European Commission v Portuguese Republic.
Date: 2011-05-05
25. It follows from Article 38(1)(c) of the Rules of Procedure of the Court of Justice and from the case-law relating to that provision that the application initiating proceedings must state the subject-matter of the dispute and a summary of the pleas in law on which the application is based and that that statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the application. It is therefore necessary for the essential points of law and of fact on which a case is based to be indicated coherently and intelligibly in the application itself and for the heads of claim to be set out unambiguously so that the Court does not rule ultra petita or indeed fail to rule on a claim (see, inter alia, Case C‑343/08 Commission  v Czech Republic  [2010] ECR I‑0000, paragraph 26).
28. Second, as regards the argument concerning the EEA Agreement, it must be observed that it is true that the application was a little unclear in that respect in confining itself, having pleaded a breach of Articles 18 EC and 56 EC, to observing that there was a breach of the ‘corresponding articles’ of that agreement. However, it is common ground, first, that the Commission made clear in its reply that it intended to rely on breach of Article 40 of that agreement alone. Second, and in any event, it must be observed that, as is apparent from paragraph 59 of the defence of the Portuguese Republic, it is clear that the latter cannot reasonably be in any doubt that the Commission’s ground of challenge regarding the EEA Agreement in fact referred to Article 40 of that agreement. Accordingly, the Portuguese Republic was in a position to avail itself of its right to defend itself.
34. According to settled case-law, capital movements include investments in immovable property on the territory of a Member State by non-residents, as is clear from the nomenclature of capital movements set out in Annex I to Council Directive 88/361/EEC, that nomenclature retaining the same indicative value for the purposes of defining the notion of capital movements (see Case C-370/05 Festersen  [2007] ECR I-1129, paragraph 23, and Case C-451/05 ELISA [2007] ECR I-8251, paragraph 59).
35. Accordingly, Article 130 of the CIRS falls within the scope of both Article 56(1) EC, which prohibits, generally, restrictions on capital movements between the Member States, and Article 40 of the EEA Agreement, which contains an identical prohibition as regards relations between the States party to that agreement, whether they are Members of the European Union or of EFTA (see, as regards the latter article, Case C-72/09 Établissements Rimbaud  [2010] ECR I-0000, paragraph 21).
38. However, by arguing that the aim pursued by the obligation to appoint a tax representative is to ensure the effectiveness of fiscal supervision and the prevention of tax avoidance in the context of income tax for natural persons, the Portuguese Republic is relying on an overriding requirement of general interest capable of justifying a restriction on the exercise of freedom of movement guaranteed by the Treaty, and the Commission does not dispute that (see, inter alia, ELISA , paragraph 81; Case C-101/05 A [2007] ECR I‑11531, paragraph 55, and Joined Cases C-155/08 and C-157/08 X and Passenheim-van Schoot  [2009] ECR I-5093, paragraph 45).
40. As regards Directive 77/799, it must be recalled that, under the combined provisions of Article 1(1), (3), and (4) thereof, the competent authorities of the Member States are to exchange any information which may enable them to effect a correct assessment of income taxes in particular. Article 2 of Directive 77/799 provides that this exchange of information is to occur at the request of the competent authority of the Member State concerned. As is clear from Article 3 of that directive, the competent authorities of the Member States are also to exchange information without prior request, automatically, in respect of certain categories of cases referred to in the directive or even, in accordance with Article 4 thereof, spontaneously. Lastly, Article 11 of Directive 77/799 states that the provisions of the directive are not to impede the fulfilment of any wider obligations to exchange information which might flow from other legal acts ( ELISA , paragraphs 39, 40 and 42).
47. Moreover, the obligation to appoint a tax representative is not an appropriate or necessary measure to deal with the ‘practical problem’ identified by the Portuguese Republic, which lies in the fact that it is impossible to have direct contact with non-resident taxpayers because of the physical distance between them and the administrative bodies concerned, which slows down the operation of those bodies. With modern communication methods, it is possible to oblige non-resident taxpayers to give an address in another Member State for all notifications from the Portuguese tax authorities. As the Commission points out, in cases where the physical presence of the taxpayer is essential, it is sufficient to give him the option of being represented by a tax representative, rather than imposing a general obligation.
50. One of the principal aims of the EEA Agreement is to provide for the fullest possible realisation of the free movement of goods, persons, services and capital within the whole European Economic Area, so that the internal market established within the European Union is extended to the EFTA States. From that angle, several provisions of the abovementioned Agreement are intended to ensure as uniform an interpretation as possible thereof throughout the EEA (see Opinion 1/92 of 10 April 1992, [1992] ECR I‑2821). It is for the Court in that context to ensure that the rules of the EEA Agreement which are identical in substance with those of the Treaty are interpreted in a uniform manner within the Member States (Case C‑452/01 Ospelt and Schlössle Weissenberg  [2003] ECR I‑9743, paragraph 29, and Case C-540/07 Commission  v Italy  [2009] ECR I‑10983, paragraph 65).
51. It follows that, if restrictions on the free movement of capital between nationals of States party to the EEA Agreement must be assessed in the light of Article 40 of and Annex XII to that Agreement, those stipulations have the same legal scope as those of the substantially identical provisions of Article 56 EC (Case C‑521/07 Commission  v Netherlands  [2009] ECR I-4873, paragraph 33, and Commission  v Italy , paragraph 66).
54. None the less, as the Court has already held, the case-law concerning restrictions on the exercise of freedom of movement within the Union cannot be transposed in its entirety to movements of capital between Member States and non-member countries, since such movements take place in a different legal context (see A , paragraph 60, and Commission  v Italy , paragraph 69).
55. In this case, it should first be noted that the framework of cooperation between the competent authorities of the Member States established by Directive 77/799 does not exist between the latter and the competent authorities of a non-Member State when the latter has not entered into any undertaking of mutual assistance.
56. In that regard, in confining itself, in its reply to the observations submitted by the Spanish Government in its statement in intervention in support of the forms of order sought by the Portuguese Republic, to mentioning in a very general way the agreements linking it to the States belonging to the EEA which were not Members of the Union, the Commission failed to establish that those agreements actually included sufficient mechanisms for the exchange of information to verify and monitor the returns submitted by taxable persons residing in those States.
60. Since the provisions of the Treaty and the EEA Agreement on the free movement of capital preclude the contested legislation, there is no need for a separate examination of that legislation in the light of Article 18 EC concerning freedom of movement for persons (see, by analogy, Case C-345/05 Commission  v Portugal  [2006] ECR I-10633, paragraph 45).