C31502
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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Lenz (Free movement of capital) [2004] EUECJ C-315/02 (15 July 2004) URL: https://www.bailii.org/eu/cases/EUECJ/2004/C31502.html Cite as: [2007] BTC 131, [2004] EUECJ C-315/2, [2004] EUECJ C-315/02, [2004] ECR I-7063, [2004] 3 CMLR 13 |
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JUDGMENT OF THE COURT (First Chamber)
15 July 2004 (1)
(Free movement of capital -“ Tax on revenue from capital -“ Revenue from capital of Austrian origin: tax rate of 25 % in discharge or rate equal to half of the average tax rate on aggregate income -“ Income from capital originating in another Member State: normal tax rate)
In Case C-315/02REFERENCE to the Court under Article 234 EC by the Verwaltungsgerichtshof (Austria) for a preliminary ruling in the proceedings pending before that court between Anneliese Lenzand
Finanzlandesdirektion für Tirol, on the interpretation of Articles 73b et 73d of the EC Treaty (now Articles 56 EC et 58 EC),THE COURT (First Chamber),
after considering the observations submitted on behalf of:
-“ A. Lenz, by C. Huber and R. Leitner, accountants and tax advisers, -“ the Austrian Government by H. Dossi, acting as Agent, -“ the Danish Government by J. Molde, acting as Agent, -“ the French Government by G. de Bergues and P. Boussaroque, acting as Agents, -“ the United Kingdom Government by K. Manji, acting as Agent, and M. Hoskins, barrister, -“ the Commission of the European Communities by K. Gross and R. Lyal, acting as Agents,having regard to the Report for the Hearing
after hearing the oral observations of de A. Lenz, represented by R. Leitner and G. Toifl, tax advisers, of the Austrian Government represented by J. Bauer, acting as Agent, of the United Kingdom Government represented by M. Hoskins, and the Commission, represented by K. Gross and R. Lyal, at the hearing on 29 January 2004,
after hearing the Opinion of the Advocate General at the sitting on 25 March 2004,
gives the following
The taxation of revenue from capital of Austrian origin
Taxation of foreign revenue from capital
-˜1. Does Article 73b(1) in conjunction with Article 73d(1)(a) and (b) and (3) of the EC Treaty (now Article 56(1) in conjunction with Article 58(1)(a) and (b) and (3) EC) preclude a provision such as that in Paragraph 97(1) and (4) of the Einkommenssteuergesetz 1988 (1988 Law on Income Tax) in conjunction with Paragraph 37(1) and (4) of the Einkommenssteuergesetz 1988, under which a taxpayer in receipt of dividends from domestic shares may choose whether they should be subject to tax (at a flat rate of 25%) in discharge of liability or whether they should be taxed at a rate equivalent to half of the average tax rate applicable to the aggregate income, whereas dividends from foreign shares are always taxed at the normal rate of income tax? 2. Is the level of taxation of the revenue of a limited company which has its seat and head office in another EU Member State or a non-Member State in which shares are held of relevance to the answer to the first question? 3. If the answer to the first question is in the affirmative, can the situation described in Article 73b(1) of the EC Treaty (now Article 56(1) EC) arise as a result of the corporation tax paid in the countries in which they are established by companies limited by shares with seats and head offices in other EU Member States or non-Member States being credited pro rata against the Austrian income tax payable by the recipient of the dividends?-™
On those grounds,
THE COURT (First Chamber),
in answer to the questions referred to it by the Verwaltungsgerichtshof by order of 27 August 2002, hereby rules: 1. Articles 73b and 73d(1) and (3) of the EC Treaty (now, respectively, Articles 56 EC and 58(1) and (3) EC) preclude legislation, such as that at issue in the main proceedings, which allows only the recipients of revenue from capital of Austrian origin to choose between a special tax with discharging effect and ordinary income tax with the application of a rate reduced by half, while providing that revenue from capital originating in another Member State must be subject to ordinary income tax without any reduction in the rate. 2. Refusal to grant the recipients of revenue from capital originating in another Member State the tax advantages granted to recipients of revenue from capital of Austrian origin cannot be justified by the fact that revenue from companies established in another Member State is subject to low taxation in that State.
Jann |
Rosas |
von Bahr |
Silva de Lapuerta |
Lenaerts |
|
Registrar |
President of the First Chamber |
R. Grass |
P. Jann |
1 -“ Language of the case: German.