Société Générale SA v Ministre de l'Action et des Comptes publics.
Date: 2021-02-25
The national court also refers to the case-law of the Court of Justice and, in particular, to paragraph 47 of the judgment of 20 May 2008, Orange European Smallcap Fund (C‑194/06, EU:C:2008:289) and paragraph 28 of the judgment of 24 October 2018, Sauvage and Lejeune (C‑602/17, EU:C:2018:856), from which it follows that Union law does not require a Member State to grant a concession in response to offset the disadvantage resulting from a series of charges to tax that is exclusively due to the parallel exercise of the various Member States’ fiscal sovereignty.  However, where that Member State has decided to grant such a concession, that power must be exercised in accordance with Union law. Furthermore, a disadvantageous tax treatment resulting from the allocation of those powers between two Member States and the disparity between their tax systems cannot be regarded as constituting a difference in treatment which is prohibited.
It must be observed, in that regard, that it is for each Member State to organise, in compliance with EU law, its system for taxing distributed profits and to define, in that context, the tax base and the tax rate which apply to the shareholder receiving them (see, inter alia, judgments of 20 May 2008, Orange European Smallcap Fund, C‑194/06, EU:C:2008:289, paragraph 30, and order of 4 February 2016, Baudinet and Others, C‑194/15, not published, EU:C:2016:81, paragraph 30  and the case-law cited).
It follows that dividends distributed by a company established in one Member State to a shareholder resident in another Member State are liable to be subject to juridical double taxation where the two Member States choose to exercise their fiscal competence and to subject those dividends to taxation in the hands of the shareholder (judgment of 10 February 2011 in  Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and  C‑437/08, EU:C:2011:61, paragraph 168  and the case-law cited, and order of  4 February 2016, Baudinet and Others, C‑194/15, not published, EU:C:2016:81, paragraph 31).
On the other hand, the disadvantages that may result from the parallel exercise of the tax powers of the various Member States, in so far as such an exercise is not discriminatory, do not constitute restrictions prohibited by the FEU Treaty (judgment of 10 February 2011 in Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 169 and the case-law cited, and order of 4 February 2016, Baudinet and others, C‑194/15, unpublished, EU:C:2016:81, paragraph 32).
Moreover, the Court has ruled that since European Union law, as it currently stands, does not lay down any general criteria for the attribution of areas of competence between the Member States in relation to the elimination of double taxation within the European Union, the fact that both the Member State in which the dividends are paid and the Member State in which the shareholder is resident are liable to tax those dividends does not mean that the Member State of residence is obliged, under European Union law, to prevent the disadvantages which could arise from the exercise of competence thus attributed by the two Member States (judgment of 10 February 2011 in  Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and  C‑437/08, EU:C:2011:61, paragraph 170  and the case-law cited, and order of 4 February 2016, Baudinet and Others, C‑194/15, not published, EU:C:2016:81, paragraph 33).
In accordance with settled case-law, although the Member States are free to determine the connecting factors for the allocation of fiscal jurisdiction in bilateral conventions for the avoidance of double taxation, that allocation of fiscal jurisdiction does not allow them to apply measures contrary to the freedoms of movement guaranteed by the FEU Treaty. As far as concerns the exercise of the power of taxation, so allocated by bilateral conventions for the avoidance of double taxation, the Member States must comply with EU rules and, more particularly, observe the principle of equal treatment (see, to that effect, judgments of  24 October 2018, Sauvage and Lejeune, C‑602/17, EU:C:2018:856, paragraph 24, and  14 March 2019, Jacob and Lennertz, C‑174/18, EU:C:2019:205, paragraph 25).
Furthermore, as the Court has already stated, the purpose of a convention for the avoidance of double taxation, such as those at issue in the main proceedings, is not to ensure that the taxation to which the taxpayer is subject in one Member State is not higher than that to which he would be subject in the other Member State (see, to that effect, judgment of  12 May 1998, Gilly, C‑336/96, EU:C:1998:221, paragraph 46.