Proceedings brought by A Oy.
Date: 2017-11-23
22


It is therefore for the Member States, in compliance with EU law, to lay down such provisions.
23


According to the Court’s case-law, operations covered by the Mergers Directive are a particular method of exercise of the freedom of establishment, important for the proper functioning of the internal market, and are therefore economic activities in respect of which the Member States are required to comply with that freedom (see, to that effect, judgment of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraph 28 and the case-law cited).
24


It is settled case-law of the Court that Article 49 TFEU requires the abolition of restrictions of freedom of establishment. Even though, according to their wording, the provisions of the FEU Treaty on freedom of establishment are aimed at ensuring that foreign nationals 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 (judgment of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraph 58 and the case-law cited).
25


All measures which prohibit, impede or render less attractive the exercise of freedom of establishment must be considered to be restrictions of that freedom (judgment of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraph 59 and the case-law cited).
28


Such an impediment is permissible only if it relates to situations which are not objectively comparable or if it can be justified by overriding reasons of the public interest recognised by EU law. It is further necessary, in such a case, that it is appropriate for ensuring the attainment of the objective in question and does not go beyond what is necessary to attain that objective (judgment of 29 November 2011, National Grid Indus, C‑371/10, EU:C:2011:785, paragraph 42 and the case-law cited).
29


As to whether the situations are comparable, it must be stated that, with reference to legislation of a Member State which seeks to tax capital gains generated within its tax jurisdiction, the situation of a company which, in the course of a transfer of assets, transfers a non-resident permanent establishment to a company that is also non-resident is, as regards the taxation of the capital gains of that permanent establishment which were generated within the tax jurisdiction of that Member State before the transfer, comparable to that of a resident company which, in the course of a transfer of assets, transfers a permanent establishment to another resident company (see, to that effect, judgment of 21 May 2015, Verder LabTec, C‑657/13, EU:C:2015:331, paragraph 38 and the case-law cited).
30


As to whether the impediment can be justified by overriding reasons of the public interest recognised by EU law, it must be recalled, first, that the need to preserve the allocation of powers of taxation between Member States is a legitimate objective recognised by the Court, and that, in the absence of any unifying or harmonising measures of the European Union, the Member States retain the power to define, by treaty or unilaterally, the criteria for allocating their powers of taxation, with a view to eliminating double taxation (judgment of 21 May 2015, Verder LabTec, C‑657/13, EU:C:2015:331, paragraph 42 and the case-law cited).
31


Second, in accordance with the principle of fiscal territoriality, a Member State is entitled, in the case of a transfer of a non-resident permanent establishment to a non-resident company by way of a transfer of assets, to charge tax at the time of the transfer on the capital gains generated within its tax jurisdiction before the transfer. Such a measure is intended to prevent situations that might jeopardise the right of that Member State to exercise its powers of taxation in relation to activities carried on within that jurisdiction (see, to that effect, judgment of 21 May 2015, Verder LabTec, C‑657/13, EU:C:2015:331, paragraph 43 and the case-law cited).
32


Therefore the transfer of a non-resident permanent establishment of a resident company, by way of a transfer of assets, to a non-resident company cannot mean that the Member State concerned must waive its right to tax the capital gains generated within its tax jurisdiction before the transfer (see, to that effect, judgment of 21 May 2015, Verder LabTec, C‑657/13, EU:C:2015:331, paragraph 44).
34


As to the proportionality of the legislation at issue in the main proceedings, it follows from the Court’s case-law, first, that it is in accordance with the principle of proportionality for the Member State of the transferring company, for the purpose of safeguarding the exercise of its powers of taxation, to determine the amount of tax on the capital gains generated within its tax jurisdiction at the time when its tax jurisdiction over the assets concerned ceases to exist, in the present case at the time of the transfer in question (see, to that effect, judgment of 21 May 2015, Verder LabTec, C‑657/13, EU:C:2015:331, paragraph 48 and the case-law cited).
35


It has been held, second, that legislation of a Member State offering a taxpayer the choice between immediate payment of tax, which creates a disadvantage for the taxpayer in terms of cash flow but frees it from subsequent administrative burdens, and deferred payment of tax, possibly together with interest in accordance with the applicable national legislation, which necessarily involves an administrative burden for the taxpayer in connection with tracing the transferred assets, constitutes a measure which, while being appropriate for ensuring the balanced allocation of powers of taxation between the Member States, is less harmful to freedom of establishment than immediate collection of the tax due (see, to that effect, judgment of 29 November 2011, National Grid Indus, C‑371/10, EU:C:2011:785, paragraph 73).
36


As regards the administrative burden, the Court has explained that the taxpayer should be given the option to choose between, on the one hand, bearing the administrative burden relating to deferred payment of tax and, on the other, immediate collection of the tax. If the taxpayer considers that the burden is not excessive and chooses to bear it, the burden to be borne by the tax authorities cannot be regarded as excessive either (see, to that effect, judgment of 16 April 2015, Commission v Germany, C‑591/13, EU:C:2015:230, paragraph 73 and the case-law cited).
38


That assessment cannot be called in question by the fact that the legislation, pursuant to Article 10(2) of the Mergers Directive, gives relief for the tax that, but for the provisions of that directive, would have been charged on such capital gains in the Member State in which the non-resident permanent establishment is situated, given that the disproportionality of that legislation does not derive from the amount of tax due but from the fact that it makes no provision for the taxpayer to defer the time at which it is collected (see, to that effect, judgment of 14 September 2017, Trustees of the P Panayi Accumulation & Maintenance Settlements, C‑646/15, EU:C:2017:682, paragraph 60).
39


As regards the justification based on the need to ensure the effective collection of tax, raised by the German and Swedish Governments, it should be observed that, while the Court has previously accepted that it may constitute an overriding reason of the public interest capable of justifying a restriction of the freedoms of movement guaranteed by the FEU Treaty (see, to that effect, judgment of 19 June 2014, Strojírny Prostějov and ACO Industries Tábor, C‑53/13 and C‑80/13, EU:C:2014:2011, paragraph 46 and the case-law cited), the legislation at issue in the main proceedings is not appropriate for attaining it, so that that objective cannot, in a case such as that in the main proceedings, justify an impediment to freedom of establishment. As the Commission observed, for a Member State to allow a resident transferring company to opt for deferred payment of tax would not affect that Member State’s possibility of requesting from that company the necessary information for collecting the tax due or of proceeding effectively to collecting it (see, by analogy, judgment of 19 June 2014, Strojírny Prostějov and ACO Industries Tábor, C‑53/13 and C‑80/13, EU:C:2014:2011, paragraphs 49 to 53).