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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Papillon (Free movement of persons) [2008] EUECJ C-418/07 (27 November 2008) URL: https://www.bailii.org/eu/cases/EUECJ/2008/C41807.html Cite as: EU:C:2008:659, [2009] STC 542, [2008] EUECJ C-418/07, ECLI:EU:C:2008:659, [2009] BTC 390, [2008] ECR I-8947, [2009] 1 CMLR 36, [2009] STI 85, [2008] EUECJ C-418/7 |
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(Freedom of establishment Direct taxation Corporation tax Group taxation regime Resident parent company Resident sub-subsidiaries held through a non-resident subsidiary)
In Case C-418/07,
REFERENCE for a preliminary ruling under Article 234 EC from the Conseil d'État (France), made by decision of 10 July 2007, received at the Court on 12 September 2007, in the proceedings
Société Papillon
Ministère du Budget, des Comptes publics et de la Fonction publique,
composed of K. Lenaerts (Rapporteur), President of the Chamber, R. Silva de Lapuerta, E. Juhász, G. Arestis and J. Malenovský, Judges,
Advocate General: J. Kokott,
Registrar: B. Fülöp, Administrator,
having regard to the written procedure and further to the hearing on 4 June 2008,
after considering the observations submitted on behalf of:
Société Papillon, by G. Calisti, avocat,
the French Government, by G. de Bergues and J.'C. Gracia, acting as Agents,
the German Government, by C. Blaschke, acting as Agent,
the Spanish Government, by M. Muñoz Pérez, acting as Agent,
the Netherlands Government, by C. Wissels, C. ten Dam and M. de Grave, acting as Agents,
the Commission of the European Communities, by R. Lyal and J.'P. Keppenne, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 4 September 2008,
gives the following
Legal context
'A company ... can render itself the sole party liable for corporation tax due on the overall profits of the group formed by it and the companies of which it is the holder, continuously throughout the financial year, directly or indirectly through companies in the group, of at least 95% of the capital. ... The companies in the group remain obliged to declare their results. ... Only those companies which have given their consent and whose results are subject to corporation tax may be members of the group. ...'.
The dispute in the main proceedings and the questions referred
'1. Inasmuch as the tax benefit arising under the 'tax integration' scheme affects the liability to tax of the parent company of the group, which can offset the profits and losses of all the companies of the integrated group, and benefit from the tax neutrality of the internal transactions of that group, does the impossibility resulting from the scheme defined by Article 223A et seq. of the [CGI] of including within the membership of a tax-integrated group a sub-subsidiary of the parent company, when it is held through a subsidiary which, being established in another Member State ... and not carrying on business in France, is not subject to French corporation tax and thus cannot itself form part of the group, constitute a restriction on the freedom of establishment by reason of the tax consequences arising from the choice of the parent company as to whether to hold a sub-subsidiary through a French subsidiary or instead through a subsidiary established in another Member State?
2. If the answer is in the affirmative, can such a restriction be justified either by the need to maintain the coherence of the 'tax integration' system in particular the arrangements for the tax neutrality of transactions within the group, having regard to the consequences of a system which consists of treating a subsidiary established in another Member State as belonging to the group solely for the purposes of the condition as to the indirect holding of the sub-subsidiary, while remaining automatically excluded from the application of the group scheme since it is not subject to French tax or by any other overriding reason of public interest?
The questions referred
Costs
On those grounds, the Court (Fourth Chamber) hereby rules:
Article 52 of the Treaty (now, after amendment, Article 43 EC) is to be interpreted as meaning that it precludes legislation of a Member State by virtue of which a group tax regime is made available to a parent company which is resident in that Member State and holds subsidiaries and sub-subsidiaries which are also resident in that State, but is unavailable to such a parent company if its resident sub-subsidiaries are held through a subsidiary which is resident in another Member State.
[Signatures]
* Language of the case: French.