Action brought on 13 February 2012 — European Commission v French Republic

(Case C-76/12)

2012/C 133/29

Language of the case: French

Parties

Applicant: European Commission (represented by: W. Roels and C. Soulay, Agents)

Defendant: French Republic

Form of order sought

Pleas in law and main arguments

By its action, the Commission challenges the difference in the tax treatment of dividends paid by French companies to undertakings for collective investment in transferable securities (UCITS) depending on whether those UCITS are resident or non-resident in France. One of the elements of the tax regime applied to UCITS resident in France is the fact that the latter are not subject to tax in respect of dividends distributed to them by French companies. By contrast, pursuant to Article 119a (2) of the French General Tax Code (Code général des impôts), a withholding tax is applied to dividends distributed by French companies to non-resident UCITS. The Commission takes the view that the differing tax treatment applied to resident and to non-resident UCITS, although they are in an objectively comparable situation irrespective of their State of residence, constitutes an obstacle to the free movement of capital, and that that obstacle is not justified by the effectiveness of fiscal supervision or by the need to safeguard a balanced apportionment of the power to tax.

The Commission notes that, according to settled case-law as set out in particular in the judgments in Case C-540/07 Commission v Italy [2009] ECR I-10983 and Case C-284/09 Commission v Germany [2011], the Court has held that Member States which subject dividends distributed to companies established in other Member States to a tax regime which is less favourable than that applied to dividends distributed to resident companies, without that difference in treatment being justified by objectively different situations or by overriding reasons in the general interest, have failed to fulfil their obligations in respect of the free movement of capital.