Wienand Meilicke and Others v Finanzamt Bonn-Innenstadt.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Writing for the Court: Levits
• ECLI: ECLI:EU:C:2011:438
• Docket Number: C-262/09
• Date: 30 June 2011
• Procedure Type: Reference for a preliminary ruling

Case C-262/09

Wienand Meilicke and Others

v

Finanzamt Bonn-Innenstadt

(Reference for a preliminary ruling from the Finanzgericht Köln)

(Free movement of capital – Income tax – Certificate relating to corporation tax actually paid on dividends of foreign origin – Prevention of double taxation of dividends – Tax credit for dividends paid by resident companies – Proof required as to the foreign tax deductible)

Summary of the Judgment

1. Free movement of capital – Restrictions – Tax legislation – Income tax – Taxation of dividends – Calculation of the tax credit granted to a taxable person fully taxable in a Member State for dividends paid by a capital company established in another Member State

(Arts 56 EC and 58 EC)

2. Free movement of capital – Restrictions – Tax legislation – Income tax – Taxation of dividends – Evidence to be adduced by a taxable person fully taxable in a Member State in order to obtain a tax credit for dividends paid by a capital company established in another Member State

(Arts 56 EC and 58 EC)

3. Free movement of capital – Restrictions – Tax legislation – Income tax – Taxation in a Member State of dividends paid by a capital company established in another Member State

1. For the calculation of the amount of the tax credit to which a shareholder fully taxable in a Member State with regard to dividends paid by a capital company established in another Member State is entitled, Articles 56 EC and 58 EC preclude the application, failing the adducing of the evidence required under the legislation of the first Member State, of a national provision under which corporation tax imposed on dividends of foreign origin is set off against a shareholder’s income tax to the level of the fraction of corporation tax imposed on gross dividends distributed by companies in the first Member State.

2. The calculation of the tax credit must be made in relation to the rate of corporation tax on the distributed profits applicable to the dividend‑paying company according to the law of the Member State of establishment; the amount to be imposed may not, however, exceed the amount of the income tax to be paid on dividends received by the recipient shareholder in the Member State in which that shareholder is fully taxable.

When a Member State has a system for preventing or mitigating a series of charges to tax or economic double taxation for dividends paid to residents by resident companies, it must treat dividends paid to residents by non-resident companies in the same way. That implies that in such a situation such a national system must be transposed, to the fullest extent possible, to cross-border situations.

(see paras 29, 31, 34, operative part 1)

3. As regards the degree of detail which the evidence required must meet in order to benefit from a tax credit relating to dividends paid by a capital company established in a Member State other than that in which beneficiary is fully taxable, Articles 56 EC and 58 EC preclude the application of a national provision under which the degree of detail and the form of evidence to be adduced by such a shareholder must be the same as those required when the dividend-paying company is established in the Member State of taxation of that shareholder.

4. The tax authorities of the Member State of taxation are entitled to require that shareholder to provide documentary evidence enabling them to ascertain, clearly and precisely, whether the conditions for obtaining a tax credit under national legislation have been met without having to make an estimate of that tax credit.

National rules which would unconditionally prevent shareholders having invested abroad from adducing evidence which satisfies criteria, in particular those of presentation, other than those laid down for national investments, would not only breach the principle of sound administration, but in particular go beyond what is necessary to attain the objective of effective fiscal supervision.

(see paras 43, 53, operative part 2)

5. The principle of effectiveness precludes amended national legislation which, retroactively and without any transitional period, does not permit the offsetting of foreign corporation tax imposed on dividends paid by a capital company established in another Member State by submitting either a certificate relating to that tax in accordance with the legislation of the Member State in which the shareholder is fully taxable, or documentary evidence allowing the tax authorities of that Member State to determine, clearly and precisely, whether the conditions for obtaining that tax advantage have been met. It is for the referring court to determine a reasonable period for the submission of such a certificate or documentary evidence.

As regards the restitution of national taxes unduly levied, if the rules for restitution are amended by national law with retroactive effect, the principle of effectiveness requires new legislation to include transitional arrangements allowing an adequate period after the enactment of the legislation for lodging the claims for repayment which persons were entitled to submit under the earlier legislation.

(see paras 57, 59, operative part 3)

JUDGMENT OF THE COURT (First Chamber)

30 June 2011 (*)

(Free movement of capital – Income tax – Certificate relating to corporation tax actually paid on dividends of foreign origin – Prevention of double taxation of dividends – Tax credit for dividends paid by resident companies – Proof required as to the foreign tax deductible)

In Case C‑262/09,

REFERENCE for a preliminary ruling under Article 234 EC, from the Finanzgericht Köln (Germany), made by decision of 14 May 2009, received at the Court on 13 July 2009, corrected by decision of 10 August 2009, received at the Court on 7 September 2009, in the proceedings

Wienand Meilicke,

Heidi Christa Weyde,

Marina Stöffler

v

Finanzamt Bonn-Innenstadt,

THE COURT (First Chamber),

composed of A. Tizzano, President of the Chamber, M. Ilešič, E. Levits (Rapporteur), M. Safjan and M. Berger, Judges,

Advocate General: V. Trstenjak,

Registrar: K. Malacek, Administrator,

having regard to the written procedure and further to the hearing on 27 October 2010,

after considering the observations submitted on behalf of:

– Mr Meilicke, Ms Weyde and Ms Stöffler, by W. Meilicke and D. Rabback, Rechtsanwälte,

– the Finanzamt Bonn-Innenstadt, by G. Sasonow and, F. Mlosch, Prozessbevollmächtigte,

– the German Government, by M. Lumma and C. Blaschke, acting as Agents,

– the European Commission, by R. Lyal and W. Mölls, acting as Agents,

– after hearing the Opinion of the Advocate General at the sitting on 13 January 2011,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Articles 56 EC and 58 EC which have been replaced, from 1 December 2009, by Articles 63 TFEU and 65 TFEU.

2 The reference has been made in proceedings between Mr W. Meilicke, Ms H.C.Weyde and Ms M. Stöffler, in their capacity as heirs of Mr H. Meilicke, who died on 3 May 1997, and the Finanzamt Bonn-Innenstadt (Germany) (Bonn‑Innenstadt Tax Office, ‘the Finanzamt’), regarding the taxation of dividends paid to the deceased in the course of the years 1995 to 1997 by companies established in Denmark and in the Netherlands.

Legal context

Community law

3 In Chapter 4, entitled ‘Capital and payments’, of Title III, itself entitled ‘Free movement of persons, services and capital,’ in Part Three of the EC Treaty, dealing with the policies of the Community, Article 56(1) EC stated:

‘Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.’

4 Article 58(1) EC provided:

‘The provisions of Article 56 shall be without prejudice to the right of Member States:

(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;

…’ .

5 Article 58(3) EC provided:

‘The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 56 EC.’

6 Article 2(1) of Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation (OJ 1997 L 336, p. 15) provides:

‘1. The competent authority of a Member State may request the competent authority of another Member State to forward the information referred to in Article 1(1) in a particular case. …’

German law applicable to the years 1995 to 1997

7 Under Paragraphs 1, 2 and 20 of the Law on Income Tax (Einkommensteuergesetz) of 7 September 1990 (BGBl. 1990 I, p. 1898), as amended by the Law of 13 September 1993 (BGBl. 1993 I, p. 1569, ‘the EStG’), dividends payable to a person resident in Germany and therefore fully taxable there for income tax purposes, are taxed there as income from capital.

8 Under Paragraph 27(1) of the Law on Corporation Tax (Körperschaftsteuergesetz) of 11 March 1991 (BGBl. 1991 I, p. 638), as amended by the Law of 13 September 1993 (‘the KStG’), dividends distributed by capital companies fully taxable for corporation tax purposes in Germany, are subject to that tax at 30%. That results in a distribution of 70% of the pre-tax profits and a tax credit of 30/70, that is 3/7 of the dividends received.

9 Under the second sentence of Paragraph 36(2)(3) of the EStG, as interpreted in the light of Case C-292/04 Meilicke and Others [2007] ECR I-1835, that tax credit applies to dividends received from capital companies fully taxable for corporation tax purposes in Germany or in another Member State. Consequently, persons...