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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Commission v Kingdom of Sweden (Failure of a Member State to fulfil obligations, Tax legislation) [2007] EUECJ C-104/06 (18 January 2007) URL: https://www.bailii.org/eu/cases/EUECJ/2007/C10406.html Cite as: [2007] ECR I-671, [2007] EUECJ C-104/6, [2007] EUECJ C-104/06 |
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(Failure of a Member State to fulfil obligations -“ Tax legislation -“ Deferral of taxation on capital gains arising on sale of residential property -“ Articles 18 EC, 39 EC and 43 EC -“ Articles 28 and 31 of the European Economic Area Agreement)
In Case C-104/06,
ACTION under Article 226 EC for failure to fulfil obligations, brought on 22 February 2006,
Commission of the European Communities, represented by L. Ström van Lier and R. Lyal, acting as Agents, with an address for service in Luxembourg,
applicant,
Kingdom of Sweden, represented by A. Kruse, acting as Agent,
defendant,
composed of E. Juhász, President of the Chamber, G. Arestis (Rapporteur) and J. Malenovský, Judges,
Advocate General: Y. Bot,
Registrar: R. Grass,
having regard to the written procedure,
having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
gives the following
Legal context
The EEA Agreement
-1. Freedom of movement for workers shall be secured among EC [European Community] Member States and EFTA [European Free Trade Association] States.
2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of EC Member States and EFTA States as regards employment, remuneration and other conditions of work and employment.
3. It shall entail the right, subject to limitations justified on grounds of public policy, public security or public health:
(a) to accept offers of employment actually made;
(b) to move freely within the territory of EC Member States and EFTA States for this purpose;
(c) to stay in the territory of an EC Member State or an EFTA State for the purposes of employment in accordance with the rules governing the employment of nationals of that State laid down by law, regulation or administrative action;
(d) to remain in the territory of an EC Member State or an EFTA State after having been employed there.
4. The provisions of this Article shall not apply to employment in the public service.
5. Annex V contains specific provisions on the free movement of workers.'
-1. Within the framework of the provisions of this Agreement, there shall be no restrictions on the freedom of establishment of nationals of an EC Member State or an EFTA State in the territory of any other of these States. This shall also apply to the setting-up of agencies, branches or subsidiaries by nationals of any EC Member State or EFTA State established in the territory of any of these States.
Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of Article 34, second paragraph, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of Chapter 4.
2. Annexes VIII to XI contain specific provisions on the right of establishment.'
National legislation
'A taxpayer may benefit from a deferral of taxation where he or she:
(1) declares a capital gain on the sale of a previous residence,
(2) has acquired or intends to acquire a replacement residence and
(3) lives or intends to live in the replacement residence.'
'Replacement residence means an asset situated in Sweden and which, on purchase, comprises:
(1) a house with a parcel of land forming a residential unit,
(2) a house on land belonging to another,
(3) a house adapted for one or two families with its parcel of land within an agricultural unit,
(4) land on which a house such as that referred to in paragraphs 1 or 3 is being built, or
(5) housing in a private housing association.'
Pre-litigation procedure
The action
Free movement of persons
Free movement of capital
Costs
On those grounds, the Court (Eighth Chamber) hereby:
1. Declares that, by adopting and maintaining in force tax provisions, such as those in Chapter 47 of the law on income tax (1999:1229) (inkomstskattelagen (1999:1229)), which make entitlement to deferral of taxation on capital gains arising from the sale of a private residential property or of a right to reside in a private cooperative property conditional on the newly-acquired residence also being on Swedish territory, the Kingdom of Sweden has failed to fulfil its obligations under Articles 18 EC, 39 EC and 43 EC and under Articles 28 and 31 of the EEA Agreement;
2. Orders the Kingdom of Sweden to pay the costs.
[Signatures]
* Language of the case: Swedish.