HSBC Holdings plc and Vidacos Nominees Ltd v The Commissioners of Her Majesty's Revenue & Customs.
Date: 2009-10-01
25. As a preliminary point, it should be noted that the directive provided for complete harmonisation of the cases in which the Member States may levy indirect taxes on the raising of capital (see, to that effect, Case C-178/05 Commission  v Greece  [2007] ECR I-4185, paragraph 31).
26. As the Court has already held, where a matter is harmonised at Community level, national measures relating thereto must be assessed in the light of the provisions of that harmonising measure and not of those of the EC Treaty (see, to that effect, Case C-324/99 DaimlerChrysler  [2001] ECR I-9897, paragraph 32 and Case C-257/06 Roby Profumi  [2008] ECR I-189, paragraph 14).
28. From the outset, it should be noted that, as is apparent from the preamble thereto, the directive seeks to promote the free movement of capital, which is considered essential to the creation of an economic union whose characteristics are similar to those of a domestic market. The pursuit of such an objective presupposes, so far as taxation on the raising of capital is concerned, the abolition of indirect taxes in force in the Member States until then and the imposition in place of them of a duty charged only once in the common market and at the same level in all the Member States.
30. Article 12(1) of the directive establishes an exhaustive list of taxes and duties other than capital duty which, notwithstanding Articles 10 and 11, may be imposed on capital companies in connection with the transactions referred to in those provisions (see Case 36/86 Investeringsforeningen Dansk Sparinvest  [1988] ECR 409, paragraph 9). Article 12 of the directive, and in particular Article 12(1)(a) thereof, refers to the ‘duties on the transfer of securities, whether charged at a flat rate or not’.
32. It should be noted that to permit the levying of tax or duty on the initial acquisition of a newly issued security amounts in reality to taxing the very issue of that security as it forms an integral part of an overall transaction with regard to the raising of capital. The issue of securities is not an end in itself, and has no point until those securities find investors (Case C-415/02 Commission  v Belgium  [2004] ECR I-7215, paragraph 32).
33. For Article 11(a) of the directive to have practical effect, therefore, ‘issue’, for the purposes of that provision, must include the first acquisition of securities immediately consequent upon their issue ( Commission  v Belgium , paragraph 33).
34. To interpret the term ‘transfer’ referred to in Article 12(1)(a) of the directive in a way such as that proposed by the United Kingdom Government and by the Commission of the European Communities, namely that SDRT at the rate of 1.5% is a charge on share transfers in the form of a ‘season ticket’, would effectively deprive Article 11(a) of the directive of its practical effect and call in question the clear distinction established by Articles 11(a) and 12(1)(a) of the directive between the concepts of ‘issue’ and ‘transfer’. In fact, such an interpretation would have the consequence that issues could nevertheless be subject to a tax or duty, although they, while necessarily involving an acquisition of newly issued securities, must not, under that provision, be subject to any taxes or duties other than capital duty.