Case C‑6/16

Eqiom SAS
and
Enka SA

v

Ministre des Finances and des Comptes publics

(Request for a preliminary ruling from the Conseil d’État (France))

(Reference for a preliminary ruling — Direct taxation — Freedom of establishment — Free movement of capital — Withholding tax — Directive 90/435/EEC — Article 1(2) — Article 5(1) — Exemption — Dividends distributed by a resident subsidiary to a non-resident parent company controlled directly or indirectly by one or more residents of third States — Presumption — Fraud, tax evasion and abuse)

Summary — Judgment of the Court (Sixth Chamber), 7 September 2017

1. Approximation of laws—Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States—Directive 90/435—Exhaustive harmonization—Absence—Possibility to assess the compatibility of national legislation in the same area on the basis of primary law

   (Council Directive 90/435, Art. 1(2))

2. Approximation of laws—Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States—Directive 90/435—Exemption, in the Member State of the subsidiary, from withholding tax on profits distributed to the parent company—Dividends distributed by a resident subsidiary to a non-resident parent company controlled directly or indirectly by one or more nationals of third States—Conditions for granting—Establishment by the parent company that there is no abuse of the right to exemption—Unlawful

   (Art. 49 TFEU; Council Directive 90/435, Arts 1(2) and 5(1))

3. Freedom of movement for persons—Freedom of establishment—Free movement of capital—Scope—Tax legislation or Fiscal legislation—Corporation tax—Taxation of dividends—Holding of capital in a subsidiary conferring a definite influence on the management of a company established in another Member State—Inapplicability of the provisions on the free movement of capital—Applicability of the provisions governing the freedom of establishment—Parent company directly or indirectly controlled by one or more residents of third States—Irrelevant

   (Arts 49 TFEU and 63 TFEU)

1.  See the text of the decision.

   (see paras 15-18)

2.  Article 1(2) of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, as amended by Council Directive 2003/123/EC of 22 December 2003, first, and Article 49 TFEU, secondly, must be interpreted as precluding national tax legislation, such as that at issue in the main proceedings, which subjects the grant of the tax advantage provided for by Article 5(1) of that directive — namely, the exemption from withholding tax of profits distributed by a resident subsidiary to a non-resident parent company, where that parent company is directly or indirectly controlled by one or more residents of third States — to the condition that that parent company establish that the principal purpose or one of the principal purposes of the chain of interests is not to take advantage of that exemption.

   Therefore, the power conferred on the Member States by Article 1(2) of the Parent-Subsidiary Directive to apply, in the field governed by that directive, domestic or agreement-based provisions in order to prevent fraud and abuse cannot be given an interpretation going beyond the actual terms of that provision (see, to that effect, judgment of 25 September 2003, Océ van der Grinten, C‑58/01, EU:C:2003:495, paragraph 86).

   In that context, it should be noted that, in order for national legislation to be regarded as seeking to prevent tax evasion and abuses, its specific objective must be to prevent conduct involving the creation of wholly artificial arrangements which do not reflect economic reality, the purpose of which is unduly to obtain a tax advantage (see, to that effect, judgments of 12 September 2006, Cadbury Schweppes and Cadbury Schweppes Overseas, C‑196/04, EU:C:2006:544, paragraph 55, and of 5 July 2012, SIAT, C‑318/10, EU:C:2012:415, paragraph 40).

   In order to determine whether an operation pursues an objective of fraud and abuse, the competent national authorities may not confine themselves to applying predetermined general criteria, but must carry out an individual examination of the whole operation at issue. The imposition of a general tax measure automatically excluding certain categories of taxpayers from the tax advantage, without the tax authorities being obliged to provide even prima facie evidence of fraud and abuse, would go further than is necessary for preventing fraud and abuse (see, to that effect, judgment of 8 March 2017, Euro Park Service, C‑14/16, EU:C:2017:177, paragraphs 55 and 56).

   Therefore, a general presumption of fraud and abuse cannot justify either a fiscal measure which compromises the objectives of a directive, or a fiscal measure which prejudices the enjoyment of a fundamental freedom guaranteed by the treaties (judgments of 26 September 2000, Commission v Belgium, C‑478/98, EU:C:2000:497, paragraph 45 and the case-law cited, and of 5 July 2012, SIAT, C‑318/10, EU:C:2012:415, paragraph 38).

   Although the Court considered, as regards measures provided for by a Member State in order to prevent or mitigate a series of liabilities to tax or the double taxation of profits distributed by a resident company, that the resident shareholders receiving dividends are not necessarily in a situation which is comparable to that of shareholders receiving dividends who are resident in another Member State, it also stated that, since a Member State exercises its power to tax not only over the income of resident shareholders, but also over that of non-resident shareholders, from dividends which they receive from a resident company, the situation of those non-resident shareholders becomes comparable to that of the resident shareholders (judgment of 14 December 2006, Denkavit Internationaal and Denkavit France, C‑170/05, EU:C:2006:783, paragraphs 34 and 35 and the case-law cited).

   However, it must be noted that the objective of combating fraud and tax evasion, whether it is relied on under Article 1(2) of the Parent-Subsidiary Directive or as justification for an exception to primary law, has the same scope. Therefore, the findings set out in paragraphs 30 to 36 of the present judgment also apply with regard to that freedom.

   (see paras 27, 30-32, 59, 64, 66, operative part)

3.  See the text of the decision.

   (see paras 41, 44, 46, 48)