Keywords
Summary

Keywords

Tax provisions – Harmonisation of laws – Indirect taxes on the raising of capital – Capital duty charged on capital companies

(Council Directive 69/335, Art. 5(3), second indent)

Summary

In accordance with the second indent of Article 5(3) of Directive 69/335 concerning indirect taxes on the raising of capital, as amended by the Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded, in determining the amount of capital duty chargeable on an increase in a company’s capital arising from the conversion into shares – following the accession of a Member State to the European Union on 1 May 2004 – of loans taken up by that company before that accession, account must be taken of the previous taxation of those loans on the basis of the national law in force at the material time.

The introduction into the law of a Member State of such a rule prohibiting the same amounts from being taxed again following their transfer into capital cannot be considered to cast doubt on taxation which had already occurred, and thereby to have retroactive effect. That rule has, as its sole objective and scope, the prevention of double taxation of the same taxable amount and the rule applies, from its entry into force, both to loans already assumed before the Member State’s accession to the European Union – and so before the entry into force of that rule within the legal order of that Member State – and converted into shares subsequent to that accession, and to loans agreed after that accession.

The second indent of Article 5(3) of Directive 69/335 is, therefore, merely a new rule which applies immediately to transactions carried out after its entry into force in a Member State and coming within it scope without retroactive application of that directive to facts occurring before that Member State’s accession.

(see paras 36-38, 40, 42, operative part)