European Commission v Republic of Finland.
Date: 2012-11-08
13. It is clear from the case‑law that the Court may of its own motion, or on a proposal from the Advocate General, or at the request of the parties, order the reopening of the oral procedure, in accordance with Article 61 of the Rules of Procedure, if it considers that it lacks sufficient information or that the case must be dealt with on the basis of an argument which has not been debated between the parties (see, inter alia, Case C‑210/06 Cartesio [2008] ECR I‑9641, paragraph 46).
28. It must be recalled that, according to settled case‑law, the measures prohibited by Article 63(1) TFEU 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 (see, in particular, Joined Cases C‑436/08 and C‑437/08 Haribo Lakritzen Hans Riegel and Österreichische Salinen  [2011] ECR I‑305, paragraph 50, and Case C‑493/09 Commission v Portugal  [2011] ECR I‑9247, paragraph 28).
32. Therefore, while dividends received by resident pension funds are, in practice, exempt or partially exempt from income tax as a result of the provisions of national law at issue, the dividends received by non-resident pension funds are taxed at 19.5% under the same national legislation, or at 15% or less under double taxation conventions concluded by the Republic of Finland.
33. Treating dividends paid to non-resident pension funds less favourably than dividends paid to resident pension funds is liable to deter companies established in another Member State from investing in the Republic of Finland, and thus constitutes a restriction on the free movement of capital prohibited, in principle, by Article 63 TFEU (see, Case C‑379/05 Amurta  [2007] ECR I‑9569, paragraph 28).
34. Contrary to what the French Republic and the United Kingdom suggest, it cannot be held that this unfavourable treatment is offset by the double taxation conventions concluded by the Republic of Finland. It is necessary for that purpose that the application of such a convention should allow the effects of the difference in treatment under national legislation to be compensated for (see, Case C‑284/09 Commission v Germany  [2011] ECR I‑9879, paragraph 63, and the case‑law cited). As is clear from the explanations provided on that point at the hearing by the Republic of Finland, that Member State has concluded only three conventions providing for a rate of taxation on dividends of 0%, most of the other conventions providing for a rate of 15%.
35. In order for such a difference in treatment to be compatible with the provisions of the FEU Treaty on the free movement of capital, it must concern situations which are not objectively comparable or be justified by an overriding reason of public interest (see, in particular, Case C‑446/04 Test Claimants in the FII Group Litigation  [2006] ECR I‑11753, paragraph 167, and Case C‑436/06 Grønfeldt  [2007] ECR I‑12357, paragraph 16).
36. As regards the question whether the situations at issue are objectively comparable, it must be recalled that the comparability of a cross-border situation with an internal situation must be examined having regard to the aim pursued by the national provisions at issue (see, Case C‑337/08 X Holding  [2010] ECR I‑1215, paragraph 22, and Case C‑18/11 Philips Electronics UK  [2012] ECR, paragraph 17).
37. Furthermore, it is settled case‑law that, in relation to expenses, such as business expenses which are directly linked to an activity which has generated taxable income in a Member State, residents and non-residents of that State are in a comparable situation, with the result that legislation of that State which denies non-residents, in matters of taxation, the right to deduct such expenses, while, on the other hand, allowing residents to do so, risks operating mainly to the detriment of nationals of other Member States and therefore constitutes indirect discrimination on grounds of nationality (Case C‑450/09 Schröder [2011] ECR I‑2497, paragraph 40 and the case‑law cited).
44. Furthermore, it cannot be held, contrary to the submissions of the Kingdom of Denmark, the Kingdom of the Netherlands and the Kingdom of Sweden, that resident and non-resident pension funds are in a different situation solely because the dividends paid to the latter are subject to a withholding tax. The national legislation at issue in the main proceedings does not simply provide for different procedures for charging tax depending on the place of residence of the recipient of nationally sourced dividends, but provides, in fact, that only non-resident pension funds are to be taxed on those dividends (see, by analogy, Joined Cases C‑338/11 to C‑347/11 Santander Asset Management SGIIC and Others  [2012] ECR, paragraph 43).
49. For an argument based on such a justification to succeed, a direct link must be established between the tax advantage concerned and the offsetting of that advantage by a particular tax levy (see Case C‑380/11 DI. VI. Finanziaria di Diego della Valle & C.  [2012] ECR, paragraph 47 and the case‑law cited).
52. In that regard, it suffices to state that the only reference to any subsequent taxation of benefits paid by pension funds to beneficiaries does not mean that a direct link exists, within the meaning of the case‑law cited in paragraph 49 of the present judgment, to the required legal standard (see, to that effect, Commission  v Portugal , paragraph 37).
53. With regard to the adverse effect that the system at issue has on Article 40 of the EEA Agreement, a point raised by the Commission, it should be noted that, in so far as the provisions of that article have the same legal scope as the substantially identical provisions of Article 63 TFEU all the foregoing considerations may, in circumstances such as those in the present case, be transposed, mutatis mutandis , to Article 40 of the EEA Agreement (see, Case C‑250/08 Commission  v Belgium  [2011] ECR I‑12341, paragraph 83 and the case‑law cited).