Keywords
Summary

Keywords

Freedom to provide services – Free movement of capital – Restrictions – Tax legislation – Fixed levy on certain income arising from investments – Condition of residence or establishment of the debtor in the Member State concerned – Not permissible – Justification – Absence

(Arts 49 EC and 56 EC)

Summary

A Member State has failed to fulfil its obligations under Articles 49 and 59 EC where it excludes altogether the application of the rate of the fixed levy to income arising from certain investments where the debtor is not resident or established in that Member State.

Apart from having the effect of discouraging taxpayers who are resident in a Member State from entering into contracts generating such income with companies which are established in another Member State, such legislation also has a restrictive effect as regards those companies as it prevents them from raising capital in the Member State concerned.

The need to ensure payment of taxes and effective fiscal supervision does not justify such a restriction on the freedom to provide services and the free movement of capital. While the prevention of tax avoidance and the need for effective fiscal supervision may be relied upon to justify restrictions on the exercise of fundamental freedoms guaranteed by the Treaty, a general presumption of tax avoidance or fraud is not, however, sufficient to justify a fiscal measure which compromises the objectives of the Treaty.

Furthermore, the restrictive measure in question does not comply with the principal of proportionality, in that it is not appropriate for securing the attainment of the objective it pursues and it goes beyond what is necessary to attain it.

(see paras 23-24, 27-28, 34, operative part)