Keywords
Summary

Keywords

Freedom of movement for persons - Freedom of establishment - Equal treatment - Direct taxation - Special levy on turnover - Undertakings exploiting proprietary medicinal products granted tax rebates - Limited to expenditure on research carried out in the levying State - Not permissible - The general interest pleaded in justification - Effectiveness of fiscal supervision specifically pleaded in justification - No such justification

(EC Treaty, Arts 52 (now, after amendment, Art. 43 EC) and 58 (now Art. 48 EC))

Summary

$$Articles 52 of the EC Treaty (now, after amendment, Article 43 EC) and 58 thereof (now Article 48 EC) preclude national legislation under which undertakings established in that State and exploiting proprietary medicinal products there are charged a special levy on pre-tax turnover derived from certain of those proprietary medicinal products during the last tax year before enactment of that legislation and are allowed to deduct from the amount payable only expenditure, incurred during the same tax year, on research carried out in the levying State, when such legislation applies to Community undertakings operating in that State through a secondary place of business.

The tax allowance in question seems likely to work more particularly to the detriment of undertakings of that kind, since, in most cases, those are the undertakings which will have developed their research activities outside the territory of the levying State. It thus leads to unequal treatment which cannot be justified by reference to the general interest - in the name of effectiveness of fiscal supervision, for instance - where that national legislation wholly prevents the taxpayer from submitting evidence that expenditure relating to research carried out in other Member States has actually been incurred.