CELEX: 62007CC0397
Language: en
Date: 2009-03-05 00:00:00
Title: Opinion of Advocate General Kokott delivered on 5 March 2009. # Commission of the European Communities v Kingdom of Spain. # Failure of a Member State to fulfil obligations - Indirect taxes on the raising of capital - Capital companies - Directive 69/335/EEC - Articles 2(1) and (3), 4(1) and 7 - Capital duty - Exemption - Conditions - Transfer of effective centre of management or of registered office from one Member State to another Member State - Capital duty on the capital allocated to commercial activities pursued in a Member State by branches or permanent establishments of companies established in another Member State. # Case C-397/07.

OPINION OF ADVOCATE GENERAL
      KOKOTT
      delivered on 5 March 2009 1(1)
      
      Case C‑397/07
      Commission of the European Communities
      v
      Kingdom of Spain
      (Directive 69/335/EEC – Indirect taxes – Raising of capital – Restructuring measures – Transfer of a company’s registered office)I –  Introduction
      1.        In the present action for failure to fulfil obligations, the Commission alleges that the Kingdom of Spain has failed to fulfil
         its obligations under Directive 69/335/EEC concerning indirect taxes on the raising of capital. (2)
      
      2.        The case concerns, first, provisions of Spanish law which make tax exemptions that are mandatory under the directive dependent
         on opting for a specific tax regime. At issue, secondly, are provisions concerning the taxation of the transfer of a company’s
         registered office to Spain from another Member State. Thirdly, the Commission objects to Spanish provisions under which tax
         is charged on capital used to carry out the business activity of foreign companies in Spain.
      
      II –  Legal framework
      A –    Directive 69/335
      3.        According to the first and second recitals in its preamble, Directive 69/335 is designed to promote the free movement of capital.
         For that purpose, as the sixth to eighth recitals in the preamble indicate, the directive provides for the harmonisation of
         the duties on contributions of capital to companies, by introducing a uniform tax on the raising of capital (‘capital duty’).
         That duty is to be charged once only within the common market. 
      
      4.        Article 2 of the directive provides:
      
      ‘1.      Transactions subject to capital duty shall only be taxable in the Member State in whose territory the effective centre of
         management of a capital company is situated at the time when such transactions take place.
      
      …
      3.      When the registered office and the effective centre of management of a capital company are situated in a third country, the
         supplying of fixed or working capital to a branch situated in a Member State may be taxed in the Member State in whose territory
         the branch is situated.’
      
      5.        Article 3 of the directive specifies the companies that are to be considered as capital companies within the meaning of the
         directive.
      
      6.        Article 4(1) of the directive lists the transactions which are subject to capital duty. These include both the formation of
         a capital company and the increase of its capital, and:
      
      ‘(g)      the transfer from a Member State to another Member State of the effective centre of management of a company, firm, association
         or legal person which is considered in the latter Member State, for the purposes of charging capital duty, as a capital company,
         but is not so considered in the other Member State;
      
      (h)      the transfer from a Member State to another Member State of the registered office of a company, firm, association or legal
         person, whose effective centre of management is in a third country and which is considered in the latter Member State, for
         the purposes of charging capital duty, as a capital company, but is not so considered in the other Member State.’
      
      7.        As regards the rate of capital duty, the original version of Article 7 of Directive 69/335 provided as follows:
      
      ‘1.      Until the entry into force of the provisions to be adopted by the Council in accordance with paragraph 2:
      (a)      the rate of capital duty may not exceed 2% or be less than 1%;
      (b)      this rate shall be reduced by 50% or more when one or more capital companies transfer all their assets and liabilities, or
         one or more parts of their business to one or more capital companies which are in the process of being formed or which are
         already in existence. 
      
      …’
      8.        Directive 73/80/EEC (3) reduced to between 0% and 0.50% the rate of capital duty laid down in the original version of Article 7(1)(b) of the directive.
      
      9.        Council Directive 73/79/EEC of 9 April 1973 (4) extended the field of application of the reduced rate of capital duty. It added to Article 7(1) a subparagraph (bb) which
         covers further restructuring measures. According to that subparagraph, the rate of capital duty may also be reduced where
      
      ‘a capital company which is in the process of being formed or is already in existence acquires shares representing at least
         75% of the issued share capital of another capital company. Where the said percentage is reached by means of two or more transactions,
         the reduced rate shall apply only to the transaction whereby this percentage is reached and to subsequent transactions’.
      
      10.      Directive 85/303 (5) introduced further amendments. It broadened the aim of the directive, as is apparent from the second and third recitals in
         its preamble:
      
      ‘… the economic effects of capital duty are detrimental to the regrouping and development of undertakings; … such effects
         are particularly harmful in the present economic situation in which there is a paramount need for priority to be given to
         stimulating investment;
      
      … the best solution for attaining these objectives would be to abolish capital duty …’
      11.      As amended by Directive 85/303, Article 7 now reads as follows:
      
      ‘l.      Member States shall exempt from capital duty transactions, other than those referred to in Article 9, which were, as at 1
         July 1984, exempted or taxed at a rate of 0.50% or less.
      
      …
      2.      Member States may either exempt from capital duty all transactions other than those referred to in paragraph 1 or charge duty
         on them at a single rate not exceeding 1%.’
      
      B –    National law
      12.      Article 19(1)(1) of the Spanish Law on capital transfers and documented legal transactions (Ley del Impuesto sobre Transmisiones
         Patrimoniales y Actos Jurídicos Documentados) (‘the tax law’), enacted by Royal Legislative Decree (Real Decreto Legislativo)
         No 1/1993, (6) stipulates which transactions are subject to capital duty. Included among these transactions are the formation of a company,
         increasing or reducing a company’s capital, mergers and demergers, and the winding-up of companies.
      
      13.      Article 45, Part I(b)(10), and Article 21 of the tax law, in conjunction with the second additional provision of the consolidated
         version of the Spanish Law on corporation tax (Ley del Impuesto sobre Sociedades) (‘the law on corporation tax’) (7) provides that transactions involving merger, demerger, the transfer of parts of undertakings and the exchange of shares,
         defined in Title VII of Chapter VIII of the law on corporation tax, which establishes a special regime in this connection,
         are exempt from the duty, provided that this regime is in each case applicable to the transaction concerned.
      
      14.      Article 96 of the law on corporation tax, entitled ‘Applicability of the tax regime’, sets out the conditions governing the
         applicability of this special regime. It provides:
      
      ‘1.      In order for the regime established in this Chapter to be applicable, there must have been an election to opt for the regime
         and the following conditions must have been satisfied:
      
      (a)      in cases of merger and of demerger, that option must have been included within the proposal and the agreements for merger
         or demerger of the transferor and transferee undertakings, which are domiciled for tax purposes in Spain.
      
      …
      (b)      with regard to contributions in kind, the option must be exercised by the transferee undertaking in the resolution approving
         the takeover or merger, which failing, in the authentic instrument by which the transaction or contract in question is constituted.
      
      …
      (c)      in cases involving a share exchange, the option must be exercised by the transferee undertaking in the resolution approving
         the takeover or merger, which failing, in the authentic instrument by which the transaction or contract in question is constituted.
         In cases involving a public offer for the acquisition of shares, the option must be exercised by the body of the company having
         the authority to implement the transaction and must appear in the information documents relating to the offer. 
      
      …
      In every case, the exercise of the option must be notified to the Ministry of Finance in the form and within the period laid
         down by the applicable provisions.
      
      2.      The regime laid down by this Chapter shall not apply where the principal object of the transaction entered into is tax avoidance
         or tax evasion. In particular, the regime shall not apply where the transaction is entered into otherwise than for valid economic
         reasons, such as the restructuring or rationalisation of the activities of the undertakings involved in the transaction, but
         solely in order to obtain a tax advantage.
      
      …’
      15.      Article 19(3) of the tax law provides that liability to the tax is to arise in cases involving:
      
      ‘The transfer of the place of the centre of effective management or the registered office of a company to Spain, where neither
         of these was previously located in a Member State of the European Economic Community or where the undertaking was not subject,
         in a Member State, to a tax equivalent to the duty provided for in this Title.’
      
      16.      Article 20 of the tax law provides:
      
      ‘Undertakings which carry out, through branches or permanent establishments, commercial transactions in Spain and whose registered
         office or centre of effective management are located in a country which does not belong to the European Economic Community
         or are located in such a country without the undertaking being subject to a tax equivalent to the duty provided for in this
         Title, shall be taxed in the same way and under the same conditions as Spanish undertakings as regards the amount of their
         capital which is allocated to those transactions.’
      
      III –  Procedure and forms of order sought
      17.      The pre-litigation procedure having been duly carried out, the Commission has brought the present action, in which it claims
         that the Court should (a) declare that:
      
      –        by subjecting the application of the obligatory exemptions from capital duty to certain conditions,
      –        by imposing an indirect tax on the transfer of the effective centre of management or the registered office of a company to
         Spain, for those companies which have not been subject to a similar tax in their country of origin, and
      
      –        by subjecting to an indirect tax capital used to carry out business transactions through a subsidiary or fixed place of business
         of companies established in another Member State which does not apply a tax similar to the Spanish tax,
      
      the Kingdom of Spain has failed to fulfil its obligations under Directive 69/335;
      and (b):
      –        order the Kingdom of Spain to pay the costs.
      18.      The Kingdom of Spain contends that the Court should dismiss the action and order the Commission to pay the costs.
      
      19.      The Hellenic Republic was granted leave to intervene by decision of 11 February 2008, but took part in neither the written
         nor the oral procedure.
      
      20.      On completion of the written procedure, the parties made oral submissions at the hearing before the Court on 15 January 2009.
      
      IV –  Legal assessment
      A –    First plea
      21.      By its first plea, the Commission alleges that the Spanish legislation makes subject to an inadmissible condition the tax
         exemption for certain transactions in relation to which the directive stipulates that such tax exemption is mandatory.
      
      1.      The different requirements for exemption from duty for transactions under Article 7(1)(b) and (bb)
      22.      One can only assess whether it is contrary to the directive to introduce conditions for the grant of tax exemptions, if it
         is first established whether the directive actually provides for mandatory exemption from tax for the transactions at issue. That question cannot, for instance, be left open simply because the parties
         tacitly answer it in the affirmative. It is, in fact, a point of law which is material to the resolution of the dispute in
         the main proceedings and which the Court must examine of its own motion. 
      
      23.      Pursuant to Article 7(1) of the directive, as amended by Directive 85/303, it is mandatory to exempt from capital duty those
         transactions which were, as at 1 July 1984, exempted or taxed at a rate 0.50% or less.
      
      24.      In that connection, it should be borne in mind that Spain did not become a member of the European Communities until 1 January
         1986. However, the Court has already held that the date of 1 July 1984, which Article 7(1) of Directive 69/335 sets as the
         reference date, applies also to Member States which acceded to the Communities after that date. (8)
      
      25.      In its application, the Commission refers – without entering into further detail – to transactions which it is mandatory to
         exempt. However, the grounds of the application indicate that the Commission is referring here to those company restructuring
         transactions which are identified in Article 7(1)(b) or (bb) of the earlier version of the directive. 
      
      26.      For the purposes of my further analysis, it is necessary – as the Commission also correctly maintains – to distinguish between
         the restructuring transactions that are covered by Article 7(1)(b) and those that are covered by Article 7(1)(bb).
      
      27.      In the case of transactions subject to Article 7(1)(b), it is in fact irrelevant, as I shall explain below, whether and at
         what rate they were actually taxed in Spain on 1 July 1984. 
      
      28.      The original version of Article 7(1)(b) provided for a rate of tax of 1%, which was reduced to between 0% and 0.50% by Directive
         73/80. It follows that all the Member States were under an obligation to tax transactions subject to Article 7(1)(b) at a
         maximum rate of 0.50% no later than 1 July 1984. Since Directive 85/303 stipulated that it was mandatory to exempt all transactions
         that were subject to a rate of capital duty of 0.50% or less, there was an automatic requirement to exempt transactions subject to Article 7(1)(b), as a result of the earlier reduction in the rate of tax.
      
      29.      That being so, Spain cannot object that it did not accede to the European Communities until 1 January 1986 and that, consequently,
         the versions of Directive 73/80 which reduced the rate of tax on transactions subject to Article 7(1)(b) as at 1 January 1976 (9) to 0.50% were not directly applicable to Spain. The legislative effect of Directive 85/303 is the same in relation to Spain
         as to the existing Member States. At the time of Spain’s accession, the rate of tax, which had been reduced by the amendments
         to Directive 69/335, formed part of the acquis communautaire whose implementation Spain had to ensure, and, on the basis of the acquis, the directive gives rise to mandatory tax exemptions for transactions subject to Article 7(1)(b). 
      
      30.      As regards transactions subject to Article 7(1)(b), any other interpretation would result, contrary to the aim of the directive,
         in capital duty being inconsistently applied in the existing and new Member States. The existing Member States were required
         to apply a reduced rate of tax to transactions covered by Article 7(1)(b) on 1 July 1984, with the result that it was mandatory
         to exempt such transactions from capital duty by virtue of Directive 85/303. If, in relation to Member States which acceded
         later, the point of reference for transactions covered by Article 7(1)(b) was their actual taxation as at 1 July 1984 and
         not, hypothetically, the taxation obtaining under the acquis communautaire at that date, the effect would be to undermine the directive’s declared aim of achieving harmonisation.
      
      31.      Consequently, it is obligatory for restructuring measures under Article 7(1)(b) of the directive to be exempted from the tax
         in Spain. 
      
      32.      With regard to transactions under Article 7(1)(bb), however, the principle continues to apply that it is mandatory to exempt
         them from the tax only if, as at 1 July 1984, they were actually exempted from the tax or were subject to a maximum rate of
         tax of 0.50%. In its original version, the directive in fact provided for only an optional and not a compulsory tax reduction
         in relation to such transactions. (10)
      
      33.      It follows that, unlike transactions under Article 7(1)(b), transactions under Article 7(1)(bb) were not uniformly and mandatorily
         subject, as at 1 July 1984, to a rate of tax which resulted in it being mandatory to exempt them from tax on the basis of
         Directive 85/303.
      
      2.      Factual basis of the application as regards transactions covered by Article 7(1)(bb) 
      34.      For the application to be conclusive, the Commission would, therefore, have needed to argue, in relation to transactions subject
         to Article 7(1)(bb), that such transactions were exempt from the duty in Spain as at 1 July 1984. Only in that event would
         it be mandatory to exempt the transactions from the duty under the directive.
      
      35.      It is questionable whether the Commission has succeeded in satisfying the burden of proof imposed on it in that respect. 
      
      36.      At the hearing, the Spanish Government indicated that, in 1984, the transactions at issue were taxed at a rate of 1%. It follows
         that it is not mandatory to exempt them from the tax. In response to the Commission’s objection that Spain had failed to make
         that submission at the proper time, the latter stated that, in pointing this out, it had not been its intention to contradict
         the Commission’s position. When questioned by the Court, the parties agreed that, on that issue, the statements in the written
         observations should be taken as the point of reference.
      
      37.      In its application, the Commission made no mention of the taxation of transactions subject to Article 7(1)(bb) as at 1 July
         1984 in Spain. In its defence, (11) the Spanish Government stated that Spain had not elected to apply a reduced rate of tax to transactions covered by Article 7(1)(bb).
         That being so, the Commission ought to have argued, in its reply at the latest, and to have provided facts to support this,
         that the disputed transactions were none the less subject, in Spain, to a rate of tax of 0.50% or less. But the Commission
         stated nothing of the kind. It therefore remains unclear whether transactions subject to Article 7(1)(bb) were taxed as at
         1 July 1984 at a maximum rate of 0.50% or were subject to a higher rate of capital duty. Consequently, for the purposes of
         deciding the present case, it cannot be assumed that it was mandatory to exempt transactions covered by Article 7(1)(bb) from
         the duty in Spain. In that respect, the Commission’s application must be dismissed on the ground that it is inconclusive.
      
      38.      The only question that might arise is whether a Member State must also grant exemption from duty, without attaching conditions
         to such an exemption, for transactions that it is not mandatory to exempt from the tax. The Commission appears to suggest this in its application, when it states that Article 7(2) of Directive
         69/335 authorises the Member States either to exempt from capital duty all transactions, other than those listed in Article
         7(1), or to tax them at a single rate not exceeding 1%.
      
      39.      This might be taken to imply that the directive leaves the Member States precisely three options: retention of the tax, if
         levied in 1984, complete tax exemption or charging a reduced rate of tax. The directive would, consequently, preclude exemption
         to which a condition attaches. That interpretation of the directive would best take into account, in particular, the need
         for legal certainty. However, the opposite view could also be taken. Since its amendment by Directive 85/303, the aim and
         object of Directive 69/335 have been to reduce capital duty. It could therefore be argued that – before a Member State takes
         up the option of retaining the tax – it would have to be consistent with the aim and object of the directive to allow that
         Member State to exempt the transaction from the duty subject to a condition.
      
      40.      In the present case, there is no need to take a final decision on that point, since, in its application, the Commission has
         simply complained that Spain sets a condition for the exemption from capital duty of transactions that it is mandatory to exempt from it. It would be contrary to the principle that the Court must not rule ultra petita, were the Court additionally to express a view on transactions that it is not mandatory to exempt.
      
      41.      Since the Commission’s argument in relation to transactions within the meaning of Article 7(1)(bb) is not based on factual
         allegations that are adequately substantiated, the analysis that follows must be confined to transactions subject to Article
         7(1)(b).
      
      3.      Taxation of transactions subject to Article 7(1)(b)
      42.      In the Commission’s view, in the case of transactions which it is mandatory to exempt from capital duty, it is incompatible
         with the directive to make exemption from the duty dependent on fulfilling a condition.
      
      43.      Article 7(1) of the directive, which lays down the mandatory exemption, makes no provision for exception to or restriction
         on the tax exemption. Consequently, to restrict the tax exemption or to confine it to certain cases infringes the directive.
         In principle, a rule which attaches a further condition to a tax exemption also constitutes an obstacle to the tax exemption.
      
      44.      The Spanish legislation makes exemption from the duty dependent on the undertaking in question having previously opted for
         a special tax regime.
      
      45.      The Spanish Government defends that provision by claiming, first of all, that this requirement is merely a formality which
         does not, therefore, stand in the way of the exemption from duty.
      
      46.      That claim cannot, however, be accepted. 
      
      47.      It should first be stated that the directive does not provide that exemption from capital duty may be made subject to any
         kind of condition, even a formal one. Moreover, the Spanish provision at issue is more than a pure formality. That follows,
         first, from the fact that it lays down a deadline by which time the decision to opt for the special tax regime must be notified
         to the authorities and, in addition, imposes formal requirements. Secondly, opting for the special regime also has, as the
         Commission maintains, an effect on the amount of corporate tax and income tax which is payable.
      
      48.      As further justification for its legislation, Spain contends that it is needed in order to prevent tax avoidance and tax evasion.
      
      49.      It must first be pointed out, in that connection, that Directive 69/335 contains no provision authorising the Member States
         to adopt measures to combat tax avoidance and tax evasion. However, the application of Community legislation cannot be extended,
         in such a case, to permit abusive practices by commercial operators, that is to say, transactions carried out not in the context
         of normal commercial operations, but solely for the purpose of wrongfully obtaining advantages provided for by Community law. (12) A Member State may therefore adopt measures in that connection to prevent abusive practices. Such measures must, however,
         be proportionate. 
      
      50.      However, the Spanish Government has failed to put forward evidence to support its contention that it is necessary to make
         all transactions subject to the requirement to opt for a specific tax regime in order to prevent tax avoidance and tax evasion.
         The Commission has, moreover, pointed out that, as well as notifying the exercising of the option, the companies concerned
         are required to notify the restructuring measures to the financial authorities. Spain has not explained why it is necessary,
         for the purposes of preventing tax avoidance and tax evasion, to require companies to exercise the option, as well as to provide
         that information. It must, therefore, be assumed that there are less constrictive ways of preventing tax evasion in individual
         cases, without generally requiring all those concerned to opt for a specific tax regime. The Spanish legislation is accordingly
         not justified.
      
      51.      Finally, in its rejoinder, the Spanish Government referred in its challenge to the first plea to Directive 2008/7, (13) amending and revising Directive 69/335.
      
      52.      It should first be pointed out that in determining whether an action for failure to fulfil obligations is well founded, the
         legal position at the time of the reasoned opinion is the critical factor. At that time, only the earlier version of the directive
         was in force.
      
      53.      Spain submits that, by virtue of Articles 4 and 5(1) of Directive 2008/7, certain company restructuring measures are specifically
         exempted from capital duty. The Spanish Government seeks to infer from this that, under the earlier versions of the directive,
         it could not have been mandatory to exempt all restructuring transactions from tax.
      
      54.      That elicits the objection that, to a large extent, Directive 2008/7 merely clarifies and revises the earlier version of the
         directive. Consequently, not every tax exemption provided for in Directive 2008/7 constitutes a newly introduced tax exemption.
         As stated above, it was previously mandatory to exempt restructuring transactions under Article 7(1)(b) of the original version
         of Directive 69/335 from capital duty.
      
      55.      It follows that the Spanish Government’s reference to Directive 2008/7 cannot affect the conclusion previously reached.
      
      56.      It must therefore be held as an interim conclusion that the Commission’s first plea is justified in so far as it relates to
         transactions under Article 7(1)(b) of the directive in its original version. The first plea must be rejected as to the remainder.
      
      B –    Second plea
      57.      By its second plea, the Commission objects that an indirect tax is charged on the transfer to Spain of a company’s effective
         centre of management or registered office, where this was not subject, in the company’s State of origin, to a tax comparable
         to the Spanish tax.
      
      58.      Article 4 of Directive 69/335 contains an exhaustive list of transactions which are subject to capital duty.
      
      59.      According to Article 4(1)(g) and (h), the transfer of the effective centre of management or registered office of a company,
         firm, association or legal person from one Member State to another Member State is to be subject to capital duty, if, for
         the purpose of charging capital duty, that body is considered as a capital company in the State of transfer but is not considered
         as a capital company in the State of origin.
      
      60.      On that basis, a transfer of a company’s registered office may not be taxed if the company is considered, in both the Member
         States concerned, as a capital company for the purpose of charging capital duty. (14)
      
      61.      As the Court has already held, the question of when the transfer of the registered office or effective centre of management
         may be taxed hinges solely on whether the company is regarded as a capital company in the State of origin and not on whether capital duty was actually charged in the State of origin. (15) The determining factor cannot, therefore, consist in the criterion of being subject to capital duty in the State of origin
         but, exclusively, in the criterion of classification as a capital company. (16)
      
      62.      Article 3(1) of the directive identifies, in a mandatory and uniform fashion, for all Member States, those companies which
         are to be regarded as capital companies within the meaning of the directive. 
      
      63.      Consequently, if, pursuant to Article 7(2) of Directive 69/335, a Member State refrains from charging capital duty on a company
         which is to be regarded as a capital company within the meaning of the directive, this may not result, where the registered
         office is transferred from that Member State to another Member State, in the latter State taxing that transfer.
      
      64.      The criterion of ‘taxation in the State of origin’ employed in the Spanish legislation on transfer of a registered office
         does not therefore correspond to the criterion of ‘classification as a capital company’ laid down in the directive. The former
         criterion may in fact result in a company, which is a capital company within the meaning of the directive, being taxed when
         its registered office is transferred to Spain, because its State of origin decided not to charge capital duty. The Spanish
         provisions must therefore be regarded as having failed properly to transpose Article 4(1)(g) and (h) of Directive 69/335.
         
      
      65.      Nor is that finding invalidated by the argument put forward by the Spanish Government in its defence, when it claims that
         the legislation is needed to prevent tax avoidance and tax evasion. According to the Spanish Government, there is a risk of
         companies being set up in a Member State which does not charge capital duty, and then to transfer their registered office
         to Spain, in order to avoid Spanish capital duty.
      
      66.      As I have already mentioned, Directive 69/335 contains no specific provision that would empower the Member States to adopt
         general measures to prevent tax avoidance. (17) Consequently, the Member States can prevent the application of Community law only in specific circumstances entailing abusive
         or fraudulent practice. (18)
      
      67.      The Court has held that the application of Community legislation cannot be extended to cover abusive practices by economic
         operators, that is to say, transactions carried out not in the context of normal commercial operations, but solely for the
         purpose of wrongfully obtaining advantages provided for by Community law. (19)
      
      68.      However, the fact that a company is set up in a particular Member State to enable it to benefit from more favourable legislative
         provisions is not of itself sufficient to support the finding that an abuse of Community legislation has occurred. Only the
         formation of a company in a Member State under wholly artificial arrangements which do not reflect economic reality, with
         the aim of avoiding the tax normally payable, goes beyond the protection which Directive 69/335 must afford to the companies
         to which it applies. (20)
      
      69.      The rule at issue is not, however, confined to preventing abuse in specific cases, but provides for a general taxation of
         transactions which should be exempt from tax under the directive. Consequently, the Spanish legislation fails to meet the
         requirements of Community law. (21)
      
      70.      In submissions in defence in relation to that plea, the Spanish Government also refers, in its rejoinder, to Directive 2008/7
         which amended and revised Directive 69/335.
      
      71.      Applying a form of inverted logic, the Spanish Government seeks to infer from the fact that, under the new version of the
         directive, the duty charged on the transfer of a registered office under Article 4(1)(g) and (h) has been abolished, it should
         follow that, under the earlier version of the directive, the transfer of a registered office could be taxed without restriction.
      
      72.      But that is patently not the case. Under Article 4(1)(g) and (h), the transfer of a registered office could be taxed only
         subject to the strict condition that the company concerned was not considered as a capital company, within the meaning of
         the directive, in its State of origin. And even before the amendments introduced by Directive 2008/7, it was not permissible,
         as I have explained above, to make the taxation of the transfer of a registered office dependent on whether the company concerned
         had already been subject to capital duty in the State of origin, as provided for by the Spanish legislation. 
      
      73.      My interim conclusion must be that the Commission’s second plea is well founded.
      
      C –    Third plea
      74.      By its third plea, the Commission alleges that the Spanish legislation taxes capital used to carry out the business transactions
         of branches or permanent establishments of companies in Spain which have their registered office or effective centre of management
         in a different Member State, if the latter Member State does not apply a tax similar to the Spanish tax. In the Commission’s
         view, the Spanish legislation is in breach of Article 2(1) of Directive 69/335.
      
      75.      According to Article 21 of the Protocol on the Statute of the Court of Justice and Article 38(1)(c) of the Rules of Procedure,
         in any application made under Article 226 EC, the Commission must indicate the specific complaints on which the Court is called
         upon to rule and, at the very least in summary form, the legal and factual particulars on which those complaints are based,
         to allow the Court to rule on the application. (22)
      
      76.      In this case, the application fails to meet those requirements in relation to the third plea.
      
      77.      In the section of the application containing the legal assessment, the Commission merely alleges a breach of Article 2(1)
         of the directive. Article 2(1) provides that transactions subject to capital duty are to be taxable only in the Member State
         in whose territory the effective centre of management of a capital company is situated at the time when such transactions
         take place.
      
      78.      However, the Commission’s application fails to identify the facts and circumstances that are supposed to have resulted in
         a breach of Article 2(1) of the directive.
      
      79.      It is true that Article 2(1) of the directive contains a rule on how the power to tax is to be allocated as between the Member
         States, conferring the right to tax on the Member State in which the effective centre of management of a company is located.
         However, as is clear from its wording, the rule under Article 2(1) applies only to transactions which are subject to capital
         duty.
      
      80.      Article 4 of the directive determines which transactions are subject to capital duty. Those transactions include, among others,
         the formation of a capital company and an increase in the capital of a capital company.
      
      81.      The Commission has failed to specify which transactions are actually taxed under Spanish law. The Commission refers only to
         the taxation of capital used by permanent establishments and subsidiaries to carry out business transactions. Consequently,
         it is not clear, for example, whether the tax is charged only once or on a regular basis. 
      
      82.      Consequently, it is not possible to link that taxation procedure unequivocally to one of the transactions covered by Article
         4 of Directive 69/335.
      
      83.      If the transaction that has been taxed cannot be brought within the transactions to which Article 4 of Directive 69/335 refers,
         then, contrary to what the Commission alleges, the breach of Article 2(1) of the directive which the Commission alleges could
         not have taken place, as the legislation would not be covered by Directive 69/335. It is conceivable that the Spanish rules
         might be in breach of the principles of the freedom of establishment or the free movement of capital. However, the Commission
         has not alleged that the fundamental freedoms have been infringed.
      
      84.      Since the exposition of the plea on which the Commission relies in its action for failure to fulfil obligations is insufficiently
         clear, the requirements laid down by Article 21 of the Protocol on the Statute of the Court of Justice and Article 38(1)(c)
         of the Rules of Procedure have not been satisfied.
      
      85.      The third plea must therefore be rejected as inadmissible.
      
      V –  Costs
      86.      Under Article 69(3) of the Court’s Rules of Procedure, where each party succeeds on some and fails on other heads, the Court
         may order that the parties must bear their own costs. Spain has failed in relation to the second plea, and the Commission
         in relation to the third plea; the Commission has succeeded in part only in relation to the first plea. Since the parties
         have succeeded and failed to the same extent in relation to the pleas to which equal significance must be attached, each party
         must bear its own costs. 
      
      87.      Pursuant to Article 69(4) of the Rules of Procedure, the Hellenic Republic must itself bear the costs which it has incurred
         as a result of its intervention.
      
      VI –  Conclusion
      88.      Accordingly, I propose that the Court should:
      
      (1)      declare that the Kingdom of Spain has failed to fulfil its obligations under Council Directive 69/335/EEC of 17 July 1969
         concerning indirect taxes on the raising of capital, as amended by Council Directive 85/303/EEC of 10 June 1985, 
      
      –        by attaching an additional condition to the exemption from duty for transactions subject to Article 7(1)(b) of Directive 69/335
         in its original version, and
      
      –        by making subject to the duty the transfer from another Member State to Spain of a company’s registered office or effective
         centre of management, if a tax similar to the Spanish tax has not been levied in the State of origin;
      
      (2)      dismiss the action as to the remainder;
      (3)      order that the Kingdom of Spain and the Commission should each bear their own costs;
      (4)      order the Hellenic Republic to bear its own costs.
      1 –	Original language: German.
      
      2 –	Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital (OJ, English Special Edition
         1969 (II), p. 412), as amended by Council Directive 85/303/EEC of 10 June 1985 (OJ 1985 L 156, p. 23) (‘Directive 69/335’).
      
      3 –	Council Directive 73/80/EEC of 9 April 1973 fixing common rates of capital duty (OJ 1973 L 103, p. 15).
      
      4 –	Council Directive 73/79/EEC of 9 April 1973 varying the field of application of the reduced rate of capital duty provided
         for in respect of certain company reconstruction operations by Article 7(1)(b) of the directive concerning indirect taxes
         on the raising of capital (OJ 1973 L 103, p. 13).
      
      5 –	Cited in footnote 2.
      
      6 –	Royal Legislative Decree of 24 September 1993, BOE (Spanish Official Journal) of 20 October 1993.
      
      7 –	Enacted by Royal Legislative Decree (Real Decreto Legislativo) No 4/2004 of 5 March 2004, BOE of 11 March 2004.
      
      8 –	See, to that effect, Case C-366/05 Optimus – Telecomunicações [2007] ECR I-4985, paragraph 32.
      
      9 –	See Article 2 of Directive 73/80, cited in footnote 3.
      
      10 –	Article 7(1)(bb) provides that the rate of capital duty may be reduced.
      
      11 –	Paragraph 11.
      
      12 –	See Case C‑255/02 Halifax and Others [2006] ECR I-1609, paragraph 69, and Case C‑251/06 ING. AUER [2007] ECR I‑9689, paragraph 41.
      
      13 –	Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital (OJ 2008 L 46, p. 11;
         ‘Directive 2008/7’).
      
      14 –	That interpretation is confirmed by Article 4(3)(b) of the directive, according to which such transfers also cannot be
         subject to capital duty charged on the formation of a company under Article 4(1)(a).
      
      15 –	See Case C‑178/05 Commission v Greece [2007] ECR I‑4185 and my Opinion of 15 February 2007 in that case, and ING. AUER, cited in footnote 12, paragraph 35.
      
      16 –	See Commission v Greece, cited in footnote 15, paragraph 30, and ING. AUER, cited in footnote 12, paragraph 33.
      
      17 –	Commission v Greece, cited in footnote 15, paragraph 32, and ING. AUER, cited in footnote 12, paragraph 40.
      
      18 –	Commission v Greece, cited in footnote 15, paragraph 32.
      
      19 –	See Commission v Greece, cited in footnote 15, paragraph 32; ING. AUER, cited in footnote 12, paragraph 41; and Halifax and Others, cited in footnote 12, paragraph 69, and the case-law referred to therein.
      
      20 –	See Commission v Greece, cited in footnote 15, paragraph 32, and ING. AUER, cited in footnote 12, paragraph 43 et seq.
      
      21 –	See, to that effect, Commission v Greece, cited in footnote 15, paragraph 32.
      
      22 –	See Case C‑347/88 Commission v Greece [1990] ECR I-4747, paragraph 28; Case C‑52/90 Commission v Denmark [1992] ECR I‑2187, paragraph 17; Case C‑202/99 Commission v Italy [2001] ECR I‑9319, paragraph 20; and the judgment of 14 October 2004 in Case C‑55/03 Commission v Spain, paragraph 23.