Finanzamt Speyer-Germersheim v STEKO Industriemontage GmbH.
Date: 2009-01-22
23. It should be noted that the measures prohibited by Article 56(1) EC, as restrictions on the movement of capital, include those which are likely 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 (see Case C‑513/03 Van Hilten-van der Heijden  [2006] ECR I‑1957, paragraph 44; Case C‑370/05 Festersen  [2007] ECR I‑1129, paragraph 24; and Case C‑101/05 A  [2007] ECR I‑11531, paragraph 40).
24. National measures which can be regarded as ‘restrictions’ within the meaning of Article 56(1) EC include not only measures liable to prevent or limit the acquisition of shares in companies established in other States (Case C‑112/05 Commission  v Germany  [2007] ECR I‑8995, paragraph 19 and case-law cited) but also measures liable to discourage the maintenance of such holdings in companies established in other States (see, by analogy, Case C‑324/00 Lankhorst-Hohorst [2002] ECR I‑11779, paragraph 32, and Case C‑524/04 Test Claimants in the Thin Cap Group Litigation  [2007] ECR I‑2107, paragraph 61).
29. It is insignificant, in that regard, that the difference in treatment existed only for a limited period of time (Case C‑436/06 Grønfeldt  [2007] ECR I‑12357, paragraph 15). That fact alone does not preclude the difference in treatment from having significant effects – as indeed shown in the facts in the main proceedings – or, therefore, from giving rise to a genuine restriction on the free movement of capital.
30. According to case-law, a national tax provision which distinguishes between taxpayers depending on the place where their capital is invested could be regarded as being compatible with the EC Treaty provisions on the free movement of capital provided that the difference in treatment applies to situations which are not objectively comparable or is justified by overriding reasons in the general interest (see Case C‑194/06 Orange European Smallcap Fund  [2008] ECR I‑0000, paragraph 59 and case-law cited).
33. That reasoning cannot be accepted. The application of different taxation systems to a resident company depending on whether it has holdings in resident or non-resident companies cannot be a valid criterion for assessing the objective comparability of their situations and, therefore, for identifying an objective difference between them. It is precisely the application of different taxation systems that is responsible for the difference in treatment, in respect of which it must be assessed whether it is justified or not.
34. Furthermore, it is important to note that the Court has already held, as regards losses incurred by parent companies resident in Germany in respect of write-downs made to the book value of their shareholdings in subsidiaries, that those companies are in a comparable situation whether the shares are held in subsidiaries established in Germany or in other Member States. The Court has stated that, in each case, first, the losses which it is sought to deduct are borne by the parent companies and, second, the profits of those subsidiaries, whether they come from subsidiaries which are taxable in Germany or from those which are taxable in other Member States, are not taxable in the hands of the parent companies (Case C‑347/04 Rewe Zentralfinanz  [2007] ECR I‑2647, paragraph 34).
52. As to the argument concerning the need to preserve the coherence of the tax system in its entirety, the Court has held that, for such an argument to succeed, a direct link must be established between the tax advantage concerned and the offsetting of that advantage by a particular tax levy (see Case C‑293/06 Deutsche Shell  [2008] ECR I‑1129, paragraph 38 and case-law cited).
53. Furthermore, the direct nature of such a link must be established, in light of the objective pursued by the tax rules concerned, in relation to the relevant tax payers by a strict correlation between the deductible element and the taxable element ( Deutsche Shell , paragraph 39).
54. However, as regards the determination of the taxable revenue of resident companies holding shares in non-resident companies, the Court has already held that the fact that it is possible, subsequently, to obtain an exemption for capital gains realised on a disposal, assuming that a sufficient level of profit is achieved, does not constitute a consideration based on fiscal coherence which is capable of justifying a refusal to allow an immediate deduction in respect of losses incurred by companies holdings shares in non-resident companies (see, by analogy, Rewe Zentralfinanz , paragraph 67).