Margaretha Bouanich v Skatteverket.
Date: 2006-01-19
28. The first point to be noted here is that, according to the settled case-law of the Court, while direct taxation falls within the competence of the Member States, they must none the less exercise that competence consistently with Community law (see, in particular, Case C-80/94 Wielockx  [1995] ECR-I 2493, paragraph 16, and Case C-319/02 Manninen  [2004] ECR I-7477, paragraph 19).
29. A resale of shares to the issuing company such as that made by Ms Bouanich constitutes a capital movement as referred to in Article 1 of Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (article repealed by the Treaty of Amsterdam) (OJ 1988 L 178, p. 5) and in the nomenclature of capital movements set out in Annex I to that directive. This nomenclature still has the same indicative value for the purposes of defining the notion of capital movements (see Case C-452/01 Ospelt and Schlössle Weissenberg  [2003] ECR I-9743, paragraph 7, and Case C-376/03 D . [2005] ECR I-0000, paragraph 24). A transaction of that kind therefore falls within the scope of the Community rules relating to the free movement of capital.
34. As the Advocate General pointed out at points 33 and 34 of her Opinion, the effect of such legislation is to make cross-frontier transfer of capital less attractive both by deterring investors who are not resident in Sweden from buying shares in companies resident in Sweden and also, consequently, by restricting the opportunities available to Swedish companies to raise capital from investors who are not resident in Sweden.
35. In those circumstances, it must be held that a refusal to allow a non-resident shareholder, on the occasion of a share repurchase, to deduct the cost of acquisition of the shares constitutes a restriction on the movement of capital within the meaning of Article 56 EC.
38. However, unequal treatment permitted under Article 58(1)(a) EC must be distinguished from arbitrary discrimination prohibited under Article 58(3) EC. According to the case-law, for a national fiscal provision 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 overriding reasons in the general interest (see Case C-35/98 Verkooijen  [2000] ECR I-4071, paragraph 43; Manninen,  paragraphs 28 and 29; and Case C-512/03 Blanckaert  [2005] ECR I-0000, paragraph 42).
40. It must be noted that the cost of acquisition is directly linked to the payment made on the occasion of a share repurchase so that, in this regard, residents and non-residents are in a comparable situation. There is no objective difference between the two situations such as to justify different treatment on this point as between the two categories of taxpayers.
49. It is to be noted that under the second indent of Article 293 EC, the abolition of double taxation is one of the objectives of the Community to be attained by the Member States. In the absence of unifying or harmonising measures at Community level for the elimination of double taxation, the Member States retain competence for determining the criteria for taxation on income and wealth with a view to eliminating double taxation by means, inter alia, of international agreements. In those circumstances, the Member States remain at liberty to determine the connecting factors for the allocation of fiscal jurisdiction by means of bilateral agreements (see Case C-336/96 Gilly  [1998] ECR I-2793, paragraphs 24 and 30; Saint-Gobain , paragraph 57; and D. , paragraph 52).
50. None the less, such an allocation of fiscal jurisdiction does not permit Member States to introduce discriminatory measures which are contrary to the Community rules.
51. Since the tax system under the Franco-Swedish agreement, as interpreted in the light of the commentaries on the OECD Model Tax Convention, forms part of the legal background to the main proceedings and has been presented as such by the national court, the Court of Justice must take it into account in order to give an interpretation of Community law that is relevant to the national court. It is not for the Court to interpret national law or to assess its application in the present case (see, inter alia, Case C-435/93 Dietz  [1996] ECR I-5223, paragraph 39, and Case C-136/95 Thibault  [1998] ECR I-2011, paragraph 21).
52. With regard to tax treatment under the Franco-Swedish agreement, it should be recalled that a non-resident shareholder such as Ms Bouanich is permitted, under that agreement, as interpreted in the light of the commentaries on the OECD Model Tax Convention, to deduct the nominal value of the shares from the taxable amount payable on the occasion of a repurchase of those shares. The remaining amount is then taxed at the rate of 15%.
53. In view of the fact that resident shareholders are taxed at the rate of 30% on share repurchase payments after deduction of the cost of acquisition, it must be ascertained whether those shareholders are treated more favourably than non-resident shareholders. In order to do this, it is necessary to know the cost of acquisition of those shares as well as their nominal value.
54. In that regard, it must be recalled that the assessment and finding of the facts in a case are not matters for the Court of Justice but for the national court (see Case 36/79 Denkavit  [1979] ECR 3439, paragraph 12; Joined Cases C-175/98 and C‑177/98 Lirussi and Bizzaro  [1999] ECR I-6881, paragraph 37; and Case C‑318/98 Fornasar and Others [2000] ECR I-4785, paragraph 31).
55. It is therefore a matter for the national court to determine in the proceedings before it whether the fact that non-resident shareholders are permitted to deduct the nominal value and are liable to a maximum tax rate of 15% amounts to treatment that is no less favourable than that afforded to resident shareholders, who have the right to deduct the cost of acquisition and are taxed at a rate of 30%.