CELEX: 62004CC0345
Language: en
Date: 2006-06-22
Title: Opinion of Mr Advocate General Léger delivered on 22 June 2006. # Centro Equestre da Lezíria Grande Lda v Bundesamt für Finanzen. # Reference for a preliminary ruling: Bundesfinanzhof - Germany. # Freedom to provide services - Tax legislation - Corporation tax - Equestrian presentations and lessons organised in a Member State by a company established in another Member State - Deduction of operating expenses - Conditions - Direct economic connection to income received in the State in which the activity is pursued. # Case C-345/04.

OPINION OF ADVOCATE GENERAL
      LÉGER
      delivered on 22 June 2006 (1)
      
      Case C‑345/04
      Centro Equestre da Lezíria Grande Lda
      v 
      Bundesamt für Finanzen
      (Reference for a preliminary ruling from the Bundesfinanzhof (Germany))
      (Tax legislation – Tax on income – Article 59 of the EC Treaty (now, after amendment, Article 49 EC) – Equestrian dressage performances and lessons provided in a Member State by a company established in another Member State
         – Deductibility of expenses having an economic connection with the supply of services in the Member State of taxation)
      1.     On a proper construction, does Article 59 of the EC Treaty (now, after amendment, Article 49 EC) preclude tax legislation
         of a Member State under which a company established in another Member State cannot, under a tax reimbursement procedure, obtain
         a deduction for business expenses incurred in the supply of services in the first State unless those expenses have a direct
         economic connection with the income received for the services, whereas no such condition applies to a company established
         in the Member State itself?
      
      2.     Furthermore, does Article 59 of the Treaty preclude tax legislation of a Member State under which a reimbursement of tax previously
         paid by a company established in another Member State can be made only if the business expenses in respect of which a deduction
         is claimed exceed half of the income received by that company in the first Member State?
      
      3.     These are, in substance, the issues raised by the Bundesfinanzhof (Federal Finance Court) (Germany) in this reference for
         a preliminary ruling, which arises from a dispute between a Portuguese-registered company and the German tax authorities concerning
         the refusal by the latter, upon an application for reimbursement of tax paid by the company on income earned from equestrian
         events held in Germany, to allow in full the business expenses incurred in connection with those performances.
      
      I –  The national legal framework
      4.     Under German tax law, companies which have neither their registered office nor their place of management in Germany are partially
         taxable, that is to say, they are taxed only on income arising in that Member State. (2)
      
      5.     Accordingly, income earned from equestrian performances put on in Germany by a Portuguese-registered company having neither
         its registered office nor its place of management in Germany is subject to corporation tax in that State. (3) That company thus falls into the category of companies partially subject to corporation tax in Germany. It is, therefore,
         subject to a limited tax liability in that Member State.
      
      6.     In the case of partially taxable individuals, income tax is recovered by means of a withholding tax deducted at source from
         the proceeds of events of an artistic, sporting or similar nature held in Germany. (4) The rate of withholding tax applicable to a company subject to partial taxation in Germany was 45% at the time material to
         the main proceedings. (5)
      
      7.     The tax liability on income subject to deduction of withholding tax at source is deemed satisfied by that deduction, (6) which is treated as full and final discharge.
      
      8.     There is an exception to this rule, however, in so far as a partially taxable person may apply for reimbursement of all or
         part of the tax paid by way of deduction at source.
      
      9.     In order for a reimbursement to apply, the business expenses which have a direct economic connection with the taxable income
         must be greater than half of that income. (7)
      
      10.   The tax paid is then refunded if it exceeds 50% of the difference between the income and the business expenses which have
         a direct economic connection with it. (8)
      
      11.   Unlike partially taxable persons, those who are fully taxable, that is, subject to unrestricted taxation in Germany on their
         worldwide income, may deduct from their taxable income in Germany the entirety of their expenses relating to artistic or sporting
         events held there, irrespective of whether or not those expenses have a direct economic connection with that income. Accordingly,
         their overheads are also deductible.
      
      12.   Finally, under Article 24(1)(a) of the Double Taxation Agreement, where a person resident in the Portuguese Republic has income
         which is taxable in Germany under that agreement, the Portuguese authorities will offset the income tax paid in Germany against
         the income tax liability in Portugal.
      
      II –  Facts and procedure in the main proceedings 
      13.   Centro Equestre da Lezíria Grande Lda (‘CELG’ or ‘the applicant’) is a company established under Portuguese law and having
         its registered office and place of management in Portugal. In 1996, CELG took part in a tour of Germany, Ireland and the United
         Kingdom in which presentations and lessons were given in equestrian dressage.
      
      14.   CELG is partially subject to corporation tax in Germany on income arising in that Member State. In 1997, it applied to the
         Bundesamt für Finanzen (Federal Tax Office; ‘the BfF’), on the basis of Paragraph 50(5), fourth sentence, third clause, of
         the EStG, for repayment of DEM 71 758 in corporation tax withheld at source on that income, as well as DEM 5 381.85 by way
         of the solidarity surcharge.
      
      15.   For the purposes of that application and at the BfF’s request, CELG produced audited Portuguese accounts setting out various
         expenses relating to the whole of the 1996 tour, which comprised 14 performances.
      
      16.   These accounts mentioned the following expenses: communications, travel, accommodation and advertising; personnel costs; day-to-day
         expenditure on horses; water and electricity; veterinarian services and medication; farrier services; equipment for horses
         and riders and depreciation of costumes; writing-down costs for horses; truck transport (multiple repairs due to long journeys
         plus depreciation), and, finally, tax consultancy fees.
      
      17.   As performances had been given in 11 German cities, CELG calculated that Germany accounted for 11/14 of the expenditure, or
         DEM 367 028.70. With revenues from the whole tour coming to DEM 354 361, CELG calculated that it had incurred a loss of DEM
         12 667.70.
      
      18.   The BfF refused the repayment sought by CELG on the ground, inter alia, that a direct economic connection existed only in
         part between the expenses and the revenues received in Germany.
      
      19.   CELG appealed that decision to the Finanzgericht (Finance Court). In its appeal, it mentioned further expenses, corresponding,
         inter alia, to half of its accountancy costs and a pro rata share of licence fees. The Finanzgericht dismissed the appeal
         as unfounded, taking the view that more than 50% of the expenses cited had no direct connection with the income. That court
         also found that the applicant’s expenses directly connected with the income arising in Germany did not exceed half of that
         income. CELG appealed to the Bundesfinanzhof on a point of law (‘Revision’).
      
      III –  The reference for a preliminary ruling
      20.   In its order for reference, the Bundesfinanzhof first observes that, in the light of the Finanzgericht’s findings, even if
         the expenses incurred by the applicant did in total exceed half of its income, it would not be entitled to succeed in its
         appeal, since overheads are not regarded as having a direct economic connection with the income received in Germany, as required
         by Paragraph 50(5), fourth sentence, third clause, second sentence, of the EStG.
      
      21.   The Bundesfinanzhof takes the view that the difference in treatment under German tax legislation as between fully and partially
         taxable persons in relation to the computation of taxable income raises doubts as to its compatibility with Community law.
         Specifically, the referring court believes that this difference in treatment may be in conflict with the freedom to provide
         services enshrined in Article 59 of the Treaty and Article 60 of the EC Treaty (now Article 50 EC) and, consequently, inconsistent
         with the judgment of the Court in Gerritse. (9)
      
      22.   Citing this judgment, which it regards as applying also to corporate bodies, the Bundesfinanzhof considers the reasons why
         non-resident taxpayers are treated less favourably than resident taxpayers under the German tax legislation.
      
      23.   It notes in this connection that, while such a difference in treatment may be justified on the ground that the indirect costs
         in question could be claimed both in reimbursement proceedings in Germany as well as in the State of residence, that risk
         of double deduction applies equally in the case of expenses which have a direct economic connection with income obtained in
         Germany.
      
      24.   Moreover, such a risk of double deduction of business expenses does not arise where the State of residence avoids double taxation
         with the State in which the income is received – as in this case the Portuguese Republic does with the Federal Republic of
         Germany – not by exempting tax paid in Germany but by setting it off against the tax payable in Portugal.
      
      25.   The referring court further considers that a potential risk of double deduction of business expenses does not justify discriminatory
         treatment of non-residents inasmuch as the wish to avoid a reduction in tax revenue cannot in any case be regarded as a matter
         of overriding general interest. (10) Finally, the referring court notes, this difference in treatment cannot be justified by the need to safeguard the cohesion
         of the tax system in question.
      
      26.   In the light of these considerations, the Bundesfinanzhof decided to stay the proceedings and to refer the following question
         to the Court for a preliminary ruling:
      
      ‘Is it contrary to Article 59 of the Treaty establishing the European Communities if a person with restricted tax liability
         in Germany who is a national of a Member State may claim repayment of tax deducted at source on his income in Germany only
         when the operating expenses that have a direct economic connection to that income are greater than half of that income?’
      
      IV –  Analysis
      27.   There are, to my mind, two aspects to this question.
      28.   In the first place, the Bundesfinanzhof seeks to ascertain whether Article 59 of the Treaty, on a proper construction, precludes
         tax legislation of a Member State under which a company established in another Member State cannot, in a procedure for reimbursement
         of tax previously charged on income received in respect of services supplied in the first Member State, obtain a deduction
         for business expenses incurred in the supply of those services unless those expenses have a direct economic connection with
         that income, in the case where no such condition applies to a company established in that Member State itself. 
      
      29.   In the second place, it asks whether that article of the Treaty precludes tax legislation of a Member State under which reimbursement
         of tax previously paid by a company established in another Member State can be made only if the business expenses in respect
         of which a deduction is claimed exceed half the income received by that company in the first Member State.
      
      30.   In short, the Bundesfinanzhof is asking the Court to consider whether Article 50(5), fourth sentence, third clause, second
         sentence, of the EStG is compatible with Article 59 of the Treaty, in so far as that provision of national law makes the deductibility
         of business expenses incurred by a non-resident supplier of services subject to two cumulative conditions, namely a condition
         that there be a direct economic connection between the business expenses and the income, and a condition that the expenses
         exceed half of the income received by the supplier in the State of supply.
      
      A –    The condition of a direct economic connection between the business expenses and the income
      31.   As already noted, it is necessary to determine whether Article 59 of the Treaty, on a proper construction, precludes tax legislation
         of a Member State under which a company established in another Member State cannot, in a procedure for reimbursement of tax
         previously charged on income received in respect of services supplied in the first Member State, obtain a deduction for business
         expenses incurred in the supply of those services unless those expenses have a direct economic connection with that income,
         in the case where no such condition applies to a company established in that Member State itself.
      
      32.   The condition under national law that there be an economic link between the business expenses for which deduction is sought
         and the activity which generated the taxable income constitutes, in my view, an expression of the fiscal principle of territoriality,
         which has been recognised by the Court as applicable in Community law. (11)
      
      33.   It is consistent with this principle for a Member State to treat residents as fully taxable, that is, taxable on their worldwide
         income, and non-residents, by contrast, as partially taxable, that is, taxable only on income from activities carried on in
         that Member State.
      
      34.   Furthermore, it is also in accordance with the fiscal principle of territoriality that, in the computation of the taxable
         income of non-resident taxpayers, only income and expenditure connected with their activities in the State of taxation are
         taken into account in assessing them for tax in that State.
      
      35.   A relevant precedent here is Futura Participations and Singer, in which the Court had to decide, inter alia, whether Article 52 of the EC Treaty (now, after amendment, Article 43 EC)
         precludes a Member State from making the carrying-forward of previous losses, requested by a taxpayer having a branch in that
         State but not resident there, subject to the condition that the losses must be economically related to the income earned by
         the taxpayer in that State. That condition meant that only losses arising from the non-resident taxpayer’s activities in the
         Member State of taxation could be carried forward.
      
      36.   Having established that, for the purpose of calculating the basis of assessment for non-resident taxpayers, only profits and
         losses arising from their activities in Luxembourg were taken into account in calculating the tax payable by them in the State
         of taxation, the Court held that ‘[s]uch a system, which is in conformity with the fiscal principle of territoriality, cannot
         be regarded as entailing any discrimination, overt or covert, prohibited by the Treaty’. (12)
      
      37.   It may, in my view, be inferred from that case-law that Article 59 of the Treaty does not preclude, per se, a condition of
         an economic link between the business expenses in respect of which a deduction is claimed and the chargeable income, as prescribed
         by Paragraph 50(5), fourth sentence, third clause, second sentence, of the EStG.
      
      38.   While this condition laid down by the Member State of taxation for the deductibility of business expenses incurred by companies
         supplying services which are established in another Member State thus appears to me to be justified in the light of the fiscal
         principle of territoriality, the manner in which that condition is applied in national law must not, however, result in discriminatory
         treatment of such companies vis-à-vis companies supplying services that are established in the Member State of taxation.
      
      39.   It now falls to be determined, therefore, whether or not the application of the German tax legislation, inasmuch as it requires
         the economic link between the business expenses and income of companies supplying services that are established in another
         Member State to be direct, results in such discriminatory treatment of those companies, which would be contrary to the freedom
         to provide services.
      
      40.   According to the German Government, three situations have to be distinguished under its national law. (13)
      
      41.   In the first situation, that of a company taxable in Germany on its worldwide income, that company is entitled under the German
         legislation to deduct from its taxable income the entirety of the operating expenses relating to its equestrian performances.
         No distinction is made according to whether or not there is a direct economic connection between the expenses and the income.
         Accordingly, overheads too are deductible from taxable income.
      
      42.   In the second situation, that of a company subject to limited tax liability in Germany and engaged in similar activities in
         that Member State, that company is entitled to deduct the entirety of its operating expenses if it has an establishment in
         Germany. To be deemed to have an establishment in Germany, it is sufficient for the company to have a permanent representative
         or a branch there.
      
      43.   Finally, a company engaged in similar activities in Germany and which is taxable in Germany on its German-source income only,
         but does not have an establishment in that Member State, can deduct only operating expenses which have a direct economic connection
         with its German-source income, and thus with the series of performances staged in Germany. That is the situation in which
         CELG finds itself in the present case.
      
      44.   The German Government accepts that companies such as CELG, which are taxable on German-source income only and do not have
         an establishment in Germany, are subject to different tax treatment to that of companies in the first two situations. It argues
         that this difference in treatment does not constitute discrimination contrary to the freedom to provide services inasmuch
         as the situation of a company taxable on German-source income only and not having an establishment in Germany is not comparable
         to that of a company taxable on German-source or worldwide income and which does have an establishment in Germany. (14) In that regard, the German Government points out, inter alia, that a company taxable on German-source income only and not
         having an establishment in Germany plays a less significant role in the country’s economic life. (15)
      
      45.   I do not share that view.
      46.   Contrary to what the German Government submits, I am of the opinion that, with regard to the deductibility of expenses economically
         connected with artistic or sporting events held in Germany, a company taxable on German-source income only and not having
         an establishment in Germany is not in a situation objectively different from that of a company taxable on German-source or
         worldwide income and which does have an establishment there.
      
      47.   Both companies supply the same kind of service and have to incur expenses of comparable nature and scale in order to be able
         to provide their services. They therefore suffer, with respect to the same activity carried on in Germany, a similar depletion
         of their earnings as a result of outlays economically connected with their activities in the State where the services were
         supplied.
      
      48.   For them to be subject to different tax treatment in relation to the deductibility of expenses of that kind relating to services
         supplied in the State of taxation therefore constitutes, to my mind, discrimination contrary to Article 59 of the Treaty.
      
      49.   This analysis is, I believe, borne out by the Court’s conclusions in Gerritse on the issue of deductibility of business expenses.
      
      50.   In that case, Mr Gerritse, a Netherlands national resident in the Netherlands, received a fee in 1996 for performing as a
         drummer at a radio station in Berlin. That fee was subjected to income tax at the rate of 25%, which was deducted at source.
         Before the Court, Mr Gerritse and the Commission of the European Communities argued inter alia that, in the case of self-employed
         persons who are taxable in full, only the profit was subject to income tax, business expenses being generally excluded from
         the basis of assessment, whereas, in the case of partially taxable persons, the tax of 25% is levied on gross income, business
         expenses being non-deductible. Mr Gerritse also pointed out the serious consequences of the contentious provisions of the
         German tax legislation for non-resident artists touring in Germany, whose business expenses are frequently very high.
      
      51.   In its judgment, the Court held that ‘a national provision which, in matters of taxation, refuses to allow non-residents to
         deduct business expenses, whereas residents are allowed to do so, risks operating mainly to the detriment of nationals of
         other Member States and therefore constitutes indirect discrimination on grounds of nationality, contrary in principle to
         Articles 59 and 60 of the Treaty’. (16)
      
      52.   In arriving at that conclusion, the Court had to satisfy itself that the situations of residents and non-residents were comparable
         for the purposes of the deductibility of business expenses. On that point, it found that ‘the business expenses in question
         are directly linked to the activity that generated the taxable income in Germany, so that residents and non-residents are
         placed in a comparable situation in that respect’. (17)
      
      53.   The criterion of comparability as between residents and non-residents is based here on the idea that, in relation to income
         earned from the same business activity in Germany, these two categories of taxpayer suffer a similar depletion of that income
         as a result of the business expenses they have had to lay out in order to carry on that activity. Since there is, from this
         point of view, no objective difference between them, to treat them differently in terms of their entitlement to deduct such
         expenses constitutes indirect discrimination on grounds of nationality, contrary to Articles 59 and 60 of the Treaty. 
      
      54.   The Court thus established that resident and non-resident suppliers of services must be treated identically as regards computation
         of taxable income and, more specifically, as regards the deduction of business expenses directly linked to the activity that
         generated the taxable income in Germany.
      
      55.   There is no reason, in my view, why the same should not apply in the case where companies, rather than individuals, seek to
         rely on the freedom to provide services.
      
      56.   Moreover, while it is true that the Court, in the Gerritse judgment, placed the emphasis on the existence of a direct link between the business expenses and the activity that generated
         the income taxable in Germany, I do not think that that condition is to be given the same meaning as the national-law condition
         of a ‘direct economic connection’ mentioned in Paragraph 50(5), fourth sentence, third clause, second sentence, of the EStG.
         Under that provision, it will be recalled, companies taxable on German-source income only and not having an establishment
         in Germany cannot obtain a deduction for overheads even if these are economically connected with their activities in Germany.
      
      57.   I do not believe either that, in finding that ‘the business expenses in question are directly linked to the activity that
         generated the taxable income in Germany’, on which basis it held that the situations of residents and non-residents were comparable,
         the Court intended to signify anything other than the need for a causal economic nexus between those expenses and that income, which, as we have seen, is in accordance with the fiscal principle of territoriality.
      
      58.   This analysis leads, in my opinion, to the conclusion that, with regard to the deductibility of expenses relating to equestrian
         events held in Germany, and by analogy to the situation of suppliers of services who are natural persons, whether residents
         or non-residents of the State in which the services are supplied, a company taxable on German-source income only and not having
         a German establishment is not in a situation that is objectively different from that of a company taxable on German-source
         income only or on worldwide income and which does have an establishment in Germany. Such companies must, accordingly, be treated
         identically as regards computation of their taxable income and, more specifically, as regards the deduction of business expenses
         directly connected with the activity that generated the income taxable in Germany.
      
      59.   I do not find convincing the grounds adduced by the German Government in justification of the different tax treatment of resident
         and non-resident suppliers of services in relation to the deduction of business expenses economically connected with their
         respective activities in the State of taxation.
      
      60.   As regards the potential risk of a double deduction of business expenses in both the State in which the service was supplied
         and the State in which the company in question is registered, it must first be noted that under the German tax legislation,
         in relation to the repayment procedure contemplated by Paragraph 50(5) of the EStG, the Ministry of Finance can inform the
         State of residence of a taxpayer taxable on German-source income only of the content of a repayment application and the amount
         involved, and that by lodging such an application the taxpayer consents to the disclosure of that information to its State
         of residence. The Federal Republic of Germany has thus put in place a mechanism specifically to prevent any double deduction
         of allowable business expenses. I take the view that such a mechanism for cooperation between the competent authorities of
         the State of taxation and the State of residence ought to be capable of being applied, more broadly, to all business expenses
         economically connected with the activity carried on by a non-resident supplier of services in the State of taxation. (18)
      
      61.   It must also be noted that under Article 24(1)(a) of the Double Taxation Agreement, when a Portuguese resident receives income
         that is taxable in Germany under that agreement, the income tax paid in Germany is set off against the tax due in Portugal
         on that person’s income. In carrying out this set-off, the State of residence may check which business expenses were deducted
         in the calculation of the tax paid in the State of supply in order to prevent the double deduction of such expenses.
      
      62.   In the light of these considerations, I take the view that, while Article 59 of the Treaty does not preclude, per se, the
         application to a non-resident supplier of services of a condition that there be an economic connection between the business
         expenses in respect of which a deduction is claimed and the taxed income, it does, on a proper construction, preclude tax
         legislation of a Member State under which a company established in another Member State cannot, in a procedure for reimbursement
         of tax previously charged on income received for services supplied in the first Member State, obtain a deduction for business
         expenses incurred in the supply of those services unless those expenses have a direct economic connection with the income
         received for the services, in the case where no such condition applies to a company established in that Member State itself.
      
      63.   I would note, finally, that, in accordance with the fiscal principle of territoriality and with what seems to me to flow from
         the Gerritse judgment, this conclusion holds only for business expenses which are economically connected with the performances which took
         place in the territory of the State of taxation, in other words, the expenses which were necessary for the proper staging
         of the equestrian performances in that State. Accordingly, in the case of a touring show, such as that in the main proceedings,
         which visits several Member States, the business expenses incurred by the non-resident supplier of services must be deductible
         in the State of taxation in proportion to the number of performances that took place in the territory of that State.
      
      B –    The condition that business expenses must exceed half of the income received by the supplier of services in the State of supply
            
      64.   The Bundesfinanzhof also seeks the Court’s guidance as to whether, on a proper interpretation, Article 59 of the Treaty precludes
         tax legislation of a Member State according to which repayment of tax previously paid by a company established in another
         Member State can be made only if the business expenses for which a deduction is claimed exceed half of the income received
         by the company in the first Member State.
      
      65.   As we have already seen, Gerritse is authority for the proposition that resident and non-resident suppliers of services must be treated identically as regards
         computation of taxable income and, more specifically, as regards the deductibility of expenses having an economic connection
         with the supply of the service in the State of taxation.
      
      66.   However, by making the deductibility of business expenses incurred by a non-resident supplier of services subject to an additional
         condition that does not apply to resident suppliers, the German tax legislation has the effect of treating the former less
         favourably than the latter. If a non-resident supplier of services does not satisfy the condition that its business expenses
         for which a deduction is claimed exceed half of its income in the State where the services were supplied, that supplier, unlike
         a resident supplier, will be unable to deduct those expenses. The result, in that case, is that the non-resident supplier
         of services is taxed more heavily.
      
      67.   Since, as has already been shown, resident and non-resident suppliers of services are in a comparable situation with regard
         to the deductibility of business expenses economically connected with their activities in the State of taxation, such unfavourable
         treatment of non-resident suppliers of services constitutes discrimination contrary to Article 59 of the Treaty.
      
      68.   I therefore propose that the Court reply to the Bundesfinanzhof to the effect that, on a proper interpretation, Article 59
         of the Treaty precludes tax legislation of a Member State under which reimbursement of tax previously paid by a company established
         in another Member State can be made only if the business expenses in respect of which a deduction is claimed exceed half of
         the income received by that company in the first Member State, in the case where no such condition applies to a company established
         in that Member State itself.
      
      V –  Conclusion
      69.   In the light of the foregoing considerations, I take the view that the Court should answer the question referred for a preliminary
         ruling by the Bundesfinanzhof in the following terms:
      
      While Article 59 of the EC Treaty (now, after amendment, Article 49 EC) does not preclude, per se, the application to a non-resident
         supplier of services of a condition that there be an economic connection between the business expenses in respect of which
         a deduction is claimed and the taxed income, it does, on a proper construction, preclude tax legislation of a Member State
         under which a company established in another Member State cannot, in a procedure for reimbursement of tax previously charged
         on income received for services supplied in the first Member State, obtain a deduction for business expenses incurred in the
         supply of those services unless those expenses have a direct economic connection with the income received for the services,
         in the case where no such condition applies to a company established in that Member State itself.
      
      On a proper construction, Article 59 of the Treaty further precludes tax legislation of a Member State under which reimbursement
         of tax previously paid by a company established in another Member State can be made only if the business expenses in respect
         of which a deduction is claimed exceed half of the income received by that company in the first Member State, in the case
         where no such condition applies to a company established in that Member State itself.
      
      1 –	Original language: French.
      
      2 –	Paragraph 2(1) of the Law on Corporation Tax (Körperschaftsteuergesetz; the ‘KStG’).
      
      3 –	Paragraph 49(1), point 2(d), of the Law on Income Tax, as amended in 1996 and in 1997 (Einkommensteuergesetz; the ‘EStG’),
         in conjunction with Paragraph 8(1) of the KStG and Article 17(2) of the Agreement of 15 July 1980 between the Federal Republic
         of Germany and the Portuguese Republic for the prevention of double taxation in the field of income and wealth taxes (BGBl.
         1982 II, p. 129; the ‘Double Taxation Agreement’).
      
      4 –	Paragraph 50a(4), first sentence, first clause, of the EStG.
      
      5 –	Paragraph 23(1) of the KStG.
      
      6 –	Paragraph 50(5), first sentence, of the EStG.
      
      7 –	Paragraph 50(5), fourth sentence, third clause, second sentence, of the EStG. This provision, which was introduced into
         the EStG in 1997, applies retroactively to income received after 31 December 1995 (see Paragraph 52(3), second sentence, of
         the EStG of 1997).
      
      8 –	Paragraph 50(5), fourth sentence, third clause, third sentence, of the EStG.
      
      9 –	Case C-234/01 [2003] ECR I-5933.
      
      10 –	It cites in this regard Case C-264/96 ICI [1998] ECR I‑4695, paragraph 28.
      
      11 –	See, in particular, Case C-250/95 Futura Participations and Singer [1997] I‑2471, paragraphs 21 and 22, and Case C‑446/03 Marks & Spencer [2005] ECR I‑10837, paragraph 39.
      
      12 –	Futura Participations and Singer, paragraph 22.
      
      13 –	See written observations, paragraph 9.
      
      14 –	Ibidem, paragraphs 10 and 11.
      
      15 –	Ibidem, paragraph 12.
      
      16 –	Paragraph 28.
      
      17 –	Paragraph 27.
      
      18 –	Besides the cooperation mechanism thus provided for under the German tax legislation in relation to the tax repayment procedure,
         Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States
         in the field of direct taxation (OJ 1977 L 336, p. 15) established, more generally, the principle that the authorities in
         question must exchange any information that may enable them to effect a correct assessment of taxes on income and on capital.