Commission of the European Communities v Kingdom of Spain.
Date: 2009-07-09
20. It should be recalled at the outset that, in Case C‑366/05 Optimus – Telecomunicações  [2007] ECR I‑4985, paragraphs 25 to 33, the Court held that, with respect to a State such as in the present case the Kingdom of Spain, which acceded to the Community with effect from 1 January 1986, the date 1 July 1984, which is taken as the reference date for the purposes of the mandatory exemption provided for in Article 7(1) of Directive 69/335, as amended by Directive 85/303, also applies in respect of Spain. At the hearing, the Agent for the Kingdom of Spain referred to a l egislative text concerning transactions involving capital companies which are taxed in Spain as at 1 July 1984. As the parties were asked by the President of the bench to state their position on that information which could constitute fresh evidence, they accepted that the Court rule on the case on the basis of the written observations lodged with it.
21. As regards transactions coming under Article 7(1)(b), the rate of capital duty had been reduced with binding effect as from 1 January 1976 by Directive 73/80 and fixed at 0% to 0.50%. Accordingly, following the amendment to Article 7(1) by Directive 85/303, the transactions in question were, as from 1 January 1986, mandatorily exempted from capital duty. The Commission’s complaints therefore relate to those transactions.
29. The special regime in dispute cannot be justified by the objective of combating tax avoidance and evasion. According to the Court’s settled case-law, since Directive 69/335 harmonises exhaustively the cases in which the Member States may impose capital duty and does not contain any provision expressly authorising the Member States to take general measures to prevent tax avoidance, the Member States can prevent the application of Community law only in specific circumstances entailing an abusive or fraudulent practice (Case C‑178/05 Commission  v Greece  [2007] ECR I‑4185, paragraph 32).
30. Consequently, as rightly observed by the Commission, such measures cannot be founded on a general suspicion of tax evasion. They may be adopted only on a case-by-case basis, in order to put a stop to wholly artificial arrangements which do not reflect economic reality and aim to avoid the tax normally payable (see, to that effect, Case C‑251/06 ING. AUER  [2007] ECR I‑9689, paragraph 44), it being understood that, in such cases, the competent national authorities bear the burden of proving the fraudulent or artificial nature of the transaction in question.
35. It should be noted, first, that it is clear from Article 4(1)(g) and (h) of Directive 69/335 that capital duty is chargeable on transfers, from a Member State to another Member State, of the effective centre of management or registered office of companies which are considered in the latter Member State, for the purposes of charging capital duty, to be capital companies, but are not so considered in the former Member State. Consequently, the only criterion to which that provision makes the application of capital duty subject in the event of such a transfer is that of whether the entity in question is a ‘capital company’ in the Member State of origin. Thus such a transfer may not be made subject to capital duty when the entity in question is considered a ‘capital company’ in the Member State of origin and in the host Member State (see, to that effect, Commission  v Greece , paragraphs 26, 27 and 29).
38. That provision is also contrary to the general system established by Directive 69/335. The fact that a Member State has exercised the option provided for in that directive by abolishing capital duty does not mean that, if the effective centre of management of a capital company is transferred from one Member State to another Member State, the latter State may automatically make that transaction subject to capital duty (see, to that effect, ING. AUER , paragraphs 34 and 35).
39. Secondly, Article 19(3) of the tax law is based on a general presumption of tax evasion, as that provision contains measures which are applied automatically and without distinction. For the reasons set out in paragraphs 29 and 30 of this judgment and in keeping with the Court’s settled case-law referred to in those paragraphs, that provision may not be justified by the objective of combating tax avoidance and evasion. More specifically, exercise of a right created by Community law, such as establishment of a company in another Member State or transfer of its effective centre of management or registered office, cannot in itself warrant suspicion of abuse ( Commission  v Greece , paragraph 32).