Deister Holding AG and Juhler Holding A/S v Bundeszentralamt für Steuern.
Date: 2017-12-20
39


It is appropriate to note that, in accordance with settled case-law, the procedure provided for by Article 267 TFEU is an instrument of cooperation between the Court and national courts by means of which the former provides the latter with interpretation of such EU law as is necessary for them to give judgment in cases upon which they are called to adjudicate (judgment of 8 December 2016, Eurosaneamientos and Others, C‑532/15 and C‑538/15, EU:C:2016:932, paragraph 26 and the case-law cited).
40


In the context of that cooperation, it is solely for the national court hearing the case, which must assume responsibility for the subsequent judicial decision, to determine, with regard to the particular aspects of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it refers to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is in principle bound to give a ruling (judgment of 8 December 2016, Eurosaneamientos and Others, C‑532/15 and C‑538/15, EU:C:2016:932, paragraph 27 and the case-law cited).
41


It follows that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought is unrelated to the actual facts of the main action or its object, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 8 December 2016, Eurosaneamientos and Others, C‑532/15 and C‑538/15, EU:C:2016:932, point 28 and the case-law cited).
45


Given that the questions referred concern both the provisions of the Parent-Subsidiary Directive and those of the FEU Treaty and that, according to settled case-law, any national measure in an area which has been the subject of exhaustive harmonisation at the level of the European Union must be assessed in the light of the provisions of that harmonising measure, and not in the light of the provisions of primary law, it should be noted that the Court has held that Article 1(2) of that directive does not carry out such harmonisation (see, to that effect, judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, points 15 to 17).
48


As is apparent from the third recital of the Parent-Subsidiary Directive, that directive seeks, by the introduction of a common tax system, to eliminate any disadvantage to cooperation between companies of different Member States as compared with cooperation between companies of the same Member State and thereby to facilitate the grouping together of companies at EU level. That directive thus seeks to ensure the neutrality, from the tax point of view, of the distribution of profits by a company established in one Member State to its parent company established in another Member State (judgment of 8 March 2017, Wereldhave Belgium and Others, C‑448/15, EU:C:2017:180, paragraph 25 and the case-law cited).
50


On that basis, in order to avoid double taxation, Article 5(1) of that directive establishes the principle that withholding tax on profits distributed by a subsidiary established in one Member State to its parent company established in another Member State is prohibited (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 22 and the case-law cited).
51


By precluding Member States from imposing withholding tax on the profits distributed by a resident subsidiary to its non-resident parent company, that article of the Parent-Subsidiary Directive limits the powers of the Member States regarding the taxation of profits distributed by companies established in their territory to companies established in another Member State (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 23 and the case-law cited).
52


Thus, given that the Parent-Subsidiary Directive is intended to streamline the tax arrangements governing cross-border cooperation within the European Union, the Member States cannot unilaterally introduce restrictive measures and subject the right to exemption from withholding tax under Article 5(1) of that directive to various conditions (see, to that effect, judgments of 17 October 1996, Denkavit and Others, C‑283/94, C‑291/94 and C‑292/94, EU:C:1996:387, paragraph 26, and of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 24 and the case-law cited).
55


In that regard, it must be found that, in interpreting Article 1(2) of the Parent-Subsidiary Directive, it is irrelevant that the word ‘necessary’ does not appear expressly in the German language version of the provision. The Member States may, in any event, exercise the option provided for in that article only whilst observing the general principles of EU law and, more specifically, the principle of proportionality (see, by analogy, judgment of 17 July 1997, Leur-Bloem, C‑28/95, EU:C:1997:369, paragraphs 38 and 43).
56


Observance of that principle requires that the measures taken by the Member States for the prevention of fraud and abuse must be appropriate for attaining that objective and must not go beyond what is necessary to attain it (see, to that effect, judgments of 18 November 1987, Maizena and Others, 137/85, EU:C:1987:493, paragraph 15, and of 30 June 2011, Meilicke and Others, C‑262/09, EU:C:2011:438, paragraph 42 and the case-law cited).
59


As regards measures for the prevention of fraud and abuse within the meaning of Article 1(2) of the Parent-Subsidiary Directive, it should be noted that, since that provision provides for an exception to the general rules laid down by the directive, namely the common tax rules applicable to parent companies and subsidiaries coming within the scope of the directive, it must be subject to strict interpretation (see, to that effect, judgments of 24 June 2010, P. Ferrero e C. and General Beverage Europe, C‑338/08 and C‑339/08, EU:C:2010:364, paragraph 45, and of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraph 49 and the case-law cited).
60


The Court has stated 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 (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 30 and the case-law cited).
61


Therefore, a general presumption of fraud and abuse cannot justify either a fiscal measure which compromises the objectives of a directive or a fiscal measure which prejudices the enjoyment of a fundamental freedom guaranteed by the treaties (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 31 and the case-law cited).
62


In order to determine whether an operation pursues an objective of fraud and abuse, the competent national authorities may not confine themselves to applying predetermined general criteria, but must carry out an individual examination of the whole operation at issue. The imposition of a general tax measure automatically excluding certain categories of taxable person from the tax advantage, without the tax authorities being required to provide even prima facie evidence of fraud and abuse, would go further than is necessary for preventing fraud and abuse (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 32 and the case-law cited).
67


Moreover, it should be noted that the non-resident parent company is in any event subject to the tax legislation of the Member State in which it is established (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 35 and the case-law cited).
76


It is apparent from the Court’s case-law that the issue of the tax treatment of dividends equally may fall within the scope of freedom of establishment as well as within the free movement of capital (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 39 and the case-law cited).
77


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 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 40 and the case-law cited).
78


In that regard, the Court has already held that 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 provisions of the Treaty on freedom of establishment. However, 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 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 41 and the case-law cited).
79


In the present case, according to the order for reference the tax legislation at issue in the main proceedings was applicable to companies holding at least 15% of the capital of their subsidiaries. By contrast, that order contains no information concerning the purpose of that legislation.
80


That shareholding 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 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 43 and the case-law cited).
81


In those circumstances, it is necessary to take account of the facts of the case in point in order to determine whether the situation to which the dispute in the main proceedings relates falls within the scope of one or other of those freedoms of movement (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 44 and the case-law cited).
84


In that context, it must be added that the origin of the shareholders of the companies at issue in the main proceedings does not affect the right of those companies to rely on freedom of establishment. In that regard, it is clear from the Court’s case-law that it does not follow from any provision of EU law that the origin of the shareholders, be they natural or legal persons, of companies resident in the European Union affects the right of those companies to rely on that freedom (see, to that effect, judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 48 and the case-law cited). In the cases in the main proceedings, it is common ground that the parent companies in question are companies established in the European Union. Accordingly, those companies may rely on that freedom.
86


Freedom of establishment, which Article 49 TFEU grants to EU nationals, includes the right for them to take up and pursue activities as self-employed persons and to set up and manage undertakings under the conditions laid down for its own nationals by the law of the Member State where such establishment is effected. It entails, in accordance with Article 54 TFEU, for companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the European Union, the right to exercise their activity in the Member State concerned through a subsidiary, a branch or an agency (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 52 and the case-law cited).
87


As regards treatment in the host Member State, the case-law of the Court holds that since the second sentence of the first paragraph of Article 49 TFEU expressly leaves economic operators free to choose the appropriate legal form in which to pursue their activities in another Member State, that freedom of choice must not be limited by discriminatory tax provisions (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 53 and the case-law cited).
88


Moreover, all measures which prohibit, impede or render less attractive the exercise of freedom of establishment must be considered to be restrictions on that freedom (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 54 and the case-law cited).
91


That restriction is permissible only if it relates to situations which are not objectively comparable or if it is justified by overriding reasons in the public interest recognised by EU law. It is further necessary, in such a case, that the restriction be appropriate for ensuring the attainment of the objective that it pursues and not go beyond what is necessary to attain it (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 57 and the case-law cited).
93


Although the Court considered, as regards measures provided for by a Member State in order to prevent or mitigate a series of charges to tax or the double taxation of profits distributed by a resident company, that resident shareholders receiving dividends are not necessarily in a situation which is comparable to that of shareholders receiving dividends who are resident in another Member State, it also stated that, since a Member State exercises its power to tax not only over the income of resident shareholders, but also over that of non-resident shareholders, from dividends which they receive from a resident company, the situation of those non-resident shareholders becomes comparable to that of the resident shareholders (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 59 and the case-law cited).
96


In that regard, it should be noted, first, that the objectives of combating tax evasion and avoidance and of seeking to safeguard a balanced allocation of taxation powers between the Member States are connected and, secondly, because they constitute overriding reasons in the public interest, they are capable of justifying a restriction on the exercise of freedom of movement guaranteed by the Treaty (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 63 and the case-law cited).
97


However, it must be noted that the objective of combating tax evasion and avoidance, whether it is relied on under Article 1(2) of the Parent and Subsidiaries Directive or as justification for an exception to primary law, has the same scope (judgment of 7 September 2017, Eqiom and Enka, C‑6/16, EU:C:2017:641, paragraph 64). Therefore, the findings set out in paragraphs 60 to 74 above also apply with regard to that freedom.