Royal Bank of Scotland plc v Elliniko Dimosio (Greek State).
Date: 1999-04-29
19 The first point to be made is that, although direct taxation falls within their competence, the Member States must none the less exercise that competence consistently with Community law and avoid any 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; Case C-107/94 Asscher [1996] ECR I-3089, paragraph 36; and Case C-250/95 Futura Participations and Singer [1997] ECR I-2471, paragraph 19).
20 Next, according to the case-law of the Court, the general prohibition of discrimination on grounds of nationality laid down by Article 7 of the EEC Treaty (now Article 6 of the EC Treaty) has been implemented, in the particular fields which they govern, by Articles 48, 52 and 59 of the Treaty.  Consequently, any rules incompatible with those provisions are also incompatible with Article 6 of the Treaty (Case 305/87 Commission v Greece [1989] ECR 1461, paragraph 12).  Article 6 of the EC Treaty therefore applies independently only to situations governed by Community law in regard to which the Treaty lays down no specific non-discrimination rules (Commission v Greece, cited above, paragraph 13, and Case C-1/93 Halliburton Services [1994] ECR I-1137, paragraph 12).
22 Article 52 of the Treaty constitutes one of the fundamental provisions of Community law and has been directly applicable in the Member States since the end of the transitional period.  Under that provision, freedom of establishment for nationals of one Member State on the territory of another Member State includes the right 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 country where such establishment is effected.  The abolition of restrictions on freedom of establishment also applies to restrictions on the setting up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of another Member State (Case 270/83 Commission v France [1986] ECR 273, paragraph 13).
23  Freedom of establishment, which Article 52 accords to nationals of any Member State and which for them includes the right to take up and pursue activities as self-employed persons under the conditions laid down for its own nationals by the law of the country where such establishment is effected, includes, pursuant to Article 58 of the EC Treaty, the right of companies or firms formed in accordance with the law of a Member State and having their seat registered office, central administration or principal place of business within the Community to pursue their activities in the Member State concerned through a branch or agency.  With regard to companies, it should be noted in this context that it is their seat in the abovementioned sense that serves as the connecting factor with the legal system of a particular State, like nationality in the case of natural persons.  Acceptance of the proposition that the Member State in which a company seeks to establish itself may freely apply to it different treatment solely by reason of the fact that its seat is situated in another Member State would thus deprive that provision of all meaning (Commission v France, cited above, paragraph 18).
26 In order to determine whether a difference in tax treatment such as that resulting from Article 109 of the Code is discriminatory, it is necessary to ascertain whether, for the purposes of the taxation of profits earned in Greece, a company having its seat in Greece and a branch established in Greece of a company having its seat in another Member State are in an objectively comparable situation.  It is settled case-law that discrimination consists in the application of different rules to comparable situations or in the application of the same rule to different situations (see, for example, Schumacker, cited above, paragraph 30; Wielockx, cited above, paragraph 17; and Asscher, cited above, paragraph 40).
27 As far as direct taxation is concerned, the Court has held, in cases relating to the taxation of income of natural persons, that the situations of residents and non-residents in a given State are not generally comparable, since there are objective differences between them from the point of view of the source of the income and the possibility of taking account of their ability to pay tax or their personal and family circumstances (Schumacker, cited above, paragraphs 31 to 32; Wielockx, cited above, paragraph 18; and Asscher, cited above, paragraph 41). However, it has explained that, in the case of a tax advantage denied to non-residents, a difference in treatment between the two categories of taxpayer might constitute discrimination within the meaning of the Treaty where there is no objective difference such as to justify different treatment on this point as between the two categories of taxpayers (Schumacker, cited above, paragraphs 36 to 38, and Asscher, cited above, paragraph 42).
32 Finally, it is necessary to examine whether discrimination such as that in question in the main proceeding may be justified.  According to settled case-law, only an express derogating provision, such as Article 56 of the EC Treaty, could render such discrimination compatible with Community law (see Case 352/85 Bond van Adverteerders and Others [1988] ECR 2085, paragraphs 32 and 33, and Case C-288/89 Stichting Collectieve Antennevoorziening Gouda and Others [1991] ECR I-4007, paragraph 11).