Eqiom SAS, formerly Holcim France SAS and Enka SA v Ministre des Finances et des Comptes publics.
Date: 2017-09-07
15


Given that the questions referred concern both the provisions of the Parent-Subsidiary Directive and those of the Treaty and that, according to settled case-law, any national measure in an area which has been the subject of exhaustive harmonisation at the level of the European Union must be assessed in the light of the provisions of that harmonising measure, and not in the light of the provisions of primary law (judgment of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraph 19 and the case-law cited), it is necessary to determine first of all whether Article 1(2) of the Parent-Subsidiary Directive carries out such harmonisation.
16


In that regard, it should be noted that it is clear from the wording of that provision that such is not the case.
17


Article 1(2) of the Parent-Subsidiary Directive recognises solely the Member States’ power to apply domestic or agreement-based provisions required for the prevention of fraud and abuse. It follows that such provisions may therefore be assessed in the light of primary EU law.
20


As is apparent from the third recital thereof, the Parent-Subsidiary Directive seeks, by the introduction of a common tax system, to eliminate 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 EU level. That directive thus seeks to ensure the neutrality, from the tax point of view, of the distribution of profits by a company established in one Member State to its parent company established in another Member State (judgment of 8 March 2017, Wereldhave Belgium and Others, C‑448/15, EU:C:2017:180, paragraph 25 and the case-law cited).
22


On that basis, in order to avoid double taxation, Article 5(1) of that directive establishes the principle that withholding taxes on profits distributed by a subsidiary established in one Member State to its parent company established in another Member State are prohibited (see, in that regard, judgments of 17 October 1996, Denkavit and Others, C‑283/94, C‑291/94 and C‑292/94, EU:C:1996:387, paragraph 22, and of 25 September 2003, Océ van der Grinten, C‑58/01, EU:C:2003:495, paragraph 83).
23


By precluding Member States from imposing withholding tax on the profits distributed by a resident subsidiary to its non-resident parent company, Article 5(1) of the Parent-Subsidiary Directive limits the powers of the Member States regarding the taxation of profits distributed by companies established in their territory to companies established in another Member State (see, to that effect, judgment of 1 October 2009, Gaz de France — Berliner Investissement, C‑247/08, EU:C:2009:600, paragraph 38).
24


The Member States cannot, therefore, unilaterally introduce restrictive measures and subject the right to exemption from withholding tax provided by Article 5(1) of that directive to various conditions (see, to that effect, order of 4 June 2009, KBC Bank and Beleggen, Risicokapitaal, Beheer, C‑439/07 and C‑499/07, EU:C:2009:339, paragraph 38 and the case-law cited).
26


As the Advocate General stated in points 24 and 25 of her Opinion, although Article 1(2) of the Parent-Subsidiary Directive reflects the general principle of EU law that no one may benefit from the rights stemming from the legal system of the European Union for abusive or fraudulent ends, it must nevertheless, in so far as it constitutes a derogation from the tax rules established by that directive, be interpreted strictly (see, to that effect, judgment of 25 September 2003, Océ van der Grinten, C‑58/01, EU:C:2003:495, paragraph 86).
27


Therefore, the power conferred on the Member States by Article 1(2) of the Parent-Subsidiary Directive to apply, in the field governed by that directive, domestic or agreement-based provisions in order to prevent fraud and abuse cannot be given an interpretation going beyond the actual terms of that provision (see, to that effect, judgment of 25 September 2003, Océ van der Grinten, C‑58/01, EU:C:2003:495, paragraph 86).
30


In that context, it should be noted that, in order for national legislation to be regarded as seeking to prevent tax evasion and abuses, its specific objective must be to prevent conduct involving the creation of wholly artificial arrangements which do not reflect economic reality, the purpose of which is unduly to obtain a tax advantage (see, to that effect, judgments of 12 September 2006, Cadbury Schweppes and Cadbury Schweppes Overseas, C‑196/04, EU:C:2006:544, paragraph 55, and of 5 July 2012, SIAT, C‑318/10, EU:C:2012:415, paragraph 40).
31


Therefore, a general presumption of fraud and abuse cannot justify either a fiscal measure which compromises the objectives of a directive, or a fiscal measure which prejudices the enjoyment of a fundamental freedom guaranteed by the treaties (judgments of 26 September 2000, Commission v Belgium, C‑478/98, EU:C:2000:497, paragraph 45 and the case-law cited, and of 5 July 2012, SIAT, C‑318/10, EU:C:2012:415, paragraph 38).
32


In order to determine whether an operation pursues an objective of fraud and abuse, the competent national authorities may not confine themselves to applying predetermined general criteria, but must carry out an individual examination of the whole operation at issue. The imposition of a general tax measure automatically excluding certain categories of taxpayers from the tax advantage, without the tax authorities being obliged to provide even prima facie evidence of fraud and abuse, would go further than is necessary for preventing fraud and abuse (see, to that effect, judgment of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraphs 55 and 56).
35


Moreover, it should be pointed out that such a company is, in any event, subject to the tax legislation of the Member State in which it is established (see, to that effect, judgment of 12 December 2002, Lankhorst-Hohorst, C‑324/00, EU:C:2002:749, paragraph 37 and the case-law cited).
39


It is apparent from the Court’s case-law that the issue of the tax treatment of dividends equally may fall within the scope of freedom of establishment as well as within the free movement of capital (judgment of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 30 and the case-law cited).
40


As regards the question whether national legislation falls within the scope of one or other of the freedoms of movement, the purpose of the legislation concerned must be taken into consideration (judgment of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 31 and the case-law cited).
41


In that regard, the Court has already held that national legislation intended to apply only to those shareholdings which enable the holder to exert a definite influence on a company’s decisions and to determine its activities falls within the provisions of the Treaty on freedom of establishment. However, national provisions which apply to shareholdings acquired solely with the intention of making a financial investment without any intention to influence the management and control of the undertaking must be examined exclusively in light of the free movement of capital (judgment of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 32 and the case-law cited).
43


As the Advocate General noted in point 42 of her Opinion, such a shareholding does not necessarily imply that the company holding those shares exercises a definite influence over the decisions of the company distributing the dividends (see, to that effect, judgment of 13 April 2000, Baars, C‑251/98, EU:C:2000:205, paragraph 20).
44


In such circumstances, it is necessary to take account of the facts of the case in point in order to determine whether the situation to which the dispute in the main proceedings relates falls within the scope of one or other of those freedoms of movement (see, to that effect, judgment of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraphs 93 and 94).
48


The Court has already ruled that it does not follow from any provision of European Union law that the origin of the shareholders, be they natural or legal persons, of companies resident in the European Union affects that right, since the status of being a European Union company is based, under Article 54 TFEU, on the location of the corporate seat and the legal order where the company is incorporated, not on the nationality of its shareholders (judgment of 1 April 2014, Felixstowe Dock and Railway Company and Others, C‑80/12, EU:C:2014:200, paragraph 40).
52


Freedom of establishment, which Article 49 TFEU grants to European Union nationals, includes the right for them to take up and pursue activities as self‑employed persons and to set up and manage undertakings under the conditions laid down for its own nationals by the law of the Member State where such establishment is effected. It entails, in accordance with Article 54 TFEU, for companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the European Union, the right to exercise their activity in the Member State concerned through a subsidiary, a branch or an agency (judgment of 17 July 2014, Nordea Bank Danmark, C‑48/13, EU:C:2014:2087, paragraph 17 and the case-law cited).
53


As regards treatment in the host Member State, the case-law of the Court holds that, since the second sentence of the first paragraph of Article 49 TFEU expressly leaves economic operators free to choose the appropriate legal form in which to pursue their activities in another Member State, that freedom of choice must not be limited by discriminatory tax provisions (judgment of 17 May 2017, X, C‑68/15, EU:C:2017:379, paragraph 40 and the case-law cited).
54


Moreover, all measures which prohibit, impede or render less attractive the exercise of freedom of establishment must be considered to be restrictions on that freedom (judgment of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraph 59 and the case-law cited).
57


That restriction is permissible only if it relates to situations which are not objectively comparable or if it is justified by overriding reasons in the public interest recognised by EU law. It is further necessary, in such a case, that the restriction be appropriate for ensuring the attainment of the objective that it pursues and not go beyond what is necessary to attain it (judgment of 17 December 2015, Timac Agro Deutschland, C‑388/14, EU:C:2015:829 paragraphs 26 and 29 and the case-law cited).
59


Although the Court considered, as regards measures provided for by a Member State in order to prevent or mitigate a series of liabilities to tax or the double taxation of profits distributed by a resident company, that the resident shareholders receiving dividends are not necessarily in a situation which is comparable to that of shareholders receiving dividends who are resident in another Member State, it also stated that, since a Member State exercises its power to tax not only over the income of resident shareholders, but also over that of non-resident shareholders, from dividends which they receive from a resident company, the situation of those non-resident shareholders becomes comparable to that of the resident shareholders (judgment of 14 December 2006, Denkavit Internationaal and Denkavit France, C‑170/05, EU:C:2006:783, paragraphs 34 and 35 and the case-law cited).
63


In that regard, it should be noted, first, that the objectives of combating fraud and tax evasion and of seeking to safeguard a balanced allocation of taxation powers between the Member States are connected (judgment of 17 December 2015, Timac Agro Deutschland, C‑388/14, EU:C:2015:829, point 47 and the case-law cited) and, secondly, because they constitute overriding reasons in the public interest, they are capable of justifying a restriction on the exercise of freedom of movement guaranteed by the Treaty (judgment of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraph 65 and the case-law cited).
64


However, it must be noted that the objective of combating fraud and tax evasion, whether it is relied on under Article 1(2) of the Parent-Subsidiary Directive or as justification for an exception to primary law, has the same scope. Therefore, the findings set out in paragraphs 30 to 36 of the present judgment also apply with regard to that freedom.