Case C‑657/13

Verder LabTec GmbH & Co. KG

v

Finanzamt Hilden

(Request for a preliminary ruling from the Finanzgericht Düsseldorf)

‛Reference for a preliminary ruling — Taxation — Freedom of establishment — Article 49 TFEU — Restrictions — Staggered recovery of tax on unrealised capital gains — Preservation of allocation of powers of taxation between Member States — Proportionality’

Summary — Judgment of the Court (Third Chamber), 21 May 2015

1. Questions referred for a preliminary ruling — Admissibility — Limits — Hypothetical questions

   (Art. 267 TFEU)

2. Freedom of establishment — Provisions of the Treaty — Scope

   (Art. 49 TFEU)

3. Freedom of establishment — Restrictions — Tax legislation — Transfer of assets from a company located within the territory of the Member State concerned to another Member State — National legislation providing for the disclosure of unrealised capital gains relating to those assets the staggered recovery of the tax relating to those gains over 10 annual instalments — Not permissible — Justification — Preservation of allocation of powers of taxation between Member States — Condition — Proportionality

   (Art. 49 TFEU)

1.  See the text of the decision.

   (see paras 29, 30)

2.  See the text of the decision.

   (see paras 32-35)

3.  Article 49 TFEU must be interpreted as not precluding tax legislation of a Member State, which, in the case of a transfer of assets from a company located within the territory of that Member State to a permanent establishment of that company located within the territory of another Member State, provides for the disclosure of unrealised capital gains pertaining to those assets which have been generated within the territory of that first Member State, the taxation of such capital gains and the staggered recovery of the tax relating to those gains over 10 annual instalments.

   It is true that such tax legislation constitutes a restriction on freedom of establishment within the meaning of Article 49 TFEU in so far as the disclosure of those capital gains and their taxation would not take place in relation to a similar transfer within the national territory, since those unrealised capital gains are not taxed until they have actually been realised.

   However, that restriction may be objectively justified by overriding reasons in the public interest recognised by EU law. In fact, that tax legislation is appropriate for ensuring the preservation of the allocation of powers of taxation between the Member States concerned, since it covers the case of a transfer of assets to a permanent establishment located within the territory of a Member State other than the Member State at issue, whose income is exempt from tax in that latter Member State.

   Accordingly, the disclosure of unrealised capital gains relating to the transferred assets generated prior to that transfer within the tax jurisdiction of the Member State at issue, and the taxation of those unrealised capital gains, is intended to ensure the taxation of those unrealised capital gains, generated within the tax jurisdiction of that Member State. The taxation of income relating to those assets generated after such a transfer falls to the other Member State, in whose territory the permanent establishment is located.

   A staggered recovery of the tax on unrealised capital gains by 10 annual instalments, instead of immediate recovery, constitutes a proportionate measure to attain the objective of preserving the allocation of taxation powers between the Member States.

   (see paras 37, 39, 40, 46, 47, 51-53, operative part)

Case C‑657/13

Verder LabTec GmbH & Co. KG

v

Finanzamt Hilden

(Request for a preliminary ruling from the Finanzgericht Düsseldorf)

‛Reference for a preliminary ruling — Taxation — Freedom of establishment — Article 49 TFEU — Restrictions — Staggered recovery of tax on unrealised capital gains — Preservation of allocation of powers of taxation between Member States — Proportionality’

Summary — Judgment of the Court (Third Chamber), 21 May 2015

1. Questions referred for a preliminary ruling — Admissibility — Limits — Hypothetical questions

   (Art. 267 TFEU)

2. Freedom of establishment — Provisions of the Treaty — Scope

   (Art. 49 TFEU)

3. Freedom of establishment — Restrictions — Tax legislation — Transfer of assets from a company located within the territory of the Member State concerned to another Member State — National legislation providing for the disclosure of unrealised capital gains relating to those assets the staggered recovery of the tax relating to those gains over 10 annual instalments — Not permissible — Justification — Preservation of allocation of powers of taxation between Member States — Condition — Proportionality

   (Art. 49 TFEU)

1.  See the text of the decision.

   (see paras 29, 30)

2.  See the text of the decision.

   (see paras 32-35)

3.  Article 49 TFEU must be interpreted as not precluding tax legislation of a Member State, which, in the case of a transfer of assets from a company located within the territory of that Member State to a permanent establishment of that company located within the territory of another Member State, provides for the disclosure of unrealised capital gains pertaining to those assets which have been generated within the territory of that first Member State, the taxation of such capital gains and the staggered recovery of the tax relating to those gains over 10 annual instalments.

   It is true that such tax legislation constitutes a restriction on freedom of establishment within the meaning of Article 49 TFEU in so far as the disclosure of those capital gains and their taxation would not take place in relation to a similar transfer within the national territory, since those unrealised capital gains are not taxed until they have actually been realised.

   However, that restriction may be objectively justified by overriding reasons in the public interest recognised by EU law. In fact, that tax legislation is appropriate for ensuring the preservation of the allocation of powers of taxation between the Member States concerned, since it covers the case of a transfer of assets to a permanent establishment located within the territory of a Member State other than the Member State at issue, whose income is exempt from tax in that latter Member State.

   Accordingly, the disclosure of unrealised capital gains relating to the transferred assets generated prior to that transfer within the tax jurisdiction of the Member State at issue, and the taxation of those unrealised capital gains, is intended to ensure the taxation of those unrealised capital gains, generated within the tax jurisdiction of that Member State. The taxation of income relating to those assets generated after such a transfer falls to the other Member State, in whose territory the permanent establishment is located.

   A staggered recovery of the tax on unrealised capital gains by 10 annual instalments, instead of immediate recovery, constitutes a proportionate measure to attain the objective of preserving the allocation of taxation powers between the Member States.

   (see paras 37, 39, 40, 46, 47, 51-53, operative part)