude from this that the national legislation at issue does indeed constitute a restriction on the
         movement of capital within the meaning of that provision.
      
      6.     I shall then consider the extent to which that restriction may be justified.
      7.     It will be recalled that the need to guarantee the effectiveness of fiscal supervision may justify a restriction on the free
         movement of capital, provided the measure in question is appropriate for the purpose of achieving that objective and does
         not go beyond what is necessary for that purpose. I shall also state that, in relations between Member States and third countries,
         this ground for restriction may justify a tax advantage being conditional upon the existence of a convention providing for
         the exchange of information where that advantage is subject to conditions under national law and the tax authorities of the
         Member State concerned are not in a position to check compliance with those conditions using their own resources.
      
      8.     I shall conclude from this that the restriction at issue does comply with Articles 56 EC and 58 EC if the national court finds
         that the exemption from income tax in respect of dividends distributed in the form of shares in a subsidiary is subject to
         conditions and, in order to check compliance with those conditions, the national tax authorities require information which
         can be obtained only by the competent tax authorities of the country in which the distributing parent company is established.
      
      I –  National legislation
      9.     Under Swedish Law No 1229 of 1999, (2) dividends paid to a natural person by a limited liability company are normally subject to income tax.
      
      10.   Under Paragraph 16 of Chapter 42 of the Swedish Law, dividends distributed by a Swedish limited liability company in the form
         of shares in a subsidiary are not included in taxable income provided:
      
      (1)      the distribution is made in proportion to the number of shares held in the parent company;
      (2)      the shares in the parent company are quoted on the Stock Exchange;
      (3)      all the parent company’s shares in the subsidiary are distributed;
      (4)      the shares in the subsidiary after the distribution are not held by any undertaking that belongs to the same group as the
         parent company;
      
      (5)      the subsidiary is a Swedish limited liability company or a foreign company; and
      (6)      the subsidiary’s business activity consists primarily in trading or, directly or indirectly, holding shares in undertakings
         that primarily conduct trading and in which the subsidiary, directly or indirectly, holds shares with a total number of votes
         corresponding to more than half the number of votes for all the shares in the undertaking.
      
      11.   Those provisions entered into force for the first time in 1992 and apply only to profits distributed by Swedish limited liability
         companies. Those provisions were repealed in 1994 and then reintroduced in 1995.
      
      12.   The Swedish Government explains that that legislation was adopted in order to facilitate the restructuring of undertakings
         and the dividing-up of companies. As a result of that legislation, a shareholder who receives profits from a distributing
         parent company in the form of shares which that company holds in a subsidiary may defer taxation of the profits thus distributed
         until the shares received have been sold.
      
      13.   According to the Swedish Government, such distribution of profits is not taxed because the shares held in the parent company
         are regarded as having lost the value represented by the shares in the subsidiary. In reality, the only effect of the distribution
         is that the indirect owners of the subsidiary become its direct owners, without any alteration in the value of the shares
         held. At the time of distribution, the purchase price of shares in the parent company is divided between those shares and
         the shares in the subsidiary. At the time of sale, the capital gain or loss is therefore determined on the basis of the corresponding
         fraction of the purchase price.
      
      14.   Under Paragraph 16a of Chapter 42 of the Swedish Law, added in 2001, the exemption provided for in Paragraph 16 of that chapter
         also applies if the distribution of shares is carried out by a foreign company which corresponds to a Swedish limited liability
         company and is established in a State within the EEA or in a State with which the Kingdom of Sweden has concluded a taxation
         convention that contains a provision on exchange of information.
      
      15.   On 7 May 1965, the Swiss Confederation and the Kingdom of Sweden concluded a convention for the avoidance of double taxation
         in respect of taxes on income and capital. (3) The division of the power to tax dividends is governed by Article 10 of that Convention. (4)
      
      16.   The Convention does not contain a provision on exchange of information between the competent authorities of the two Contracting
         States. Article 27 of the Convention provides for an amicable procedure between the authorities with a view to the avoidance
         of taxation which is not in accordance with the provisions of the Convention and to resolve any difficulties or doubts arising
         as to the interpretation or application of those provisions. (5)
      
      17.   Moreover, it is clear from paragraph 5 of the record of negotiations and initialling in connection with the conclusion of
         the Convention that the Swiss delegation considered that the only information that could form the subject of an exchange was
         that needed in order to ensure proper application of the Convention and that which would prevent improper application of it.
         It is clear from the same paragraph that the Kingdom of Sweden took formal note of that explanation and did not seek to include
         in the Convention any express provision on exchange of information.
      
      18.   Furthermore, on 17 August 1993, an arrangement was concluded between the Swiss Confederation and the Kingdom of Sweden (the
         ‘Arrangement’) concerning the implementation of Articles 10 and 11 of the Convention. (6) That Arrangement lays down, first, the procedure to be followed by an individual to obtain tax relief under Articles 10 and
         11 and, second, the way in which such applications are to be dealt with by the tax authorities of the Contracting States.
      
      II –  The dispute in the main proceedings and the question referred for a preliminary ruling
      19.   A, a natural person residing in Sweden, owns shares in company X, with its registered office in Switzerland, which is considering
         distributing the shares it holds in one of its subsidiaries. A applied to the Skatterättsnämnden (Revenue Law Commission)
         for a preliminary decision on whether such a distribution was exempt from tax. A stated that X corresponded to a Swedish limited
         liability company and the conditions for tax exemption imposed by the Law, other than those relating to the location of the
         registered office of the company, were satisfied.
      
      20.   In a preliminary decision delivered on 19 February 2003, the Skatterättsnämnden responded that the distribution contemplated
         should be exempt from tax under the Treaty provisions on free movement of capital.
      
      21.   On the one hand, it considered that the condition laid down in Paragraph 16a of Chapter 42 of the Swedish Law, concerning
         the existence of a provision on exchange of information, was not satisfied. That condition refers to cooperation such as that
         provided for in Article 26 of the Model Tax Convention of the Organisation for Economic Cooperation and Development (OECD)
         and there is no such provision in the agreements entered into with the Swiss Confederation.
      
      22.   On the other hand, the Skatterättsnämnden found that the distribution in question was a movement of capital and that the absence
         of any exemption should be viewed as a restriction within the meaning of Article 56 EC. In its opinion, that restriction is
         not covered by Article 57(1) EC because the movement in question does not involve direct investment.
      
      23.   The Skatterättsnämnden therefore considered that, as the reason for the restriction was that it was impossible for the Skatteverket
         (Tax Board) to check compliance with the conditions for granting the exemption, the restriction was disproportionate for the
         purposes of securing that objective, even though the provisions of Council Directive 77/799/EEC (7) are not applicable in the context of relations with the Swiss Confederation. The Arrangement appears to allow the Swedish
         tax authorities to obtain the information required for the application of their domestic law and it is possible to give taxpayer
         A the opportunity to demonstrate himself that all the requirements under the Swedish Law are satisfied.
      
      24.   The Skatteverket appealed against that decision to the Regeringsrätten (Supreme Administrative Court) (Sweden).
      25.   The Skatteverket argued that the Treaty provisions on free movement of capital are unclear with regard to the movement of
         capital between Member States and third countries, in particular in the case of countries that oppose exchanging information
         for purposes of fiscal supervision. Where the possibility of obtaining such information is very limited, a restriction such
         as that at issue in the main proceedings could be justified by the right of the Member States to guarantee the effectiveness
         of fiscal supervision. Indeed, this reason has been recognised in case-law as an overriding requirement of general interest
         capable of justifying a restriction on a freedom of movement guaranteed by the Treaty.
      
      26.   A maintained, however, that the restriction in question could not be justified, since the taxpayer concerned may undertake
         to show that all the requirements for the tax exemption are satisfied.
      
      27.   It was in those circumstances that the national court decided to stay the proceedings and refer the following question to
         the Court for a preliminary ruling:
      
      ‘In a situation such as that in the present case, is it contrary to the provisions on free movement of capital between Member
         States and third countries to tax A in respect of dividends distributed by X because X is not established in a State within
         the EEA or in a State with which [the Kingdom of] Sweden has concluded a taxation convention that contains a provision on
         exchange of information?’
      
      III –  Analysis
      28.   As a preliminary point, it should be observed that, although nowadays direct taxation, which includes taxation of dividends,
         falls within their competence, the Member States must none the less exercise that competence consistently with Community law
         and, in particular, the freedoms of movement established by the Treaty. (8)
      
      29.   Also, according to the request from the national court, the compatibility of the contested legislation with Community law
         must be assessed against the yardstick of the EC Treaty provisions on the free movement of capital.
      
      30.   According to case-law, national legislation which makes the receipt of dividends liable to tax, where the rate depends on
         whether the source of those dividends is national or otherwise, irrespective of the extent of the shareholder’s holding in
         the distributing company, may fall within the scope of both Article 43 EC on freedom of establishment and Article 56 EC on
         free movement of capital. (9)
      
      31.   It is also settled case-law that the chapter of the Treaty concerning the right of establishment does not include any provision
         extending its application to situations which involve the establishment in a third country of a Member State national or of
         a company incorporated under the legislation of a Member State. (10)
      
      32.   Since the situation at issue in the main proceedings concerns the distribution of dividends to a shareholder residing in a
         Member State by a company established in a third country, only the Treaty provisions on free movement of capital can apply.
      
      33.   By its question, the Regeringsrätten asks in essence whether Articles 56 EC and 58 EC must be interpreted as meaning that
         legislation under which exemption from income tax in respect of dividends distributed in the form of shares in a subsidiary,
         which is subject to a number of conditions, can be granted only where the distributing parent company is established in a
         State within the EEA or in a State with which the Member State has concluded a taxation convention that contains a provision
         on exchange of information constitutes a restriction on the movement of capital and, if so, whether that restriction may be
         justified.
      
      34.   This question therefore contains two points. It requires us to decide, first of all, whether the legislation at issue must
         be regarded as a restriction on the movement of capital within the meaning of Article 56(1) EC. Then, in the case of an affirmative
         answer to the first point, it asks whether such a restriction may be justified.
      
      35.   Before considering those two points, it would be appropriate, first, to recall the content of the Treaty provisions on free
         movement of capital and the principal stages leading up to it and, second, to give a brief summary of the relevant provisions
         on the exchange of information on direct taxation, both at intra-Community level and in relations between Member States and
         third countries.
      
      A –    The Treaty provisions on free movement of capital
      36.   The Treaty provisions on free movement of capital comprise a principle, set out in Article 56 EC, and limitations on that
         principle, laid down in Articles 57 EC to 60 EC.
      
      1.      Recognition of the principle of free movement of capital
      37.   The movement of capital, between Member States on the one hand, and between Member States and third countries on the other
         hand, has been the subject of gradual liberalisation.
      
      38.   In the Treaty of Rome establishing the European Economic Community, movement of capital within and outside the Community was
         the subject of separate provisions that were scarcely binding. Thus, within the Community, under Article 67 of the EEC Treaty
         (subsequently Article 67 of the EC Treaty, which was itself repealed by the Treaty of Amsterdam), Member States were required
         in the course of the transitional period gradually to abolish restrictions on the movement of capital only ‘to the extent
         necessary to guarantee the proper functioning of the common market’. So far as outside the Community was concerned, Article 70
         of the EEC Treaty (subsequently Article 70 of the EC Treaty, which was itself repealed by the Treaty of Amsterdam) merely
         provided for gradual coordination of the exchange rate policies of Member States in respect of third countries.
      
      39.   In the light of the scarcely binding nature of Article 67 of the Treaty, the Court considered that that provision was not
         directly effective after the end of the transitional period, unlike the provisions of the Treaty introducing the other freedoms
         of movement, whilst acknowledging that free movement of capital itself constituted one of the ‘fundamental freedoms’ of the
         Treaty. (11)
      
      40.   A significant step was taken with Council Directive 88/361/EEC. (12) That directive provided for complete, unconditional liberalisation of the movement of capital between Member States, since
         Article 1 of the directive required the Member States to abolish restrictions on the movement of capital taking place between
         persons resident in their territory. The time‑limit imposed on the Member States for complying with that obligation expired
         on 1 July 1990. In its judgment in Bordessa and Others, (13) the Court held that Article 1 of Directive 88/361 had direct effect.
      
      41.   On the other hand, as regards external relations, Directive 88/361 was less binding, since, under Article 7 of the directive,
         in their treatment of transfers in respect of movements of capital to or from third countries, the Member States were required
         only to endeavour to attain the same degree of liberalisation as that which applied to transactions within the Community.
      
      42.   The Treaty on European Union was the second important step in the process of liberalisation. At formal level, that treaty
         provided for the replacement of Articles 67 to 73 of the EEC Treaty (subsequently Article 73 of the EC Treaty, which was itself
         repealed by the Treaty of Amsterdam) by Articles 73b to 73g of the EC Treaty (now Articles 56 EC to 60 EC) from 1 January
         1994.
      
      43.   As regards the substance, the EU Treaty made free movement of capital a fundamental freedom guaranteed by the Treaty, not
         only as regards movements between Member States but also between Member States and third countries. Thus, Article 73b(1) of
         the EC Treaty (now Article 56(1) EC) provides that ‘[w]ithin the framework of the provisions set out in this chapter, all
         restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited’.
      
      44.   In the light of the precise and unconditional nature of that provision, the Court held in Sanz de Lera and Others (14) that the principle of free movement of capital has direct effect in that it prohibits restrictions both between Member States
         and between Member States and third countries. (15)
      
      45.   The Treaty of Amsterdam, which entered into force on 1 May 1999, renumbered the articles of the Treaty and reproduced the
         provisions of Article 73b(1) of the Treaty in Article 56(1) EC.
      
      2.      Limitations on the principle of free movement of capital
      46.   The limitations on the principle of free movement of capital include two sets of provisions, consisting, first, of safeguard
         clauses and, second, of derogations.
      
      a)      The safeguard clauses
      47.   The safeguard clauses are contained in Articles 59 EC and 60 EC. They relate only to third countries. They are of a temporary
         nature and are intended to be applied in exceptional circumstances.
      
      48.   Article 59 EC permits a response to be made to economic difficulties. The article provides that, where, in exceptional circumstances,
         movements of capital to or from third countries cause, or threaten to cause, serious difficulties for the operation of economic
         and monetary union, the Council of the European Union, acting by a qualified majority on a proposal from the Commission of
         the European Communities and after consulting the European Central Bank, may take safeguard measures with regard to third
         countries for a period not exceeding six months if such measures are strictly necessary.
      
      49.   Article 60 EC, for its part, is of a political nature. It enables the Community legislature to take retaliatory measures with
         regard to movements of capital where the Community, in the context of common action adopted pursuant to the provisions of
         the Treaty relating to common foreign and security policy, has decided to cut back or break off economic relations with one
         or more third countries.
      
      b)      The derogations
      50.   These are laid down in Articles 57 EC and 58 EC.
      51.   Article 57 EC also concerns only relations with third countries and covers movements of capital regarded as being particularly
         sensitive. These are movements of capital involving direct investment (including investment in real estate), establishment,
         the provision of financial services or the admission of securities to capital markets. Article 57(1) EC provides that national
         or Community restrictions which existed in respect of such movements of capital on 31 December 1993 are to be maintained.
      
      52.   Article 57(2) EC permits the Council to adopt new measures on those movements of capital. Under that provision, the Council
         is to act by a qualified majority when deciding to extend the freedom of such movements of capital and by unanimity when deciding
         to restrict them.
      
      53.   Article 58 EC, for its part, describes the powers retained by the Member States which enable them to restrict the movement
         of capital to or from other Member States or third countries. It provides:
      
      ‘1.      The provisions of Article 56 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
         and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements
         for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy
         or public security.
      
      2.      The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment
         which are compatible with this Treaty.
      
      3.      The measures and procedures referred to in paragraphs 1 and 2 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.’
      
      54.   It is clear from case-law that measures that may be regarded as essential in order to prevent infringements of the laws and
         regulations of a Member State include, in particular, those intended to guarantee the effectiveness of fiscal supervision. (16)
      
      55.   Furthermore, the list of justification measures in Article 58(1)(b) EC is not exhaustive. The Court has accepted that free
         movement of capital, like other freedoms of movement, may be restricted on other grounds, regarded as an overriding reason
         or requirement in the general interest. (17) The Court has held on a number of occasions that the need to guarantee the effectiveness of fiscal supervision also constitutes
         an overriding requirement of general interest capable of justifying a restriction on the free movement of capital. (18)
      
      56.   However, whatever the ground relied on, the measure in question must be suitable for the purposes of attaining the objective
         which it pursues and not go beyond what is necessary in order to attain it.
      
      57.   Lastly, in Test Claimants in the FII Group Litigation, (19) the Court stated that it may be that a Member State will be able to demonstrate that a restriction on capital movements to
         or from third countries is justified for a particular reason in circumstances where that reason would not constitute a valid
         justification for a restriction on capital movements between Member States.
      
      B –    Relevant provisions on the exchange of information for tax purposes
      1.      The exchange of information between Member States for tax purposes
      58.   The exchange of information between Member States for tax purposes is governed mainly by Directive 77/799.
      59.   That directive was adopted in order to deal with the following two facts. First, practices of tax evasion and tax avoidance
         extending across the frontiers of Member States lead to budget losses and violations of the principle of fair taxation and
         are liable to affect the operation of the common market. Second, the international nature of the problem means that national
         measures, whose effect does not extend beyond the frontiers of the Member States, are insufficient, as is collaboration between
         administrations on the basis of bilateral agreements. (20)
      
      60.   Directive 77/799 provides that the competent authorities of the Member States are to exchange, in accordance with the provisions
         of that directive, any information that may enable them to effect a correct assessment of taxes on income and on capital.
         Under that directive and according to case-law, a Member State may therefore request the competent authorities of another
         Member State to send to it all the information it considers necessary to ascertain the correct amount of income tax payable
         by a taxpayer under its domestic legislation. (21)
      
      61.   This is not, however, an unlimited obligation. That directive imposes no obligation on the requested Member State to have
         enquiries carried out or to provide information where the laws or administrative practices of that State do not permit the
         competent authorities either to carry out such enquiries or to collect or use such information for that State’s own purposes.
      
      62.   To the same effect, Council Directive 2003/48/EC (22) introduced a system for the automatic exchange of information between Member States concerning interest payments.
      
      2.      The exchange of information for tax purposes between third countries and Member States
      63.   As regards the exchange of information for tax purposes between third countries and Member States, measures equivalent to
         those provided for by Directive 2003/48 in the specific area covered by that directive have been the subject of agreements
         between the European Community, on the one hand, and the Swiss Confederation, the Principality of Andorra, the Principality
         of Liechtenstein, the Principality of Monaco, and the Republic of San Marino, on the other hand. (23)
      
      64.   In addition to those individual agreements, the exchange of information for tax purposes between third countries and Member
         States continues to be covered by bilateral or multilateral conventions. That is the case, in particular, as regards the exchange
         of information between the Member States and the countries within the EEA, that is, the Republic of Iceland, the Principality
         of Liechtenstein and the Kingdom of Norway. Those countries are not bound, under the Agreement on the European Economic Area
         of 2 May 1992, (24) to transpose into domestic law measures of secondary legislation relating to the exchange of information on tax matters,
         such as Directive 77/799.
      
      65.   Article 26 of the OECD Model Tax Convention provides the standard format most widely used for this type of convention. (25) In the version in force on 29 April 2000, the model text is worded as follows:
      
      ‘1.      The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions
         of this Convention or of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting
         States, or of their political subdivisions or local authorities, in so far as the taxation thereunder is not contrary to the
         Convention. …
      
      2.      In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:
      (a)      to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting
         State;
      
      (b)      to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the
         other Contracting State;
      
      (c)      to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process,
         or information, the disclosure of which would be contrary to public policy (ordre public).’
      
      66.   It is against that background that I shall examine whether the Swedish Law must be regarded as a restriction on the movement
         of capital and, if so, whether that restriction may be justified.
      
      C –    Whether there is a restriction on the movement of capital
      67.   The first question which must be answered is whether legislation under which exemption from income tax in respect of dividends
         distributed in the form of shares in a subsidiary can be granted only where the distributing parent company is established
         in a State within the EEA or in a State with which the Member State has concluded a taxation convention that contains a provision
         on exchange of information constitutes a restriction on the movement of capital.
      
      68.   The Skatteverket and the Swedish, German, French and Netherlands Governments suggest that this question should be answered
         in the negative. In the view of those governments, Article 56(1) EC should not have the same scope in relations with third
         countries as it has in an intra-Community context. They put forward a number of arguments in support of that position, which
         may be summarised as follows.
      
      69.   First, the liberalisation of capital movements to and from third countries does not pursue the same objective as the liberalisation
         of such movements between Member States. In the case of relations with third countries, it is a case not of establishing the
         internal market but of ensuring the credibility of the single Community currency on world financial markets and maintaining
         financial centres with a worldwide dimension within the Member States.
      
      70.   Second, the liberalisation of capital movements to and from third countries is the result of a unilateral step taken by the
         Community, which is not necessarily reciprocated by such countries. To consider Article 56(1) EC as having the same scope
         with regard to third countries as it has in an intra-Community context would thus weaken the Community’s position in its negotiations
         with such countries. Such a broad interpretation would also conflict with association agreements, in which the provisions
         on free movement of capital have more limited scope.
      
      71.   Lastly, interpretation of Article 56(1) EC with regard to relations with third countries should take account of the fact that
         those countries are not bound by Community law, in particular by Directive 77/799. It is also necessary to take into account
         the fact that the scope of free movement of capital may overlap with the scope of freedom of establishment. It is necessary
         therefore to ensure, with regard to relations with third countries, that Article 56(1) EC is not interpreted as enabling economic
         operators who do not meet the requirements for exercising freedom of establishment in a Member State to circumvent those requirements.
      
      72.   The Swedish, German, French and Netherlands Governments deduce from those arguments that the concept of ‘movement of capital’
         used in Article 56(1) EC does not cover a distribution of dividends by a company established in a third country and that the
         Swedish Law does not constitute a restriction within the meaning of that provision.
      
      73.   I do not agree with that view. Like A and the Commission, I am of the opinion that the terms ‘movement of capital’ and ‘restrictions’
         in Article 56(1) EC must have the same scope in the case of relations between Member States and third countries as it does
         in the intra-Community context. I base my position on the following grounds.
      
      74.   First, I refer to the content of Article 56(1) EC. That provision lays down, in like terms, the principle of free movement
         of capital between Member States on the one hand, and between Member States and third countries on the other hand. In the
         light of the origin of that provision, its content is, in my view, decisive for the purpose of interpreting the scope of Article 56(1)
         EC with regard to the movement of capital at non-Community level.
      
      75.   As I pointed out above, until the EU Treaty, free movement of capital between Member States and between Member States and
         third countries was governed by separate provisions with differing content. Moreover, in Directive 88/361, the principle of
         free movement of capital between Member States was already stated clearly and unconditionally. Therefore, the fact that, in
         the EU Treaty, the Member States decided to enshrine that principle, in the same article and in the same terms, both within
         the Community and in relations between Member States and third countries, to my mind demonstrates their intention to give
         that freedom of movement the same scope at intra-Community level and at non-Community level.
      
      76.   The argument put forward by the governments which have intervened in the present proceedings that the liberalisation of the
         movement of capital to and from third countries does not pursue the same objective as freedom of movement of capital within
         the Union does not, in my opinion, invalidate this view.
      
      77.   The Treaty does not state the reasons why the scope of that freedom was extended to third countries. It is commonly accepted
         that this extension should be seen in the context of the development of the Community’s monetary policy. However, if the Member
         States had wanted that difference in objective to be reflected in the scope of that liberalisation as regards their relations
         with third countries, they should, logically, have set out the principle of free movement of capital within the Community
         and at non-Community level in different terms, as had been the case previously. The fact that, despite that difference in
         objective, they chose to provide for such freedom of movement in the same terms and in the same article of the Treaty can,
         in my view, be explained only by the intention to give it the same scope in both cases.
      
      78.   Second, confirmation of this view is to be found in the other articles of the chapter on free movement of capital.
      79.   In Articles 57 EC, 59 EC and 60 EC, the Community legislature expressly provided for economic and political safeguard clauses
         and derogations which apply specifically to such freedom of movement in relation to third countries. It is therefore those
         provisions, as well as those of Article 58 EC, which are designed to take into account the differences in objective and in
         legal context of the free movement of capital between Member States and third countries, and not Article 56(1) EC. In other
         words, it is because Article 56(1) EC has the same scope as regards relations between Member States and third countries as
         it has in the intra-Community context that it was necessary to provide for safeguard clauses and derogations in respect of
         non-Community relations.
      
      80.   As regards the first sentence of Article 57(2) EC, which states that the Council may, acting by a qualified majority, adopt
         measures on the movement of capital to or from third countries, ‘[w]hilst endeavouring to achieve the objective of free movement
         of capital between Member States and third countries to the greatest extent possible and without prejudice to the other chapters
         of this Treaty’, (26) unlike the German Government, I do not think that that shows that Article 56(1) EC has a less extensive scope as regards
         its non-Community dimension. 
      
      81.   The first sentence of Article 57(2) EC should be read in the context of Article 57(1) EC, which provides that restrictions
         which existed on 31 December 1993 under the laws of Member States and under Community law in respect of the movement of capital
         to or from third countries involving direct investment (including investment in real estate), establishment, the provision
         of financial services or the admission of securities to capital markets are to be maintained.
      
      82.   Article 57(1) EC thus provides for such existing restrictions to be maintained indefinitely. The first sentence of Article 57(2)
         EC must therefore, in my view, be interpreted as allowing the Community and the Member States to conclude a convention with
         a third country that includes provisions on the free movement of capital which are uniformly applicable in all Member States
         without the possibility of the restrictions in Article 57(1) EC being relied on against them. The first sentence of Article 57(2)
         EC thus constitutes the legal basis which enables the Community legislature to refrain from applying such national or Community
         restrictions in the context of an agreement with a third country. (27)
      
      83.   Lastly, the second sentence of Article 57(2) EC allows the Council to adopt measures that restrict the free movement of capital
         in respect of one or more third countries, which gives the Community a means of exerting pressure in negotiations with the
         country or countries concerned.
      
      84.   Third, I am of the opinion that that interpretation is not at odds with the arguments put forward by the Skatteverket and
         by the Swedish, German, French and Netherlands Governments.
      
      85.   I do not therefore think that that interpretation is capable of weakening the Community’s position in its negotiations with
         a third country or that it would conflict with the provisions of an association agreement on the movement of capital between
         the Community and the third country that is party to that agreement.
      
      86.   As mentioned above, the free movement of capital between Member States and third countries established by Article 56 EC is
         subject to several limitations under Articles 57 EC to 60 EC. These include, in particular, the maintenance of national or
         Community restrictions existing on 31 December 1993 on certain movements of capital. I can also point to the obstacles to
         this freedom of movement caused by measures taken by the Member States in order to prevent infringements of their laws, in
         particular in the field of taxation, referred to in Article 58(1)(b) EC. Lastly, these may also be national measures justified
         by an overriding requirement of general interest.
      
      87.   As will be shown more specifically in the second part of my analysis, and as is clear from the judgment in Test Claimants in the FII GroupLitigation, the justification for a restriction based on the need to guarantee the effectiveness of fiscal supervision should be given
         a wider scope in the case of movements to or from third countries than in the intra-Community context, in particular since
         the obligations placed upon Member States under Community secondary legislation on the exchange of information do not apply
         to those countries.
      
      88.   The Community’s negotiating power with third countries does not appear to me to be weakened in view of all these limitations
         on the scope of Article 56(1) EC, because those countries must still undertake the commitments necessary to ensure that such
         limitations are removed from conventions or association agreements concluded with the Community.
      
      89.   Nor do I think that my interpretation of Article 56(1) EC has the effect of allowing a natural or legal person who does not
         satisfy the requirements for relying on the Treaty provisions on freedom of establishment to circumvent those requirements.
      
      90.   It must be observed, first of all, that there is no such risk in the case in the main proceedings. The movement of capital
         in question is a distribution, by a parent company established in a third country, of dividends in the form of shares in a
         subsidiary, which is itself established in a third country, to a shareholder residing in a Member State. Such an operation
         might, therefore, in certain circumstances, give that shareholder a holding in the foreign subsidiary of the distributing
         company of such an extent that it enables the holder to have a definite influence on that subsidiary’s decisions. However,
         it cannot permit a shareholder residing in a third country to take control of a subsidiary established in a Member State.
      
      91.   Next, in its recent case-law, the Court has provided clarification as to the limits of the scope of freedom of establishment
         and free movement of capital respectively.
      
      92.   It is clear from that case-law that, where the legislation of a Member State, by reason of its purpose, concerns situations
         in which a shareholder’s holding enables him to have a definite influence on a company’s decisions and to determine its activities,
         as may be the case with a national law on controlled foreign companies (28) or legislation designed to combat undercapitalisation, (29) that legislation must be examined in the light of the articles of the Treaty relating to freedom of establishment and those
         articles alone. (30)
      
      93.   In such cases, the restrictive effects such legislation might have on the free movement of capital would appear to be the
         unavoidable consequence of any restriction on freedom of establishment and do not therefore justify an examination of that
         legislation in the light of Articles 56 EC to 60 EC. In other words, the Treaty provisions on free movement of capital do
         not apply in such a situation and cannot therefore be relied upon in order to circumvent the fact that it is impossible for
         a national of a third country established outside the Union to rely on the articles of that treaty relating to freedom of
         establishment.
      
      94.   It is true, however, that national legislation which makes the receipt of dividends liable to tax, where the rate depends
         on whether the source of those dividends is national or otherwise, irrespective of the extent of the holding which the shareholder
         has in the distributing company, may be covered by the free movement of capital. It is therefore conceivable that a shareholder
         who is a national of a third country and is established outside the Union and who has a significant holding in the capital
         of a company that is resident in a Member State, may rely on Article 56(1) EC in order to challenge that legislation.
      
      95.   The fact that the extent of his holding in the capital of a company that is resident in a Member State enables a shareholder
         to have a definite influence on that company’s decisions and to determine its activities does not in itself appear to constitute
         sufficient justification to exclude the application of Article 56(1) EC, in the light of Article 57(1) EC. The latter provision,
         as was seen above, provides that the Member States may maintain restrictions existing on 31 December 1993 on the movement
         of capital to or from third countries where such movement involves ‘establishment’. It may therefore be deduced from that
         provision that the movement of capital to or from third countries may involve establishment.
      
      96.   However, even though a shareholder who is a national of a third country and is established outside the Union, and whose holding
         in the capital of a company resident in a Member State is of such an extent that he may rely on Article 56 EC, the risk that
         the rules of the Treaty on freedom of establishment will be circumvented in such a situation may also be avoided by virtue
         of Article 58(2) EC. In my view, that provision allows the Member States to adopt restrictive measures with regard to the
         distribution of dividends to such shareholders.
      
      97.   It is in the light of those considerations that I take the view that the concepts of ‘movement of capital’ and ‘restrictions’
         used in Article 56(1) EC should be interpreted in the same manner, both as regards relations between Member States and third
         countries and as regards intra-Community relations.
      
      98.   On the basis of this premiss, there seems no serious reason to doubt, first, that a distribution of dividends in the form
         of shares in a subsidiary constitutes a movement of capital within the meaning of that provision.
      
      99.   In Verkooijen, (31) the Court held that the fact that a national of a Member State residing in that Member State receives dividends from shares
         in a non-resident company constitutes a movement of capital within the meaning of Article 1 of Directive 88/361. It based
         that finding on the ground that the receipt of such dividends necessarily presupposes participation in new or existing undertakings,
         as referred to in point 2 of Part I of the nomenclature annexed to that directive.
      
      100. That finding may also be applied where the dividends distributed are in the form of shares in a subsidiary, since, as the
         Commission contends, such distribution presupposes that the recipient holds shares in the distributing company. Moreover,
         in so far as Article 56 EC substantially reproduces the content of Article 1 of Directive 88/361, the nomenclature of ‘capital
         movements’ annexed to that directive still has, according to established case-law, the same indicative value for the purpose
         of defining the concept of ‘movement of capital’. (32)
      
      101. Secondly, there is no doubt that the Swedish Law constitutes a restriction on such movement of capital. That law, in so far
         as it precludes from exemption dividends distributed by companies established in States which are outside the EEA and which
         have not concluded with the Kingdom of Sweden a convention that contains a provision on exchange of information, discourages
         taxpayers in that Member State from investing their capital in companies established in such third countries.
      
      102. Similarly, that law has a restrictive effect on the ability of such companies to raise capital in Sweden. It also constitutes
         a restriction in that regard, since such companies are entitled to rely on the Treaty provisions on free movement of capital,
         as is clear from case-law. (33)
      
      103. Legislation under which exemption from income tax in respect of dividends distributed in the form of shares in a subsidiary
         can be granted only where the distributing parent company is established in a State within the EEA or in a State with which
         the Member State has concluded a taxation convention that contains a provision on exchange of information therefore constitutes
         a restriction on the movement of capital within the meaning of Article 56(1) EC.
      
      104. It is appropriate at this point to consider whether such a restriction may be justified.
      D –    Justification for the restriction
      105. The Skatteverket and the Swedish Government, together with a number of other governments, maintain that the restriction at
         issue is justified by the need to guarantee the effectiveness of fiscal supervision. The Italian Government, for its part,
         contends that that restriction is covered by Article 57(1) EC.
      
      106. I shall begin by considering whether that restriction is an existing measure as referred to in Article 57(1) EC, because,
         if that is the case, there is no need to investigate whether it is justified on the basis of Article 58 EC.
      
      1.      Whether Article 57(1) EC is applicable
      107. Article 57(1) EC provides that Member States may maintain restrictions which existed on 31 December 1993 in respect of the
         movement of capital involving direct investment. Unlike the Italian Government, I do not think that that provision can apply
         to the Swedish Law.
      
      108. It is apparent from the information supplied by the Regeringsrätten that the national legislation providing for the exemption
         of dividends was in force on 31 December 1993 and that it applied solely to dividends paid by Swedish companies, with the
         effect that companies established in third countries were excluded from it. It could therefore be argued that, to that extent,
         the national legislation already excluded from the exemption dividends of companies established in third countries which had
         not concluded a taxation convention providing for the exchange of information with the Kingdom of Sweden.
      
      109. However, the Regeringsrätten also states that that legislation was repealed in 1994 and then reintroduced in 1995. In view
         of the repeal, I do not think that the Swedish Law can be treated as ‘restrictions which exist on 31 December 1993’, as referred
         to in Article 57(1) EC, irrespective of whether the movement of capital at issue involves direct investment within the meaning
         of that provision. 
      
      110. Indeed, that provision must be interpreted in the light of the system of which it forms part. Article 57(1) EC constitutes
         a derogation from the principle laid down in Article 56(1) EC. It should therefore be subject to strict interpretation. Moreover,
         the provisions of the second sentence of Article 57(2) EC make it clear that any new restriction must be imposed by the Council
         acting unanimously.
      
      111. In my view, therefore, the words ‘restrictions which exist on 31 December 1993’ presuppose that the legal provisions relating
         to the restriction in question have formed part of the national legal order continuously since 31 December 1993. Article 57(1)
         EC provides that Member States may maintain the restrictions referred to in that article permanently but does not provide
         that they may reintroduce restrictions that have been repealed.
      
      112. In repealing that restriction, the Member State concerned considered that it was no longer required in its relations with
         third countries. To allow the Member State to reintroduce such a restriction at any time would conflict with the principle
         laid down in Article 56 EC and with Articles 57(2) EC and 58 EC to 60 EC, under which the adoption of political or economic
         safeguard measures is subject to very strict conditions and any new measure which constitutes a step back as regards freedom
         of movement of capital to or from third countries requires unanimity within the Council.
      
      113. This view appears to me to accord with case-law. In Konle, the Court interpreted the concept of ‘existing legislation’ used in Article 70 of the Act concerning the conditions of accession
         of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which
         the European Union is founded, (34) as allowing the Republic of Austria to maintain its existing legislation governing secondary residences for a limited period.
         It applied that interpretation in the context of legislation on the taxation of dividends in Test Claimants in the FII Group Litigation (35) and in Holböck. (36)
      
      114. It is apparent from that case-law that any national measure adopted after 31 December 1993 is not, by that fact alone, automatically
         excluded from the derogation laid down in Article 57(1) EC. The Court accepted that that article also covers provisions which
         are, in substance, identical to previous legislation or which are limited to reducing or eliminating an obstacle to the exercise
         of Community rights and freedoms in that legislation.
      
      115. However, it is not apparent from the grounds of those judgments nor from the context in which they were delivered that the
         concept of ‘existing restrictions’ can also apply where legislation that was in force at the relevant date has been repealed
         and then reintroduced into the national legal order some time later. In Konle, Test Claimants in the FII Group Litigation and Holböck, the contested legislation constituted an amendment to the legislation in force at the relevant date. In those cases, there
         was no time when, as in the case in the main proceedings, the original restriction had been removed from the national legal
         order and the contested legislation had not yet entered into force.
      
      116. Nor have I found in the Court’s judgments interpreting the concept of ‘existing legislation’ in a legal context other than
         direct taxation any example to contradict my view.
      
      117. I am therefore of the opinion that the restriction at issue in the main proceedings cannot be justified by Article 57(1) EC.
      2.      Justification on the basis of Article 58 EC
      118. The Skatteverket and the Swedish Government, supported in this respect by the Danish, Spanish, French, Netherlands and United
         Kingdom Governments, argue that the restriction concerned is justified by the fact that it is impossible for the Swedish tax
         authorities to check with a third country such as the Swiss Confederation that the conditions to which the exemption is subject
         are complied with.
      
      119. According to the Swedish Government, this concerns the first, third, fourth and final conditions of the Swedish Law, which
         provide that the distribution must be made in proportion to the number of shares held in the parent company, that all the
         parent company’s shares in the subsidiary must be distributed, that the shares in the subsidiary after the distribution are
         not to be held by any undertaking that belongs to the same group as the parent company, and that the subsidiary’s business
         activity must consist primarily in trading or, directly or indirectly, holding shares in undertakings that engage in such
         activity. According to the Swedish Government, the information needed to check compliance with those conditions where the
         distributing parent company is established abroad can be obtained only by the authorities of the country of establishment.
      
      120. Those interveners maintain that national tax authorities must be able to check the evidence supplied by the taxpayer. In the
         absence of a provision on exchange of information between the competent national authorities, there is a risk that tax law
         will be infringed. Exclusion from the exemption where the distributing company is established in a third country which did
         not wish to conclude a convention providing for the exchange of information is not therefore disproportionate.
      
      121. A challenges this view and contends that the restriction at issue in the main proceedings is not proportionate for the purposes
         of attaining the objective of guaranteeing the effectiveness of fiscal supervision, since he is able to supply evidence himself
         that the requirements under the Swedish Law are met.
      
      122. A refers in that regard to the position adopted by the Court in Baxter and Others (37) and Danner, (38) that a Member State cannot withhold a tax advantage from a taxpayer on the ground that it must be possible for that State
         to check the information supplied by the taxpayer in respect of transactions entered into abroad.
      
      123. The Commission also expresses doubts as to whether the restriction at issue in the main proceedings is inconsistent with the
         principle of proportionality. It considers that evidence of the various requirements under the Swedish Law could be supplied
         by the taxpayer and that it is for the national court to ascertain whether checks by the competent tax authority are necessary
         or not.
      
      124. Like the Skatteverket and the intervening governments, I am of the opinion that the restriction may be justified by the need
         to guarantee the effectiveness of fiscal supervision. I base this opinion on the following grounds.
      
      125. I am aware that the need to guarantee the effectiveness of fiscal supervision constitutes an overriding requirement of general
         interest capable of justifying a restriction on the movement of capital. This justification may also be linked to Article 58(1)(b)
         EC, which refers to measures taken by Member States to prevent infringements of national law and regulations. However, in
         order for the restriction to be justified, it is necessary, according to case-law, for the national measure in question to
         be suitable for the purposes of attaining the objective pursued but it must not go beyond what is necessary to attain it,
         in accordance with the principle of proportionality. (39)
      
      126. That case-law on the scope of Article 58 EC in connection with intra-Community movements of capital may also be applied when
         assessing whether restrictions on the movement of capital to or from third countries are compatible with that article, since
         Article 58 EC, like Article 56 EC, makes no distinction between those two categories of movement of capital.
      
      127. In the present case, it is indisputable that the exclusion from the exemption from income tax of dividends distributed by
         companies established in third countries that have not concluded a convention with the Kingdom of Sweden providing for the
         exchange of information for purposes of fiscal supervision is indeed suitable for the purpose of attaining the objective pursued,
         which is to ensure that that exemption is granted solely in respect of distributions which meet the conditions laid down in
         the Swedish Law.
      
      128. The question at the centre of the present case is therefore whether the limitation at issue in the main proceedings is proportionate
         for the purpose of attaining that objective.
      
      129. More specifically, that question arises because the exclusion from the exemption of profits distributed by a company established
         in a third country which has not concluded a convention with the Kingdom of Sweden that provides for exchange of information
         absolutely prevents the taxpayer receiving dividends from those companies from submitting evidence that the conditions laid
         down in the Swedish Law are met. The question is therefore whether such an exclusion, based on the premiss that evidence supplied
         by the taxpayer cannot be checked with the competent authorities of the country of establishment, can be regarded as proportionate.
      
      130. I consider, for the following reasons, that this premiss is indeed made out in the present case. It is clear, in that regard,
         from the documents and explanations provided by the Swedish Government, that the only information which can be obtained from
         the Swiss authorities under agreements concluded with the Swiss Confederation is that needed to ensure proper application
         of the Convention. However, since the Skatterättsnämnden considered, on the contrary, that it is possible under the Arrangement
         to obtain the information needed to check compliance with the conditions laid down in the Swedish Law, it will be for the
         national court to verify this point.
      
      131. On the assumption, therefore, that the premiss that the evidence supplied by the taxpayer cannot be checked with the competent
         Swiss authorities is well founded, I am of the view that the exclusion at issue in the main proceedings must be regarded as
         proportionate for the following two reasons.
      
      132. First, the fact that it is impossible for a Member State to obtain from the competent authorities of the country of establishment
         the information needed to check the evidence supplied by the taxpayer where those authorities alone are in a position to gather
         that information reduces significantly that State’s capacity to exercise genuine supervision. In such cases, it can take as
         its basis only the evidence supplied by the taxpayer and, where appropriate, by third parties.
      
      133. Moreover, since that taxpayer knows that such evidence cannot be checked with the authorities of the country in which the
         distributing company is established, the Member State concerned faces an increased likelihood that its legislation will be
         infringed.
      
      134. In those circumstances, it does not seem to me excessive for that Member State to exclude from the tax advantage in question
         situations where it is not in a position to conduct genuine and effective supervision of compliance with the conditions to
         which that advantage is subject under its national legislation.
      
      135. I do not think that the case-law relied upon by A, in particular Baxter and Others and Danner, precludes this view.
      
      136. Under that case-law, in the Community context, the fact that it is impossible, or difficult, for one Member State to obtain
         from another Member State the information needed in order to check that the conditions laid down in its national legislation
         are complied with does not justify absolutely preventing the taxpayer from demonstrating himself that those conditions are
         indeed met.
      
      137. Such an impossibility or difficulty may arise in an intra-Community context. We have seen that although, under Directive 77/799,
         a Member State may request the competent authorities of another Member State to send to it all the information it considers
         necessary to ascertain the correct amount of income tax payable by a taxpayer in accordance with its domestic legislation,
         that possibility is not unlimited. Article 8(1) of that directive provides that the requested Member State is under no obligation
         to have enquiries carried out or to provide information if the competent authorities are prevented by its laws or administrative
         practices from carrying out those enquiries and from collecting or using that information for that State’s own purposes.
      
      138. In such cases, according to established case-law, Member States are not permitted to exclude in principle the granting of
         a tax advantage such as that at issue in the main proceedings. The Court points out that national tax authorities may demand
         from the taxpayer such proof as they consider necessary and, where appropriate, refuse to grant that advantage where such
         proof is not forthcoming. (40)
      
      139. Therefore, if, in the intra-Community context, exclusion in principle of such a tax advantage where it is impossible to check
         compliance with national conditions with another Member State is regarded as disproportionate, it is, in my view, because
         that situation falls within the exception provided for in Article 8 of Directive 77/799. Where that exception applies, the
         restriction on the exercise of freedom of movement, which the exclusion in principle of that fiscal advantage would entail,
         is disproportionate, because failure to provide assistance on the part of the Member State in which the transactions are carried
         out falls within the accepted limitations on the requirement to provide mutual assistance laid down by Directive 77/799.
      
      140. That case-law is therefore linked to the existence of the requirement of mutual assistance provided for by that directive
         and to the fact that that requirement is not unlimited. Therefore it cannot, in my view, be applied in the context of the
         movement of capital to or from a third country where that country, which is by definition outside the scope of Directive 77/799,
         is not bound by any requirement to provide mutual assistance.
      
      141. Moreover, there is reason to believe that the case-law relied upon by A is also based on the fact that, as a result of other
         relevant provisions of Community law, the taxpayer is in a position to provide evidence which may constitute a reliable and
         relevant basis for supervision.
      
      142. Thus, in Baxter and Others, to which A refers, the Court had to consider French legislation allowing only expenditure on research carried out in France
         to be deducted from the amount payable by way of a special levy imposed as pharmaceutical undertakings. That limitation on
         the deductibility of research costs thus prevented Community undertakings operating a secondary place of business in France
         from deducting research costs incurred in other Member States. It was viewed by the Court as a restriction on freedom of establishment.
         The French Government argued that that limitation was essential to enable its tax authorities to ascertain the nature and
         genuineness of the research expenditure incurred.
      
      143. The Court held that that plea could not be accepted and that the possibility could not be excluded a priori that the taxpayer
         may be able to provide relevant documentary evidence enabling the French tax authorities to ascertain the nature and genuineness
         of the research expenditure incurred in other Member States. In the light of the case made by the Commission, there is every
         reason to believe that the Court took into consideration the fact that the taxpayer could submit information in the accounts
         of parent companies established in other Member States and that that information could constitute a reliable basis for control
         because it had to be prepared in accordance with Fourth Council Directive 78/660/EEC (41) and Seventh Council Directive 83/349/EEC. (42)
      
      144. To sum up, it is therefore where there is a requirement to provide mutual assistance and, to a certain extent, because the
         evidence provided by the taxpayer is covered by the Community legal order, that the fact that such evidence cannot be checked
         with another Member State cannot be regarded as sufficient reason to prevent, absolutely, that taxpayer from showing that
         he does in fact meet the conditions to which the grant of the tax advantage in question is subject under national law.
      
      145. That case-law cannot be applied in the context of the movement of capital to or from third countries which are not bound by
         any mutual assistance requirement and which are not subject to Community law. (43)
      
      146. The second ground on which my position rests relates to the need to encourage third countries to conclude conventions providing
         for the exchange of information with the Community or, at least, with the Member States.
      
      147. I note that the Community legislature considered it necessary to adopt Directive 77/799 in order to combat practices of tax
         evasion and tax avoidance because such practices are liable to affect the operation of the common market. The freedoms of
         movement, at Community level, therefore go hand in hand with a system of mutual assistance between the competent authorities
         of the Member States, which is designed to ensure correct assessment of taxes on income and on capital.
      
      148. That concern is also shared by the Contracting States of the OECD, which, in Article 26 of the Model Tax Convention on Income
         and on Capital, also laid down an obligation to exchange such information as is foreseeably relevant to the enforcement of
         domestic tax laws.
      
      149. Lastly, it appears that, despite those provisions, tax evasion is on the increase and, in order to combat this practice, further
         action at Community (44) and at international (45) levels has been and is required.
      
      150. If the Court were to consider that exclusion from a tax advantage in the context of the movement of capital to or from a third
         country which has not concluded a convention providing for the exchange of information with the Member State concerned is
         a disproportionate measure, the Community and the Member States would inevitably be deprived of a means of exerting pressure
         that might encourage third countries to make such commitments. That would make combating tax evasion more difficult and give
         rise to an unbalanced situation to the detriment of the Community.
      
      151. For my part, I consider that this method of exerting pressure is necessary in order to combat tax evasion and tax avoidance
         and that, as regards the movement of capital to and from third countries, Article 56 EC must be interpreted as providing for
         liberalisation subject to conditions. A Member State is therefore entitled, in my opinion, to make such liberalisation subject
         to the condition that third countries should undertake to engage in administrative cooperation with its national authorities
         and afford mutual assistance at a level equivalent to that required at intra-Community level under Directive 77/799.
      
      152. This requirement also appears to me to be acceptable in the light of the fact that that directive, by virtue of the restriction
         contained in Article 8 thereof, requires Member States to observe to some extent a ‘principle of equivalence’, in so far as,
         in order to ensure the correct assessment of the amount of income tax payable to the requesting State, they are required to
         carry out for the benefit of that State the same enquiries as those which they would be entitled to make in order to apply
         their own legislation and not to conduct any investigations which their legislation or their administrative practices preclude
         them from conducting. (46)
      
      153. It is in the light of those considerations that I take the view that legislation under which exemption from income tax in
         respect of dividends distributed in the form of shares in a subsidiary, which is subject to a number of conditions, can be
         granted only where the distributing parent company is established in a State within the EEA or in a State with which the Member
         State has concluded a taxation convention that contains a provision on exchange of information may be justified by the need
         to guarantee the effectiveness of fiscal supervision.
      
      154. This conclusion must, however, be subject to one caveat. Such justification may only be accepted if the Member State itself
         is not able to check compliance with the conditions imposed by its domestic law on the granting of the tax advantage in question.
         It is clear that if the national tax authorities are in a position to carry out such checks using their own resources, the
         absence of a convention providing for the exchange of information with the third country concerned does not preclude the Member
         State from conducting genuine and effective supervision of compliance with its legislation.
      
      155. In the present case, the Skatteverket and the Swedish Government claimed that the national tax authorities were not in a position
         to check compliance with the first, third, fourth and final conditions of the Swedish Law. I am of the view that this question
         is one of fact for the national court. The restriction in question cannot therefore be said to comply with Articles 56 EC
         and 58 EC unless the national court finds that compliance with those conditions cannot be checked by the Swedish tax authorities
         using their own resources and that information is required which the competent authorities of the country of establishment
         of the distributing company alone are in a position to obtain.
      
      156. In the light of these considerations, I propose that the answer to the question referred for a preliminary ruling should be
         that Articles 56 EC and 58 EC must be interpreted as meaning that legislation under which exemption from income tax in respect
         of dividends distributed in the form of shares in a subsidiary can be granted only where the distributing parent company is
         established in a State within the EEA or in a State with which the Member State has concluded a taxation convention that contains
         a provision on exchange of information constitutes a restriction on the movement of capital. Such a restriction is justified
         by the need to guarantee the effectiveness of fiscal supervision where the exemption is subject to conditions, compliance
         with which cannot be checked by the national tax authorities using their own resources, and information is required which
         the competent authorities of the country of establishment of the distributing company alone are in a position to obtain.
      
      IV –  Conclusion
      157. In the light of the foregoing considerations, I propose that the Court reply as follows to the question submitted for a preliminary
         ruling by the Regeringsrätten:
      
      Articles 56 EC and 58 EC must be interpreted as meaning that legislation under which exemption from income tax in respect
         of dividends distributed in the form of shares in a subsidiary can be granted only where the distributing parent company is
         established in a State within the European Economic Area or in a State with which the Member State has concluded a taxation
         convention that contains a provision on exchange of information constitutes a restriction on the movement of capital.
      
      Such a restriction is justified by the need to guarantee the effectiveness of fiscal supervision where the exemption is subject
         to conditions, compliance with which cannot be checked by the national tax authorities using their own resources, and information
         is required which the competent authorities of the country of establishment of the distributing company alone are in a position
         to obtain.
      
      1 –	Original language: French.
      
      2 –	Law on Income Tax (Inkomstskattelagen (1999:1229); the ‘Swedish Law’).
      
      3 –	The ‘Convention’.
      
      4 –	Article 10(1) of that Convention provides that dividends paid by a company which is resident in one Contracting State to
         a resident of the other Contracting State are liable to tax in that State. Article 10(2) of the Convention provides, however,
         that such dividends may be taxed in the State in which the distributing company is resident, but the tax so charged must not
         exceed 15% of the gross amount of the dividends. If this leads to taxation of dividends in both Contracting States, that double
         taxation is governed by Article 25 of the Convention. Thus, in the case of a natural person residing in Sweden who receives
         dividends from a company established in Switzerland, the income tax paid in Sweden must be deducted from the income tax paid
         in Switzerland.
      
      5 –	Article 27 reads as follows:
      
      	‘1.	Where a resident of one Contracting State considers that the actions of one or both of the Contracting States result
         or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies
         provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which
         he is a resident.
      
      	2.	The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to
         arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting
         State, with a view to the avoidance of taxation which is not in accordance with this Convention.
      
      	3.	The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or
         doubts arising as to the interpretation or application of this Convention. They may also consult together for the elimination
         of double taxation in cases not provided for in this Convention.
      
      	4.	The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching
         an agreement in the sense of the preceding paragraphs. If it appears that oral exchanges of views would assist such agreement
         such exchanges of views may take place within a committee composed of representatives of the competent authorities of the
         Contracting States.’
      
      6 –	Article 11 governs the allocation of the power to tax interest.
      
      7 –	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).
      
      8 –	Case C‑157/05 Holböck [2007] ECR I-4051, paragraph 21 and case-law cited.
      
      9 –	Ibid., paragraph 24 and case-law cited.
      
      10 –	Ibid., paragraph 28 and case-law cited.
      
      11 –	Case 203/80 Casati [1981] ECR 2595, paragraph 8.
      
      12 –	Directive of 24 June 1988 for the implementation of Article 67 of the Treaty (OJ 1988 L 178, p. 5).
      
      13 –	Joined Cases C‑358/93 and C‑416/93 [1995] ECR I‑361, paragraph 34.
      
      14 –	Joined Cases C‑163/94, C‑165/94 and C‑250/94 [1995] ECR I‑4821.
      
      15 –	Since the cases in the main proceedings concerned the export of currency to third countries, the Court held that ‘Article 73b(1)
         of the Treaty, which lays down the principle of free movement between the Member States and between Member States and non-member
         countries, [confers] rights on individuals which they may rely on before the courts and which the national courts must uphold’
         (paragraph 43). The German Government in its written observations in the present case argued that in paragraph 46 of Sanz de Lera and Others the Court limited the direct effect of Article 73b(1) of the Treaty to movements of capital other than those involving direct
         investment. I do not share that view. To my mind, the Court held in paragraph 46 that the prohibition laid down in Article 73b(1)
         of the Treaty applies to restrictions which do not fall within Article 73c(1) of the EC Treaty (now Article 57(1) EC), since
         the latter provision relates to restrictions on movements of capital involving direct investment which existed on 31 December 1993 (emphasis added). The Court did not therefore exclude from the prohibition contained in Article 73b(1) of the Treaty all
         movements of capital involving direct investment, but only those existing on 31 December 1993. That is why the judgment in
         Sanz de Lera and Others, should, in my view, be interpreted as meaning that the principle of free movement of capital enshrined in Article 73b(1)
         of the Treaty has direct effect as regards relations with third countries and as regards all movements of capital within the
         meaning of that provision.
      
      16 –	Case C‑478/98 Commission v Belgium [2000] ECR I‑7587, paragraph 38 and case-law cited, and paragraph 39.
      
      17 –	See, inter alia, Case C‑302/97 Konle [1999] ECR I‑3099, paragraph 40.
      
      18 –	See, inter alia, Case C‑386/04 Centro di Musicologia Walter Stauffer [2006] ECR I‑8203, paragraph 47 and case-law cited, and Case C‑150/04 Commission v Denmark [2007] ECR I‑1163, paragraph 51 and case-law cited.
      
      19 –	Case C‑446/04 [2006] ECR I‑11753, paragraph 171.
      
      20 –	First and third recitals in the preamble to Directive 77/799.
      
      21 –	Case C‑136/00 Danner [2002] ECR I‑8147, paragraph 49 and case-law cited.
      
      22 –	Directive of 3 June 2003 on taxation of savings income in the form of interest payments (OJ 2003 L 157, p. 38).
      
      23 –	See, as regards the Swiss Confederation, the Agreement between the European Community and the Swiss Confederation providing
         for measures equivalent to those laid down in Directive 2003/48 (OJ 2004 L 385, p. 30).
      
      24 –	OJ 1994 L 1, p. 3; ‘the EEA Agreement’.
      
      25 –	According to the information available on the OECD website, over 2 000 bilateral conventions are based on the OECD model.
      
      26 –	The first sentence of Article 57(2) EC states:
      
      	‘Whilst endeavouring to achieve the objective of free movement of capital between Member States and third countries to the
         greatest extent possible and without prejudice to the other chapters of this Treaty, the Council may, acting by a qualified
         majority on a proposal from the Commission, adopt measures on the movement of capital to or from third countries involving
         direct investment – including investment in real estate – establishment, the provision of financial services or the admission
         of securities to capital markets.’
      
      27 –	See, inter alia, Council Decision 2000/658/EC of 28 September 2000 concerning the conclusion of the Economic Partnership,
         Political Coordination and Cooperation Agreement between the European Community and its Member States, of the one part, and
         the United Mexican States, of the other part (OJ 2000 L 276, p. 44).
      
      28 –	See, in that regard, Case C‑196/04 Cadbury Schweppes and Cadbury Schweppes Overseas [2006] ECR I‑7995, paragraphs 31 to 33.
      
      29 –	See Case C‑524/04 Test Claimants in the Thin Cap Group Litigation [2007] ECR I‑2107, paragraphs 26 to 34, and the order in Case C‑492/04 Lasertec [2007] ECR I‑3775, paragraphs 18 to 26.
      
      30 –	See, concerning the application of the same principle as regards the limits of the scope of free movement of capital and
         freedom to provide services, Case C‑452/04 FidiumFinanz [2006] ECR I‑9521, paragraphs 34, 48 and 49.
      
      31 –	Case C‑35/98 [2000] ECR I‑4071.
      
      32 –	Fidium Finanz, paragraph 41 and case-law cited.
      
      33 –	Fidium Finanz, paragraph 25, and Holböck, paragraph 30.
      
      34 –	OJ 1994 C 241, p. 21, and OJ 1995 L 1, p. 1.
      
      35 –	Paragraphs 189 to 195.
      
      36 –	Paragraphs 40 to 43.
      
      37 –	Case C‑254/97 [1999] ECR I‑4809.
      
      38 –	Case C‑136/00 [2002] ECR I‑8147.
      
      39 –	See, in particular, Centro di Musicologia Walter Stauffer, paragraph 32.
      
      40 –	See, for a recent application, Commission v Denmark, paragraph 54.
      
      41 –	Directive of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies
         (OJ 1978 L 222, p. 11).
      
      42 –	Directive of 13 June 1983 based on Article 54(3)(g) of the Treaty on consolidated accounts (OJ 1983 L 193, p. 1).
      
      43 –	Moreover, I do not think that the Swedish Law should be regarded as disproportionate, in the situation of a taxpayer such
         as A, in view of the fact that the exemption at issue in the main proceedings is not excluded where the distributing company
         is established in a State within the EEA which is not a member of the Union and which is therefore not required to transpose
         Directive 77/799 into its domestic law. It does not appear that the Swiss Confederation, which has not ratified the EEA Agreement,
         is in a comparable position to that of the Republic of Iceland, the Principality of Liechtenstein or the Kingdom of Norway.
         So far as the Republic of Iceland and the Kingdom of Norway are concerned, they have concluded a multilateral convention on
         administrative assistance with the Kingdom of Sweden which includes provisions on the exchange of information and other rules
         on administrative assistance in fiscal matters. The Principality of Liechtenstein has not, to my knowledge, concluded a convention
         of this type with the Kingdom of Sweden. The latter was therefore, in my view, entitled also to exclude from the exemption
         at issue in the main proceedings dividends distributed by companies established in Liechtenstein. However, the fact that such
         dividends are not excluded from that exemption does not show that the Swedish Law is disproportionate with regard to dividends
         distributed by a company established in Switzerland. Moreover, the situation of a company established in Switzerland is not
         comparable to that of a company established in Liechtenstein, since that State, unlike the Swiss Confederation, is required
         under the EEA Agreement to transpose into its domestic law measures for the application of the freedoms of movement, in particular
         the directives harmonising company law, and, inter alia, the directives relating to company accounts (see Annex XXII to the
         EEA Agreement).
      
      44 –	See, in that regard, the communication from the Commission to the Council, the European Parliament and the European Economic
         and Social Committee concerning the need to develop a coordinated strategy to improve the fight against fiscal fraud (COM(2006) 254
         final).
      
      45 –	See amendments to Article 26 of the OECD Model Tax Convention, approved by the OECD Committee on Fiscal Affairs on 1 June
         2004.
      
      46 –	This limitation was clearly confirmed by Council Directive 2004/56/EC of 21 April 2004 amending Directive 77/799 (OJ 2004
         L 127, p. 70).