Keywords
Summary

Keywords

Freedom to provide services – Restrictions – Tax legislation

(Art. 56 TFEU)

Summary

Article 56 TFEU is to be interpreted as precluding a provision of a Member State pursuant to which the benefit of a tax credit for investments is denied to an undertaking which is established solely in that Member State on the sole ground that the capital goods, in respect of which that credit is claimed, are physically used in the territory of another Member State.

Such a national provision – which applies a less favourable tax regime to investments used in the territory of other Member States, in which the undertaking concerned is not established, than to investments that are used in national territory – is likely, if not to discourage national undertakings from providing, in other Member States, services that require the use of capital goods situated in those other Member States, at least to make that provision of cross-border services less attractive or more difficult than the provision of services in national territory by means of capital goods situated in that territory.

Such national rules cannot be justified by the need to ensure the coherence of the national tax system since there is no direct link, as regards the tax system concerned, between, on the one hand, the grant to a resident undertaking providing services in other Member States of a tax credit for investments used for those purposes and, on the other hand, the financing of that tax advantage by means of the tax levied on the income made by the recipients of the services provided by means of those assets.

Such rules cannot, moreover, be justified by the need to prevent abuse since they affect every undertaking which uses capital goods in the territory of another Member State, and do so even where nothing points towards the existence of a wholly artificial arrangement which does not reflect economic reality and whose only purpose is to obtain a tax advantage.

Furthermore such a national provision which consistently refuses the benefit of a tax advantage when the investment is not used in national territory, notwithstanding the fact that the investment in question is unconnected with any social objective, cannot be justified by the discretion of Member States to choose the interests of the general public which they wish to promote by granting tax advantages.

(see paras 17, 23, 25, 28-30, 32, 34, operative part)