CELEX: 62016CC0014
Language: en
Date: 2016-10-26
Title: Opinion of Advocate General Wathelet delivered on 26 October 2016.

OPINION OF ADVOCATE GENERAL
      WATHELET
      delivered on 26 October 2016 (
            1
         )
      
         Case C‑14/16
      
      
         Euro Park Service, having assumed the rights and obligations of Cairnbulg Nanteuil
      
         v
      
      
         Ministre des finances et des comptes publics
      
      
         (Request for a preliminary ruling from the Conseil d’État (Council of State, France))
      
      ‛Reference for a preliminary ruling — Taxation — Common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States — Directive 90/434/EEC — Article 11 — Tax evasion or avoidance — Prior approval of the tax authority — Freedom of establishment — Article 49 TFEU’
      
         I – Introduction
      
      
               1.
            
            
               This request for a preliminary ruling of 16 December 2015 by the Conseil d’État (Council of State, France), lodged at the Court Registry on 11 January 2016, is concerned with the interpretation of Article 49 TFEU and Article 11 of Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States. (
                     2
                  )
            
         
               2.
            
            
               The request was made in proceedings between the company governed by Luxembourg law Euro Park Service (‘Euro Park’), successor in law to the French company SCI Cairnbulg Nanteuil (‘SCI Cairnbulg Nanteuil’), and the French tax authority (‘the tax authority’) concerning the imposition of supplementary corporation tax assessments, the additional contribution for that tax and the corresponding penalties. According to the French tax authority, those taxes and penalties arise from the fact, first, that SCI Cairnbulg Nanteuil had not sought the ministerial approval provided for under French law in the case of transfers to a foreign company and, secondly, that, in any event, that approval would not have been granted to it since the company’s dissolution was not justified for commercial reasons, but had the objective of evading or avoiding tax.
            
         
               3.
            
            
               The referring court considers that in order to resolve the dispute before it, it is necessary to ascertain, in particular, whether Article 49 TFEU precludes national legislation which, for the purpose of preventing tax evasion and avoidance, systematically imposes a condition that the use of the common system of taxation applicable to mergers and operations treated as such is to be subject to a process of prior approval only for transfers made to foreign legal persons.
            
         
         II – Legal framework
      
      A – EU law
      
      
               4.
            
            
               Article 49 TFEU (ex Article 43 EC) is worded as follows:
               ‘Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State.
               …’
            
         
               5.
            
            
               Article 4 of Directive 90/434 provides:
               ‘1.   A merger or division shall not give rise to any taxation of capital gains calculated by reference to the difference between the real values of the assets and liabilities transferred and their values for tax purposes.
               …’
            
         
               6.
            
            
               Article 11 of Directive 90/434 provides:
               ‘1.   A Member State may refuse to apply or withdraw the benefit of all or any part of the provisions of Titles II, III and IV where it appears that the merger, division, transfer of assets or exchange of shares:
               
                        (a)
                     
                     
                        has as its principal objective or as one of its principal objectives tax evasion or tax avoidance; the fact that one of the operations referred to in Article 1 is not carried out for valid commercial reasons such as the restructuring or rationalisation of the activities of the companies participating in the operation may constitute a presumption that the operation has tax evasion or tax avoidance as its principal objective or as one of its principal objectives.
                     
                  …’
            
         B – French law
      
      
               7.
            
            
               The relevant provisions of the General Tax Code (code général des impôts) (‘the CGI’) in force in France at the material time are as follows.
            
         
               8.
            
            
               Article 210 A of the CGI provides:
               ‘1.   Net capital gains and profits generated by all assets transferred as a result of a merger shall not be subject to corporation tax.
               …
               3.   The application of those provisions shall be subject to the condition that the acquiring company undertakes, in the merger instrument, to comply with the following requirements:
               …
               
                        b.
                     
                     
                        It must take the place of the acquired company for the reinstatement of the final balance which had been deferred for the purposes of the taxation of the acquired company;
                     
                  
                        c.
                     
                     
                        It must calculate the capital gains which arise subsequently on the disposal of the non-depreciable fixed assets transferred to it, on the basis of the value which they had for tax purposes in the acquired company’s records;
                     
                  
                        d.
                     
                     
                        It must reinstate in its taxable profits the capital gains generated when the depreciable assets are transferred …’
                     
                  
         
               9.
            
            
               Article 210 B(3) of the CGI provides:
               ‘... Approval shall be granted where, having regard to the assets transferred:
               
                        a.
                     
                     
                        the operation is justified for commercial reasons, resulting, inter alia, in the exercise by the company receiving the transfer of an independent activity, or in the improvement of structures, or in an association between the parties;
                     
                  
                        b.
                     
                     
                        the operation does not have as its principal objective or as one of its principal objectives tax evasion or tax avoidance;
                     
                  
                        c.
                     
                     
                        the manner in which the operation is carried out makes it possible for the capital gains deferred for tax purposes to be taxed in the future.’
                     
                  
         
               10.
            
            
               According to the referring court, Article 210 C of the CGI transposes Directive 90/434 into French law. That article states:
               ‘1.   The provisions of Articles 210 A and 210 B shall apply to operations entered into exclusively by legal persons or organisations liable to corporation tax.
               2.   Those provisions shall apply to transfers made to foreign legal persons by French legal persons only where those transfers were approved beforehand in accordance with the conditions laid down in Article 210 B(3).
               …’
            
         
         III – The dispute in the main proceedings and the questions referred for a preliminary ruling
      
      
               11.
            
            
               Euro Park was the shareholder of SCI Cairnbulg Nanteuil and is its successor in law.
            
         
               12.
            
            
               On 26 November 2004, SCI Cairnbulg Nanteuil was ‘wound up without going into liquidation … by and for the benefit of its sole shareholder ...’. (
                     3
                  ) At that time, SCI Cairnbulg Nanteuil opted to use the special system for mergers provided for in Article 210 et seq. of the CGI. Consequently, it did not, for the financial year ending 26 November 2004, declare for the purposes of corporation tax the net capital gains and profits generated by all the assets which it transferred to Euro Park Service.
            
         
               13.
            
            
               It is clear from the order for reference that those transfers, made up of immovable property, were valued at their net accounting value, that is to say EUR 9387700, in the notarial instrument of 19 April 2005 by which the transfer of the whole of the assets of SCI Cairnbulg Nanteuil to Euro Park Service was recorded. On the same day, the latter transferred that immovable property to SCI IBC Ferrier for the sum of EUR 15776600, corresponding to its market value as at 26 November 2004.
            
         
               14.
            
            
               Following a tax inspection, the tax authority called into question SCI Cairnbulg Nanteuil’s use of the special system for mergers. According to that authority, SCI Cairnbulg Nanteuil had not sought the ministerial approval provided for under the CGI and that approval would not, in any event, have been granted, since the operation at issue could not be justified for commercial reasons, but had the objective of evading or avoiding tax.
            
         
               15.
            
            
               Consequently, Euro Park, the successor in law to Cairnbulg Nanteuil, was made liable for the additional tax and the tax contributions, together with the penalties laid down in Article 1729 of the CGI in the event of a deliberate infringement.
            
         
               16.
            
            
               Euro Park requested the tribunal administratif de Paris (Administrative Court, Paris) (France) to order the cancellation of those taxes and penalties. By judgment of 6 July 2011, the tribunal administratif de Paris (Administrative Court, Paris) rejected that request. By judgment of 11 April 2013, the cour d’appel de Paris (Court of Appeal, Paris) (France) upheld the judgment of the tribunal administratif de Paris (Administrative Court, Paris). Euro Park brought an appeal in cassation before the Conseil d’État (Council of State). In that context, the Conseil d’État (Council of State) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
               
                        ‘(1)
                     
                     
                        When national legislation of a Member State makes use, in domestic law, of the option under Article 11(1) of [Directive 90/434], is there scope for the measures adopted for the implementation of that option to be reviewed in the light of primary EU law?
                     
                  
                        (2)
                     
                     
                        If so, must the provisions of Article 49 TFEU be interpreted as precluding national legislation, aimed at preventing tax evasion or avoidance, from imposing a condition that the use of the common system of taxation applicable to mergers and transactions treated as such is to be subject to a process of prior approval only as regards transfers made to foreign legal persons, but not transfers made to legal persons incorporated under national law?’
                     
                  
         
         IV – The procedure before the Court
      
      
               17.
            
            
               Written observations were submitted by Euro Park, the French Government and the European Commission. Those parties presented oral argument at the hearing on 7 September 2016.
            
         
         V – Analysis
      
      A – Preliminary observations
      
      
               18.
            
            
               As requested by the Court, this Opinion will focus on the second question referred by the referring court, which is raised only in the event that the first question referred is answered in the affirmative, namely that when national legislation of a Member State makes use, in domestic law, of the option under Article 11(1) of Directive 90/434, is there scope for the measures adopted for the implementation of that option to be reviewed in the light of primary EU law.
            
         
               19.
            
            
               By its second question, the referring court asks, in essence, whether Article 49 TFEU must be interpreted as meaning that it precludes national legislation, aimed at preventing tax evasion or avoidance, from imposing a condition that the use of the common system of taxation applicable to mergers and transactions treated as such is to be subject to a process of prior approval as regards transfers made to foreign legal persons, although that process does not apply to transfers made to legal persons incorporated under national law.
            
         
               20.
            
            
               It should be recalled that, according to the referring court and the French Government, Article 210 C of the CGI, which lays down the process of prior approval at issue, transposes Directive 90/434 into French law.
            
         
               21.
            
            
               According to the French Government, it is indisputable that the national legislation at issue is compatible with the provisions of Directive 90/434.
            
         
               22.
            
            
               Euro Park takes the view, however, that Article 210 C of the CGI is not compatible with Article 11 of Directive 90/434, and the Commission considers that the introduction of a process of approval for all transfers from one company to another in the context of a merger conflicts with the objective of Directive 90/434 as is clear from its first recital. A process of prior approval would render the benefit of that directive illusory. Furthermore, according to the Commission, it is not clear from the request for a preliminary ruling ‘to what extent French legislation contains provisions laying down detailed rules which are sufficiently precise, clear and foreseeable to enable taxpayers to know their rights and therefore to satisfy the general legal principle of legal certainty’.
            
         
               23.
            
            
               Therefore, before answering the second question raised by the referring court which is concerned with Article 49 TFEU, I take the view, like the Commission, that it is necessary to analyse Directive 90/434 and, in particular, Article 11(1)(a) thereof. (
                     4
                  )
            
         B – Directive 90/434
      
      
               24.
            
            
               It is settled case-law that the objective pursued by Directive 90/434, as is clear from its first recital, (
                     5
                  ) is to introduce ‘tax rules which are neutral from the point of view of competition in order to allow undertakings to adapt themselves to the requirements of the common market, to increase their productivity and to improve their competitive strength at the international level. That same recital also states that mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States ought not to be hampered by restrictions, disadvantages or distortions arising from the tax provisions of the Member States’. (
                     6
                  ) The objective of Directive 90/434 ‘is to eliminate fiscal barriers to cross-border restructuring of undertakings, by ensuring that any increases in the value of shares are not taxed until their actual disposal’. (
                     7
                  )‘To that end, Directive 90/434 provides, inter alia in Article 4, that a merger or division is not to give rise to any taxation of capital gains calculated by reference to the difference between the real value of the assets and liabilities transferred and their value for tax purposes …’ (
                     8
                  )
            
         
               25.
            
            
               However, the Court has also ruled that Article 11 of Directive 90/434 reserved to the Member States a degree of competence. (
                     9
                  )‘Article 11(1)(a) [of Directive 90/434] allows the Member States to refuse to apply or withdraw the benefit of all or any part of the provisions of [that] directive, including the tax advantages … [laid down in Article 4 of the directive], where it appears that the merger, division, transfer of assets or exchange of shares has, in particular, as its principal objective or as one of its principal objectives tax evasion or tax avoidance’. (
                     10
                  )
            
         
               26.
            
            
               Article 11(1)(a) of Directive 90/434 further states that the fact that the operation is not carried out for valid commercial reasons such as the restructuring or rationalisation of the activities of the companies participating in the operation may constitute a presumption that the operation has tax evasion or tax avoidance as its principal objective. (
                     11
                  )
            
         
               27.
            
            
               In paragraph 43 of the judgment of 17 July 1997 in Leur-Bloem (C‑28/95, EU:C:1997:369), the Court held that, in the absence of more detailed provisions of EU law concerning ‘application of the presumption mentioned in Article 11(1)(a), it is for the Member States, observing the principle of proportionality, to determine the provisions needed for the purposes of applying this provision’.
            
         
               28.
            
            
               The Court also ruled that the introduction of a general rule which automatically excludes certain categories of operations from the tax advantage would go further than is necessary for preventing tax evasion or avoidance and would undermine the aim pursued by Directive 90/434. (
                     12
                  ) It is settled case-law that, in order to determine whether an operation has as its objective tax evasion or avoidance, the Member States, in transposing Article 11(1)(a) of Directive 90/434, may not confine themselves to applying predetermined general criteria but must subject each particular case to a general examination of that issue. (
                     13
                  )
            
         C – Application of Article 11(1)(a) of Directive 90/434 in the present case
      1. The compatibility of Article 210 B(3) and Article 210 C(2) of the CGI with Article 11(1)(a) of Directive 90/434
      
               29.
            
            
               Under Article 210 B(3) of the CGI, the prior approval laid down in Article 210 C(2) of the CGI is to be granted where the operation satisfies three conditions, namely that it is justified for commercial reasons, that it does not have as its principal objective or as one of its principal objectives tax evasion or tax avoidance and that the manner in which the operation is carried out makes it possible for the capital gains deferred for tax purposes to be taxed in the future.
            
         
               30.
            
            
               The French Government submitted at the hearing that the approval provided for in Article 210 C(2) of the CGI was granted as soon as the operation at issue satisfied the first condition laid down in Article 210 B(3) of the CGI, namely that the operation was justified for commercial reasons. According to the French Government, when examining the operation, the tax authority is authorised only to ascertain the commercial reality of that operation and not its commercial desirability.
            
         
               31.
            
            
               In the light of the unequivocal wording of Article 210 B(3) of the CGI, which clearly requires three conditions to be satisfied before the approval may be granted, I cannot, without further evidence, take account of that argument put forward by the French Government.
            
         
               32.
            
            
               The French Government also submits that the French legislation requires not that the approval for a cross-border operation, covered by Directive 90/434, be granted in advance, but only that the application for approval be made in advance, that is to say, submitted before the operation is carried out. In the view of the French Government, in those circumstances, the operation at issue may be carried out before the approval has been granted by means of a condition precedent linked to the granting of the approval. Consequently, the French Government considers that that system is akin to a declaration system rather than an authorisation system.
            
         
               33.
            
            
               Apart from the fact that such a condition precedent seems to me actually impracticable and incompatible with the commercial reality of the operations covered by Directive 90/434, (
                     14
                  ) I would note, in particular, that Article 210 C(2) of the CGI expressly provides that the provisions of Article 210 A and Article 210 B of the CGI apply to transfers made to foreign legal persons by French legal persons only ‘where those transfers were approved beforehand in accordance with the conditions laid down in Article 210 B(3)’ (
                     15
                  ) of the CGI. (
                     16
                  ) Therefore, the wording of Article 210 C(2) of the CGI is in direct conflict with the argument put forward by the French Government.
            
         
               34.
            
            
               Furthermore, it is important to note that Article 11(1)(a) of Directive 90/434 authorises Member States not to apply the provisions of Directive 90/434 under only one condition, namely that the operation covered by that directive ‘has as its principal objective or as one of its principal objectives tax evasion or tax avoidance’. (
                     17
                  ) Like the Commission, I take the view that it is clear from what follows in Article 11(1)(a) that although the fact that the operation at issue is not carried out for valid commercial reasons may constitute a presumption that the operation has tax evasion or tax avoidance as its principal objective or as one of its principle objectives, the absence of valid commercial reasons does not constitute independent and additional justification for non-application of the provisions of Directive 90/434. (
                     18
                  )
            
         
               35.
            
            
               It follows that, by its first and second conditions, Article 210 B(3) of the CGI derives two conditions from the single element laid down in Article 11(1)(a) of Directive 90/434 and, therefore, extends the scope of the reservation of competence beyond that laid down in that provision.
            
         
               36.
            
            
               Moreover, the third condition laid down in Article 210 B(3) of the CGI, (
                     19
                  ) which is also not provided for in Article 11(1)(a) of Directive 90/434, (
                     20
                  ) cannot be justified by the aim of combating tax evasion or tax avoidance, (
                     21
                  ) as claimed by the French Government, since that objective is already expressly covered by the second condition of Article 210 B(3) of the CGI.
            
         
               37.
            
            
               In its written observations, the French Government considers that the provisions of the national legislation at issue concern not only the aim of combating tax evasion and tax avoidance but also the safeguarding of a balanced allocation between the Member States of the power to tax.
            
         
               38.
            
            
               I do not think that that argument can be upheld.
            
         
               39.
            
            
               Whilst it is true that the Court ruled that the balanced allocation between Member States of the power to tax could be accepted as justification for a restriction on fundamental freedoms, in particular, where the system in question is designed to prevent conduct capable of jeopardising the right of a Member State to exercise its tax jurisdiction in relation to activities carried out in its territory, (
                     22
                  ) the third condition of Article 210 B(3) of the CGI cannot be justified by that objective since the balanced allocation between the Member States of the power to tax is protected by Directive 90/434 itself and the relevant case-law.
            
         
               40.
            
            
               It is common ground that Article 4(1) of Directive 90/434 does not lead to a definitive exemption of the capital gains relating to the activity transferred. That provision provides only for the deferral of the taxation of the capital gains relating to the activity transferred until their actual disposal. According to the fourth recital of Directive 90/434, (
                     23
                  ) the tax system which it establishes avoids the imposition of tax in connection with the operations to which it refers ‘while at the same time safeguarding the financial interests of the State of the transferring or acquired company’. I would note that, in paragraph 28 of the case which gave rise to the judgment of 19 December 2012 in 3D I (C‑207/11, EU:C:2012:818), the Court ruled that ‘it follow[ed] from the fourth and sixth recitals in the preamble thereto that that directive establishe[d] only a system of deferral of the taxation of the capital gains relating to the assets transferred, which, while avoiding taxation arising from the business transfer itself, safeguards the financial interests of the State of the transferring company while ensuring taxation of those capital gains at the date of their actual disposal’.
            
         
               41.
            
            
               However, the third condition laid down in Article 210 B(3) of the CGI may seek to ensure the recovery of taxes at the time of the actual disposal of the capital gains. (
                     24
                  ) In addition to the fact that that objective is not covered by the reservation of competence laid down in Article 11(1)(a) of Directive 90/434 and therefore constitutes an additional requirement which widens the scope of the reservation of competence provided for by that provision, it should be noted that the recovery of taxes may be ensured by means other than that process of prior approval, namely, in particular, use of Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures. (
                     25
                  )
            
         
               42.
            
            
               In conclusion, national legislation such as that in the case in the main proceedings extends the conditions set out in Article 11(1)(a) of Directive 90/434 governing the right of Member States to refuse to apply to the operations referred to in Directive 90/434 the tax advantages laid down therein.
            
         2. The introduction of a general presumption of tax evasion or tax avoidance
      
               43.
            
            
               It is clear from the file before the Court that the national legislation at issue, and in particular Article 210 B(3) and Article 210 C(2) of the CGI, provides, for each cross-border merger, for a process of prior approval which systematically and unconditionally requires that evidence be provided that the operation at issue is justified for commercial reasons and does not have as its principal objective or as one of its principle objectives tax evasion or tax avoidance, without the tax authority being required to provide even prima facie evidence of the absence of valid commercial reasons or evidence of tax evasion or tax avoidance. (
                     26
                  )
            
         
               44.
            
            
               I would note that by making, in relation to cross-border mergers, use of the system of taxation laid down in Directive 90/434 subject to such a process of prior approval, the national legislation at issue introduces a general presumption of tax evasion or tax avoidance.
            
         
               45.
            
            
               Apart from the fact that the Court has never accepted that a restriction of one of the fundamental freedoms guaranteed by the Treaty can be justified by a need to combat tax evasion or tax avoidance based on a general presumption of evasion or abuse, (
                     27
                  ) the introduction of such a presumption seems to me clearly to infringe the principle of proportionality. It is apparent from the case-law of the Court that, ‘where rules are predicated on an assessment of objective and verifiable elements for the purposes of determining whether a transaction represents a wholly artificial arrangement entered into for tax reasons alone, they may be regarded as not going beyond what is necessary to prevent tax evasion and avoidance, if, on each occasion on which the existence of such an arrangement cannot be ruled out, those rules give the taxpayer an opportunity, without subjecting him to undue administrative constraints, to provide evidence of any commercial justification that there may have been for that transaction’. (
                     28
                  ) It follows from the foregoing that legislation cannot require the taxpayer to provide, as a matter of course, proof that an operation is genuine and proper, without the tax authority being required to provide even prima facie evidence of tax evasion or avoidance. (
                     29
                  ) Whilst the process of prior approval is indeed appropriate for combating the tax evasion or tax avoidance covered by Article 11(1)(a) of Directive 90/434, (
                     30
                  ) it undermines the scheme of that provision and goes beyond what is necessary to attain the objective pursued.
            
         
               46.
            
            
               The introduction of a presumption such as that at issue in the case in the main proceedings subjects, systematically and in advance, every cross-border merger to significant administrative constraints, even where there is no evidence whatsoever of tax evasion or tax avoidance. Such a presumption therefore goes against the objective of Directive 90/434, which, according to its first recital, seeks to
                  reduce obstacles to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States arising from the tax provisions of the Member States. (
                     31
                  )
            
         D – The judgment in Pelati
         
      
      
               47.
            
            
               The French Government considers that in the judgment of 18 October 2012 in Pelati (C‑603/10, EU:C:2012:639, paragraph 32), the existence of a prior administrative procedure designed to assess eligibility for the advantages set out in Directive 90/434 was not criticised in the light of EU law except as regards the starting-point of the time-limit for the application for approval which was not known in advance by the taxpayer. (
                     32
                  )
            
         
               48.
            
            
               It is true that in the judgment of 18 October 2012 in Pelati (C‑603/10, EU:C:2012:639, paragraph 37), the Court ruled that legislation such as that at issue ‘under which the grant of the tax advantages applicable to a division in accordance with that directive is subject to the condition that the application relating to that operation is submitted within a specified period’ was not contrary to Directive 90/434 and left it to the referring court to ascertain whether the details, and more particularly the starting-point, of the time-limit for submitting the pending application complied with the principle of effectiveness.
            
         
               49.
            
            
               I do not believe, however, that it is possible to find in that judgment of 18 October 2012 in Pelati (C‑603/10, EU:C:2012:639) the conclusions which the French Government draws from it in relation to the present case. In that case, the Slovenian tax authority’s refusal to grant the tax advantages laid down in Directive 90/434 was based solely on the fact that the application for prior approval had not been submitted within the time-limit provided for by the national legislation at issue.
            
         
               50.
            
            
               That case is in no way concerned with the substantive conditions, which, furthermore, are not described in the judgment. The Court ruled that the mere fact of providing for a process of prior approval was not contrary to Directive 90/434 and focused its analysis on whether the provisions relating to the time-limit for submitting the application complied with the principle of effectiveness.
            
         
               51.
            
            
               What appears to be open to question in the present case is not the existence as such of an approval process, but the substantive conditions and conditions as to evidence required to obtain that approval and, more particularly, whether those conditions comply with the principle of proportionality, a question with which, furthermore, the judgment of 18 October 2012 in Pelati (C‑603/10, EU:C:2012:639) is not concerned.
            
         
               52.
            
            
               Furthermore, it is clear from the judgment of 18 October 2012 in Pelati (C‑603/10, EU:C:2012:639, paragraph 36), that the details of the implementation of a process of prior approval must be sufficiently precise, clear and foreseeable to enable taxpayers to ascertain their rights and to ensure that they will be in a position to enjoy the tax advantages provided for by Directive 90/434.
            
         
               53.
            
            
               In that regard, by pointing out that, during 2015, all of the applications for approval under Article 210 B of the CGI were granted by the French administrative authorities, the French Government takes the view that the introduction of a prior approval process ensures greater legal certainty for the company granted the approval, since the eligibility criteria for that approval are clear, precise and foreseeable.
            
         
               54.
            
            
               However, Euro Park argues that ‘there is no time limit for obtaining approval. At most, the tax authority’s four-month silence constitutes an implied rejection decision which may be challenged before the Tax Court’. Euro Park adds that ‘the time-limits for processing the application for approval are manifestly incompatible with the course of trade’.
            
         
               55.
            
            
               In my view, the French legislation does not lay down detailed rules which are sufficiently precise, clear and foreseeable to enable taxpayers to know their rights and therefore to satisfy the general principle of legal certainty.
            
         
               56.
            
            
               At the hearing of 7 September 2016, the French Government confirmed that the conditions for application of the approval process at issue were described only briefly in Article 210 B of the CGI, adding that the details of those conditions could be found on the tax authority’s website and in the public comments of the tax authority, which can be relied on as against the French administrative authorities.
            
         
               57.
            
            
               Added to this is the fact that the provisions of Article 210 B(3) of the CGI and of Article 210 C(2) of the CGI are not consistent, (
                     33
                  ) according to the French Government itself, with the ‘practice’ applied by the French administrative authorities in this field, which is in itself sufficient to create uncertainty as to the detailed rules for the application of Article 11(1)(a) of Directive 90/434 in France. Those detailed rules do not appear to be sufficiently precise, clear and foreseeable to enable taxpayers to ascertain their rights, particularly since at least some of those rules may be changed at the discretion of the tax authority.
            
         
               58.
            
            
               It is also necessary to note that the statistics relied on by the French Government relate only to 2015 whereas the operation at issue in the main proceedings was carried out in 2004 and that, at the hearing, the French Government was unable to provide statistics for any of the other years.
            
         
               59.
            
            
               As regards the time-limits applicable to the approval process, the French Government stated, in response to questions raised by the Court at the hearing, that, pursuant to a (non-specified) decree, reasons were always given for rejection decisions, but also confirmed that the fact that four months had passed with no response from the tax authority to an application for prior approval amounted to an implied rejection decision, which will, in that case, be reasoned only if the taxpayer so requests.
            
         
               60.
            
            
               In my view, those elements are not consistent with the objective of Directive 90/434 set out in its first recital, according to which the operations covered by that Directive must not be hampered by restrictions, disadvantages or distortions arising in particular from the tax provisions of the Member States.
            
         
               61.
            
            
               In those circumstances and having regard to the foregoing considerations, in particular concerning the principles of proportionality, legal certainty and effectiveness, I take the view that Article 11(1)(a) of Directive 90/434 precludes national legislation, aimed at preventing tax evasion or avoidance, from imposing a condition that the use of the common system of taxation applicable to mergers and operations treated as such is to be subject to a process of prior approval such as that at issue, which is limited only to transfers made to foreign legal persons and excludes transfers made to legal persons incorporated under national law.
            
         E – The existence of a restriction on the freedom of establishment
      
      
               62.
            
            
               It is settled case-law that Article 49 TFEU requires the abolition of restrictions on the freedom of establishment. Even though, according to their wording, the Treaty provisions on freedom of establishment are aimed at ensuring that foreign nationals are treated in the host Member State in the same way as nationals of that State, they also prohibit the Member State of origin from hindering the establishment in another Member State of one of its nationals or of a company incorporated under its legislation. (
                     34
                  )
            
         
               63.
            
            
               It is also settled case-law that all measures which prohibit, impede or render less attractive the exercise of the freedom of establishment must be regarded as restrictions on that freedom. (
                     35
                  )
            
         
               64.
            
            
               The French Government accepts that the legislation at issue constitutes a restriction on the freedom of establishment since it treats mergers, divisions, transfers of assets or exchanges of shares carried out between companies of different Member States less favourably than the same operations when carried out between two French companies.
            
         
               65.
            
            
               I also think that, by imposing a condition that the use of the common system of taxation applicable to mergers and operations treated as such is to be subject to a process of prior approval only for transfers made to foreign legal persons but not for transfers made to legal persons incorporated under national law, the national legislation at issue impedes the freedom of establishment of French companies wishing to carry out cross-border operations.
            
         
               66.
            
            
               In order to qualify for the special tax system, transfers made by a legal person governed by French law to a foreign legal person are made less attractive, since they are subject to an additional condition, namely the prior approval of the tax authority, a process which requires them to rebut a general presumption of tax evasion. (
                     36
                  )
            
         
               67.
            
            
               Consequently, Article 210 B(3) of the CGI and Article 210 C(2) of the CGI introduce a difference in treatment for cross-border operations which is likely to deter French companies from exercising their freedom of establishment.
            
         F – Justification
      
      
               68.
            
            
               The question remains whether that restriction can be justified in the light of the provisions of the FEU Treaty.
            
         
               69.
            
            
               According to well-established case-law, national measures which are liable to hinder the exercise of fundamental freedoms guaranteed by the Treaty or make them less attractive may be allowed if they pursue a legitimate objective in the public interest, are appropriate to ensuring the attainment of that objective, and do not go beyond what is necessary to attain it. (
                     37
                  )
            
         
               70.
            
            
               It should be noted that, according to settled case-law, the objective of combating tax evasion or tax avoidance (
                     38
                  ) may justify a measure restricting the exercise of the fundamental freedoms guaranteed by the Treaty.
            
         
               71.
            
            
               Nevertheless, it must be ascertained whether the national legislation at issue goes beyond what is necessary to attain those objectives.
            
         
               72.
            
            
               For that analysis, I shall start from the principle that the objective of combating tax evasion or tax avoidance referred to in Article 11(1)(a) of Directive 90/434 reflects the general principle of EU law which prohibits abuse of rights. Therefore, it is my view that that objective has the same scope when it is relied on under Article 11(1)(a) of Directive 90/434 or as justification for an exception to primary law, in particular Article 49 TFEU.
            
         
               73.
            
            
               I would also point out that, at the hearing of 7 September 2016, the French Government noted that it is clear from the relationship between paragraph 45 of the judgment of 26 September 2000 in Commission v Belgium (C‑478/98, EU:C:2000:497) and paragraph 44 of the judgment of 17 July 1997 in Leur-Bloem (C‑28/95, EU:C:1997:369) that the Court understands the concept of general presumption of tax evasion in the same way when examining the compatibility of national legislation with primary law, in particular Article 49 TFEU, and Article 11(1)(a) of Directive 90/434.
            
         
               74.
            
            
               Therefore, the considerations that I have set out in this Opinion on the proportionality of the system of prior approval at issue and the general presumption of tax evasion or tax avoidance which it introduces apply, mutatis mutandis, to the analysis of the system of approval in the light of Article 49 TFEU, which, therefore, for the same reasons as those set out in Article 11(1)(a) of Directive 90/434, precludes a system of prior approval such as that at issue.
            
         
         VI – Conclusion
      
      
               75.
            
            
               In the light of the foregoing conclusions, I invite the Court to answer the second question referred by the Conseil d’État (Council of State, France) as follows:
               Article 49 TFEU and Article 11(1)(a) of Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States preclude national legislation, aimed at preventing tax evasion or avoidance, from imposing a condition that the use of the common system of taxation applicable to mergers and transactions treated as such is to be subject to a process of prior approval such as that at issue, which applies only to transfers made to foreign legal persons, but not to transfers made to legal persons incorporated under national law and requires the taxpayer, as a matter of course, to provide proof that an operation is genuine and proper, even where there is no evidence whatsoever of tax evasion or tax avoidance.
            
         (
            1
         )	Original language: French.
      (
            2
         )	OJ 1990 L 225, p. 1.
      (
            3
         )	As described in the request for a preliminary ruling.
      (
            4
         )	Directive 90/434 was repealed, in the interests of clarity and rationality, by Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States (OJ 2009 L 310, p. 34), which codified Directive 90/434. I would note that Article 15(1)(a) of Directive 2009/133 is essentially the same as Article 11(1)(a) of Directive 90/434.
      (
            5
         )	The first recital of Directive 90/434 states as follows: ‘whereas mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States may be necessary in order to create within the Community conditions analogous to those of an internal market and in order thus to ensure the establishment and effective functioning of the common market; whereas such operations ought not to be hampered by restrictions, disadvantages or distortions arising in particular from the tax provisions of the Member States; whereas to that end it is necessary to introduce with respect to such operations tax rules which are neutral from the point of view of competition, in order to allow enterprises to adapt to the requirements of the common market, to increase their productivity and to improve their competitive strength at the international level ...’. Emphasis added.
      (
            6
         )	See the judgment of 20 May 2010 in Modehuis A. Zwijnenburg (C‑352/08, EU:C:2010:282, paragraph 38).
      (
            7
         )	See the judgment of 20 May 2010 in Modehuis A. Zwijnenburg (C‑352/08, EU:C:2010:282, paragraph 39).
      (
            8
         )	See the judgment of 20 May 2010 in Modehuis A. Zwijnenburg (C‑352/08, EU:C:2010:282, paragraph 40).
      (
            9
         )	See the judgment of 17 July 1997 in Leur-Bloem (C‑28/95, EU:C:1997:369, paragraph 35).
      (
            10
         )	Emphasis added. See the judgment of 17 July 1997 in Leur-Bloem (C‑28/95, EU:C:1997:369, paragraph 38). Article 11(1)(a) of Directive 90/434 reflects the general principle of EU law that prohibits abuse of rights. See the judgment of 10 November 2011 in Foggia — Sociedade Gestora de Participações Sociais (C‑126/10, EU:C:2011:718, paragraph 50).
      (
            11
         )	See, also, the judgment of 20 May 2010 in Modehuis A. Zwijnenburg (C‑352/08, EU:C:2010:282, paragraph 43). It should be noted that, in paragraphs 45 and 46 of that judgment, the Court pointed out that it is only by way of exception and in specific cases that Member States may, pursuant to Article 11(1)(a) of Directive 90/434, refuse to apply or withdraw the benefit of all or any part of the provisions of that directive. Consequently, Article 11(1)(a) of Directive 90/434, as a provision setting out an exception, must be subject to strict interpretation, regard being had to its wording, purpose and context.
      (
            12
         )	Judgment of 10 November 2011 in Foggia — Sociedade Gestora de Participações Sociais (C‑126/10, EU:C:2011:718, paragraph 37).
      (
            13
         )	See, to that effect, the judgment of 10 November 2011 in Foggia — Sociedade Gestora de Participações Sociais (C‑126/10, EU:C:2011:718, paragraph 37 and the case-law cited).
      (
            14
         )	The existence of a condition precedent actually implies that the operation is not carried out.
      (
            15
         )	Emphasis added.
      (
            16
         )	The point at issue is an application for prior approval, not a prior application for approval!
      (
            17
         )	See Article 11(1)(a) of Directive 90/434 and point 25 of this Opinion.
      (
            18
         )	Furthermore, it is my view that it is incumbent on the national administrative authorities to demonstrate the absence of commercial reasons in order to benefit from the presumption laid down in the second sentence of Article 11(1)(a) of Directive 90/434 that an operation has tax evasion or tax avoidance as its principal objective. See points 26 to 28 of this Opinion.
      (
            19
         )	Namely ‘the manner in which the operation is carried out makes it possible for the capital gains deferred for tax purposes to be taxed in the future’.
      (
            20
         )	Nor, furthermore, by the reservation of competence to the Member States laid down in Article 11(1)(b) of Directive 90/434, which is concerned with the representation of employees.
      (
            21
         )	The only aspect provided for in Article 11(1)(a) of Directive 90/434.
      (
            22
         )	See, in particular, the judgment of 5 July 2012 in SIAT (C‑318/10, EU:C:2012:415, paragraph 45).
      (
            23
         )	The fourth recital of Directive 90/434 states that ‘the common tax system ought to avoid the imposition of tax in connection with mergers, divisions, transfers of assets or exchanges of shares, while at the same time safeguarding the financial interests of the State of the transferring or acquired company’. See also, by analogy, the sixth recital of Directive 90/434 which states that, ‘the system of deferral of the taxation of the capital gains relating to the assets transferred until their actual disposal, applied to such of those assets as are transferred to that permanent establishment, permits exemption from taxation of the corresponding capital gains, while at the same time ensuring their ultimate taxation by the State of the transferring company at the date of their disposal’.
      (
            24
         )	At the hearing of 7 September 2016 and following a question put by the Court, the French Government was not able to confirm the objective of that third condition. Euro Park argued at the hearing that the third condition seeks to ensure that there remains a permanent establishment in French territory.
      (
            25
         )	OJ 2010 L 84, p. 1.
      (
            26
         )	According to the Commission, ‘it appears to fall exclusively to the taxpayer to demonstrate that there is no tax abuse or tax avoidance, without the French administrative authorities being required to provide even prima facie evidence, so as to permit only then the taxpayer to provide evidence that there is no tax evasion or tax avoidance’.
      (
            27
         )	See, by analogy, the judgment of 9 November 2006 in Commission v Belgium (C‑433/04, EU:C:2006:702, paragraph 35 and the case-law cited) where the Court ruled that ‘a general presumption of tax avoidance or fraud is not sufficient to justify a fiscal measure which compromises the objectives of the Treaty’. See, also, the judgments of 4 March 2004 in Commission v France (C‑334/02, EU:C:2004:129, paragraph 27); 12 September 2006 in Cadbury SchweppesandCadbury Schweppes Overseas (C‑196/04, EU:C:2006:544, paragraphs 50 and 51) and 13 March 2007 in Test Claimants in the Thin Cap Group Litigation (C‑524/04, EU:C:2007:161, paragraph 82).
      (
            28
         )	See the judgment of 3 October 2013 in Itelcar (C‑282/12, EU:C:2013:629, paragraph 37 and the case-law cited).
      (
            29
         )	See, by analogy, the judgment of 5 July 2012 in SIAT (C‑318/10, EU:C:2012:415, paragraph 55), in which the Court points out that ‘the special rule requires the … taxpayer to provide, as a matter of course, proof that all the services are genuine and proper and that all related payments are normal, without the tax authority being required to provide even prima facie evidence of tax evasion or avoidance’.
      (
            30
         )	See, by analogy, the judgment of 5 July 2012 in SIAT (C‑318/10, EU:C:2012:415, paragraph 42). The Commission takes the view that, although the national legislation at issue is appropriate for preventing conduct consisting in the creation of wholly artificial arrangements which do not reflect economic reality, with a view to escaping the tax normally due on the profits generated by activities carried out on the national territory, that legislation infringes the principle of proportionality.
      (
            31
         )	The Commission takes the view that the general presumption of tax evasion or tax avoidance introduced by the French legislation undermines the objective of Directive 90/434.
      (
            32
         )	Euro Park claims that although the requirement for approval is not in itself contrary to the directive, the granting of that approval cannot legitimately be made subject to constraints additional to those laid down in Directive 90/434.
      (
            33
         )	See points 30 and 32 of this Opinion.
      (
            34
         )	See the judgment of 29 November 2011 in National Grid Indus (C‑371/10, EU:C:2011:785, paragraph 35 and the case-law cited).
      (
            35
         )	See the judgment of 29 November 2011 in National Grid Indus (C‑371/10, EU:C:2011:785, paragraph 36).
      (
            36
         )	See points 42 to 44 of this Opinion.
      (
            37
         )	See the judgment of 7 September 2006 in N (C‑470/04, EU:C:2006:525, paragraph 40 and the case-law cited).
      (
            38
         )	See the judgments of 12 September 2006 in Cadbury Schweppes and Cadbury Schweppes Overseas (C‑196/04, EU:C:2006:544, paragraphs 51 and 55) and 9 November 2006 in Commission v Belgium (C‑433/04, EU:C:2006:702, paragraph 35 and the case-law cited).