Skatteverket v A.
Date: 2007-12-18
19. As a preliminary point, it is to be noted that, according to settled case-law, although direct taxation falls within their competence, the Member States must none the less exercise that competence consistently with Community law (Case C‑35/98 Verkooijen  [2000] ECR I-4071, paragraph 32; Case C-319/02 Manninen  [2004] ECR I-7477, paragraph 19; and Case C-292/04 Meilicke and Others [2007] ECR I-1835, paragraph 19).
20. In that regard, Article 56(1) EC, which entered into force on 1 January 1994, gave effect to the liberalisation of capital between the Member States and between Member and non-member States. To that end, it provides, in the chapter of the Treaty entitled ‘Capital and payments’, that all restrictions on the movement of capital between Member States and between Member and non-member States are prohibited (Joined Cases C-163/94, C-165/94 and C-250/94 Sanz de Lere and Others [1995] ECR I-4821, paragraph 19, and Case C-513/03 van Hilten-van der Heijden [2006] ECR I-1957, paragraph 37).
The direct effect of Article 56(1) EC in relations between Member and non-member States
21. At the outset, it should be noted that Article 56(1) EC lays down a clear and unconditional prohibition for which no implementing measure is needed and which confers rights on individuals which they can rely on before the courts (see, to that effect, Sanz de Lera and Others , paragraphs 41 and 47).
25. At paragraph 48 of the judgment in Sanz de Lera and Others , the Court held that Article 73b(1) of the EC Treaty (now Article 56(1) EC), in conjunction with Articles 73c and 73d(1)(b) of the EC Treaty (now Articles 57 EC and 58(1)(b) EC respectively), may be relied on before national courts and may render national rules that are inconsistent with them inapplicable.
26. Thus, the Court recognised the direct effect of Article 56(1) EC, without drawing a distinction between the categories of capital movement which are covered by Article 57(1) EC and those which are not so covered. The Court held that the exception provided for in Article 57(1) EC cannot preclude Article 56(1) EC from conferring rights on individuals which they can rely on before the courts ( Sanz de Lera and Others , paragraph 47).
27. It follows that, as regards the movement of capital between Member and non-member States, Article 56(1) EC, in conjunction with Articles 57 EC and 58 EC, may be relied on before national courts and may render national rules that are inconsistent with it inapplicable, irrespective of the category of capital movement in question.
The concept of restrictions on the movement of capital between Member and non-member States
37. Accordingly, because of the degree of legal integration that exists between Member States of the European Union, in particular by reason of the presence of Community legislation which seeks to ensure cooperation between national tax authorities, such as Directive 77/799, the taxation by a Member State of economic activities having cross-border aspects which take place within the Community is not always comparable to that of economic activities involving relations between Member States and third countries (Case C-446/04 Test Claimants in the FII Group Litigation [2006] ECR I-11753, paragraph 170). According to the Court, it may also be that a Member State will be able to demonstrate that a restriction on the movement of capital to or from third countries is justified for a particular reason in circumstances where that reason would not constitute a valid justification for a restriction on capital movements between Member States ( Test Claimants in the FII Group Litigation , paragraph 171 ) .
40. 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 van Hilten-van der Heijden  , paragraph 44, and Case C-370/05 Festersen  [2007] ECR I-1129, paragraph 24).
42. The effect of such legislation is to discourage taxpayers residing in Sweden from investing their capital in companies established outside the EEA. Since the dividends which such companies pay to Swedish residents receive less favourable tax treatment than dividends distributed by a company established in an EEA Member State, the shares of such companies are less attractive to investors residing in Sweden than shares in companies established in such a State (see, to that effect, Verkooijen , paragraphs 34 and 35, and Manninen , paragraphs 22 and 23, and, with regard to movement of capital between Member States and third countries, Test Claimants in the FII Group Litigation , paragraph 166).
46. A restriction on capital movements consisting of a less favourable tax treatment of foreign-sourced dividends is covered by the concept of ‘direct investment’ under Article 57(1) EC in so far as it relates to investments of any kind undertaken by natural or legal persons and which serve to establish or maintain lasting and direct links between the persons providing the capital and the undertakings to which that capital is made available in order to carry out an economic activity (see, to that effect, Test Claimants in the FII Group Litigation , paragraphs 179 to 181; Case C-157/05 Holböck [2007] ECR I-0000, paragraphs 33 and 34; and Case C-112/05 Commission v Germany  [2007] ECR I-0000, paragraph 18).
48. As the Advocate General pointed out at points 110 to 112 of his Opinion, the words ‘restrictions which exist on 31 December 1993’ presuppose that the legal provision relating to the restriction in question have formed part of the legal order of the Member State concerned continuously since that date. If that were not the case, a Member State could, at any time, reintroduce restrictions on the movement of capital to or from third countries which existed as part of the national legal order on 31 December 1993 but had not been maintained.
49. The Court expressed a similar view when called upon to rule on whether the exception provided for in Article 57(1) EC was applicable to restrictions on the movement of capital which existed in the legal order of a Member State on 31 December 1993. While the Court accepted that any national measure adopted after that date is not, by that fact alone, automatically excluded from the derogation laid down in Article 57(1), it understood that possibility to encompass provisions which, in substance, are identical to previous legislation or which are limited to reducing or eliminating an obstacle to the exercise of Community rights and freedoms in the earlier legislation, whilst excluding provisions based on an approach which differs from that of the previous law and establishes new procedures (see, to that effect, Test Claimants in the FII Group Litigation , paragraph 192, and Holböck , paragraph 41). In so doing, the Court did not have in contemplation provisions which, whilst in substance identical to legislation which existed on 31 December 1993, reintroduced an obstacle to the free movement of capital which, following the repeal of the earlier legislation, no longer existed.
51. Admittedly, the provisions on exemption were repealed in 1994, then reintroduced in 1995 and extended in 2001 to dividends paid by companies established in an EEA Member State or in another State with which the Kingdom of Sweden has concluded a convention providing for the exchange of information. However, the fact remains that, as the Italian Government contends, that exemption was removed continuously, at the very least with effect from 1992, for dividends paid by companies established in a third country outside the EEA which has not concluded such a convention with the Kingdom of Sweden.
55. Under Article 58(1)(b) EC, Article 56 EC is without prejudice to the right of a Member State to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation. The Court thus recognised that the need to guarantee the effectiveness of fiscal supervision constitutes an overriding requirement of general interest capable of justifying a restriction on the exercise of freedom of movement guaranteed by the Treaty (Case C-250/95 Futura Participations and Singer [1997] ECR I-2471, paragraph 31; Case C‑315/02 Lenz [2004] ECR I-7063, paragraphs 27 and 45; and Case C‑386/04 Centro di Musicologia Walter Stauffer  [2006] ECR I-8203, paragraph 47).
56. For a restrictive measure to be justified, it must comply with the principle of proportionality, in that it must be appropriate for securing the attainment of the objective it pursues and must not go beyond what is necessary to attain it (see, in particular, Case C-334/02 Commission v France  [2004] ECR I-2229, paragraph 28).
58. As A and the Commission pointed out, with regard to national legislation restricting the exercise of one of the freedoms of movement guaranteed by the Treaty, the Court has held that a Member State cannot rely on the fact that it may be impossible to seek cooperation from another Member State in conducting inquiries or collecting information in order to justify a refusal to grant a tax advantage. Indeed, even if it proves difficult to verify the information provided by the taxpayer, in particular due to the limited nature of the exchange of information provided for by Article 8 of Directive 77/799, there is no reason why the tax authorities concerned should not request from the taxpayer the evidence that they consider they need to effect a correct assessment of the taxes and duties concerned and, where appropriate, refuse the exemption applied for if that evide nce is not supplied (see, to that effect, Case C-204/90 Bachmann  [1992] ECR I-249, paragraph 20; Case C‑150/04 Commission v Denmark  [2007] ECR I‑1163, paragraph 54; and Case C-451/05 ELISA  [2007] ECR I-0000, paragraphs 94 and 95).
59. In that context, the Court has held that the taxpayer should not be precluded a priori from providing relevant documentary evidence enabling the tax authorities of the Member State imposing the tax to ascertain, clearly and precisely, that he is not attempting to avoid or evade the payment of taxes (see, to that effect, Case C‑254/97 Baxter and Others  [1999] ECR I‑4809, paragraphs 19 and 20; Case C‑39/04 Laboratoires Fournier [2005] ECR I‑2057, paragraph 25; and ELISA , paragraph 96).
60. However, that case-law, which relates to restrictions on the exercise of freedom of movement within the Community, cannot be transposed in its entirety to movements of capital between Member States and third countries, since such movements take place in a different legal context from that of the cases which gave rise to the judgments referred to in the two preceding paragraphs.
62. In second place, as the Advocate General pointed out at points 141 to 143 of his Opinion, with regard to the documentary evidence which the taxpayer may provide to enable the tax authorities to ascertain whether the requirements under national legislation are satisfied, the Community harmonisation measures on company accounts which apply in the Member States allow the taxpayer to produce reliable and verifiable evidence on the structure or activities of a company established in another Member State, whereas the taxpayer is not ensured of such an opportunity in the case of a company established in a third country which is not required to apply those Community measures.
63. It follows that, where the legislation of a Member State makes the grant of a tax advantage dependent on satisfying requirements, compliance with which can be verified only by obtaining information from the competent authorities of a third country, it is, in principle, legitimate for that Member State to refuse to grant that advantage if, in particular, because that third country is not under any contractual obligation to provide information, it proves impossible to obtain such information from that country.