Wienand Meilicke and Others v Finanzamt Bonn-Innenstadt.
Date: 2011-06-30
26. The Court then pointed out that, in accordance with paragraph 54 of  Manninen , the calculation of a tax credit granted to a shareholder fully taxable in Finland, who received dividends from a company established in another Member State, must take account of the tax actually paid by the company established in that other Member State, as such tax arises from the general rules on calculating the basis of assessment and from the rate of corporation tax in that latter Member State ( Meilicke and Others , paragraph 15).
28. It follows from the foregoing that, in its answer to the question referred in Meilicke and Others , recalled in paragraph 20 of this judgment, the Court ruled out the possibility that the calculation of the tax credit to which a shareholder who is fully taxable in a Member State as regards dividends distributed by a capital company established in another Member State could be done on a basis other than that of the corporation tax rate on the distributed profits applicable to the dividend-paying company according to law of the Member State of establishment.
29. Furthermore, the Court has already held that where a Member State has a system for preventing or mitigating a series of charges to tax or economic double taxation for dividends paid to residents by resident companies, it must treat dividends paid to residents by non-resident companies in the same way (see, to that effect, Case C-315/02 Lenz [2004] ECR I-7063, paragraphs 27 to 49; Manninen , paragraphs 29 to 55, and Case C-374/04 Test Claimants in Class IV of the ACT Group Litigation  [2006] ECR I-11673, paragraph 55).
30. Under such systems, the situation of shareholders resident in a Member State and receiving dividends from a company established in that State is comparable to that of shareholders who are resident in that State and receive dividends from a company established in another Member State, inasmuch as both the dividends deriving from a national source and those deriving from a foreign source may be subject, first, in the case of corporate shareholders, to a series of charges to tax and, secondly, in the case of ultimate shareholders, to economic double taxation (see, to that effect, Lenz , paragraphs 31 and 32, and Manninen , paragraphs 35 and 36 and Test Claimants in Class IV of the ACT Group Litigation , paragraph 56).
32. In a context such as that in the case in the main proceedings, the obligation of a Member State to eliminate double taxation on a natural person benefiting ultimately from dividends of foreign origin is limited to the deduction of the corporation tax paid by the dividend-paying company on dividends distributed, according to the law of the Member State in which the company is established, from the income tax payable by the shareholder in respect of those dividends.
33. As the Finanzamt Köln and the German Government claim, the principle of free movement of capital, in Article 56(1) TFEU, cannot have the effect of requiring Member States to go beyond the cancelling of national income tax payable by a shareholder on dividends of foreign origin received and the reimbursing of a sum whose origin is in the tax system of another Member State (see, by analogy, Case C-446/04 Test Claimants in the FII Group Litigation  [2006] ECR I-11753, paragraph 52), if the first Member State is not to see its fiscal autonomy limited by the exercise of fiscal power of the other Member State (see, in particular, Test Claimants in the FII Group Litigation , paragraph 47; Case C‑194/06 Orange European Smallcap Fund  [2008] ECR I-3747, paragraph 30, and Case C-128/08 Damseaux  [2009] ECR I-6823, paragraph 25).
37. That being made clear, it must be noted that, next, it is inherent in the principle of the fiscal autonomy of Member States that they determine what is, according to their own national system, the evidence required in order to benefit from such a tax credit.
38. Nevertheless, the exercise of that fiscal autonomy must be carried out in accordance with the requirements of EU law, in particular those imposed by the Treaty provisions on the free movement of capital.
39. In this respect, the Court has already had occasion to state that the possible difficulties that may arise in determining the tax actually paid in another Member State cannot justify a restriction on the free movement of capital (see Manninen , paragraph 54, and Test Claimants in the FII Group Litigation , paragraph 70).
40. In the present case, it must be held that national legislation such as that at issue in the main proceedings, under which the tax credit is granted only following submission of a certificate in accordance with its national system, without any opportunity for the shareholder of showing, by means of other factors and relevant information, the tax actually paid, constitutes a disguised restriction on the free movement of capital prohibited by Article 65(3) TFEU (see, to that effect, Case C-318/07 Persche  [2009] ECR I-359, paragraph 72).
41. However, it is clear from the case-law that the need to ensure the effectiveness of fiscal supervision constitutes an overriding reason relating to the general interest capable of justifying a restriction on the exercise of the fundamental freedoms guaranteed by the Treaty and that a Member State is authorised to apply measures which enable the amount of costs deductible in that Member State, which were incurred in another Member State, to be ascertained clearly and precisely (see, in particular, Case C-250/95 Futura Participations and Singer  [1997] ECR I-2471, paragraph 31, and Case C-39/04 Laboratoires Fournier  [2005] ECR I-2057, paragraph 24).
42. However, for a restrictive measure to be justified, it must observe 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 (Case C‑101/05 A  [2007] ECR I‑11531, paragraphs 55 and 56, and Persche , paragraph 52).
43. National rules which would unconditionally prevent shareholders having invested abroad from adducing evidence which satisfies criteria, in particular those of presentation, other than those laid down for national investments, would not only breach the principle of sound administration, but in particular go beyond what is necessary to attain the objective of effective fiscal supervision.
44. It is not a priori inconceivable that those shareholders may be able to provide relevant documentary evidence enabling the tax authorities of the Member State of taxation to ascertain, clearly and precisely, the reality and nature of tax deductions made in other Member States (see, by analogy, Laboratoires Fournier , paragraph 25 and Persche , paragraph 53).
45. As regards the burden of proof and the degree of detail which the evidence required must meet in order to benefit from a tax credit in respect of dividends paid by a capital company established in another Member State, it must be borne in mind that the tax authorities of a Member State are entitled to require the taxpayer to provide such proof as they may consider necessary in order to determine whether the conditions for a tax advantage provided for in the legislation at issue have been met and, consequently, whether or not to grant that advantage (see Joined Cases C-436/08 et C-437/08 Haribo Lakritzen Hans Riegel and Österreichische Salinen  [2011) ECR 1-0000, paragraph 95 and case-law cited).
46. Such an assessment must not be conducted too formalistically, so that the provision of documentary evidence which lacks the degree of detail and is not presented in the form of a corporation tax certificate provided for by the Member State of taxation of a shareholder having received dividends from a capital company established in another Member State, but which enables the tax authorities of the Member State of taxation to ascertain, clearly and precisely, whether the conditions for obtaining a tax advantage are met, must be considered by those authorities to be equivalent to the production of the above-mentioned certificate.
48. In this respect, as a matter of fact, the Court has already stated that the inadequate flow of information to the investor is not a problem for which the Member State concerned should have to answer (see Haribo Lakritzen Hans Riegel and Österreichische Salinen , paragraph 98).
50. In that connection, the fact that, for dividends distributed by companies established in Member States other than that granting a tax credit, the tax authorities of that latter Member State may have recourse to the mechanism of mutual assistance under Directive 77/799 does not mean that they would be required to spare the company receiving dividends the necessity of providing them with proof of the tax paid in another Member State by the company making the distribution (see Haribo Lakritzen Hans Riegel and Österreichische Salinen , paragraph 100).
51. Since Directive 77/799 provides that the national tax authorities may request information which they cannot obtain themselves, the use, in Article 2(1), of the word ‘may’ indicates that, whilst it is possible for those authorities to request information from the competent authority of another Member State, such a request does not in any way constitute an obligation. It is for each Member State to assess the specific cases in which information concerning transactions by taxable persons in its territory is lacking and to decide whether those cases justify submitting a request for information to another Member State ( Haribo Lakritzen Hans Riegel and Österreichische Salinen , paragraph 101 and the case-law cited).
52. Consequently, Directive 77/799 does not require the tax authorities to have recourse to the mechanism of mutual assistance for which the directive provides as soon as the information provided by that shareholder is not sufficient to establish whether that shareholder fulfils the conditions laid down by the national legislation for a right to a tax credit (see Haribo Lakritzen Hans Riegel and Österreichische Salinen , paragraph 102 and the case-law cited).
55. It must be borne in mind that, according to settled case-law, in the absence of relevant EU rules, the detailed procedural rules designed to ensure the protection of the rights which individuals acquire under EU law are a matter for the domestic legal order of each Member State, in accordance with the principle of the procedural autonomy of the Member States, provided that they are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not render impossible in practice or excessively difficult the exercise of rights conferred by the EU legal order (principle of effectiveness) (see Case C-201/02 Wells [2004] ECR I-723, paragraph 67 and Joined Cases C-392/04 et C‑422/04 i-21 Germany and Arcor  [2006] ECR I-8559, paragraph 57).
56. As regards the latter principle, the Court has held that it is compatible with EU law to lay down reasonable time-limits for bringing proceedings in the interests of legal certainty which protects both the taxpayer and the administration concerned. Such time-limits do not make it impossible in practice or excessively difficult to exercise the rights conferred by EU law (see Case C-228/96 Aprile  [1998] ECR I‑7141, paragraph 19).
57. Moreover, as regards the restitution of national taxes unduly levied, the Court has stated that, where the rules for restitution are amended by national law with retroactive effect, the principle of effectiveness requires new legislation to include transitional arrangements allowing an adequate period after the enactment of the legislation for lodging claims for repayment which persons were entitled to submit under the original legislation (see, to that effect, Case C-62/00 Marks & Spencer  [2002] ECR I-6325, paragraph 38, and Case C‑255/00 Grundig Italiana  [2002] ECR I-8003, paragraph 37).