Strojírny Prostějov, a.s. and ACO Industries Tábor s.r.o. v Odvolací finanční ředitelství.
Date: 2014-06-19
23. In order to reply to those questions, it must be noted at the outset that, as EU law stands at present, although direct taxation does not as such fall within the purview of the European Union, the powers retained by the Member States must nevertheless be exercised consistently with EU law (see FKP Scorpio Konzertproduktionen , C‑290/04, EU:C:2006:630, paragraph 30 and the case-law cited).
24. Furthermore, as regards the question whether national legislation falls within the scope of one or other of the freedoms of movement laid down by the Treaties, it is clear from well-established case-law that the purpose of the legislation concerned must be taken into consideration (see, inter alia, Test Claimants in the FII Group Litigation , C‑35/11, EU:C:2012:707, paragraph 90, and Cadbury Schweppes and Cadbury Schweppes Overseas , C‑196/04, EU:C:2006:544, paragraphs 31 to 33).
26. According to settled case-law, Article 56 TFEU confers rights not only on the provider of services but also on the recipient of those services (see, inter alia, Luisi and Carbone , 286/82 and 26/83, EU:C:1984:35, paragraph 10; FKP Scorpio Konzertproduktionen , EU:C:2006:630, paragraph 32; and X , C‑498/10, EU:C:2012:635, paragraph 23).
30. However, notwithstanding the possible restrictive effects of that legislation on freedom of establishment and the free movement of workers, such effects are an unavoidable consequence of any restriction on the freedom to provide services and do not justify, in any event, an independent examination of that legislation in the light of Articles 45 TFEU and 49 TFEU (see, to that effect, Omega , C‑36/02, EU:C:2004:614, paragraph 27, and Cadbury Schweppes and Cadbury Schweppes Overseas , EU:C:2006:544, paragraph 33).
32. That provision applies independently only to situations governed by EU law for which the FEU Treaty lays down no specific rules of non-discrimination. In relation to the freedom to provide services, the principle of non-discrimination was implemented by Articles 56 TFEU to 62 TFEU (see, by analogy, Attanasio Group , C‑384/08, EU:C:2010:133, paragraph 37, and Schulz-Delzers and Schulz , C‑240/10, EU:C:2011:591, paragraph 29).
34. In order to determine whether the legislation at issue in the main proceedings is consistent with the freedom to provide services, it should be recalled that, according to the Court’s case-law, Article 56 TFEU requires the abolition of any restriction on that fundamental freedom imposed on the ground that the person providing a service is established in a Member State other than the one in which the service is provided (see Commission v Germany , 205/84, EU:C:1986:463, paragraph 25; Commission v Italy , C‑180/89, EU:C:1991:78, paragraph 15; FKP Scorpio Konzertproduktionen , EU:C:2006:630, paragraph 31; and X , EU:C:2012:635, paragraph 21).
35. Restrictions on the freedom to provide services are national measures which prohibit, impede or render less attractive the exercise of that freedom ( X , EU:C:2012:635, paragraph 22 and the case-law cited).
37. It is clear that, in the present case, the obligation to withhold an advance payment on the income tax of workers supplied by temporary employment agencies not established in the Czech Republic and to pay that advance payment to the Czech State is inevitably imposed on the recipients of the services provided by those agencies and entails an additional administrative burden which is not required for the recipients of the same services provided by a resident service provider. Consequently, such an obligation is liable to render cross-border services less attractive for those recipients than services provided by resident service providers, and consequently to deter those recipients from having recourse to service providers resident in other Member States (see, to that effect, FKP Scorpio Konzertproduktionen , EU:C:2006:630, paragraph 33; Commission v Belgium , C‑433/04, EU:C:2006:702, paragraphs 30 to 32; and X , EU:C:2012:635, paragraph 28).
42. That conclusion cannot challenged by the argument of the Czech Government that the effects of the legislation at issue are negligible, given that, according to settled case-law, a restriction on a fundamental freedom is prohibited by the Treaty even if it is of limited scope or minor importance ( Commission v France , C‑34/98, EU:C:2000:84, paragraph 49, and X , EU:C:2012:635, paragraph 30).
Justification of a restriction on the freedom to provide services
44. However, according to settled case-law of the Court, where national legislation falling within an area which has not been harmonised at EU level is applicable without distinction to all persons and undertakings operating in the territory of the Member State concerned, it may, notwithstanding its restrictive effect on the freedom to provide services, be justified where it meets overriding requirements in the public interest in so far as that interest is not already safeguarded by the rules to which the service provider is subject in the Member State in which he is established and in so far as it is appropriate for securing the attainment of the objective which it pursues and does not go beyond what is necessary in order to attain it (see, inter alia, Säger , C‑76/90, EU:C:1991:331, paragraph 15, and Commission v Belgium EU:C:2006:702, paragraph 33).
46. It should be noted, in that respect, that the Court has already recognised that the need to ensure the effective collection of income tax may constitute an overriding reason in the public interest capable of justifying a restriction on the freedom to provide services ( FKP Scorpio Konzertproduktionen , EU:C:2006:630, paragraph 35, and X , EU:C:2012:635, paragraph 39).
47. In particular, the Court even stated that the procedure of retention at source is a legitimate and appropriate means of ensuring the tax treatment of the income of a person established outside the State of taxation and ensuring that the income concerned does not escape taxation in the State of residence and the State where the services are provided ( FKP Scorpio Konzertproduktionen , EU:C:2006:630, paragraph 36, and X , EU:C:2012:635, paragraph 39).
49. As the Advocate General noted at point 70 of his Opinion, it is clear that, in this case, it cannot be claimed that the temporary employment agencies at issue in the main proceedings provide their services in the Czech Republic only on an occasional basis, given that they acted through a branch registered in the commercial register of the Czech Republic.
50. In those circumstances, even though, as the Czech Government states, a branch, under Czech law, does not have legal personality and cannot therefore be obliged to pay taxes under Czech law, the fact remains that such a branch provides the service provider with a physical presence in the territory of the host Member State and performs certain administrative tasks on behalf of the temporary employment agency concerned such as signing contracts.
51. In this respect, not only can it not be excluded that the Czech tax authorities recover the tax due from that branch and that therefore that branch carries out the withholding at issue, but it is also apparent from the documents before the Court in Case C‑80/13 that, in this case, the advance payments on the salaries of the employees concerned were in fact made by the branch of the Slovak temporary employment agency.
52. Furthermore, the imposition on the resident recipients of those services, instead of on the Czech branch of the agencies resident in other Member States, of the administrative burden linked to the withholding tax on income payable by the seconded workers does not appear to be simpler or more efficient from the point of view of the service providers or from the point of view of the Czech administration. Since the branch of the temporary employment agency of which the workers are employees has the necessary information concerning the income of those workers more easily available to it, the administrative burden connected to the withholding operation would be less onerous for that branch than for the recipient of the services.
53. It follows that, accordingly, the national legislation at issue in the main proceedings is not appropriate to ensure the effective collection of income tax.
55. It is true that the Court has held on several occasions that the prevention of tax avoidance and the need for effective fiscal supervision may be relied on to justify restrictions on the exercise of the fundamental freedoms guaranteed by the Treaty (see Baxter and Others , C‑254/97, EU:C:1999:368, paragraph 18, and Commission v Belgium  EU:C:2006:702, paragraph 35).
56. However, the Court has also stated that a general presumption of tax avoidance or evasion based on the fact that a service provider is based in another Member State is not sufficient to justify a fiscal measure which compromises the objectives of the Treaty (see, to that effect, Centro di Musicologia Walter Stauffer , C‑386/04, EU:C:2006:568, paragraph 61; Commission v Belgium , EU:C:2006:702, paragraph 35; and Commission v Spain , C‑153/08, EU:C:2009:618, paragraph 39).