Organon Portuguesa – Produtos Químicos e Farmacêuticos Ldª

(Reference for a preliminary ruling from the

Supremo Tribunal Administrativo)

(Indirect taxes on the raising of capital – Directive 69/335/EEC – Disposal of shares of a limited company)

Summary of the Judgment

Tax provisions – Harmonisation of laws – Indirect taxes on the raising of capital – Capital duty levied on capital companies

(Council Directive 69/335, Art. 12(1)(a))

Directive 69/335 concerning indirect taxes on the raising of capital, as amended by Directive 85/303, does not preclude national legislation which provides, in respect of the drawing-up of a notarial act recording a disposal of shares which is not linked to an increase in capital, for the charging of fees which are fixed by reference to a flat rate and/or the value of the shares being disposed of.

A tax constituted by such fees falls within the exception provided for in Article 12(1)(a) of Directive 69/335, which allows a tax to be charged in the event of a transfer of securities and, consequently, collection thereof is not contrary to the directive. The fact that the amount of those fees increases directly and without an upper limit in proportion to the value of the shares disposed of is not such as to affect this conclusion. By providing that the duties to which it refers may be ‘charged at a flat rate or not’, Article 12(1)(a) of Directive 69/335 allows the Member States freely to determine the rate thereof.

(see paras 21-25, operative part)

7 September 2006 (*)

(Indirect taxes on the raising of capital – Directive 69/335/EEC – Disposal of shares of a limited company)

In Case C-193/04,

REFERENCE for a preliminary ruling under Article 234 EC from the Supremo Tribunal Administrativo (Supreme Administrative Court) (Portugal), made by decision of 17 March 2004, received at the Court on 26 April 2004, in the proceedings

Organon Portuguesa – Produtos Químicos e Farmacêuticos Lda,

intervening party:

Ministério Público,

THE COURT (First Chamber),

composed of P. Jann, President of the Chamber, N. Colneric, J.N. Cunha Rodrigues, E. Juhász (Rapporteur) and E. Levits, Judges,

Advocate General: C. Stix-Hackl,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 12 May 2005,

after considering the observations submitted on behalf of:

– Organon Portuguesa – Produtos Químicos e Farmacêuticos Lda, by I. Vieira, advogada,

– the Portuguese Government, by L. Fernandes and A.F. Ferreira, acting as Agents,

– the German Government, by A. Tiemann, acting as Agent,

– the Spanish Government, by F. Díez Moreno, acting as Agent,

– the Commission of the European Communities, by L. Ström, G. Braga da Cruz and M. Afonso, acting as Agents,

having decided, after hearing views of the Advocate General, to proceed to judgment without an Opinion,

gives the following

1 The reference for a preliminary ruling concerns the interpretation of Articles 4(3), 10(c) and 12(1)(e) of Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital (OJ, English Special Edition, 1969(II), p. 412), as amended by Council Directive 85/303/EEC of 10 June 1985 (OJ 1985 L 156, p. 23) (‘Directive 69/335’).

2 This reference was made in the context of proceedings between the Fazenda Pública (Treasury) and the Company Organon Portuguesa – Produtos Químicos e Farmacêuticos Lda (‘Organon Portuguesa’) concerning the payment of fees for the drawing-up of a notarial act recording a disposal of shares.

Legal context

Community legislation

3 Recitals 7 to 9 of Directive 69/335 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

4 Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

5 Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

[2000] ECR I‑7213, paragraph 23).

18Article 11(a) of Directive 69/335 prohibits any form of taxation whatsoever on the creation, issue, admission to quotation on a stock exchange, making available on the market or dealing in stocks, shares or other securities of the same type, or of the certificates representing such securities, by whomsoever issued.

19Therefore, this provision also applies to any taxation imposed in respect of essential formalities linked to the disposal of shares, such as the notarial fees at issue in the main proceedings.

20However, Article 12 of Directive 69/335 provides for exceptions to Articles 10 and 11. One of those exceptions, contained in Article 12(1)(a), relates to ‘duties on the transfer of securities, whether charged at a flat rate or not’. It is common ground that the disposal of shares falls within the concept of transfer of securities.

21In that respect, it is clear from the case-law of the Court (Case C-236/97 Codan [1998] ECR I‑8679, paragraph 31, and the order of 5 February 2004 in Case C‑357/02 SONAE Distribuição, not published in the ECR, paragraph 23) that Article 12(1)(a) of Directive 69/335 allows a tax to be charged in the event of a transfer of securities, irrespective of whether the company issuing the securities is listed on a Stock Exchange and of whether those securities are transferred on the Stock Exchange or directly from the transferor to the transferee.

22Consequently, a tax such as that constituted by the fees at issue in the main proceedings falls within the exception provided for in Article 12(1)(a) of Directive 69/335 and, consequently, collection thereof is not contrary to the directive.

23It should be added in that respect that the fact that the amount of those fees increases directly and without an upper limit in proportion to the value of the shares disposed of is not such as to affect this conclusion (order in SONAE Distribuição, paragraph 25).

24By providing that the duties to which it refers may be ‘charged at a flat rate or not’, Article 12(1)(a) of Directive 69/335 allows the Member States freely to determine the rate thereof. Moreover, those duties are not deemed to constitute the consideration for a service rendered, with the result that the amount thereof need not be linked to the cost of that service and that the criteria established by the case-law (see, in particular, Case C-206/99 SONAE [2001] ECR I‑4679, paragraphs 32 to 34, and the case-law cited) to distinguish duties paid by way of fees or dues, within the meaning of Directive 69/335, from those which do not come within that category are not applicable to them (order in SONAE Distribuição, paragraphs 26 and 27).

25In the light of the foregoing, the answer to the questions referred must be that Directive 69/335 does not preclude national legislation which provides, in respect of the drawing-up of a notarial act recording a disposal of shares which is not linked to an increase in capital, for the charging of fees which are fixed by reference to a flat rate and/or to the value of the shares disposed of.

Costs

26Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (First Chamber) hereby rules:

Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital, as amended by Council Directive 85/303/EEC of 10 June 1985, does not preclude national legislation which provides, in respect of the drawing-up of a notarial act recording a disposal of shares which is not linked to an increase in capital, for the charging of fees which are fixed by reference to a flat rate and/or the value of the shares being disposed of.

[Signatures]

*

Language of the case: Portuguese.