Columbus Container Services BVBA & Co. v Finanzamt Bielefeld-Innenstadt.
Date: 2007-12-06
13. Columbus is a limited partnership governed by Belgian law, which at the time of the facts in the main proceedings had its registered office in Antwerp (Belgium). The company is a coordination centre for the purposes of Royal Decree No 187.
14. Columbus’ shares are held, on the one hand, by eight members of the same family residing in Germany, each member having a 10% holding, and, on the other hand, as regards the remaining 20%, by a German partnership, the shares in which are also held by members of that family. At Columbus’ general meeting, all shareholders are represented by the same person.
27. As a preliminary point, it must be recalled, that, according to settled case-law, in the absence of unifying or harmonising measures adopted by the Community, the Member States remain competent to determine the criteria for taxation of income and wealth with a view to eliminating double taxation by means inter alia of international agreements (see, in particular, Case C-307/97 Saint-Gobain ZN  [1999] ECR I-6161, paragraph 57; Case C-290/04 FKP Scorpio Konzertproduktionen  [2006] ECR I-9461, paragraph 54; and Case C-374/04 Test Claimants in Class IV of the ACT Group Litigation  [2006] ECR I-11673, paragraph 52).
28. However, although direct taxation falls within their competence, the Member States must exercise that competence consistently with Community law (see Case C-265/04 Bouanich [2006] ECR I-923, paragraph 28, and Test Claimants in Class IV of the ACT Group Litigation , paragraph 36).
The existence of a restriction on the freedom of establishment
29. In accordance with settled case-law, national provisions which apply to holdings by nationals of the Member State concerned in the capital of a company established in another Member State, giving them definite influence on the company’s decisions and allowing them to determine its activities, come within the scope of the provisions of the Treaty on freedom of establishment (see, to that effect, Case C-231/05 Oy AA [2007] ECR I‑0000, paragraph 20, and Case C‑112 /05 Commission v Germany  [2007] ECR I‑0000, paragraph 13).
30. Further according to that case-law, the acquisition by one or more natural persons residing in a Member State of all the shares in a company registered in another Member State, conferring on those persons definite influence over the company’s decisions and allowing them to determine its activities, is thus covered by the Treaty provisions on the freedom of establishment (see Case C-251/98 Baars  [2000] ECR I‑2787, paragraphs 21 and 22, and Case C-208/00 Überseering  [2002] ECR I‑9919, paragraph 77).
31. In the present case, it is apparent from paragraph 14 of this judgment that all shares in Columbus are held, either directly or indirectly, by members of one family. The latter pursue the same interests, take decisions concerning Columbus by agreement through the same representative at the general meeting of Columbus and decide on its activities.
33. Article 43 EC requires the elimination of restrictions on the freedom of establishment. Therefore, even though, according to their wording, the provisions of the Treaty concerning freedom of establishment are directed to 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 (see, in particular, Case C-264/96 ICI [1998] ECR I-4695, paragraph 21, and Case C-196/04 Cadbury Schweppes and Cadbury Schweppes Overseas  [2006] ECR I‑7995, paragraph 42).
34. 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 such restrictions (see Case C-55/94 Gebhard  [1995] ECR I-4165, paragraph 37, and Case C-442/02 CaixaBank France  [2004] ECR I- 8961, paragraph 11).
39. Given that the freedom of establishment prohibits any discrimination based on the place in which companies or partnerships have their seat (see, to that effect, Saint-Gobain ZN , paragraph 35, and Case C-446/04 Test Claimants in the FII Group Litigation  [2006] ECR I-11753, paragraph 40), it is not contested that the German tax legislation in issue in the main proceedings, which is comparable in this respect to the Belgian tax legislation that applied in the case resulting in the judgment in Case C‑513/04 Kerckhaert and Morres  [2006] ECR I‑10967, paragraph 17, does not make any distinction between taxation of income derived from the profits of partnerships established in Germany, and taxation of income derived from the profits of partnerships established in another Member State which subjects the profits made by those partnerships in that State to a rate of tax below 30%. By applying the set-off method to such foreign partnerships, that legislation merely subjects, in Germany, the profits made by such partnerships to the same tax rate as profits made by partnerships established in Germany.
40. Since partnerships such as Columbus do not suffer any tax disadvantage in comparison with partnerships established in Germany, there is no discrimination resulting from a difference in treatment between those two categories of partnerships.
41. It is true that, according to well-established case-law, discrimination can also arise through the application of the same rule to different situations (see Case C‑279/93 Schumacker  [1995] ECR I-225, paragraph 30, and Case C-311/97 Royal Bank of Scotland  [1999] ECR I-2651, paragraph 26).
42. However, in respect of the tax legislation of his State of residence, the position of a partner receiving profits is not necessarily altered merely by the fact that he receives those dividends from a company or partnership established in another Member State, which, in exercising its fiscal sovereignty, makes those profits subject to taxation amounting to less than 30% of the profit actually made (see, to that effect, Kerckhaert and Morres , paragraph 19).
43. In circumstances such as those in the main proceedings, the adverse consequences which might arise from the application of a system for the taxation of profits such as that put in place by the AStG result from the exercise in parallel by two Member States of their fiscal sovereignty (see Kerckhaert and Morres , paragraph 20).
44. In this respect, double taxation conventions such as those envisaged in Article 293 EC 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).
45. Community law, in its current state and in a situation such as that 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 Community. 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 Community law level (see Kerckhaert and Morres , paragraph 22).
46. Although the Member States have, within the framework of their powers referred to in paragraph 27 of this judgment, entered into numerous bilateral conventions designed to eliminate or to mitigate those negative effects, the fact none the less remains that the Court has no jurisdiction, under Article 234 EC, to rule on the possible infringement of the provisions of such conventions by a contracting Member State.
47. As the Advocate General noted in point 46 of his Opinion, the Court may not examine the relationship between a national measure, such as that in issue in the main proceedings, and the provisions of a double taxation convention, such as the Bilateral Tax Convention, since that question does not fall within the scope of Community law (see, to that effect, Case C‑141/99 AMID  [2000] ECR I-11619, paragraph 18).
48. Contrary to what the applicant in the main proceedings claims, it also does not follow from paragraphs 43 and 44 of the judgment in Case C‑294/97 Eurowings Luftverkehr  [1999] ECR I-7447 that the freedoms of movement guaranteed by the Treaty preclude the application of national legislation such as that in issue in the main proceedings.
51. As stated in paragraph 44 of this judgment, in the current state of harmonisation of Community tax law, Member States enjoy a certain autonomy. It follows from that tax competence that the freedom of companies and partnerships to choose, for the purposes of establishment, between different Member States in no way means that the latter are obliged to adapt their own tax systems to the different systems of tax of the other Member States in order to guarantee that a company or partnership that has chosen to establish itself in a given Member State is taxed, at national level, in the same way as a company or partnership that has chosen to establish itself in another Member State.
53. In this respect, it must be recalled that the fiscal autonomy referred to in paragraphs 44 and 51 of this judgment also means that the Member States are at liberty to determine the conditions and the level of taxation for different types of establishments chosen by national companies or partnerships operating abroad, on condition that those companies or partnerships are not treated in a manner that is discriminatory in comparison with comparable national establishments.
56. In this respect, suffice it to recall, as follows from the foregoing, that legislation such as that in issue in the main proceedings does not involve discrimination of taxpayers of a Member State to whom profits made by partnerships established in another Member State are attributed. Accordingly, the conclusion arrived at in paragraph 54 of this judgment also applies to the provisions of the Treaty relating to the free movement of capital (see, to that effect, Test Claimants in the FII Group Litigation , paragraph 60).