European Commission v Portuguese Republic.
Date: 2012-09-06
15. In this connection, it should be borne in mind in particular that the letter of formal notice sent by the Commission to the Member State concerned and the reasoned opinion issued by the Commission delimit the subject-matter of the dispute, so that it cannot thereafter be extended. The reasoned opinion and the proceedings brought by the Commission must consequently be based on the same complaints as those raised in the letter of formal notice initiating the pre-litigation procedure (see, to this effect, Case C-457/07 Commission  v Portugal  [2009] ECR I-8091, paragraph 55, and Case C-535/07 Commission v Austria  [2010] ECR I-9483, paragraph 41).
16. If that is not the case, that irregularity cannot be regarded as having been cured by the fact that the defendant Member State submitted observations on the reasoned opinion (see Commission  v Austria , paragraph 41 and the case-law cited). In accordance with settled case-law, the pre-litigation procedure constitutes an essential guarantee not only in order to protect the rights of the Member State concerned, but also to ensure that any contentious procedure will have a clearly defined dispute as its subject-matter (see, inter alia, Case C-365/97 Commission  v Italy  [1999] ECR I-7773, paragraph 35, and Case C-392/99 Commission  v Portugal  [2003] ECR I-3373, paragraph 133).
23. As the Advocate General notes in points 26 and 49 to 54 of his Opinion, it is not in dispute, in the light in particular of the judgment in National Grid Indus , that freedom of establishment is applicable to transfers of activities of a company from Portuguese territory to another Member State, irrespective of whether the company in question transfers its registered office and its effective management outside Portuguese territory or whether it transfers assets of a permanent establishment that is situated in Portuguese territory to another Member State.
24. Article 49 TFEU requires the abolition of restrictions on the freedom of establishment. That freedom entails, for companies formed in accordance with the laws of a Member State and having their registered office, central administration or principal place of business within the European Community, the right to pursue their activities in other Member States through a subsidiary, a branch or an agency (see Case C-157/07 Krankenheim Ruhesitz am Wannsee-Seniorenheimstatt  [2008] ECR I-8061, paragraph 28, and Case C-337/08 X Holding  [2010] ECR I-1215, paragraph 17).
25. Even though, according to their wording, the provisions of the FEU Treaty on freedom of establishment are aimed at ensuring that foreign nationals and companies 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 ( National Grid Indus , paragraph 35 and the case-law cited).
26. 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 ( National Grid Indus , paragraph 36 and the case-law cited).
28. Under those provisions, a Portuguese company which transfers its registered office and its effective management outside Portuguese territory is taxed on unrealised capital gains. By contrast, that is not so where that company maintains its seat in Portuguese territory, as it is taxed only on realised capital gains. Furthermore, those provisions also impose taxation of unrealised capital gains in the case of partial or total transfer to another Member State of the assets of a permanent establishment in Portuguese territory of a company not resident in Portugal, whereas a transfer of assets in Portuguese territory does not result in such taxation. That difference in treatment is liable to deter a company from transferring its activities from Portuguese territory to another Member State (see, to this effect, Case C-380/11 DI. VI. Finanziaria di Diego della Valle & C.  [2012] ECR, paragraph 36).
31. So far as concerns the existence of any justification for the restriction on freedom of establishment that has been found and the justification’s proportionality, the Court held in National Grid Indus , paragraph 86, that Article 49 TFEU precludes legislation of a Member State which prescribes the immediate recovery of tax on unrealised capital gains relating to assets of a company transferring its place of effective management to another Member State at the very time of that transfer.
32. Furthermore, as is apparent from paragraph 73 of the judgment in National Grid Indus , national legislation offering a company transferring its place of effective management to another Member State the choice between, first, immediate payment of the amount of tax and, secondly, deferred payment of the amount of tax, possibly together with interest in accordance with the applicable national legislation, would constitute a measure less harmful to freedom of establishment than the measures at issue in the main proceedings.
34. It should be added that, contrary to the Portuguese Republic’s submissions at the hearing, the same conclusion as in paragraph 31 of the present judgment is necessary so far as concerns the taxation of unrealised capital gains relating to assets of a permanent establishment situated in Portuguese territory which are transferred to another Member State. The observation in paragraph 57 of the judgment in National Grid Indus  that ‘the assets of a company are assigned directly to economic activities that are intended to produce a profit’, upon which the Portuguese Republic relies, was made not in the context of examination of whether the national legislation relevant in the case in question was restrictive but in the context of the analysis of its proportionality in that it did not take into account decreases in value occurring after the transfer of a company’s place of effective management to another Member State. As the Advocate General observes in point 102 of his Opinion, it is therefore not possible to infer from that statement by the Court that, on the one hand, the disconnection of the assets of a permanent establishment from any economic activity in a Member State and, on the other, the transfer of such assets to another Member State upon the cessation of that permanent establishment’s activity in the former Member State are comparable situations.