SECIL - Companhia Geral de Cal e Cimento SA v Fazenda Pública.
Date: 2016-11-24
24


In that respect, with regard to movements of capital between Member States and non-member States, the Court has held that Article 63(1) TFEU lays down a clear and unconditional prohibition for which no implementing measure is needed and which confers rights on individuals which they can rely on before the courts (judgments of 14 December 1995, Sanz de Lera and Others, C‑163/94, C‑165/94 and C‑250/94, EU:C:1995:451, paragraphs 41 and 47, and of 18 December 2007, A, C‑101/05, EU:C:2007:804, paragraph 21). That provision, read in conjunction with Articles 64 and 65 TFEU, may therefore be relied on before national courts and may render national rules that are inconsistent with it inapplicable, irrespective of the category of capital movement in question (judgment of18 December 2007, A, C‑101/05, EU:C:2007:804, paragraph 27, and order of 4 June 2009, KBC Bank and Beleggen, Risicokapitaal, Beheer, C‑439/07 and C‑499/07, EU:C:2009:339, paragraph 66 and the case-law cited).
31


As follows from the Court’s case-law, the tax treatment of dividends may fall within the scope of Article 49 TFEU on the freedom of establishment and Article 63 TFEU on the free movement of capital. 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 (see, to that effect, judgments of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraphs 89 and 90 and the case-law cited, and of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraph 25).
32


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 scope of Article 49 TFEU on freedom of establishment (judgment of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 91 and the case-law cited).
33


By contrast, 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 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 92).
34


The Court has held that, in a context relative to the tax treatment of dividends originating in a non-member State, it is sufficient to examine the purpose of national legislation in order to determine whether the tax treatment of such dividends falls within the scope of the provisions of the Treaty on the free movement of capital (see, to that effect, judgment of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraph 29 and the case-law cited).
35


In that regard, the Court has stated that national legislation relating to the tax treatment of dividends which does not apply exclusively to situations in which the parent company exercises decisive influence over the company paying the dividends must be assessed in the light of Article 63 TFEU. A company established in a Member State may therefore rely on that provision in order to call into question the legality of such legislation, irrespective of the size of its shareholding in the company paying dividends established in a non-member State (see, to that effect, judgment of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraph 30 and the case-law cited).
40


As regards, in particular, the conditions relating to obtaining the full deduction, the Court has held that a threshold of 10% indeed serves to exclude from the scope of the fiscal advantage shareholdings acquired solely with the intention of making a financial investment without any intention to influence the management and control of the undertaking, but does not in itself make the deduction applicable only to those shareholdings which enable the holder to exert a definite influence on a company’s decisions and to determine its activities (judgment of 11 September 2014, Kronos International, C‑47/12, EU:C:2014:2200, paragraph 34 and 35). The Court considered that a holding of such a size does not necessarily imply that the owner of the holding exerts a definite influence over the decisions of the company in which it is a shareholder (see, to that effect, judgments of 3 October 2013, Itelcar, C‑282/12, EU:C:2013:629, paragraph 22, and of 11 September 2014, Kronos International, C‑47/12, EU:C:2014:2200, paragraph 35).
42


It must also be borne in mind that, since the Treaty does not extend freedom of establishment to non-member States, it is important to ensure that the interpretation of Article 63(1) TFEU as regards relations with those states does not enable economic operators who do not fall within the territorial scope of freedom of establishment to profit from that freedom (judgments of 11 September 2014, Kronos International, C‑47/12, EU:C:2014:2200, paragraph 53 and the case-law cited, and of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraph 31).
45


It follows from settled case-law that the measures prohibited by Article 63(1) TFEU, as restrictions on the movement of capital, include those that are such as to discourage non-residents from making investments in a Member State or to discourage that Member State’s residents from doing so in other States (judgment of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 50 and the case-law cited).
50


That difference in treatment is liable to discourage companies resident in Portugal from investing their capital in companies established in non-member States such as the Republic of Tunisia and the Republic of Lebanon. To the extent that the income from capital originating in non-member States receives less favourable tax treatment than dividends distributed by companies established in Portugal, the shares of companies established in non-member States are less attractive to investors residing in Portugal than those of companies with their seat in that Member State (see, to that effect, judgment of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 64, and of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 80).
53


In so far as Article 65(1)(a) TFEU is a derogation from the fundamental principle of the free movement of capital, it must be interpreted strictly. It cannot therefore be interpreted as meaning that all tax legislation which draws a distinction between taxpayers on the basis of their place of residence or the State in which they invest their capital is automatically compatible with the FEU Treaty. Indeed, the derogation in Article 65(1)(a) TFEU is itself limited by Article 65(3) TFEU, which provides that the national provisions referred to in paragraph 1 of that Article ’shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 63 [TFEU]’ (judgment of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraphs 55 and 56 and the case-law cited).
54


A distinction must therefore be made between the differences in treatment authorised by Article 65(1)(a) TFEU and discrimination prohibited by Article 65(3) TFEU. It is clear from the Court’s case-law that, before national tax legislation such as that at issue in the main proceedings may be regarded as compatible with the provisions of the Treaty on the free movement of capital, the difference in treatment must concern situations not objectively comparable or be justified by an overriding reason in the public interest (judgment of 10 May 2012, Santander Asset Management SGIIC and Others, C‑338/11 to C‑347/11, EU:C:2012:286, paragraph 23 and the case-law cited).
55


According to settled case-law, with regard to tax rules, such as those at issue in the main proceedings, which seek to prevent or mitigate the economic double taxation of distributed profits, the situation of a corporate shareholder receiving dividends sourced in a non-member State 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 (see, to that effect, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 84 and the case-law cited).
56


The restriction can therefore be justified only by overriding reasons in the public interest. 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, paragraph 29 and the case-law cited).
58


According to the case-law, the prevention of tax evasion is an overriding reason in the public interest, capable of justifying a restriction on the exercise of freedom of movement guaranteed by the Treaty (see, inter alia, judgment of 11 October 2007, ELISA, C‑451/05, EU:C:2007:594, paragraph 81) as is the need to guarantee the effectiveness of fiscal supervision (see, in particular, judgment of 18 December 2007, A, C‑101/05, EU:C:2007:804, paragraph 55, and of 5 July 2012, SIAT, C‑318/10, EU:C:2012:415, paragraph 36 and the case-law cited).
59


As regards, in the first place, the arguments relating to the need to prevent tax evasion, according to settled case-law, a national measure restricting the free movement of capital may be justified by such an overriding reason in the public interest where it specifically targets wholly artificial arrangements which do not reflect economic reality and the sole purpose of which is to avoid the tax normally payable or to obtain a tax advantage on the profits generated by activities carried out on the national territory (see, to that effect, judgments of 17 September 2009, Glaxo Wellcome, C‑182/08, EU:C:2009:559, paragraph 89, and of 3 October 2013, C‑282/12, Itelcar, EU:C:2013:629, paragraph 34 and the case-law cited).
60


In those circumstances, the mere fact that the company distributing the dividends has its seat in a non-member State cannot set up a general presumption of tax evasion and justify a measure which compromises the exercise of a fundamental freedom guaranteed by the Treaty (see, by analogy, judgment of 19 July 2012, A, C‑48/11, EU:C:2012:485, paragraph 32 and the case-law cited).
63


As regards, in the second place, the need to ensure the effectiveness of fiscal supervision, it should be pointed out that movements between Member States and non-member States fall within a legal context different from that in force within the Union and that the framework for cooperation between the competent authorities of the Member States established by Directive 77/799, as amended by Council Directive 2006/98 of 20 November 2006 (OJ 2006 L 363, p. 129), in force at the material time in the main proceedings, and by Council Directive 2011/16/EU of 15 February 2011, on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC (OJ 2011 L 64, p. 1), does not exist between those authorities and the competent authorities of a non-member State where that State has not entered into any undertaking of mutual assistance (judgment of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraphs 65 and 66).
64


It is the Court’s settled case-law that, therefore, where the legislation of a Member State makes a more advantageous tax system dependent on the satisfaction of requirements, compliance with which can be verified only by obtaining information from the competent authorities of a non-member State, it is, in principle, legitimate for that Member State to refuse to grant that advantage if, in particular, because that non-member State is not under any obligation pursuant to a convention or agreement to provide information, it proves impossible to obtain such information from that non-member State (judgment of 17 October 2013, Welte, C‑181/12, EU:C:2013:662, paragraph 63 and the case-law cited).
75


Although the concept of ‘direct investment’ is not defined by the Treaty, it has nevertheless been defined in the nomenclature of the capital movements set out in Annex I to Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (article repealed by the Treaty of Amsterdam) (OJ 1988 L 178, p. 5). As the list of ‘direct investments’ in the first section of that nomenclature and the relative explanatory notes show, that concept concerns investments of any kind undertaken by natural or legal persons and which serve to establish or maintain lasting and direct links between the persons providing the capital and the undertakings to which that capital is made available in order to carry out an economic activity (judgment of 24 May 2007, Holböck, C‑157/05, EU:C:2007:297, paragraphs 33 and 34 and the case-law cited).
76


As regards shareholdings in new or existing undertakings, constituted as companies limited by shares, as the explanatory notes mentioned in the previous paragraph of this judgment confirm, the objective of establishing or maintaining lasting economic links presupposes that the shares held by the shareholder enable him, either pursuant to the provisions of the national laws relating to companies limited by shares or in some other way, to participate effectively in the management of that company or in its control (judgment of 24 May 2007, Holböck, C‑157/05, EU:C:2007:297, paragraph 35 and the case-law cited).
77


According to the case-law, the restrictions on capital movements involving establishment or direct investment within the meaning of Article 64(1) TFEU extend not only to national measures which, in their application to capital movements to or from non-member States, restrict establishment or investment, but also to those which restrict payments of dividends deriving from them (judgment of 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 103 and the case-law cited).
78


It follows that a restriction on capital movements, such as a less favourable tax treatment of foreign-sourced dividends, comes within the scope of Article 64(1) TFEU, inasmuch as it relates to holdings acquired with a view to establishing or maintaining lasting and direct economic links between the shareholder and the company concerned and which allow the shareholder to participate effectively in the management of the company or in its control (judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 185, and of 24 May 2007, Holböck, C‑157/05, EU:C:2007:297, paragraph 37).
81


It is clear from case-law that the concept of a ‘restriction which existed on 31 December 1993’ presupposes that the legal provisions relating to the restriction in question have formed part of the legal order of the Member State concerned continuously since that date. If that were not the case, a Member State could, at any time, reintroduce restrictions on the movement of capital to or from non-member States which existed as part of the national legal order on 31 December 1993 but had not been maintained (judgment of 18 December 2007, A, C‑101/05, EU:C:2007:804, paragraph 48).
82


It is also apparent from the case-law that while it is, in principle, for the national court to determine the content of the legislation which existed on a date laid down by a Union measure, it is for the Court of Justice to provide guidance on interpreting the concept of Union law which constitutes the basis of a derogation under Union law for national legislation ‘existing’ on a particular date (see, to that effect, judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 191, and of 10 April 2014, Emerging Markets Series of DFA Investment Trust Company, C‑190/12, EU:C:2014:249, paragraph 47).
84


In so far as the adoption of those two schemes has not altered the legal framework relating to the tax treatment of dividends from Tunisia and Lebanon, their adoption has not affected the classification, as an existing restriction, of the exclusion of dividends paid by companies established in such non-member States from the possibility of benefiting from a full or partial deduction of the tax (see, to that effect, judgment of 18 December 2007, A, C‑101/05, EU:C:2007:804, paragraph 51).
86


In that regard, it must be noted that Article 64(1) TFEU enshrines the power of the Member State, in its relations with non-member States, to apply restrictions on capital movements which come within the substantive scope of that provision, even though they contravene the principle of the free movement of capital laid down under Article 63(1) TFEU, provided that those restrictions already existed on 31 December 1993 (judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 187, and of 24 May 2007, Holböck, C‑157/05, EU:C:2007:297, paragraph 39).
87


A Member State waives such a power when it repeals the provisions which gave rise to the restriction in question. Article 64(1) TFEU does not cover provisions which, whilst in substance identical to legislation which existed on 31 December 1993, have reintroduced an obstacle to the free movement of capital which, following the repeal of the earlier legislation, no longer existed (see, to that effect, judgment of 18 December 2007, A, C‑101/05, EU:C:2007:804, paragraph 49).
88


A Member State also waives such a power when it adopts provisions which alter the logic underlying the earlier legislation. In that regard, it is clear from the case-law that, when assessing the power of a Member State to invoke Article 64(1) TFEU, the aspects relating to the form of the act constituting a restriction are secondary in relation to the aspects concerning the substance of that restriction. A national measure adopted after 31 December 1993 is not, for that reason alone, automatically excluded from the derogation provided for in Article 64(1) TFEU. That regime covers the provisions which, in their substance, are identical to previous legislation or which merely reduce or eliminate an obstacle to the exercise of Community rights and freedoms in earlier legislation but excludes provisions which are based on a logic different from that of the earlier law and introduce new procedures (see, to that effect, judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 192, and of 24 May 2007, Holböck, C‑157/05, EU:C:2007:297, paragraph 41).
94


As a preliminary point, it must be recalled that, according to settled case-law, an international treaty must be interpreted not solely by reference to the terms in which it is worded but also in the light of its objectives. Article 31 of the Vienna Convention on the Law of Treaties of 23 May 1969 (United Nations Treaty Series, vol. 1155, p. 331) provides in that respect that a treaty is to be interpreted in good faith in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose (see, to that effect, inter alia, judgment of 25 February 2010, Brita, C‑386/08, EU:C:2010:91, paragraphs 42 and 43 and the case-law cited).
95


In respect of the question of the direct effect of an agreement within the legal systems of the parties, the Court has ruled that when that question has not been addressed in the agreement itself, it is for the Court to resolve that question in the same way as any other question of interpretation concerning the application of agreements within the Union (judgment of 14 December 2006, Gattoussi, C‑97/05, EU:C:2006:780, paragraph 24 and the case-law cited). That is the case in respect of both the EC-Tunisia and EC-Lebanon agreements.
96


According to settled case-law, a provision in an agreement concluded by the Union with a non-member State must be regarded as having direct effect where, regard being had to its wording and to the purpose and nature of that agreement, the provision lays down a clear and precise obligation which is not subject, in its implementation or its effects, to the adoption of any subsequent measure (see, to that effect, inter alia, judgments of 27 September 2001, Gloszczuk, C‑63/99, EU:C:2001:488, paragraph 30; of 8 May 2003, Wählergruppe Gemeinsam, C‑171/01, EU:C:2003:260, paragraph 54; of 12 April 2005, Simutenkov, C‑265/03, EU:C:2005:213, paragraph 21, and of 14 December 2006, Gattoussi, C‑97/05, EU:C:2006:780, paragraph 25).
100


That provision lays down a precise obligation to produce a specific result, which may be relied on by an individual to apply to a national court to set aside the provisions at the origin of an obstacle to the free movement of capital or to apply, in its regard, the rules whose non-application is at the origin of that obstacle to the free movement of capital, without any further implementing measures being required for that purpose (see, by analogy, judgments of 27 September 2001, Kondova, C‑235/99, EU:C:2001:489, paragraph 34, and of 27 September 2001, Barkoci and Malik, C‑257/99, EU:C:2001:491, paragraph 34).
113


This difference in treatment is liable to discourage companies resident in Portugal from making direct investments in companies established in Tunisia. In so far as the capital income originating in that third country is subject to less favourable tax treatment than that reserved for dividends distributed by companies established in Portugal, the shares of companies established in Tunisia are less attractive to investors resident in Portugal than those of companies with their seat in that Member State (see, by analogy, judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 64, and of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 80).
125


That agreement does not aim at creating an internal market, comparable to that established by the FEU Treaty or establishing, like the Agreement on the European Economic Area of 2 May 1992 (OJ 1994 L 1, p. 3, ‘the EEA Agreement’), in the most complete way possible, the free movement of goods, persons, services and capital, so as to extend the internal market established in the Union to States which are parties to that agreement (see, to that effect, judgment of 23 September 2003, Ospelt and Schlössle Weissenberg, C‑452/01, EU:C:2003:493, paragraph 29).
131


In that regard, it must be held, first, that, by providing that, in the framework of the provisions of EC-Lebanon Agreement and subject to Articles 33 and 34 thereof, there are to be no restrictions between the Community, on the one hand, and the Republic of Lebanon, on the other hand, no restrictions on the movement of capital and no discrimination based on the nationality or on the place of residence of their nationals or on the place where such capital is invested, Article 31 of that agreement lays down, in clear and unconditional terms, a specific obligation as to the result to be achieved which may be relied on by an individual to request a national court to disapply the discriminatory provisions which impede the free movement of capital or to apply, in its regard, the rules whose non-application is at the origin of that obstacle to the free movement of capital, without any further implementing measures being required for that purpose (see, by analogy, judgments of 27 September 2001, Kondova, C‑235/99, EU:C:2001:489, paragraph 34, and of 27 September 2001, Barkoci and Malik, C‑257/99, EU:C:2001:491, paragraph 34).
132


The scope of the obligation under Article 31 of the EC-Lebanon Agreement is, admittedly, limited by the safeguard clause in Article 33(1) of that agreement. However, such an exception cannot preclude Article 31 from conferring on individuals rights which they may rely on before the courts (see, by analogy, judgment of 18 December 2007, A, C‑101/05, EU:C:2007:804, paragraph 26).
140


That difference in treatment with regard to the place where their capital is invested is liable to discourage companies resident in Portugal from making direct investments in companies established in Lebanon. In so far as the capital income originating in that third country is subject to less favourable tax treatment than that reserved for dividends distributed by companies established in Portugal, the shares of companies established in Lebanon are less attractive to investors resident in Portugal, than those of companies with their seat in that Member State (see, by analogy, judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 64, and of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 80).
141


In that regard, it must be recalled that it is settled case-law that with regard to a tax rule, such as that at issue in the main proceedings, which seeks to prevent or to mitigate the double economic taxation of distributed profits, the situation of a shareholder company receiving dividends sourced in a non-member State is comparable to that of a shareholder company 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 (see, by analogy, judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 62, and of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 84).
163


In that regard, according to the case-law, Article 63 TFEU requires a Member State which has a system for preventing economic double taxation as regards dividends paid to residents by other resident companies to accord equivalent treatment to dividends paid to residents by non-resident companies (see judgments 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 13 November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraph 38).
164


It is also clear from the case-law that the right to a refund of charges levied in a Member State in breach of the rules of Union law is the consequence and complement of the rights conferred on individuals by Union provisions as interpreted by the Court and the Member State is therefore required in principle to repay charges levied in breach of Union law (see judgment of 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraph 71 and the case-law cited).
165


The only exception to the right to repayment of taxes levied in breach of EU law is in a case in which a charge that was not due has been directly passed on by the taxable person to another person (see judgments of 6 September 2011, Lady & Kid and Others, C‑398/09, EU:C:2011:540, paragraph 18, and 15 September 2011, Accor, C‑310/09, EU:C:2011:581, paragraphs 72 and 74).
166


Furthermore, the Court has held that, where a Member State has levied taxes in breach of the rules of EU law, individuals are entitled to reimbursement not only of the tax unduly levied but also of the amounts paid to that State or retained by it which relate directly to that tax (see judgment of x15 September 2011, Nicula, C‑331/13, EU:C:2014:2285, paragraph 28 and the case-law cited).