Jacques Damseaux v Belgian State.
Date: 2009-07-16
22. It follows from the case-law that the Court does not have jurisdiction, under Article 234 EC, to rule on a possible infringement, by a contracting Member State, of provisions of bilateral conventions entered into by the Member States designed to eliminate or to mitigate the negative effects of the coexistence of national tax regimes (see, to that effect, Case C‑298/05 Columbus Container Services  [2007] ECR I‑10451, paragraph 46). Nor may the Court examine the relationship between a national measure and the provisions of a double taxation convention, such as the bilateral tax convention at issue in the main proceedings, since that question does not fall within the scope of the interpretation of Community law (see, to that effect, Case C‑141/99 AMID  [2000] ECR I‑11619, paragraph 18, and Columbus Container Services , paragraph 47).
24. In that regard, it must be borne in mind that, although direct taxation falls within their competence, Member States must none the less exercise that competence consistently with Community law (see, in particular, Case C‑446/03 Marks & Spencer  [2005] ECR I‑10837, paragraph 29; Case C‑196/04 Cadbury Schweppes and Cadbury Schweppes Overseas  [2006] ECR I‑7995, paragraph 40; Case C‑374/04 Test Claimants in Class IV of the ACT Group Litigation  [2006] ECR I‑11673, paragraph 36; and Case C‑379/05 Amurta  [2007] ECR I‑9569, paragraph 16).
25. It is, in particular, for each Member State to organise, in compliance with Community law, its system for taxing distributed profits and, in that context, to define the tax base and the tax rate which apply to the shareholder receiving them (see, in particular, Test Claimants in Class IV of the ACT Group Litigation , paragraph 50; Case C‑446/04 Test Claimants in the FII Group Litigation  [2006] ECR I‑11753, paragraph 47; and Case C‑194/06 Orange European Smallcap Fund [2008] ECR I‑3747, paragraph 30).
26. It follows, first, that the dividends distributed by a company established in one Member State to a shareholder residing in another Member State are liable to be subject to juridical double taxation where the two Member States choose to exercise their tax competence and to subject those dividends to taxation in the hands of the shareholder.
27. Second, the Court has already ruled that the disadavantages which could arise from the parallel exercise of tax competences by different Member States, to the extent that such an exercise is not discriminatory, do not constitute restrictions prohibited by the EC Treaty (see, to that effect, Kerckhaert and Morres , paragraphs 19, 20 and 24, and Orange European Smallcap Fund , paragraphs 41, 42 and 47).
28. Whilst abolition of double taxation within the European Community is one of the objectives of the Treaty, it must none the less be noted that, apart from the Convention of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (OJ 1990 L 225, p. 10), the Member States have not concluded any multilateral convention to that effect under Article 293 EC (see Case C‑336/96 Gilly  [1998] ECR I‑2793, paragraph 23).
29. Likewise, with the exception of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ 1990 L 225, p. 6) and Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments (OJ 2003 L 157, p. 38), no unifying or harmonising measure designed to eliminate cases of double taxation has as yet been adopted at Community-law level (see, in particular, Orange European Smallcap Fund , paragraph 32).
30. In the absence of any unifying or harmonising Community measures, Member States retain the power to define, by treaty or unilaterally, the criteria for allocating their powers of taxation, particularly with a view to eliminating double taxation (see Gilly , paragraphs 24 and 30; Case C‑307/97 Saint-Gobain ZN  [1999] ECR I‑6161, paragraph 57; Amurta , paragraph 17; and Orange European Smallcap Fund , paragraph 32). It is for the Member States to take the measures necessary to prevent situations of double taxation by applying, in particular, the criteria followed in international tax practice (see Kerckhaert and Morres , paragraph 23).
33. Even though such an attribution of powers complied, in particular, with the rules of international legal practice as reflected in the model tax convention on income and on capital drawn up by the Organisation for Economic Cooperation and Development (OECD), in particular Article 23B thereof, it is not in dispute that Community law, in its current state and in a situation such as that at issue in the main proceedings, does not lay down any general criteria for the attribution of areas of competence between the Member States in relation to the elimination of double taxation within the Community (see Kerckhaert and Morres , paragraph 22, and Columbus Container Services , paragraph 45).
34. Consequently, if a Member State cannot rely on a bilateral convention in order to avoid the obligations imposed on it by the Treaty (see Case C‑170/05 Denkavit Internationaal and Denkavit France [2006] ECR I‑11949, paragraph 53, and Amurta , paragraph 55), the fact that both the Member State in which the dividends are paid and the Member State in which the shareholder resides are liable to tax those dividends does not mean that the Member State of residence is obliged, under Community law, to prevent the disadvantages which could arise from the exercise of competence thus attributed by the two Member States.