Banque Fédérative du Crédit Mutuel v Ministre de l’Économie, des Finances et de l’Industrie.
Date: 2008-04-03
22. To answer that question, it is necessary to take account of the wording of the provision on which a ruling on interpretation is sought, as well as the objectives and the scheme of the directive (see, to that effect, Joined Cases C‑283/94, C‑291/94 and C‑292/94 Denkavit and Others  [1996] ECR I‑5063, paragraphs 24 and 26, and Case C‑375/98 Epson Europe  [2000] ECR I‑4243, paragraphs 22 and 24).
23. In that regard, it should be borne in mind that, as is particularly apparent from the third recital in the preamble thereto, the aim of the directive is to eliminate, by introducing a common system of taxation, any disadvantage to cooperation between companies of different Member States as compared with cooperation between companies of the same Member State and thereby to facilitate the grouping together of companies at Community level ( Denkavit and Others , paragraph 22; Epson Europe , paragraph 20; Case C‑294/99 Athinaiki Zithopiia [2001] ECR I‑6797, paragraph 25; Océ Van der Grinten , paragraph 45; and Case C‑446/04 Test Claimants in the FII Group Litigation  [2006] ECR I‑11753, paragraph 103).
24. The directive seeks thus to ensure the neutrality, from the tax point of view, of the distribution of profits by a subsidiary established in one Member State to its parent company established in another Member State.
25. In order to attain those objectives, Article 4(1) of the directive provides, in order to avoid double taxation, that, where a parent company receives, by virtue of its association with its subsidiary, distributed profits, the Member State of the parent company is either to refrain from taxing such profits, or to authorise the parent company to deduct from the amount of tax payable that fraction of the corporation tax paid by the subsidiary which relates to those profits and, if appropriate, the amount of the withholding tax levied by the Member State in which the subsidiary is resident, up to the limit of the amount of the corresponding domestic tax ( Test Claimants in the FII Group Litigation , paragraph 102).
26. Likewise, Article 5(1) of the directive provides, in order to avoid double taxation, for exemption in the State of the subsidiary from withholding tax upon distribution of profits to its parent company, at least where the latter holds a minimum of 25% of the capital of the subsidiary ( Denkavit and Others paragraph 22; Epson Europe , paragraph 20; Athinaiki Zithopiia , paragraph 25; and Océ Van der Grinten , paragraph 45).
27. The directive aims thus to avoid double taxation, in economic terms, of profits which a subsidiary established in one Member State distributes to its parent company established in another Member State, in other words, to avoid taxation of distributed profits, first, in the hands of the subsidiary and, then, in the hands of the parent company (see, to that effect, Athinaiki Zithopiia , paragraph 5).
31. Regarding the term ‘tax credit’, it should be pointed out that both the national court, in the grounds of its decision, and BFCM and the Commission of the European Communities, in the written observations which they have submitted to the Court, rely on the judgment in Océ Van der Grinten , in which the Court held that the tax credit in question in that case, namely an ‘ avoir fiscal’ , constitutes a fiscal instrument designed to avoid economic double taxation of profits distributed in the form of dividends and does not constitute income from shares (see Océ Van der Grinten , paragraph 56).
32. However, as the Advocate General noted at point 33 of her Opinion, the judgment in Océ Van der Grinten  dealt with a tax levied on a tax credit which did not possess the characteristics of a withholding tax on distributed profits (see Océ Van der Grinten , paragraph 55).
44. As the Advocate General noted at point 36 of her Opinion, the directive does not require a Member State to provide for the set off of such a withholding tax, where that Member State has, in accordance with Article 4(1) of the directive, opted for the exemption method. In that respect, a Member State which has opted for the exemption method cannot be criticised for offseting the withholding tax charged in the Member State of the subsidiary by the grant of a tax credit, while at the same time limiting the right to set off the tax credit to cases where the recipient parent company redistributes the dividends received within five years to its own shareholders.