Keywords
Summary

Keywords

Free movement of capital – Restrictions – Income tax relief to natural persons for the acquisition of shares – Restriction to shares in companies established in the Member State concerned – Not permissible – Justification – None

(Arts 56(1) EC and 58(1)(a) EC)

Summary

Article 56(1) EC and Article 58(1)(a) EC preclude a legal provision of a Member State which denies the availability of income tax relief to natural persons for the acquisition of shares representing cash contributions in capital companies established in other Member States.

Such legislation is a restriction on the movement of capital prohibited by Article 56 EC, in that it has the effect of discouraging nationals of the Member State concerned from investing their capital in companies which have their seat in another Member State; it also has a restrictive effect in relation to companies established in other Member States, in that it constitutes an obstacle to the raising of capital in the Member State concerned.

In the absence of a direct link between the tax advantage in question and an offsetting fiscal levy, such as the taxation of dividends subsequently paid by the companies in which the investment was made, the need to guarantee the cohesion of the tax system cannot be relied on to justify such a restriction.

(see paras 13-15, 20-23, 28, operative part)