Manfred Beker and Christa Beker v Finanzamt Heilbronn.
Date: 2013-02-28
19. It should be noted that, according to settled case-law, questions on the interpretation of European Union 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 European Union law that is sought bears no relation to the facts of the main action or its purpose, 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 (see, inter alia, Joined Cases C-188/10 and C-189/10 Melki and Abdeli  [2010] ECR I-5667, paragraph 27, and judgment of 28 February 2012 in Case C-41/11 Inter-Environnement Wallonie and Terre wallonne  [2012] ECR, paragraph 35).
23. In this connection, it is to be noted that the tax treatment of dividends may fall within Article 49 TFEU on freedom of establishment and Article 63 TFEU on the free movement of capital (Joined Cases C-436/08 and C-437/08 Haribo Lakritzen Hans Riegel and Österreichische Salinen  [2011] ECR I–305, paragraph 33, and Case C-35/11 Test Claimants in the FII Group Litigation  [2012] ECR, paragraph 89).
24. As regards the question whether national legislation falls within the scope of one or other of the freedoms of movement, it is clear from well established case-law that the purpose of the legislation concerned must be taken into consideration ( Test Claimants in the FII Group Litigation , paragraph 90 and the case-law cited).
25. 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 scope of Article 49 TFEU on freedom of establishment ( Test Claimants in the FII Group Litigation , paragraph 91 and the case-law cited).
26. On the other hand, 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 ( Test Claimants in the FII Group Litigation , paragraph 92 and the case-law cited).
27. In the present case, the contested rules apply regardless of the amount of shareholding held in a company. In so far as those rules relate to dividends which originate in a Member State, it cannot therefore be determined from their purpose whether they fall predominantly within the scope of Article 49 TFEU or Article 63 TFEU (see, to that effect, Test Claimants in the FII Group Litigation , paragraph 93).
28. In such circumstances, the Court takes 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 provisions ( Test Claimants in the FII Group Litigation , paragraph 94 and the case-law cited).
30. The Court has also held that national rules relating to the tax treatment of dividends from a third country which do not apply exclusively to situations in which the parent company exercises decisive influence over the company paying the dividends must be assessed in the light of Article 63 TFEU ( Test Claimants in the FII Group Litigation , paragraph 99).
32. It should be noted that, pursuant to the case-law of the Court, in the absence of unifying or harmonising measures adopted by the European Union, the Member States retain competence for determining the criteria for taxation on income and capital with a view to eliminating double taxation by means, inter alia, of international agreements. In that context, the Member States are free to determine the connecting factors for the allocation of fiscal jurisdiction in bilateral agreements for the avoidance of double taxation (see, inter alia, Case C-307/97 Saint-Gobain ZN  [1999] ECR I-6161, paragraph 57; Case C-385/00 de Groot [2002] ECR I-11819, paragraph 93; Case C-265/04 Bouanich  [2006] ECR I-923, paragraph 49; and Case C-527/06 Renneberg  [2008] ECR I-7735, paragraph 48).
33. Nevertheless, that allocation of the power of taxation does not mean that the Member States are entitled to impose measures that contravene the freedoms of movement guaranteed by the TFEU ( Renneberg , paragraph 50).
34. As far as concerns the exercise of the power of taxation so allocated by bilateral conventions to prevent double taxation, the Member States must comply with European Union rules ( de Groot , paragraph 94, and Renneberg , paragraph 51).
35. It also follows from settled case-law of the Court that the measures prohibited by Article 63(1) TFEU, as restrictions on the movement of capital, include those which are such as 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 (Case C-370/05 Festersen  [2007] ECR I-1129, paragraph 24; Case C-101/05 A  [2007] ECR I-11531, paragraph 40; and Haribo Lakritzen Hans Riegel and Österreichische Salinen , paragraph 50).
44. It is also apparent from that judgment that the Member State in which the income originated is required to take into account personal and family circumstances only where the taxpayer receives almost all or all of his taxable income in that State and where he has no significant income in his State of residence, so that the latter is not in a position to grant him the advantages resulting from taking account of his personal and family circumstances (see, to that effect, de Groot , paragraph 89).
47. The elements on which the Court focused its analysis in that judgment consisted of the formula employed in the rules concerned for the calculation of the amount of exemption granted to the resident taxpayer in respect of income received and taxed in the various Member States of employment of that taxpayer, and the concrete effect of that formula. The effect was, as in the case in the main proceedings, that the taxpayer benefited from the allowances relating to his personal and family circumstances only in proportion to the income which he had received in the Member State of residence (see, to that effect, de Groot , paragraph 91).
48. It should be added, in that respect, that the method employed in the rules at issue in that judgment in order to limit double taxation appears to constitute a variation of the exemption method, designed so as to correspond, in practice, to a set-off scheme (see, to that effect, de Groot , paragraphs 21 to 23).
57. In any event, a justification related to the need to safeguard the balanced allocation between the Member States of the power to tax may be accepted, in particular, where the system in question is designed to prevent conduct capable of jeopardising the right of a Member State to exercise its powers of taxation in relation to activities carried out in its territory (see, to that effect, Case C-347/04 Rewe Zentralfinanz [2007] ECR I-2647, paragraph 42; Case C-231/05 Oy AA [2007] ECR I-6373, paragraph 54; and Case C-311/08 SGI  [2010] ECR I-487, paragraph 60).
62. Even if such a system were compatible with European Union law, according to the case-law the fact that a national scheme which restricts the freedoms of movement is optional does not mean that it is not incompatible with Community law (see, to that effect, Case C-446/04 Test Claimants in the FII Group Litigation  [2006] ECR I-11753, paragraph 162, and Case C-440/08 Gielen  [2010] ECR I-2323, paragraph 53). The existence of an option which would possibly render a situation compatible with European Union law does not, in itself, correct the illegal nature of a system, such as the system provided for by the contested rules, which comprises a mechanism of taxation not compatible with that law. It should be added that this is even more so in the situation where, as in the present case, the mechanism incompatible with European Union law is one which is automatically applied where the taxpayer fails to make a choice.