Keywords
Summary

Keywords

1. Freedom of movement for persons - Freedom of establishment - Treaty provisions - Scope - Capital holding of a Member State national conferring a definite influence on the management of a company established in another Member State - Inclusion

(EC Treaty, Art.52 (now, after amendment, Art.43 EC))

2. Freedom of movement for persons - Freedom of establishment - Tax legislation - Exemption from wealth tax in respect of assets invested in shares restricted to holdings in companies established in the taxing Member State - not permissible - Whether justified - No such justification

(EC Treaty, Art. 52 (now, after amendment, Art. 43 EC))

Summary

1. It is clear from the second paragraph of Article 52 of the Treaty that freedom of establishment includes the right to set up and manage undertakings, in particular companies or firms, in a Member State by a national of another Member State. So, a national of a Member State who has a holding in the capital of a company established in another Member State which gives him definite influence over the company's decisions and allows him to determine its activities is exercising his right of establishment.

( see paras 22 )

2. Article 52 of the Treaty (now, after amendment, Article 43 EC) precludes a Member State's tax legislation, which, in circumstances where a holding in the capital of a company confers on the shareholder a definite influence over the company's decisions and allows him to determine its activities,

- allows nationals of Member States resident on its territory an exemption, in whole or in part, from wealth tax in respect of the assets invested in shares in the company,

- but makes that exemption subject to the condition that the holding be held in a company established in the Member State concerned, thus denying it to holders of shares in companies established in other Member States.

Such legislation provides for a difference in treatment between taxpayers by adopting as its criterion the seat of the companies of which those taxpayers are shareholders and cannot be justified by the need to preserve the coherence of the tax system.

( see paras 30, 37-38, 41 and operative part )