DMC Beteiligungsgesellschaft mbH v Finanzamt Hamburg-Mitte.
Date: 2014-01-23
24. In that regard, it should be pointed out that, according to settled case‑law, questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious tha t the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (Joined Cases C‑78/08 to C‑80/08 Paint Graphos and Others  [2011] I‑7611, paragraph 31 and the case-law cited).
29. As regards the question whether national legislation falls within the scope of one or other of the freedoms of movement, according to well established case-law, it is the purpose of the legislation concerned that must be taken into consideration (see Case C157/05 Holböck  [2007] ECR I‑4051, paragraph 22, and Case C‑182/08 Glaxo Wellcome  [2009] ECR I‑8591, paragraph 36).
30. It is also clear from the case-law that the Court will in principle examine the measure in dispute in relation to only one of those two freedoms if it appears, in the circumstances of the main proceedings, that one of them is entirely secondary in relation to the other and may be considered together with it (Case C‑452/04 Fidium Finanz  [2006] ECR I‑9521, paragraph 34, and Glaxo Wellcome , paragraph 37).
31. The Court has held that national legislation not 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 but which applies irrespective of the size of the holding which the shareholder has in a company may fall within the scope of both Article 49 TFEU and Article 63 TFEU (Case C‑543/08 Commission  v Portugal  [2010] ECR I‑11241, paragraph 43 and the case-law cited).
40. The fact that the unrealised gains relate to shares held by an investor who is no longer liable to tax in Germany in respect of the income he receives from those assets places the investor at a disadvantage in terms of cash flow by comparison with investors who remain liable to tax there, in so far as the conversion of interests in a limited partnership into shares in a capital company gives rise, in the first instance, to immediate taxation of the capital gains arising in relation to the interests concerned whereas, in the second instance, such gains are taxed only when they are actually realised. That different treatment as regards the taxation of capital gains is liable to deter investors who are not resident in Germany for tax purposes from contributing capital to a limited partnership governed by German law, since the conversion of an interest in that partnership into shares in a capital company will give rise to the tax disadvantage referred to above (see, to that effect, Case C‑371/10 National Grid Indus  [2011] ECR I‑12273, paragraph 37).
41. Accordingly, the legislation at issue in the main proceedings is liable to deter such investors from having holdings in a limited partnership governed by German law, since they will be required, in the event of the subsequent conversion of their holdings into shares in a capital company, to pay immediately the tax on any profit in connection with the unrealised capital gain generated in Germany, if those investors are no longer, as a result of the conversion of their holdings, subject to such tax in the future in Germany.
42. The different treatment thus established cannot be explained by an objective difference of situation, contrary to what is claimed by the Finanzamt and the German Government. From the point of view of the legislation of a Member State aiming to tax capital gains generated in its territory, the situation of an investor who transfers his interest in a limited partnership established in that territory in return for shares in a capital company also established in that territory and who, as a result, is no longer subject to tax on any profit he may receive from the sale of those shares is similar to that of an investor who carries out the same transaction but remains subject to tax on any profit he may receive as regards the capital gains relating to the interest in the limited company which were generated in that Member State before the interest was exchanged (see, to that effect, National Grid Indus , paragraph 38).
43. It follows that the different treatment, under the legislation at issue in the main proceedings, of investors who hold an interest in a limited partnership that is converted into shares in a capital company and who, as a result of that transaction, are no longer liable to tax in Germany on the income they make in that Member State, as compared with investors who, in the same circumstances, remain liable to such tax, constitutes a restriction that is, in principle, prohibited by the provisions of the FEU Treaty on free movement of capital.
Whether the restriction on free movement of capital is justified
44. It is established case-law that a restriction of free movement of capital is permissible only if it is justified by overriding reasons in the public interest (Case C‑446/03 Marks & Spencer  [2005] ECR I‑10837, paragraph 35; Case C‑196/04 Cadbury Schweppes and Cadbury Schweppes Overseas  [2006] ECR I‑7995, paragraph 47; Case C‑524/04 Test Claimants in the Thin Cap Group Litigation  [2007] ECR I‑2107, paragraph 64; and Case C‑303/07 Aberdeen Property Fininvest Alpha  [2009] ECR I‑5145, paragraph 57).
46. It should be recalled in this regard, first, that the preservation of the balanced allocation of the power to impose taxes between Member States is a legitimate objective recognised by the Court (see, to that effect, Marks & Spencer , paragraph 45; Case C‑470/04 N  [2006] ECR I‑7409, paragraph 42; Case C‑231/05 Oy AA  [2007] ECR I‑6373, paragraph 51; and Case C‑414/06 Lidl Belgium  [2008] ECR I‑3601, paragraph 31).
47. Secondly, it is settled case-law that, in the absence of any unifying or harmonising measures of the European Union, the 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 (Case C‑540/07 Commission  v Italy  [2009] ECR I‑10983, paragraph 29 and the case-law cited, and National Grid Indus , paragraph 45).
48. In that context, the conversion of an interest in a limited partnership into shares in a capital company cannot have the effect of requiring the Member State in which those entities are established to relinquish its right to tax a capital gain that was generated in its territory and fell within its tax jurisdiction before the conversion, on the ground that the capital gain has not in fact been realised.
49. The Court has thus held , in the context of the transfer of a company’s place of effective management from one Member State to another Member State, that the former State is – in accordance with the principle of fiscal territoriality, connected with a temporal component, namely the fact that the taxable person is resident for tax purposes within national territory during the period in which the capital gains arise – entitled to tax those gains at the time the tax payer leaves the country (see N , paragraph 46). Such a measure is intended to avoid situations capable of jeopardising the right of the Member State of origin to exercise its powers of taxation in relation to activities carried on in its territory, and may therefore be justified on grounds connected with the preservation of the balanced allocation of powers to impose taxes between the Member States (see Marks & Spencer , paragraph 46; Oy AA , paragraph 54; Case C‑311/08 SGI  [2010] ECR I‑487, paragraph 60; and National Grid Indus , paragraph 46).
52. On the one hand, the Court has held that a Member State is entitled to tax the economic value generated by an unrealised capital gain in its territory even if the gain concerned has not yet actually been realised ( National Grid Indus , paragraph 49).
53. On the other hand, Member States entitled to tax capital gains generated when the assets in question were in their territory have the power, for the purposes of such taxation, to make provision for a chargeable event other than the actual realisation of those gains, in order ensure that those assets are taxed (see, to that effect, Case C‑261/11 Commission  v Denmark [2013] ECR, paragraph 37).
56. However, the objective of preserving the balanced allocation of the powers to impose taxes between Member States can justify legislation such as that at issue in the main proceedings only where, in particular, the Member State in whose territory the income was generated is actually prevented from exercising its power of taxation in respect of such income.
60. It should be noted, at the outset, that it is proportionate for a Member State, for the purpose of safeguarding the exercise of its powers of taxation, to determine the tax due on the unrealised capital gains that have arisen in its territory at the time when its powers of taxation in respect of the investor in question cease to exist, namely, in the present case, at the time when the investor converts his interest in a limited partnership into shares in a capital company (see, to that effect, National Grid Indus , paragraph 52).
61. With regard to the collection of the tax due in respect of the unrealised capital gains, the Court has held that it is appropriate to give the taxable person a choice between, first, immediate payment of the amount of tax due on the unrealised capital gains relating to the assets held by that person and, second, deferred payment of that tax, possibly together with interest in accordance with the applicable national legislation (see, to that effect, Nation Grid Indus , paragraph 73, and Case C‑38/10 Commission  v Portugal  [2012] ECR, paragraphs 31 and 32).
64. Accordingly, by giving the tax payer the choice between immediate recovery or recovery spread over a period of five years, the legislation at issue in the main action does not go beyond what is necessary to attain the objective of the preservation of the balanced allocation of the power to impose taxes between Member States.
65. Lastly, with regard to the requirement to provide a bank guarantee, the Court has held that a Member State may take account of the risk of non-recovery of the tax in the national legislation applicable to deferred payments of tax debts (see, to that effect, National Grid Indus , paragraph 74).
66. However, such guarantees in themselves constitute a restrictive effect, in that they deprive the taxpayer of the enjoyment of the assets given as guarantee (Case C‑9/02 Lasteyrie du Saillant  [2004] ECR I‑2409, paragraph 47, and N , paragraph 36).
67. Therefore, such a requirement cannot, as a matter of principle, be imposed without prior assessment of the risk of non-recovery.