Groupe Steria SCA v Ministère des Finances et des Comptes publics.
Date: 2015-09-02
12. The referring court recalls that, in its judgment in X Holding  (C‑337/08, EU:C:2010:89), the Court of Justice held that Articles 49 TFEU and 54 TFEU do not preclude legislation of a Member State which makes it possible for a parent company to form a single tax entity with its resident subsidiary, but which prevents the formation of such a single tax entity with a non-resident subsidiary, in that the profits of that non-resident subsidiary are not subject to the fiscal legislation of that Member State. However, according to the referring court, that judgment did not examine whether all the advantages reserved to companies that are members of a tax-integrated group are consistent with EU law.
14. Article 49 TFEU requires the abolition of restrictions on the freedom of establishment. Therefore, even though, according to their wording, the provisions of the FEU Treaty on 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 (judgment in X , C‑686/13, EU:C:2015:375, paragraph 27 and the case-law cited).
15. It is apparent from the Court’s case-law that freedom of establishment is hindered if, under a Member State’s legislation, a resident company having a subsidiary or a permanent establishment in another Member State suffers a disadvantageous difference in treatment for tax purposes compared with a resident company having a permanent establishment or a subsidiary in the first Member State (see judgment in Nordea Bank Danmark , C‑48/13, EU:C:2014:2087, paragraph 19 and the case-law cited).
21. In order for that difference in treatment to be compatible with the provisions of the Treaty on the freedom of establishment, it must relate to situations which are not objectively comparable or be justified by an overriding reason in the general interest (see judgment in X Holding , C‑337/08, EU:C:2010:89, paragraph 20).
22. The fact that the dividends received by a parent company which enjoy full tax exemption come from subsidiaries that are part of the tax-integrated group to which the parent company concerned also belongs does not amount to an objective difference in the situation of parent companies that would justify the difference in treatment identified (see, to that effect, judgments in Papillon , C‑418/07, EU:C:2008:659, paragraphs 23 to 30; X Holding , C‑337/08, EU:C:2010:89, paragraphs 21 to 24; and SCA Group Holding and Others , C‑39/13 to C‑41/13, EU:C:2014:1758, paragraphs 29 to 31). With regard to legislation such as that at issue in the main proceedings, which, through the neutralisati on of the add-back of the proportion of costs and expenses to the parent company’s profits, provides for dividends received to be fully exempt from tax, the situation of companies belonging to a tax-integrated group is comparable to that of companies not belonging to such a group in so far as, in each case, the parent company bears the costs and expenses related to its shareholding in the subsidiary, and, moreover, the profits made by the subsidiary and from which the dividends distributed are derived are, in principle, liable to be subject to economic double taxation or to a series of charges to tax (see, to that effect, judgments in Haribo Lakritzen Hans Riegel and Österreichische Salinen , C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 113, and Santander Asset Management SGIIC and Others , C‑338/11 to C‑347/11, EU:C:2012:286, paragraph 42).
25. It should be borne in mind in that regard that, in its judgment in X Holding (C‑337/08, EU:C:2010:89, paragraphs 18 and 43), the Court, having recalled that a tax integration scheme allows, in particular, for the profits and losses of the companies constituting the tax entity to be consolidated at the level of the parent company and for the transactions carried out within the group to remain neutral for tax purposes, held that the Treaty provisions on the freedom of establishment do not preclude legislation of a Member State which makes it possible for a parent company to form a single tax entity with its resident subsidiary, but which prevents the formation of such a single tax entity with a non-resident subsidiary, in that the profits of that non-resident subsidiary are not subject to the fiscal legislation of that Member State.
26. According to the Court, the exclusion of non-resident companies from such a scheme is justified in view of the need to safeguard the balanced allocation of the power to impose taxes between the Member States. Since the parent company is at liberty to decide to form a tax entity with its subsidiary and, with equal liberty, to dissolve such an entity from one year to the next, the possibility of including a non-resident subsidiary in the single tax entity would be tantamount to granting the parent company the freedom to choose the tax scheme applicable to the losses of that subsidiary and the place where those losses are taken into account (judgment in X Holding , C‑337/08, EU:C:2010:89, paragraphs 31 to 33).
27. It cannot, however, be inferred from the judgment in 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. In that judgment, the Court merely examined the residence condition as a condition of access to a tax integration scheme, and held that that condition was justified, taking into account the fact that such a scheme allows losses to be transferred within the tax-integrated group.
28. As regards tax advantages other than the transfer of losses within the tax-integrated group, a separate assessment must therefore be made, as the Advocate General noted in point 34 of her Opinion, 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.
29. A difference in treatment such as that at issue in the main proceedings cannot be justified by the need to safeguard the balanced allocation of the power to impose taxes between the Member States. The difference in treatment concerns only incoming dividends, received by resident parent companies, so that what is concerned is the fiscal sovereignty of one and the same Member State (see, to that effect, judgment in Papillon , C‑418/07, EU:C:2008:659, paragraphs 39 and 40).
31. For an argument based on such justification to succeed, a direct link has to be 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 in Bouanich , C‑375/12, EU:C:2014:138, paragraph 69 and the case-law cited).
33. Admittedly, such treatment means that the shareholdings held by the parent company at the head of a tax-integrated group in its subsidiaries are disregarded, which means that various transactions within the group are considered non-existent in fiscal terms. The Court accepted in its judgment in Papillon (C‑418/07, EU:C:2008:659, paragraph 50) that a direct link may exist under the tax integration regime between a tax advantage given to the companies belonging to a tax-integrated group and a tax disadvantage resulting from such neutralisation of intragroup transactions. In the case giving rise to that judgment, the immediate taking into account by the parent company of the losses incurred by its subsidiary was offset by the fact that, in the context of a tax-integrated group, the existence of the first company’s holding in the second was disregarded, making it impossible for the parent company to make a provision for the depreciation of its holding in the subsidiary incurring the losses (see judgments in Papillon , C‑418/07, EU:C:2008:659, paragraph 48, and SCA Group Holding and Others , C‑39/13 to C‑41/13, EU:C:2014:1758, paragraphs 34 and 35).
34. However, unlike the situation in Papillon (C‑418/07, EU:C:2008:659), it has not been possible to identify any direct link, within the meaning of the case-law cited in paragraph 31 of the present judgment, between the tax advantage at issue in the main proceedings and a tax disadvantage resulting from the neutralisation of intragroup transactions.
39. It is evident from settled case-law that the decision which Article 4(2) of Directive 90/435 leaves in the hands of the Member States may be exercised only in compliance with the fundamental provisions of the Treaty, in this instance Article 49 TFEU (see judgments in Bosal , C‑168/01, EU:C:2003:479, paragraph 26; Keller Holding , C‑471/04, EU:C:2006:143, paragraph 45; and Test Claimants in the FII Group Litigation , C‑446/04, EU:C:2006:774, paragraph 46).