Finanzamt für Körperschaften III in Berlin v Krankenheim Ruhesitz am Wannsee-Seniorenheimstatt GmbH.
Date: 2008-10-23
24. Concerning the scope of those provisions, the Court has held that the rules prohibiting restrictions on the freedom of establishment, set out in Article 31 of the EEA Agreement, are identical to those imposed by Article 43 EC (Case C‑471/04 Keller Holding  [2006] ECR I‑2107, paragraph 49).  The Court has also held that, in the area in question, the rules of the EEA Agreement and those of the EC Treaty must be given a uniform interpretation (Case C‑452/01 Ospelt and Schlössle Weissenberg  [2003] ECR I‑9743, paragraph 29; Case C‑286/02 Bellio F.lli  [2004] ECR I‑3465, paragraph 34).
28. Freedom of establishment includes, for companies or firms formed in accordance with the laws of a Member State and having their registered office, central administration or principal place of business within the Community, the right to pursue their activities in the Member State concerned through a subsidiary, a branch or an agency (Case C‑307/97 Saint-Gobain ZN  [1999] ECR I‑6161, paragraph 35; Case C‑141/99 AMID  [2000] ECR I‑11619, paragraph 20; Keller Holding , paragraph 29).
29. The Court has also held that, 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 (Case C‑264/96 ICI  [1998] ECR I‑4695, paragraph 21; Case C‑298/05 Columbus Container Services  [2007] ECR I‑10451, paragraph 33).
30. Moreover, it is settled case-law that all measures which prohibit, impede or render less attractive the exercise of that freedom must be regarded as such restrictions (Case C‑55/94 Gebhard  [1995] ECR I‑4165, paragraph 37; Case C‑442/02 CaixaBank France  [2004] ECR I‑8961, paragraph 11).
31. Those considerations also apply where a company established in a Member State carries on business in another Member State through a permanent establishment (Case C‑414/06 Lidl Belgium  [2008] ECR I‑0000, paragraph 20).
32. Concerning the effects of the German tax system in relation to Community law, it is clear from paragraph 23 of the judgment in Lidl Belgium  that provisions which allow losses incurred by a permanent establishment to be taken into account in calculating the profits and taxable income of the principal company constitute a tax advantage. Granting or not granting such an advantage for a permanent establishment situated in a Member State other than that in which that company is established must therefore be regarded as a factor likely to affect the freedom of establishment.
35. By its action, the Federal Republic of Germany granted a tax advantage to the resident company with the permanent establishment situated in Austria, in the same way as if that permanent establishment had been situated in Germany.
38. In those circumstances, the tax situation of a company which has its registered office in Germany and has a permanent establishment in Austria is less favourable than it would be if the latter were to be established in Germany.  By reason of that difference in tax treatment, a German company could be discouraged from carrying on its business through a permanent establishment situated in Austria ( Lidl Belgium , paragraph 25).
40. It is clear from the Court’s case-law that a restriction on the freedom of establishment is permissible only if it is justified by overriding reasons in the public interest. It is further necessary, in such a case, that its application be appropriate to ensuring the attainment of the objective in question and not go beyond what is necessary to attain it ( Lidl Belgium , paragraph 27 and case-law cited).
42. On that point, it should be noted that the reintegration of losses provided for by the German tax system at issue in the main proceedings cannot be dissociated from their having earlier been taken into account.  That reintegration, in the case of a company with a permanent establishment in another State in relation to which that company’s State of residence has no power of taxation, as the referring court indicates, reflects a logical symmetry.  There was thus a direct, personal and material link between the two elements of the tax mechanism at issue in the main proceedings, the said reintegration being the logical complement of the deduction previously granted.
43. It must be concluded that the restriction which follows from the reintegration thus provided for is justified by the need to guarantee the coherence of the German tax system.
44. In that respect, it should be added that that restriction is appropriate to achieve such an objective, in that it operates in a perfectly symmetrical manner, only deducted losses being reintegrated.
45. Moreover, that restriction is entirely proportionate to the objective pursued, since the reintegrated losses are reintegrated only up to the amount of the profits made.
48. On that point, it should be remembered that, according to consistent case-law, in the absence of any unifying or harmonising Community measures, Member States retain the power to define the criteria for taxing income and wealth with a view to eliminating double taxation, by means of conventions if necessary (Case C‑290/04 FKP Scorpio Konzertproduktionen  [2006] ECR I‑9461, paragraph 54; Case C‑374/04 Test Claimants in Class IV of the ACT Group Litigation  [2006] ECR I‑11673, paragraph 52; Case C‑231/05 Oy AA  [2007] ECR I‑6373, paragraph 52).
49. That competence also implies that a Member State cannot be required to take account, for the purposes of applying its tax law, of the possible negative results arising from particularities of legislation of another Member State applicable to a permanent establishment situated in the territory of the said State which belongs to a company with a registered office in the first State (see, to that effect, Columbus Container Services , paragraph 51, and Case C‑293/06 Deutsche Shell  [2008] ECR I‑0000, paragraph 42).
50. The Court has held that freedom of establishment cannot be understood as meaning that a Member State is required to draw up its tax rules on the basis of those in another Member State in order to ensure, in all circumstances, taxation which removes any disparities arising from national tax rules, given that the decisions made by a company as to the establishment of commercial structures abroad may be to the company’s advantage or not, according to circumstances ( Deutsche Shell , paragraph 43).
54. As has been stated in paragraph 42 of this judgment, the reintegration of the amount of the permanent establishment’s losses in the results of the principal company is the indissociable and logical complement of their having previously been taken into account.