Hughes de Lasteyrie du Saillant v Ministère de l'Économie, des Finances et de l'Industrie.

• Jurisdiction: European Union
• Celex Number: 62002CJ0009
• ECLI: ECLI:EU:C:2004:138
• Docket Number: C-9/02
• Date: 11 March 2004
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling

Case C-9/02

Hughes de Lasteyrie du Saillant

v

Ministère de l’Économie, des Finances et de l’Industrie

(Reference for a preliminary ruling from the Conseil d’État (France))

(Freedom of establishment – Article 52 of the EC Treaty (now, after amendment, Article 43 EC) – Tax legislation – Transfer of tax residence to another Member State – Methods of taxing increased value of securities)

Summary of the Judgment

Freedom of movement for persons – Freedom of establishment – Tax legislation – Taxation of unrealised capital gains where tax residence transferred to another Member State – Not permissible – Justification – None

(EC Treaty, Art. 52 (now, after amendment, Art. 43 EC))

The principle of freedom of establishment laid down by Article 52 of the Treaty (now, after amendment, Article 43 EC) must be interpreted as precluding a Member State from establishing, in order to prevent a risk of tax avoidance, a mechanism for taxing latent, i.e. not yet realised, increases in value of company shares, where a taxpayer transfers his tax residence outside that State.

A taxpayer wishing to transfer his tax residence in exercise of the right guaranteed to him by that provision is subjected to disadvantageous treatment in comparison with a person who maintains his residence in that State where he becomes liable, simply by reason of such a transfer, to tax on income which has not yet been realised and which he therefore does not have, whereas, if he remained in that State, increases in value would become taxable only when, and to the extent that, they were actually realised.

That difference in treatment cannot be justified by the aim of preventing tax avoidance, since tax avoidance or evasion cannot be inferred generally from the fact that the tax residence of a physical person has been transferred to another Member State.

(see paras 38, 46, 50-51, 58, 69, operative part)

JUDGMENT OF THE COURT (Fifth Chamber)
11 March 2004(1)

(Freedom of establishment – Article 52 of the EC Treaty (now, after amendment, Article 43 EC) – Tax legislation – Transfer of residence for tax purposes to another Member State – Methods of taxing increased value of securities)

In Case C-9/02, REFERENCE to the Court under Article 234 EC by the Conseil d'État (France) for a preliminary ruling in the proceedings pending before that court between Hughes de Lasteyrie du Saillant

and

Ministère de l'Économie, des Finances et de l'Industrie, on the interpretation of Article 52 of the EC Treaty (now, after amendment, Article 43 EC),

THE COURT (Fifth Chamber),,

composed of: C.W.A. Timmermans (Rapporteur), acting for the President of the Fifth Chamber, A. La Pergola and S. von Bahr, Judges, Advocate General: J. Mischo,
Registrar: H.A. Rühl, Principal Administrator,

after considering the written observations submitted on behalf of:

–

Mr de Lasteyrie du Saillant, by E. Ginter, avocat,

–

the French Government, by G. de Bergues, F. Alabrune and P. Boussaroque, acting as Agents,

–

the Danish Government, by J. Bering Liisberg, acting as Agent,

–

the German Government, by W.-D. Plessing and M. Lumma, acting as Agents,

–

the Netherlands Government, by H.G. Sevenster, acting as Agent,

–

the Portuguese Government, by L. Fernandes and A. Seiça Neves, acting as Agents,

–

the Commission of the European Communities, by R. Lyal and C. Giolito, acting as Agents,

after hearing the oral observations of Mr de Lasteyrie du Saillant, represented by E. Ginter and B. Michaud, avocat, the French Government, represented by P. Boussaroque and J.-L. Gautier, acting as Agents, the Netherlands Government, represented by S. Terstal, acting as Agent, and the Commission, represented by R. Lyal and C. Giolito, at the hearing on 13 February 2003,

having heard the Opinion of the Advocate General at the hearing on 13 March 2003,

gives the following

Judgment

1

By a decision of 14 December 2001, received at the Court on 14 January 2002, the Conseil d’État referred to the Court for a preliminary ruling under Article 234 EC a question on the interpretation of Article 52 of the EC Treaty (now, after amendment, Article 43 EC).

2

That question was raised in proceedings between Mr de Lasteyrie du Saillant (‘Mr de Lasteyrie’) and the Minister of the Economy, Finance and Industry concerning tax charged on an unrealised increase in the value of securities, which is due in the event of a taxpayer transferring his residence for tax purposes outside France.

Legal background

3

Article 24 of Law No 98-1266 of 30 December 1998, the Finance Law for 1999 (JORF of 31 December 1998, p. 20050), in the version in force as at the date of Decree No 99-590 of 6 July 1999, applying Article 24 of the Finance Law for 1999 in respect of the methods of taxing certain increases in the value of securities in the event of the transfer of residence for tax purposes outside France (JORF, 13 July 1999, p. 10407) provides: ‘I. … II: An Article 167a shall be inserted into the Code Général des Impôts as follows: “Article 167a I. – 1. Taxpayers normally resident for tax purposes in France for at least six of the ten previous years are taxable, at the date of the transfer of their residence from France, on the increases in value determined in the company securities referred to in Article 160. 2. The increase in value to be determined shall be the difference between the value of the company securities at the date of transfer of residence for tax purposes outside France, determined in accordance with the rules laid down in Articles 758 and 885 T bis, and the price at which they were acquired by the taxpayer, or, if they were acquired for no consideration, their value as determined for the purposes of transfer duty. Losses may not be offset against increases in value of the same kind occurring elsewhere. 3. The increase in value determined shall be declared under the conditions laid down in paragraph 2 of Article 167. II.– 1. Payment of the tax on the increase in value determined may be deferred until the time of the transmission, redemption, repayment or cancellation of the company securities concerned. Suspension of payment is subject to the condition that the taxpayer shall declare the amount of the increase in value determined in accordance with the conditions in I above, applies for the benefit of suspension, designates a representative established in France authorised to receive communications concerning the basis of assessment, collection of the tax and any disputes relating thereto, and, before his departure abroad, constitutes with the official responsible for collection guarantees sufficient to ensure recovery of the debt by the Treasury. The suspension of payment provided for in this article has the effect of suspending the commencement of the statutory period within which to bring a recovery action until the date of the event causing it to expire. It is analogous to the suspension of payment provided for in Article L. 277 of the Book on Tax Procedures for applying Articles L.208, L.255 and L.279 of that book. The tax in respect of which suspension of payment is applied for pursuant to this article shall not be taken into account in relation to the award or repayment of tax credits or to the withholding or deduction of tax other than by way of discharge. 2. Taxpayers benefiting from suspension of payment pursuant to this article are required to make the declaration referred to in paragraph 1 of Article 170. The cumulative amount of suspended tax shall be indicated on that declaration, to which shall be annexed a statement drawn up on a form issued by the administration showing the amount of tax relating to the securities concerned for which the suspension period has not expired, and also showing, in appropriate cases, the nature and the date of the event causing the suspension to expire. 3. Subject to 4 below, where the taxpayer benefits from the suspension of payment, the tax due pursuant to this article shall be paid before 1 March in the year following that in which the suspension expired. However, the tax of which payment has been suspended may be demanded only up to the limit of its amount applied to the difference between, on the one hand, the price in the event of transfer or redemption, or the value in other cases, of the securities concerned as at the date of the event causing the suspension to expire, and, on the other hand, their price or acquisition value used for the application of I, 2 above. Exoneration is granted automatically in respect of the remainder. In that case, the taxpayer shall provide the calculations used, in support of the declaration referred to in 2 above. The tax paid locally by the taxpayer and relating to the increase in value actually realised outside France may be set off against the income tax established in France provided it is comparable with that tax. 4. Failure to produce the declaration and the statement referred to in 2 above, or the omission of all or part of the information that must be contained therein, results in the suspended tax becoming immediately payable. III. At the expiry of five years from the date of departure, or at the date on which the taxpayer retransfers his place of residence for tax purposes to France, if earlier, exoneration shall be automatically granted in respect of the tax established pursuant to I in so far as it relates to increases in value in relation to company securities which, at that date, remain in the ownership of the taxpayer. IV. The conditions for applying this article, and in particular the rules for avoiding double taxation of the increases in value determined, the obligations concerning declarations by taxpayers, and the methods of suspending...