X BV and X NV v Staatssecretaris van Financiën.
Date: 2018-02-22
16


It should be observed that the Court may at any moment, after hearing the Advocate General, order the reopening of the oral part of the procedure under Article 83 of its Rules of Procedure if, inter alia, it considers that it lacks sufficient information or where the case must be decided on the basis of an argument which has not been debated between the parties or the interested persons referred to in Article 23 of the Statute of the Court of Justice of the European Union (judgment of 29 April 2015, Nordzucker, C‑148/14, EU:C:2015:287, paragraph 24).
18


Article 49 TFEU requires the elimination of restrictions on freedom of establishment of nationals of a Member State in the territory of another Member State. That freedom includes, for companies established in accordance with the legislation of a Member State and having their registered office, central administration or principal place of business within the European Union — which Article 54 TFEU treats in the same way as natural persons who are nationals of Member States, for the purposes of exercising freedom of establishment — the right to exercise their activity in other Member States through a subsidiary, branch or agency (see, to that effect, judgments of 21 May 2015, Verder LabTec, C‑657/13, EU:C:2015:331, paragraph 32, and of 2 September 2015, Groupe Steria, C‑386/14, EU:C:2015:524, paragraph 14).
20


However, a difference in treatment stemming from a Member State’s legislation to the detriment of companies exercising their freedom of establishment does not constitute an obstacle to that freedom if it relates to situations which are not objectively comparable or is justified by an overriding reason in the public interest and proportionate to that objective (see, to that effect, judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 167, and 25 February 2010, X Holding, C‑337/08, EU:C:2010:89, paragraph 20).
24


It cannot, however, be inferred from the judgment of 25 February 2010, X Holding (C-337/08, EU:C:2010:89) that any difference in treatment between companies belonging to a tax-integrated group, on the one hand, and companies not belonging to such a group, on the other, is compatible with Article 49 TFEU. As regards tax advantages other than the transfer of losses within the tax-integrated group, a separate assessment must, therefore, be made as to whether a Member State may reserve those advantages to companies belonging to a tax-integrated group and consequently exclude them in cross-border situations (see, to that effect, judgment of 2 September 2015, Groupe Steria, C‑386/14, EU:C:2015:524, paragraphs 27 and 28).
32


That difference in treatment is liable to make the exercise by a parent company of its freedom of establishment through the creation of subsidiaries in other Member States less attractive. In order for that difference to be compatible with the provisions of the Treaty, it must, as is apparent from paragraph 20 above, relate to situations which are not objectively comparable or be justified by an overriding reason in the public interest.
33


Whether the cross-border and national situations are comparable must be examined having regard to the purpose and content of the national provisions in question (see, to that effect, judgment of 18 December 2014, X, C‑87/13, EU:C:2014:2459, paragraph 27).
39


First, the Court must assess whether such a difference in treatment may be justified by the need to safeguard the allocation of the power to impose taxes between the Member States. The Court has held, in the judgment of 25 February 2010, X Holding (C‑337/08, EU:C:2010:89), as is apparent from paragraph 23 of the present judgment, that consolidation at the parent-company level for the profits and losses of the companies constituting a single tax entity represents an advantage which may justifiably be reserved to resident companies in view of the need to safeguard the allocation of the power to impose taxes between the Member States.
40


However, the advantage which X BV claims in the present case may not be confused with the advantage provided by consolidation within a single tax entity. The main proceedings concern the possibility of deducting interest charges, not the general offsetting of costs and gains specific to a single tax entity. Far from reserving that possibility of deducting interest to single tax entities, Netherlands law affords that possibility to any company and restricts it only in the particular case and conditions laid down in Article 10a(2)(b) of the Law on corporation tax. In avoiding that restriction, a parent company which together with its subsidiary forms a single tax entity does not, therefore, obtain an advantage specifically linked to the tax scheme of the single tax entity.
41


That is true all the more so since the application of Article 10a(2)(b) of the Law on corporation tax seems not to depend on the place of taxation of the income comprising the interest paid and, therefore, on ascertaining which State benefits from that taxation, a factor which the Netherlands Government has not indeed addressed.
42


Consequently, the difference in treatment at issue cannot be justified by the need to safeguard the allocation of the power to impose taxes between the Member States.
43


Secondly, the referring court asks whether justification could be derived from the need to ensure the coherence of the Netherlands tax system. The Court accepts that such a justification constitutes an overriding reason in the public interest, provided that a direct link is established between the tax advantage concerned and the offsetting of that advantage by a particular tax levy, the direct nature of that link falling to be examined in the light of the objective pursued by the rules in question (judgment of 2 September 2015, Groupe Steria, C‑386/14, EU:C:2015:524, paragraph 31 and the case-law cited).
46


Thirdly, that difference in treatment is justified, according to the Netherlands Government, by the objective of the fight against tax evasion and fraud and aims to prevent conduct involving the creation of wholly artificial arrangements which do not reflect economic reality with a view to evading the tax normally due on the profits generated by activities carried out on national territory.
49


However, in order for a restriction on the freedom of establishment to be justified on the ground of prevention of abusive practices, the specific objective of that restriction must also be to prevent that abuse (see, to that effect, judgment of 12 September 2006, Cadbury Schweppes and Cadbury Schweppes Overseas, C‑196/04, EU:C:2006:544, paragraph 55). However, the Netherlands Government does not even attempt to show that the difference in treatment referred to in paragraph 30 above is based on such an intention. Nor could that be the case, since the difference in treatment does not stem from Article 10a(2)(b) of the Law on corporation tax alone, but from that provision in conjunction with Article 15 of that law, relating to the single tax entity, which has a different purpose, as is apparent from paragraph 34 above.
58


Lastly and in any event, the Court has held that it cannot be inferred from the provisions of the FEU Treaty concerning freedom of establishment that a Member State would be required to exercise, asymmetrically, its taxation powers so as to permit the deduction of losses from operations whose results, if they were positive, would not in any event be taxed (judgment of 10 June 2015, X, C‑686/13, EU:C:2015:375, paragraphs 40 and 41).