Case C-311/08
Société de Gestion Industrielle (SGI)
v
État belge
(Reference for a preliminary ruling from the tribunal de première instance de Mons)
(Freedom of establishment – Free movement of capital – Direct taxation – Income tax legislation − Determination of the taxable income of companies − Companies having a relationship of interdependence − Unusual or gratuitous advantage granted by a resident company to a company established in another Member State − Addition of the amount of the advantage in question to the profits of the resident company which granted it − Balanced allocation of the power to tax between Member States − Combating tax avoidance − Prevention of abuse − Proportionality)
Summary of the Judgment
1. Freedom of movement for persons – Freedom of establishment – Provisions of the Treaty – Scope
(Arts 43 EC, 48 EC and 56 EC)
2. Community law – Principles – Equal treatment – Discrimination on grounds of nationality – Relationship between Article 12 EC and Articles 43 EC and 56 EC
(Arts 12 EC, 43 EC and 56 EC)
3. Freedom of movement for persons – Freedom of establishment – Tax legislation – Income tax
(Arts 43 EC and 48 EC)
1. Legislation of a Member State under which a resident company is taxed in respect of an unusual or gratuitous advantage where the advantage has been granted to a company established in another Member State with which it has, directly or indirectly, a relationship of interdependence, and is not so taxed where the advantage has been granted to another resident company with which it has such a relationship, must be examined in the light of Articles 43 EC and 48 EC alone, where the dispute concerned relates solely to the effect of the legislation in question on the tax treatment of a company which has with the other companies concerned a relationship of interdependence characterised by definite influence. Although such legislation is also capable of affecting the exercise of other freedoms of movement, and in particular the free movement of capital within the meaning of Article 56 EC, Articles 43 EC and 48 EC are nevertheless applicable in such a situation.
(see paras 30, 36-37)
2. Article 12 EC applies independently only to situations governed by Community law for which the EC Treaty lays down no specific rules of non-discrimination. Articles 43 EC and 56 EC lay down such specific rules on non‑discrimination in relation to freedom of establishment and the free movement of capital.
(see paras 31-32)
3. Article 43 EC, read in conjunction with Article 48 EC, must be interpreted as not precluding, in principle, legislation of a Member State under which a resident company is taxed in respect of an unusual or gratuitous advantage where the advantage has been granted to a company established in another Member State with which it has, directly or indirectly, a relationship of interdependence, whereas a resident company cannot be taxed on such an advantage where the advantage has been granted to another resident company with which it has such a relationship.
Such a difference in the tax treatment of resident companies based on the place where the companies receiving unusual or gratuitous advantages have their registered office constitutes a restriction on freedom of establishment within the meaning of Article 43 EC, read in conjunction with Article 48 EC. A resident company could be deterred from acquiring, creating or maintaining a subsidiary in another Member State or from acquiring or maintaining a substantial holding in a company established in that State because of the tax burden imposed, in a cross‑border situation, on the grant of advantages at which such legislation is directed. Moreover, such legislation is liable to have a restrictive effect on companies established in other Member States, since such a company could be deterred from acquiring, creating or maintaining a subsidiary in the Member State concerned or from acquiring or maintaining a substantial holding in a company established in that State because of the tax burden imposed there on the grant of the advantages at which that legislation is directed. There is, in any event, still a risk of double taxation in a cross‑border situation because the unusual or gratuitous advantages granted by a resident company which are added back to that company’s own profits may give rise to the recipient company being taxed thereon in the Member State in which it is established.
However, in the light of the need to maintain the balanced allocation of the power to tax between the Member States and to prevent tax avoidance, taken together, such legislation pursues legitimate objectives which are compatible with the Treaty and constitute overriding reasons in the public interest and is appropriate for ensuring the attainment of those objectives. To permit resident companies to transfer their profits in the form of unusual or gratuitous advantages to companies with which they have a relationship of interdependence that are established in other Member States may well undermine the balanced allocation of the power to impose taxes between the Member States. It would be liable to undermine the very system of the allocation of the power to impose taxes between Member States because, according to the choice made by companies having relationships of interdependence, the Member State of the company granting unusual or gratuitous advantages would be forced to renounce its right, in its capacity as the State of residence of that company, to tax its income in favour, possibly, of the Member State in which the recipient company has its establishment. By providing that the resident company is to be taxed in respect of an unusual or gratuitous advantage which it has granted to a company established in another Member State, the legislation in question permits the Member State concerned to exercise its tax jurisdiction in relation to activities carried out in its territory.
Moreover, to permit resident companies to grant unusual or gratuitous advantages to companies with which they have a relationship of interdependence that are established in other Member States, without making provision for any corrective tax measures, carries the risk that, by means of artificial arrangements, income transfers may be organised within companies having a relationship of interdependence towards those established in Member States applying the lowest rates of taxation or in Member States in which such income is not taxed.
However, it is for the national court to verify whether such legislation goes beyond what is necessary to attain the objectives pursued by the legislation, taken together. National legislation which provides for a consideration of objective and verifiable elements in order to determine whether a transaction represents an artificial arrangement, entered into for tax reasons, is to be regarded as not going beyond what is necessary to attain the objectives relating to the need to maintain the balanced allocation of the power to tax between the Member States and to prevent tax avoidance, taken together, where, first, on each occasion on which there is a suspicion that a transaction goes beyond what the companies concerned would have agreed under fully competitive conditions, the taxpayer is given an opportunity, without being subject to undue administrative constraints, to provide evidence of any commercial justification that there may have been for that transaction. Second, where the consideration of such elements leads to the conclusion that the transaction in question goes beyond what the companies concerned would have agreed under fully competitive conditions, the corrective tax measure must be confined to the part which exceeds what would have been agreed if the companies did not have a relationship of interdependence. In those circumstances, subject to verification to be carried out by the national court as regards the last two points, which concern the interpretation and application of national law, such national legislation is proportionate to the set of objectives pursued by it.
(see paras 44-45, 53, 55, 63-64, 67, 69-72, 75-76, operative part)