Keywords
Summary

Keywords

Free movement of capital – Restrictions – Tax legislation – Income tax – Deductibility of gifts to research and teaching institutions limited to gifts to domestic institutions

(Arts 56 EC and 58 EC; EEA Agreement, Art. 40)

Summary

A Member State which authorises the deduction from tax of gifts to research and teaching institutions exclusively where those institutions are established in that State fails to fulfil its obligations under Article 56 EC and Article 40 of the Agreement on the European Economic Area.

For national tax legislation which distinguishes between gifts to national institutions and those to institutions established in other Member States to be regarded as compatible with the Treaty provisions on the free movement of capital, the difference in treatment must concern situations which are not objectively comparable, or must be justified by an overriding reason in the public interest. In order to be justified, moreover, the difference in treatment must not go beyond what is necessary to attain the objective of the legislation in question.

First, a criterion which distinguishes between taxpayers exclusively on the basis of the place of establishment of the recipient of the gift, by definition, cannot be a valid criterion for assessing the objective comparability of the situations or, consequently, for establishing an objective difference between them. Secondly, while the promotion of research and development may indeed constitute an overriding reason in the public interest, national legislation reserving the benefit of a tax credit solely to research carried out in the Member State concerned is directly contrary to the objective of European Union policy in the field of research and technical development. In accordance with Article 163(2) EC, that policy aims in particular to remove the fiscal obstacles to cooperation in the field of research, and cannot therefore be implemented by the promotion of research and development at national level.

(see paras 29, 35, 37, 44, operative part)