Futura Participations SA and Singer v Administration des contributions.
Date: 1997-05-15
18 The first condition is that losses carried forward must be economically linked to the income earned in the Member State in which tax is charged, so that only losses arising from the non-resident taxpayer's activities in that State can be carried forward.
19 According to settled case-law, although direct taxation falls within the competence of the Member States, the latter must none the less exercise that competence consistently with Community law and therefore avoid any overt or covert discrimination on grounds of nationality (Case C-279/93 Schumacker [1995] ECR I-225, paragraphs 21 and 26; Case C-80/94 Wielockx [1995] ECR I-2493, paragraph 16; and Case C-107/94 Asscher [1996] ECR I-3089, paragraph 36).
20 In the present case, the Luxembourg Law provides that, as regards resident taxpayers, all of their income is taxable, the basis of assessment to tax not being limited to their Luxembourg activities.  Consequently, although there are exemptions under which a part or even, in certain cases, all of their income earned outside Luxembourg is not subject to tax in that country, the basis for assessment for resident taxpayers at any rate includes profits and losses arising from their Luxembourg activities.
21 On the other hand, for the purpose of calculating the basis of assessment for non-resident taxpayers, only profits and losses arising from their Luxembourg activities are taken into account in calculating the tax payable by them in that State.
22 Such a system, which is in conformity with the fiscal principle of territoriality, cannot be regarded as entailing any discrimination, overt or covert, prohibited by the Treaty.
The second condition: keeping of accounts
24 Such a condition may constitute a restriction, within the meaning of Article 52 of the Treaty, on the freedom of establishment of a company or firm which, in terms of Article 58 of the Treaty, is to be treated in the same way as a natural person who is a national of a Member State, where that company or firm wishes to establish a branch in a Member State different from that in which it has its seat.
26 Consequently, the imposition of such a condition, which specifically affects companies or firms having their seat in another Member State, is in principle prohibited by Article 52 of the Treaty.  It could only be otherwise if the measure pursued a legitimate aim compatible with the Treaty and were justified by pressing reasons of public interest.  Even if that were so, it would still have to be of such a nature as to ensure achievement of the aim in question and not go beyond what was necessary for that purpose (see, to this effect, the judgments in Case C-55/94 Gebhard [1995] ECR I-4165, paragraph 37; in Case C-19/92 Kraus [1993] ECR I-1663, paragraph 32; and in Case C-415/93 Bosman [1995] ECR I-4921, paragraph 104).
31 The Court has repeatedly held that the effectiveness of fiscal supervision constitutes an overriding requirement of general interest capable of justifying a restriction on the exercise of fundamental freedoms guaranteed by the Treaty (see, for example, the judgment in Case 120/78 REWE-Zentral (`Cassis de Dijon') [1979] ECR 649, paragraph 8).  A Member State may therefore apply measures which enable the amount of both the income taxable in that State and of the losses which can be carried forward there to be ascertained clearly and precisely.
41 Under Directive 77/799, the competent authorities of a Member State may always request the competent authorities of another Member State to provide them with all the information enabling them to ascertain, in relation to the legislation which they have to apply, the correct amount of revenue tax payable by a taxpayer having his residence in that other Member State.