EV v Finanzamt Lippstadt.
Date: 2018-09-20
33


In that regard, it follows from the Court’s case-law that the tax treatment of dividends may fall within the scope of Article 49 TFEU on the freedom of establishment and Article 63 TFEU on the free movement of capital. As regards the question whether national legislation falls within the scope of one or other of the freedoms of movement, the purpose of the legislation concerned must be taken into consideration (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 31 and the case-law cited).
34


National legislation intended to apply only to those shareholdings which enable the holder to exert a definite influence on a company’s decisions and to determine its activities falls within the scope of Article 49 TFEU on freedom of establishment (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 32 and the case-law cited).
35


By contrast, national provisions which apply to shareholdings acquired solely with the intention of making a financial investment without any intention to influence the management and control of the undertaking must be examined exclusively in light of the free movement of capital (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 33 and the case-law cited).
36


The Court has held that, in a context relative to the tax treatment of dividends originating in a non-member State, it is sufficient to examine the purpose of national legislation in order to determine whether the tax treatment of such dividends falls within the scope of the provisions of the Treaty on the free movement of capital (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 34 and the case-law cited).
37


In that regard, the Court has stated that national legislation relating to the tax treatment of dividends which does not apply exclusively to situations in which the parent company exercises decisive influence over the company paying the dividends must be assessed in the light of Article 63 TFEU. A company established in a Member State may therefore rely on that provision in order to call into question the legality of such legislation, irrespective of the size of its shareholding in the company paying dividends established in a non-member State (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 35 and the case-law cited).
40


The Court has previously held that holding at least 15% of the share capital of a subsidiary does not necessarily imply that the company holding those shares exercises a definite influence over the decisions of the company distributing the dividends (see, to that effect, judgment of 20 December 2017, Deister Holding and Juhler Holding, C‑504/16 and C‑613/16, EU:C:2017:1009, paragraphs 79 and 80 and the case-law cited).
51


The Court has held that even though, according to their wording, the provisions of EU law on 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 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 (judgments of 23 November 2017, A, C‑292/16, EU:C:2017:888, paragraph 24, and of 12 June 2018, Bevola and Jens W. Trock, C‑650/16, EU:C:2018:424, paragraph 16).
52


However, the chapter of the Treaty on freedom of establishment does not contain any provision which extends the application of its provisions to situations concerning the establishment of a company of a Member State in a non-member State or the establishment of a company of a non-member State in a Member State (see, to that effect, judgment of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 97 and the case-law cited).
55


It follows from the Court’s settled case-law that the measures prohibited by Article 63(1) TFEU as restrictions on the movement of capital include those that are such as to discourage non-residents from making investments in a Member State or to discourage that Member State’s residents from doing so in other States (judgment of 2 June 2016, Pensioenfonds Metaal en Techniek, C‑252/14, EU:C:2016:402, paragraph 27 and the case-law cited).
63


Consequently, it must be held that, by submitting the tax deductibility of dividends paid by subsidiaries established in non-member States to stricter conditions than those applying to dividends paid by resident companies, the legislation at issue in the main proceedings is likely to dissuade resident parent companies from investing their capital in subsidiaries established in non-member States. To the extent that the income from capital originating in non-member States receives less favourable tax treatment than dividends distributed by resident companies, the shares of companies established in non-member States are less attractive to resident investors than those of resident companies (see, by analogy, judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 50 and the case-law cited).
67


Although the concept of ‘direct investment’ is not defined by the Treaty, it has nevertheless been defined in the nomenclature of the capital movements set out in Annex I to Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (article repealed by the Treaty of Amsterdam) (OJ 1988 L 178, p. 5). As the list of ‘direct investments’ in the first section of that nomenclature and the relative explanatory notes show, that concept concerns investments of any kind undertaken by natural or legal persons and which serve to establish or maintain lasting and direct links between the persons providing the capital and the undertakings to which that capital is made available in order to carry out an economic activity (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 75 and the case-law cited).
68


As regards shareholdings in new or existing undertakings, constituted as companies limited by shares, as the explanatory notes mentioned in the previous paragraph confirm, the objective of establishing or maintaining lasting economic links presupposes that the shares held by the shareholder enable him, either pursuant to the provisions of the national laws relating to companies limited by shares or in some other way, to participate effectively in the management of that company or in its control (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 76 and the case-law cited).
69


It follows from the case-law of the Court that the restrictions on capital movements involving establishment or direct investment within the meaning of Article 64(1) TFEU extend not only to national measures which, in their application to capital movements to or from non-member States, restrict establishment or investment, but also to those which restrict payments of dividends deriving from them (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 77 and the case-law cited).
70


It follows that a restriction on capital movements, such as a less favourable tax treatment of foreign-sourced dividends, comes within the scope of Article 64(1) TFEU, inasmuch as it relates to holdings acquired with a view to establishing or maintaining lasting and direct economic links between the shareholder and the company concerned and which allow the shareholder to participate effectively in the management of the company or in its control (judgment of 24 November 2016, SECIL, C‑464/14, EU:C:2016:896, paragraph 78 and the case-law cited).
71


In that regard, the Court has held that the fact that national legislation imposing a restriction on movements of capital involving direct investment may also apply to other situations is not such as to preclude Article 64(1) TFEU from being applicable in the circumstances which it covers (see, to that effect, judgment of 15 February 2017, X, C‑317/15, EU:C:2017:119, paragraph 21).
73


As regards the temporal criterion laid down by Article 64(1) TFEU, it is apparent from the Court’s settled case-law that while it is, in principle, for the national court to determine the content of the legislation which existed on a date laid down by an EU measure, it is for the Court of Justice to provide guidance on interpreting the concept of EU law which constitutes the basis of a derogation under EU law for national legislation ‘existing’ on a particular date (judgment of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraph 47 and the case-law cited).
74


The words ‘restrictions which exist on 31 December 1993’ in Article 64(1) TFEU presuppose that the legal provisions relating to the restriction in question have formed part of the legal order of the Member State concerned continuously since that date. If that were not the case, a Member State could, at any time, reintroduce restrictions on the movement of capital to or from non-member States which existed as part of the national legal order on 31 December 1993 but had not been maintained (judgment of 5 May 2011, Prunus and Polonium, C‑384/09, EU:C:2011:276, paragraph 34 and the case-law cited).
75


In that context, the Court has held that any national measure adopted after a date thus fixed is not, by that fact alone, automatically excluded from the derogation laid down in the EU measure in question. A provision which is, in essence, identical to the previous legislation, or limited to reducing or eliminating an obstacle to the exercise of rights and freedoms established by EU law in the earlier legislation, will be covered by the derogation. By contrast, legislation based on an approach which differs from that of the previous law and establishes new procedures cannot be treated as legislation existing at the date fixed in the EU measure in question (judgment of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraph 48 and the case-law cited).
80


In that regard, it must be recalled that, Article 64(1) TFEU, in so far as it is an exception to the fundamental principle of the free movement of capital, must be interpreted strictly (judgment of 17 October 2013, Welte, C‑181/12, EU:C:2013:662, paragraph 29).
81


Consequently, the conditions which national legislation must fulfil in order to be regarded as ‘existing’ on 31 December 1993, notwithstanding an amendment to national law after that date, must also be interpreted strictly.
86


In so far as that provision is a derogation from the fundamental principle of the free movement of capital, it must be interpreted strictly. Accordingly, it cannot be interpreted as meaning that all tax legislation which draws a distinction between taxpayers on the basis of their place of residence or the State in which they invest their capital is automatically compatible with the FEU Treaty. Indeed, the derogation in Article 65(1)(a) TFEU is itself limited by Article 65(3) TFEU, which provides that the national provisions referred to in paragraph 1 of that article ‘shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 63 [TFEU]’ (judgment of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraphs 55 and 56 and the case-law cited).
87


A distinction must, therefore, be made between the differences in treatment authorised by Article 65(1)(a) TFEU and discrimination prohibited by Article 65(3) TFEU. According to the Court’s case-law, for national tax legislation such as that at issue in the main proceedings to be capable of being regarded as compatible with the provisions of the Treaty concerning the free movement of capital, the difference in treatment must concern situations that are not objectively comparable or must be justified by an overriding reason in the public interest (judgment of 10 May 2012, Santander Asset Management SGIIC and Others, C‑338/11 to C‑347/11, EU:C:2012:286, paragraph 23 and the case-law cited).
88


In that regard, it is clear from the Court’s case-law that the comparability of a cross-border situation with an internal one must be examined having regard to the aim pursued by the national provisions at issue as well as their purpose and content (judgment of 2 June 2016, Pensioenfonds Metaal en Techniek, C‑252/14, EU:C:2016:402, paragraph 48 and the case-law cited).
89


Moreover, only the relevant distinguishing criteria established by the legislation in question must be taken into account in determining whether the difference in treatment resulting from that legislation reflects an objectively different situation (judgments of 10 May 2012, Santander Asset Management SGIIC and Others, C‑338/11 to C‑347/11, EU:C:2012:286, paragraph 28, and of 2 June 2016, Pensioenfonds Metaal en Techniek, C‑252/14, EU:C:2016:402, paragraph 49).
92


With regard to national legislation, such as that in the main proceedings, which seeks to prevent double taxation by authorising the deduction from the trade tax base of dividends from shareholdings in one or more capital companies, the situation of a company receiving dividends distributed by resident companies is comparable to that of a company receiving income from shareholdings from non-resident companies (see, by analogy, judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 62, and of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 113).
95


In that context, it should be noted that, in order for national legislation to be regarded as seeking to prevent tax evasion and abuses, its specific objective must be to prevent conduct involving the creation of wholly artificial arrangements which do not reflect economic reality, the purpose of which is unduly to obtain a tax advantage (judgments of 5 July 2012, SIAT, C‑318/10, EU:C:2012:415, paragraph 40, and of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 30 and the case-law cited).
96


However, a general presumption of fraud and abuse cannot justify a measure which prejudices the enjoyment of a fundamental freedom guaranteed by the Treaty and the mere fact that the company distributing the dividends is located in a non-member State cannot set up a general presumption of tax evasion (see, to that effect, judgment of 19 July 2012, A, C‑48/11, EU:C:2012:485, paragraph 32 and the case-law cited).