Proceedings brought by E.
Date: 2021-04-29
25


According to the Court’s case-law, the Member States must exercise their competence in the area of direct taxation in a manner that is compatible with EU law and, in particular, with the fundamental freedoms guaranteed by the FEU Treaty (see, to that effect, judgment of 18 June 2019, Austria v Germany, C‑591/17, EU:C:2019:504, paragraph 56 and the case-law cited).
26


Article 63(1) TFEU generally prohibits restrictions on movements of capital between Member States (judgment of 16 September 2020, Romenergo and Aris Capital, C‑339/19, EU:C:2020:709, paragraph 31 and the case-law cited). The measures prohibited by that provision, as restrictions on the movement of capital, include those that are such as to discourage non-residents from making investments in a Member State or to discourage that Member State’s residents from doing so in other States (judgment of 30 April 2020, Société Générale, C‑565/18, EU:C:2020:318, paragraph 22).
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In particular, a difference in treatment, where it leads to less favourable treatment of the income of a resident of a Member State originating in another Member State in comparison with the treatment of income originating in the first Member State, is liable to dissuade such a resident from investing his or her capital in another Member State (see, to that effect, judgments of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 80; of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 50; and of 20 September 2018, EV, C‑685/16, EU:C:2018:743, paragraph 63).
29


In so far as that provision constitutes a derogation from the fundamental principle of the free movement of capital, it must be interpreted strictly. Consequently, it cannot be interpreted as meaning that all tax legislation which draws a distinction between taxpayers on the basis of their place of residence or of the State in which they invest their capital is automatically compatible with the FEU Treaty. Indeed, the derogation in Article 65(1)(a) TFEU is itself limited by Article 65(3) TFEU, which provides that the national provisions referred to in paragraph 1 of that article ‘shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 63 [TFEU]’ (judgment of 21 June 2018, Fidelity Funds and Others, C‑480/16, EU:C:2018:480, paragraph 47 and the case-law cited).
30


The Court has also held that a distinction must, therefore, be made between the differences in treatment authorised under Article 65(1)(a) TFEU and the discrimination prohibited by Article 65(3) TFEU. Before national tax legislation can be regarded as compatible with the Treaty provisions on the free movement of capital, the difference in treatment resulting from that legislation must concern situations which are not objectively comparable or must be justified by an overriding reason in the public interest (judgment of 30 April 2020, Société Générale, C‑565/18, EU:C:2020:318, paragraph 24).
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Secondly, it is clear from the Court’s case-law that the comparability of a cross-border situation with an internal one must be examined having regard to the objective pursued by the national provisions at issue as well as their purpose and content, and that only the relevant distinguishing criteria established by the legislation in question must be taken into account in determining whether the difference in treatment resulting from that legislation reflects an objectively different situation (judgment of 21 June 2018, Fidelity Funds and Others, C‑480/16, EU:C:2018:480, paragraphs 50 and 51 and the case-law cited).
56


It should be recalled that, according to the Court’s settled case-law, a restriction on the free movement of capital is permissible if it is justified by overriding reasons in the public interest, if it is suitable for securing the attainment of the objective which it pursues and if it does not go beyond what is necessary in order to attain that objective (see, to that effect, judgments of 26 February 2019, X (Controlled companies established in third countries), C‑135/17, EU:C:2019:136, paragraph 70, and of 30 January 2020, Köln-Aktienfonds Deka, C‑156/17, EU:C:2020:51, paragraph 83 and the case-law cited).