CIBA Speciality Chemicals Central and Eastern Europe Szolgáltató, Tanácsadó és Keresdedelmi kft v Adó- és Pénzügyi Ellenőrzési Hivatal (APEH) Hatósági Főosztály.
Date: 2010-04-15
14. The Court has jurisdiction to interpret the provisions of the EC Treaty only as regards their application in a new Member State with effect from the date of that State’s accession to the European Union (see, to that effect, Case C‑302/04 Ynos [2006] ECR I‑371, paragraph 36, and Case C‑64/06 Telefónica O2 Czech Republic [2007] ECR I‑4887, paragraph 23).
15. As the facts in the main proceedings occurred in part after that date, the Court has jurisdiction to reply to the question referred.
The question referred for a preliminary ruling
17. According to settled case‑law, freedom of establishment, which Article 43 EC grants to Member State nationals and which includes the right for them to take up and pursue activities as self-employed persons and to set up and manage undertakings, under the conditions laid down for its own nationals by the law of the Member State where such establishment is effected, entails, in accordance with Article 48 EC, for companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the European Union, the right to exercise their activity in the Member State concerned through a subsidiary, branch or agency (see, inter alia, Case C‑466/03 Marks & Spencer [2005] ECR I‑10837, paragraph 30; Case C‑374/04 Test Claimants in Class IV of the ACT Group Litigation  [2006] ECR I‑11673, paragraph 42; and Case C‑314/08 Filipiak [2009] ECR I‑0000, paragraph 59).
18. Even though, according to their wording, the provisions concerning 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 State of origin from hindering the establishment in another Member State of one of its nationals or of a company incorporated under its legislation (see Case C‑298/05 Columbus Container Services [2007] ECR I‑10451, paragraph 33; Case C‑157/07 Krankenheim Ruhesitz am Wannsee‑Seniorenheimstatt [2008] ECR I‑8061, paragraph 29; and Filipiak , paragraph 60).
19. It is also settled case-law that all measures which prohibit, impede or render less attractive the exercise of that freedom must be regarded as constituting restrictions on the freedom of establishment (see Columbus Container Services , paragraph 34, and Krankenheim Ruhesitz am Wannsee-Seniorenheimstatt , paragraph 30).
23. Neither the fact that VTL is calculated on the basis of the wage costs of the companies liable to that levy and not on their turnover or profits, nor the fact that it is paid directly to a fund distinct from the State’s central budget and ring‑fenced for a particular use, is, of itself, such as to preclude that levy from coming within the field of direct taxation.
25. It should be observed that, assuming that VTL comes within the field of direct taxation and assuming that CIBA’s liability to pay, on the one hand, VTL on the basis of a calculation which takes account of the wage costs in respect of its branch in the Czech Republic and, on the other, contributions relating to that Member State’s public policy on employment in respect of the workers employed in that branch may be considered to be double taxation, such a fiscal disadvantage results from the exercise in parallel by two Member States of their fiscal sovereignty (see, to that effect, Case C‑513/04 Kerckhaert and Morres [2006] ECR I‑10967, paragraph 20, and Case C‑67/08 Block [2009] ECR I‑883, paragraph 28).
26. In that regard, double taxation conventions are designed to eliminate or mitigate the negative effects on the functioning of the internal market resulting from the coexistence of national tax systems referred to in the preceding paragraph ( Kerckhaert and Morres , paragraph 21, and Block , paragraph 29).
27. European Union law, in the current state of its development and in a situation such as that at issue in the main proceedings, 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. Consequently, apart from Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ 1990 L 225, p. 6), the Convention of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (OJ 1990 L 225, p. 10) and Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments (OJ 2003 L 157, p. 38), no uniform or harmonisation measure designed to eliminate double taxation has as yet been adopted at European Union law level ( Kerckhaert and Morres , paragraph 22, and Block , paragraph 30).
28. It follows from this that, in the current state of the development of European Union law, the Member States enjoy a certain autonomy in this area provided they comply with European Union law, and are not obliged therefore to adapt their own tax systems to the different systems of taxation of the other Member States in order, inter alia, to eliminate the double taxation arising from the exercise in parallel by those States of their fiscal sovereignty (see, to that effect, Columbus Container Services , paragraph 51, and Block , paragraph 31).
29. Therefore, the double taxation alleged by CIBA, assuming it exists, does not alone constitute a restriction prohibited by the Treaty (see, to that effect, Case C‑194/06 Orange European Smallcap Fund  [2008] ECR I‑3747, paragraph 42, and Case C‑128/08 Damseaux [2009] ECR I‑0000, paragraph 27).
32. Unlike those contributions, which had to be paid for each seconded worker for the purposes of his social security (see Arblade and Others , paragraphs 48, 49 and 80), VTL does not seem, as was indicated in paragraphs 22 and 24 of this judgment, to be paid by the undertakings liable to it for the purposes of granting a direct benefit to those undertakings, and even less so to their employees, but is paid into a State fund which offers grants to vocational training institutions in Hungary. VTL cannot therefore, subject to the verification by the referring court referred to in paragraph 24, be treated in the same way as the contributions which were at issue in Arblade and Others .
37. As regards the argument that the workers employed in the Czech Republic cannot benefit from the training financed by the Hungarian fund for the employment market, it must be recalled that the Member State in which the seat of the undertaking is located enjoys, in the absence of a double taxation convention, the right to tax that undertaking overall (see, to that effect, Case C‑279/93 Schumacker [1995] ECR I‑225, paragraph 32, and Case C‑414/06 Lidl Belgium [2008] ECR I‑3601, paragraph 33).
43. In that event, a company which has its seat in Hungary and has a place of business in another Member State is, as regards the advantage identified in paragraph 40 of this judgment, in a less favourable position than a company which restricts its activity to Hungarian territory alone (see, by analogy, Lidl Belgium , paragraph 25, and Filipiak , paragraph 67).
44. Thus, the difficulty in practice for a company which has its seat in Hungary of relying, with regard to a place of business situated in another Member State, on the means provided for in Hungarian legislation to reduce its gross liability to VTL can, in so far as it is confirmed by the referring court, deter that company from taking advantage of the freedom of establishment under Articles 43 EC and 48 EC and amounts to a restriction of that freedom (see, by analogy, Filipiak , paragraph 71 and case‑law cited).
45. According to the case‑law of the Court, a measure restricting one of the fundamental freedoms guaranteed by the Treaty may be accepted only if it is justified by overriding reasons in the public interest. Even if that were so, application of that measure would still have to be such as to ensure achievement of the aim pursued and not go beyond what is necessary for that purpose (see, inter alia, Case C‑527/06 Renneberg [2008] ECR I‑7735, paragraph 81).
47. In any event, a restriction such as that identified in paragraph 44 of this judgment cannot be justified by the need to preserve the coherence of a system such as the VTL system at issue in the main proceedings. For an argument based on such a justification to succeed, the Court requires that a direct link be established between the advantage concerned and the offsetting of that advantage by a particular tax levy, with the direct nature of that link falling to be examined in the light of the objective pursued by the rules in question (see, to that effect, Case C‑182/08 Glaxo Wellcome [2009] ECR I‑0000, paragraph 78 and case‑law cited). In the main proceedings, the fact that, for a company with its seat in Hungary, all of the staff belonging to a place of business situated in another Member State is taken into account does not seem to be offset by any opportunity, in practice, for that company of benefiting from the means provided for in Hungarian legislation to reduce gross liability to VTL with regard to training costs incurred in such a place of business.
48. In addition, it is apparent from Article 8(1) of the 2003 Law and the observations of the Hungarian Government that the VTL system is intended to improve the level of training of workers in the Hungarian employment market. In that regard, an offsetting of the costs of training paid outside of Hungary against gross liability to VTL could, admittedly, bring about a reduction in the revenue intended for the attainment of that objective. However, such a consideration is purely economic and cannot, therefore, according to settled case-law, constitute an overriding reason in the public interest (see, to that effect, Case C‑436/00 X and Y [2002] ECR I‑10829, paragraph 50, and Glaxo Wellcome , paragraph 82).