Judgment of the Court (Third Chamber) of 16 February 2023 (request for a preliminary ruling from the Upper Tribunal (Tax and Chancery Chamber) -United Kingdom) — Gallaher Limited v The Commissioners for Her Majesty’s Revenue and Customs

(Case C-707/20, (1) Gallaher)

(Reference for a preliminary ruling - Direct taxation - Corporate income tax - Articles 49, 63 and 64 TFEU - Freedom of establishment - Free movement of capital - Disposal of assets within a group of companies - Company resident for tax purposes in one Member State having a parent company resident for tax purposes in another Member State and a sister company resident for tax purposes in a third country - Disposal of intellectual property rights of the company resident for tax purposes in a Member State to its sister company resident for tax purposes in a third country - Disposal by the company resident for tax purposes in a Member State of shares in one of its subsidiaries to its parent company resident for tax purposes in another Member State - Consideration equal to the market value of the assets transferred - Exemption from tax or imposition of tax depending on the State in which the beneficiary company has its seat)

(2023/C 127/04)

Language of the case: English

Referring court

Upper Tribunal (Tax and Chancery Chamber)

Parties to the main proceedings

Applicant: Gallaher Limited

Defendant: The Commissioners for Her Majesty’s Revenue and Customs

Operative part of the judgment

1.	Article 63 TFEU must be interpreted as meaning that national legislation which applies only to groups of companies does not fall within its scope.

Article 49 TFEU must be interpreted as meaning that national legislation which imposes an immediate tax charge on a disposal of assets from a company which is resident for tax purposes in a Member State to a sister company which is resident for tax purposes in a third country and which does not carry on a trade in that Member State through a permanent establishment, where both of those companies are subsidiaries wholly owned by a common parent which is resident for tax purposes in another Member State, does not constitute a restriction on the freedom of establishment, within the meaning of Article 49 TFEU, of that parent company, in circumstances where such a disposal would be made on a tax-neutral basis if the sister company were also resident in the first Member State or carried on a trade there through a permanent establishment.

Article 49 TFEU must be interpreted as meaning that a restriction of the right to freedom of establishment resulting from the difference in treatment between national and cross-border disposals of assets for consideration within a group of companies under national legislation which imposes an immediate tax charge on a disposal of assets by a company resident for tax purposes in a Member State may, in principle, be justified by the need to maintain a balanced allocation of the power to impose taxes between the Member States, without it being necessary to provide for the possibility of deferring payment of the charge in order to guarantee the proportionality of that restriction, where the taxpayer concerned has obtained, by way of consideration for the disposal of the assets, an amount equal to the full market value of those assets.

(1) OJ C 110, 29.3.2021.