Santander Asset Management SGIIC SA, on behalf of FIM Santander Top 25 Euro Fi (C‑338/11) v Directeur des résidents à l'étranger et des services généraux and Santander Asset Management SGIIC SA, on behalf of Cartera Mobiliaria SA SICAV (C‑339/11 to C‑347/11) and Others v Ministre du Budget, des Comptes publics, de la Fonction publique et de la Réforme de l’État.
Date: 2012-05-10
14. It should be recalled at the outset that, according to settled case‑law, while direct taxation falls within their competence, Member States must none the less exercise that competence in accordance with European Union law (Case C‑334/02 Commission  v France  [2004] ECR I‑2229, paragraph 21; Case C‑155/09 Commission  v Greece  [2011] ECR I‑65, paragraph 39; and Case C‑10/10 Commission  v Austria [2011] ECR I‑5389, paragraph 23).
15. It is also established case‑law that the measures prohibited by Article 63(1) TFEU, as restrictions on the movement of capital, include those which 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 (Case C‑370/05 Festersen  [2007] ECR I‑1129, paragraph 24; Case C‑101/05 A  [2007] ECR I‑11531, paragraph 40; and Joined Cases C‑436/08 and C‑437/08 Haribo Lakritzen Hans Riegel and Österreichische Salinen  [2011] ECR I‑305, paragraph 50).
17. That difference in the tax treatment of dividends according to the UCITS’ place of residence may discourage, on the one hand, non‑resident UCITS from investing in companies established in France and, on the other, investors resident in France from acquiring shares in non‑resident UCITS.
21. In so far as Article 65(1)(a) TFEU is a derogation from the fundamental principle of the free movement of capital, it must be interpreted strictly. It cannot therefore 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 Treaty (see Case C‑11/07 Eckelkamp and Others  [2008] ECR I‑6845, paragraph 57; Case C‑510/08 Mattner [2010] ECR I‑3553, paragraph 32; and Haribo Lakritzen Hans Riegel and Österreichische Salinen , paragraph 56).
22. The derogation in that provision is itself limited by Article 65(3) TFEU, which provides that the national provisions referred to in Article 65(1) ‘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’.
23. The differences in treatment authorised by Article 65(1)(a) TFEU must therefore be distinguished from discrimination prohibited by Article 65(3) TFEU. The case‑law shows that, 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 on the free movement of capital, the difference in treatment must concern situations which are not objectively comparable or be justified by an overriding reason in the public interest (Case C‑35/98 Verkooijen  [2000] ECR I‑4071, paragraph 43; Case C‑319/02 Manninen [2004] ECR I‑7477, paragraph 29; and Case C‑250/08 Commission  v Belgium  [2011] ECR I‑12341, paragraph 51).
27. It is true that it is for each Member State to organise, in compliance with European Union law, its system for taxing distributed profits. However, where national tax legislation establishes a distinguishing criterion for the taxation of distributed profits, account must be taken of that criterion in determining whether the situations are comparable (see, to that effect, Case C‑170/05 Denkavit Internationaal and Denkavit France [2006] ECR I‑11949, paragraphs 34 and 35; Case C‑303/07 Aberdeen Property Fininvest Alpha [2009] ECR I‑5145, paragraphs 51 to 54; Case C‑540/07 Commission v Italy  [2009] ECR I‑10983, paragraph 43; and Case C‑284/09 Commission  v Germany  [2011] ECR I‑9879, paragraph 60).
28. 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 situations which are objectively different. Accordingly, where a Member State chooses to exercise its tax jurisdiction over dividends distributed by resident companies on the sole basis of the place of residence of the recipient UCITS, the tax situation of the latter’s shareholders is irrelevant for the purpose of determining whether or not that legislation is discriminatory.
32. Nor does the legislation at issue take account of the tax situation of the shareholders in UCITS which distribute dividends received.
39. In the light of the distinguishing criterion established by that legislation, based solely on the UCITS’ place of residence, the situations must be compared only at the level of the investment vehicle in order to determine whether that legislation is discriminatory.
40. That conclusion is not altered by the fact that, in its judgment in Case C‑194/06 Orange European Smallcap Fund [2008] ECR I‑3747, concerning the Netherlands tax scheme applicable to UCITS, the Court took account of the tax regime applicable to shareholders who are natural persons for the purpose of determining whether a tax scheme such as that at issue in that case was compatible with free movement of capital. In fact, that tax scheme, unlike that at issue in the main proceedings, made the tax exemption enjoyed by UCITS conditional on the requirement that all the profits of those undertakings be distributed to their shareholders, in order to make the tax burden on investment proceeds through fiscal investment enterprises the same as that on direct investments by private investors ( Orange European Smallcap Fund , paragraphs 8, 33 and 60). In that case, the national legislature therefore made the tax situation of the shareholder a distinguishing criterion for determining the tax treatment applicable.
41. On the other hand, in the cases in the main proceedings, the distinguishing criterion for determining the tax treatment applicable, established by the national legislation at issue, is not the tax situation of the shareholder but solely the status of the UCITS, namely whether or not it is resident.
42. Next, as pointed out by the tribunal administratif de Montreuil with regard to national legislation such as that at issue in the main proceedings, which seeks to prevent dividends distributed by resident companies being subject to a series of charges to tax, the situation of a resident recipient UCITS is comparable to that of a non‑resident recipient UCITS (see Aberdeen Property Fininvest Alpha , paragraphs 43 and 44, and Commission  v Germany , paragraph 58).
43. The argument of the French Government relying on the judgment in Case C‑282/07 Truck Center  [2008] ECR I‑10767, paragraph 74, to the effect that the different treatment of resident UCITS and non‑resident UCITS simply reflects the difference between the situations in which those undertakings find themselves with regard to tax collection, must be rejected. It should be noted that, in the case which gave rise to the judgment in Truck Center , the national legislation at issue provided that both resident recipient companies and non‑resident recipient companies were to be taxed in respect of certain nationally‑sourced income. That legislation simply laid down different procedures for charging tax, depending on the place where the recipient company had its registered office, which were justified on account of an objective difference in the situations in which resident and non‑resident companies found themselves. However, in the cases in the main proceedings, the legislation at issue does not simply provide for different procedures for charging tax depending on the place of residence of the recipient of nationally sourced dividends. On the contrary, it provides that only non‑resident UCITS are to be taxed on such dividends.
45. It is also necessary to examine whether the restriction resulting from national legislation such as that at issue in the main proceedings is justified by overriding reasons in the public interest (see Case C‑451/05 ELISA [2007] ECR I‑8251, paragraph 79; Haribo Lakritzen Hans Riegel and Österreichische Salinen , paragraph 63; and Commission  v Belgium , paragraph 68).
47. It must be recalled that the need to safeguard the balanced allocation between the Member States of the power to tax may be accepted, in particular, where the system in question is designed to prevent conduct capable of jeopardising the right of a Member State to exercise its powers of taxation in relation to activities carried out in its territory (see Case C‑231/05 Oy AA  [2007] ECR I‑6373, paragraph 54; Case C‑379/05 Amurta [2007] ECR I‑9569, paragraph 58; Aberdeen Property Fininvest Alpha , paragraph 66; and Commission  v Germany , paragraph 77).
48. However, where a Member State has chosen not to tax resident UCITS in receipt of nationally‑sourced dividends, it cannot rely on the argument that there is a need to ensure a balanced allocation between the Member States of the power to tax in order to justify the taxation of non‑resident UCITS in receipt of such income (see Amurta , paragraph 59; Aberdeen Property Fininvest Alpha , paragraph 67; and Commission v Germany , paragraph 78).
50. As regards the argument concerning the need to preserve the coherence of the French tax system, the Court has previously held that the need to safeguard such coherence may justify rules that are liable to restrict fundamental freedoms (see Case C‑204/90 Bachmann [1992] ECR I‑249, paragraph 21; Case C‑157/07 Krankenheim Ruhesitz am Wannsee‑Seniorenheimstatt [2008] ECR I‑8061, paragraph 43; and Commission  v Belgium , paragraph 70).
51. However, for an argument based on such a justification to succeed, a direct link must be established, according to settled case‑law, between the tax advantage concerned and the compensating of that advantage by a particular tax levy ( Commission  v Belgium , paragraph 71 and the case‑law cited), with the direct nature of that link falling to be examined in the light of the objective pursued by the rules in question (Case C‑418/07 Papillon  [2008] ECR I‑8947, paragraph 44, and Aberdeen Property Fininvest Alpha , paragraph 72).
58. In that connection, regard must be had to the settled case‑law of the Court to the effect that the interpretation which, in the exercise of the jurisdiction conferred on it by Article 267 TFEU, the Court gives to a rule of European Union law clarifies and defines the meaning and scope of that rule as it must be or ought to have been understood and applied from the time of its entry into force. It follows that the rule as thus interpreted may, and must, be applied by the courts even to legal relationships which arose and were established before the judgment ruling on the request for interpretation, provided that in other respects the conditions for bringing a dispute relating to the application of that rule before the competent courts are satisfied (see, in particular, Case C‑347/00 Barreira Pérez  [2002] ECR I‑8191, paragraph 44; Joined Cases C‑453/02 and C‑462/02 Linneweber and Akritidis  [2005] ECR I‑1131, paragraph 41; and Case C‑292/04 Meilicke and Others  [2007] ECR I‑1835, paragraph 34).
59. It is only exceptionally that the Court may, in application of the general principle of legal certainty inherent in the legal order of the European Union, decide to restrict for any person concerned the right to rely on a provision which it has interpreted with a view to calling in question legal relationships established in good faith. Two essential criteria must be fulfilled before such a limitation can be imposed, namely that those concerned should have acted in good faith and that there should be a risk of serious difficulties (see, inter alia, Case C‑402/03 Skov and Bilka [2006] ECR I‑199, paragraph 51, and Case C‑2/09 Kalinchev  [2010] ECR I‑4939, paragraph 50).
60. More specifically, the Court has taken that step only in quite specific circumstances, where there was a risk of serious economic repercussions owing in particular to the large number of legal relationships entered into in good faith on the basis of rules considered to be validly in force and where it appeared that individuals and national authorities had been led to adopt practices which did not comply with European Union law by reason of objective, significant uncertainty regarding the implications of European Union provisions, to which the conduct of other Member States or the Commission may even have contributed (see, inter alia, Case C‑423/04 Richards [2006] ECR I‑3585, paragraph 42, and Kalinchev , paragraph 51).
62. As regards the French Government’s reference to the far‑reaching budgetary consequences of the Court’s present judgment, it is settled case‑law that the financial consequences which might ensue for a Member State from a preliminary ruling do not in themselves justify limiting the temporal effects of the ruling (Case C‑184/99 Grzelczyk [2001] ECR I‑6193, paragraph 52; Case C‑209/03 Bidar [2005] ECR I‑2119, paragraph 68; and Kalinchev , paragraph 52). In the present case, the French Republic, which requested only at the hearing that the temporal effects of the present judgment be limited, failed to put forward any data at the hearing which would have enabled the Court to consider whether the French Republic actually risks incurring serious economic repercussions.