European Commission v French Republic.
Date: 2018-10-04
35


As the French Republic claims, EU law currently in force 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 in the European Union. Thus, each Member State remains free to organise its system for taxing distributed profits, provided that the system in question does not entail discrimination prohibited by the FEU Treaty (see, to that effect, judgment of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 40).
36


It should be recalled that, in the context of tax rules, such as those whose implementing rules are challenged by the Commission, which seek to prevent the economic double taxation of distributed profits, the situation of a corporate shareholder receiving foreign-sourced dividends is comparable to that of a corporate shareholder receiving nationally-sourced dividends in so far as, in each case, the profits made are, in principle, liable to be subject to a series of charges to tax (judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 62; of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 45; and of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 37).
37


Articles 49 and 63 TFEU require a Member State which has a system for the avoidance economic double taxation as regards dividends paid to residents by resident companies to accord equivalent treatment to dividends paid to residents by non-resident companies (judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 72; of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 60; and of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 38) unless a difference in treatment is justified by overriding reasons in the public interest (judgments of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 44, and of 11 September 2014, Kronos International, C‑47/12, EU:C:2014:2200, paragraph 69).
41


Indeed, the status of Member State of residence of the company receiving dividends cannot entail the obligation for that Member State to offset a fiscal disadvantage arising where a series of charges to tax is imposed entirely by the Member State in which the company distributing those dividends is established, in so far as the dividends received are neither taxed nor taken into account in a different way by the first Member State as regards companies established in that State (see, to that effect, judgment of 11 September 2014, Kronos International, C‑47/12, EU:C:2014:2200, paragraph 84).
43


The French Republic was therefore required, in order to bring an end to the discriminatory treatment thus found in the application of that tax mechanism seeking to avoid the economic double taxation of distributed dividends, to take into account the taxation levied earlier on the distributed profits resulting from the exercise of the tax powers of the Member State in which the dividends originated, within the limits of its own powers of taxation (see, to that effect, judgment of 11 September 2014, Kronos International, C‑47/12, EU:C:2014:2200, paragraph 86), irrespective of the level of the chain of interests on which that tax was levied, that is to say a subsidiary or a sub-subsidiary.
45


In that regard, the difference between the French mechanism, based on the grant of a tax credit in question in the present case and the UK mechanism at issue in the cases giving rise to the judgments of 12 December 2006, Test Claimants in the FII Group Litigation (C‑446/04, EU:C:2006:774), and of 13 November 2012, Test Claimants in the FII Group Litigation (C‑35/11, EU:C:2012:707), does not affect the principle recalled in the preceding paragraph. That difference concerns only the taxation method used to achieve the same objective, that is to say eliminating economic double taxation of distributed profits. Thus, each Member State remains free to organise its system for the avoidance of economic double taxation of distributed profits, in so far as the system in question does not entail discrimination prohibited by the FEU Treaty (see, to that effect, judgment of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 40).
58


It should be noted, first, that the tax authorities of a Member State are entitled to require the taxpayer to provide such proof as they may consider necessary in order to determine whether the conditions of a tax advantage provided for in the legislation at issue have been met and, consequently, whether to allow that advantage (see, to that effect, judgments of 3 October 2002, Danner, C‑136/00, EU:C:2002:558, paragraph 50; of 26 June 2003, Skandia and Ramstedt, C‑422/01, EU:C:2003:380, paragraph 43; of 27 January 2009, Persche, C‑318/07, EU:C:2009:33, paragraph 54; of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 95; of 30 June 2011, Meilickeand Others, C‑262/09, EU:C:2011:438, paragraph 45; and of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 82).
59


Second, in order to provide a practical remedy to the incompatibility of the French legislation with Articles 49 and 63 TFEU, as interpreted by the Court in its judgment of 15 September 2011, Accor (C‑310/09, EU:C:2011:581), the Court held that a Member State must be in a position to determine the amount of the corporation tax paid in the State in which the distributing company is established, which must be the subject of the tax credit granted to the recipient parent company, and stated that it is not sufficient to provide evidence that the distributing company has been taxed, in the Member State in which it is established, on the profits underlying the dividends distributed, without providing information relating to the nature and rate of the tax actually charged on those profits (judgment of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 92).
64


In that regard, it must be recalled that, in the context of proceedings brought under Article 258 TFEU for failure to fulfil obligations, it is for the Commission to prove the allegation that an obligation has not been fulfilled, by placing before the Court all the information required to enable the Court to establish that the obligation has not been fulfilled (judgment of 28 January 2016, Commission v Portugal, C‑398/14, EU:C:2016:61, paragraph 47).
74


It should be noted, as regards compliance with the principle of effectiveness that the evidence required should enable the tax authorities of the Member State of taxation to ascertain, clearly and precisely, whether the conditions for obtaining a tax advantage are met (see, to that effect, judgment of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 99).
75


In addition, the production of information relating, for each dividend to the tax rate actually applied and to the amount of tax actually paid on profits made by subsidiaries established in other Member States can only be required on condition that it is not virtually impossible or excessively difficult to furnish proof of payment of the tax by the subsidiaries established in the other Member States, in the light in particular of the provisions of the legislation of those Member States concerning the avoidance of double taxation, the recording of the corporation tax which must be paid and the retention of administrative documents (see, to that effect, judgment of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 100).
76


In that regard, the request for production of that information should be made within the statutory period for retention of administrative documents or accounts, as laid down by the law of the Member State in which the subsidiary is established. Thus, such a request cannot concern documents covering a period significantly longer than the statutory period for retention of administrative documents and accounts (see, to that effect, judgment of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 101).
107


Thus, a Member State’s failure to fulfil obligations may, in principle, be established under Article 258 TFEU whatever the agency of that State whose action or inaction is the cause of the failure to fulfil its obligations, even in the case of a constitutionally independent institution (judgments of 9 December 2003, Commission v Italy, C‑129/00, EU:C:2003:656, paragraph 29, and of 12 November 2009, Commission v Spain, C‑154/08, not published, EU:C:2009:695, paragraph 125).
108


Second, it must also be noted that, where there is no judicial remedy against the decision of a national court, that court is in principle obliged to make a reference to the Court within the meaning of the third paragraph of Article 267 TFEU where a question of the interpretation of the FEU Treaty is raised before it (judgment of 15 March 2017, Aquino, C‑3/16, EU:C:2017:209, paragraph 42).
109


Moreover, the obligation to make a reference laid down in that provision is intended in particular to prevent a body of national case-law that is not in accordance with the rules of EU law from being established in any of the Member States (judgment of 15 March 2017, Aquino, C‑3/16, EU:C:2017:209, paragraph 33 and the case-law cited).
110


Indeed, that court is not under such an obligation when it finds that the question raised is irrelevant or that the provision of EU law in question has already been interpreted by the Court or that the correct application of EU law is so obvious as to leave no scope for any reasonable doubt, and the existence of such a possibility must be assessed in the light of the specific characteristics of EU law, the particular difficulties to which its interpretation gives rise and the risk of divergences in judicial decisions within the European Union (see, to that effect, judgments of 6 October 1982, Cilfit and Others, 283/81, EU:C:1982:335, paragraph 21; of 9 September 2015, Ferreira da Silva e Brito and Others, C‑160/14, EU:C:2015:565, paragraphs 38 and 39; and of 28 July 2016, Association France Nature Environnement, C‑379/15, EU:C:2016:603, paragraph 50).
113


Consequently, there is no need to examine the other arguments put forward by the Commission in the context of the present complaint and it must be held that it was for the Conseil d’État (Council of State), as a court or tribunal against whose decisions there is no judicial remedy under national law, to request a preliminary ruling from the Court of Justice on the basis of the third paragraph of Article 267 TFEU in order to avert the risk of an incorrect interpretation of EU law (see, to that effect, judgment of 9 September 2015, Ferreira da Silva e Brito and Others, C‑160/14, EU:C:2015:565, paragraph 44).