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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Kofoed (Taxation) [2007] EUECJ C-321/05 (05 July 2007) URL: https://www.bailii.org/eu/cases/EUECJ/2007/C32105.html Cite as: EU:C:2007:408, [2007] EUECJ C-321/05, ECLI:EU:C:2007:408, [2007] EUECJ C-321/5 |
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(Directive 90/434/EEC Common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares National decision to tax an exchange of shares Exchange of shares Distribution of a dividend shortly afterwards Abuse of rights)
In Case C-321/05,
REFERENCE for a preliminary ruling under Article 234 EC, by the à'stre Landsret (Denmark), made by decision of 3 August 2004, received at the Court on 23 August 2005, in the proceedings
Hans Markus Kofoed
v
Skatteministeriet,
composed of P. Jann (Rapporteur), President of the Chamber, A. Tizzano, A. Borg Barthet, M. Ilešič and E. Levits, Judges,
Advocate General: J. Kokott,
Registrar: H. von Holstein, Deputy Registrar,
having regard to the written procedure and further to the hearing on 18 January 2007,
after considering the observations submitted on behalf of:
Hans Markus Kofoed, by L. Melchior Kjeldsen, advokat,
the Danish Government, by J. Molde, acting as Agent, assisted by K. Lundgaard Hansen, advokat,
the Government of the United Kingdom of Great Britain and Northern Ireland, by C. Gibbs, acting as Agent, and J. Stratford, Barrister,
the Commission of the European Communities, by H. Støvlbà...k and R. Lyal, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 8 February 2007,
gives the following
Legal framework
Community legislation
-1. On a merger, division or exchange of shares, the allotment of securities representing the capital of the receiving or acquiring company to a shareholder of the transferring or acquired company in exchange for securities representing the capital of the latter company shall not, of itself, give rise to any taxation of the income, profits or capital gains of that shareholder.
...
4. Paragraphs 1, 2 and 3 shall not prevent a Member State from taking into account when taxing shareholders any cash payment that may be made on the merger, division or exchange.'
National legislation
-1. In the event of an exchange of shares, the shareholders of the acquired company shall be taxed pursuant to Paragraphs 9 and 11 of the fusionsskattelov if the acquiring company and the acquired company are companies from a Member State within the meaning of Article 3 of Directive 90/434/EEC. The date of the merger is the same as that of the exchange of shares. The exchange of shares must be realised no more than six months after the first day of the exchange.
2. 'Exchange of shares' within the meaning of subparagraph 1 shall be understood to mean the operation whereby a company acquires a holding in the capital of another company such that it obtains a majority of the voting rights in that company in exchange for the issue to the shareholders of the latter company, in exchange for the shares issued, of securities representing the capital of the former company, and, if applicable, a cash payment not exceeding 10% of the nominal value or, in the absence of a nominal value, of the accounting par value of the securities issued in exchange.
...'.
-1. The shares of the transferring company (acquired company) shall be deemed to be transferred to a third party by the shareholder where consideration therefor is provided otherwise than by way of shares of the company receiving the assets (acquiring company). ...
...'.
-1. For the determination of general or special income, the shares issued by the receiving company (acquiring company) and received by the shareholders of the transferring company (acquired company) as consideration for the shares issued shall be treated as if they had been acquired on the same date and at the same price as the shares issued. ...
...'.
The dispute in the main proceedings and the question referred for a preliminary ruling
'Is Article 2(d) of Directive 90/434 EEC ... to be interpreted as meaning that there is no 'exchange of shares' within the meaning of that directive where the persons involved in the exchange of shares, at the same time as agreeing to exchange the shares in a non-legally binding manner, declare it to be their common intention to vote, at the first general meeting of the acquiring company after the exchange, in favour of distributing a dividend in excess of 10% of the nominal value of the securities issued in exchange and such a dividend is in fact distributed?'
The question referred for a preliminary ruling
In that context, the national court asks, first, whether such an exchange of shares constitutes an 'exchange of shares' within the meaning of Article 2(d) of that directive and, more specifically, whether or not a dividend such as the one paid must be included in the calculation of the cash payment provided for in that article.
Second, the national court asks, essentially, whether the tax authorities may react to a possible abuse of rights, even though the national legislature has not enacted specific measures to transpose Article 11 of Directive 90/434.
The classification as an 'exchange of shares' within the meaning of Directive 90/434
Whether a possible abuse of rights may be taken into account
Consequently, Article 8(1) of Directive 90/434 precludes, in principle, the taxation of such an exchange of shares, unless national rules on abuse of rights, tax evasion or tax avoidance may be interpreted in accordance with Article 11(1)(a) of Directive 90/434 and thus justify the taxation of that exchange.
Costs
On those grounds, the Court (First Chamber) hereby rules:
The answer to the question referred must be that, in circumstances such as those in the main proceedings, a dividend, such as that paid, is not to be included in the calculation of the 'cash payment' provided for in Article 2(d) of Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States, and that, accordingly, an exchange of shares such as that in issue constitutes an 'exchange of shares' within the meaning of Article 2(d) of that directive.
Consequently, Article 8(1) of Directive 90/434 precludes, in principle, the taxation of such an exchange of shares, unless national rules on abuse of rights, tax evasion or tax avoidance may be interpreted in accordance with Article 11(1)(a) of Directive 90/434 and thus justify the taxation of that exchange.
[Signatures]
* Language of the case: Danish.