État belge

(Reference for a preliminary ruling from the Cour de cassation (Belgium))

(Freedom of establishment – Article 52 of the EC Treaty (now, after amendment, Article 43 EC) − Non‑resident taxpayer carrying out a self-employed activity − Setting of minimum tax bases applicable only to non‑resident taxpayers − Whether justified by requirements in the general interest − Effectiveness of fiscal supervision − Not justified)

Opinion of Advocate General Mengozzi delivered on 16 November 2006

Judgment of the Court (First Chamber), 22 March 2007

Summary of the Judgment

Freedom of movement for persons – Freedom of establishment – Tax legislation

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

Article 52 of the Treaty (now, after amendment, Article 43 EC) precludes income tax legislation of a Member State which, for the assessment of the tax base in the absence of evidence provided by the interested parties or by the administration, lays down minimum tax bases only for non‑resident taxpayers.

Income derived from self-employed activity in the territory of the Member State concerned, whether by a resident taxpayer or a non-resident taxpayer, falls within the same category of income. Moreover, the situation of a resident taxpayer and that of a non-resident taxpayer present, for the tax authorities concerned, the same difficulties, with the result that those two categories of taxpayers are in an objectively comparable position. In those circumstances, a distinction based on the criterion of residence constitutes indirect discrimination, since it is liable to operate mainly to the detriment of nationals of other Member States, non-residents being in the majority of cases non-nationals.

(see paras 26, 28, 32, 38, operative part)

22 March 2007 (*)

(Freedom of establishment – Article 52 of the EC Treaty (now, after amendment, Article 43 EC) − Non‑resident taxpayer carrying out a self-employed activity − Setting of minimum tax bases applicable only to non‑resident taxpayers − Justified by requirements of general interest − Effectiveness of fiscal supervision − Not justified)

In Case C-383/05,

REFERENCE for a preliminary ruling under Article 234 EC from the Cour de cassation (Belgium), made by decision of 7 October 2005, received at the Court on 24 October 2005, in the proceedings

État belge,

THE COURT (First Chamber),

composed of P. Jann, President of the Chamber, R. Schintgen, A. Borg Barthet, M. Ilešič (Rapporteur) and E. Levits, Judges,

Advocate General: P. Mengozzi,

Registrar: R. Grass,

after considering the observations submitted on behalf of:

– Mr Talotta, by X. Thiebaut and X. Pace, avocats,

– the Belgian Government, by M. Wimmer, acting as Agent, assisted by B. van de Walle de Ghelcke, avocat,

– the Commission of the European Communities, by R. Lyal and D. Martin, acting as Agents,

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

gives the following

This reference for a preliminary ruling concerns the interpretation of Article 52 of the EC Treaty (now, after amendment, Article 43 EC).

The reference was made in the context of proceedings between Mr Talotta and the État belge (Belgian State) regarding the application to Mr Talotta in his capacity as a non‑resident taxpayer of a minimum tax base in respect of the 1992 tax year.

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 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.’

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.’

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.

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

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

21As regards resident taxpayers, it is also clear from the documents before the Court that the Belgian tax authorities may, in accordance with the criteria laid down in Article 342(1) of the Income Tax Code 1992, determine the profits to be taken into consideration by analogy with the normal profits of at least three similar resident tax payers.

22In the event that it is impossible to use that method for determining the profits, the documents before the Court also show that the authorities may, in accordance with the first paragraph of Article 341 of the Code, apply – in the case of resident taxpayers only – the flat-rate method of taxation on the basis of ‘signs or indications that the level of economic well-being enjoyed is higher than that accounted for by the income declared’.

23The turnover of non‑resident taxpayers, on the other hand, must, in the absence of evidence, be determined by applying the minimum tax bases.

24It must therefore be held that the national legislation at issue in the main proceedings treats taxpayers differently according to whether or not they are resident in Belgium.

25It cannot be accepted that the Member State of establishment may apply minimum tax bases solely to non‑resident taxpayers merely by reason of the fact that their tax residence is situated in another Member State, without depriving Article 52 of the Treaty of all meaning (see, by analogy, Case 270/83 Commission v France [1986] ECR 273, paragraph 18).

26In fact, the income received by a resident taxpayer in the context of a self-employed activity in the territory of the Member State concerned and the income acquired by a non‑resident taxpayer also in the context of a self-employed activity carried out in the territory of that Member State are in the same category of income, that is to say, income arising from self‑employed activities carried out in the territory of the same Member State.

27The Belgian Government asserts in support of its contentions that there are objective differences between the situation of residents and the situation of non‑residents as regards the means of proof available to the tax authorities for the purposes of establishing the base of the taxable income. In cases where a non-resident taxpayer’s operations are carried out in part in the territory of a Member State other than that in which he carries out his self-employed activity, it seems neither realistic nor effective, as a means of overcoming the practical problems entailed by the application of comparison-based taxation, to engage in an exchange of information with the State of residence using the mechanism provided for in 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 1977 L 336, p. 15). In the first place, the Belgian tax authorities do not have the benefit, in such cases, of information sent by the State of residence in the context of spontaneous or automatic exchanges of information and, secondly, they do not have precise factual evidence, with the result that the request for exchange of information would not be admissible.

28As the Advocate General pointed out at point 70 of his Opinion, in cases where a part of their operations is carried out in the territory of a Member State other than that in which they carry out their self-employed activities, a resident taxpayer and a non‑resident taxpayer present, for the tax authorities concerned, the same difficulties, with the result that those two categories of taxpayers are in an objectively comparable position.

29Moreover, it should be recalled that, in cases where the operations of a taxpayer are carried out in part in the territory of a Member State other than that in which he carries out his self-employed activity, a Member State may rely on Directive 77/799 in order to obtain from the competent authorities of the other Member State all the information enabling it to ascertain the correct amount of income tax, or all the information it considers necessary to ascertain the correct amount of income tax payable by a taxpayer under the legislation which it applies (see Case C‑422/01 Skandia and Ramstedt [2003] ECR I‑6817, paragraph 42 and the case‑law cited).

30Consequently, it must be held that, for the purposes of the national legislation at issue in the main proceedings, resident taxpayers and non‑resident taxpayers are in an objectively comparable situation.

31That interpretation is in no way weakened by the Belgian Government’s observation that the minimum tax bases provided for in the national legislation at issue in the main proceedings are often more favourable to non‑resident taxpayers than the comparison‑based taxation applied to resident taxpayers. Even on the assumption that the Belgian tax system is more often favourable to non‑resident taxpayers, the fact remains that where that system proves disadvantageous for non-resident taxpayers, it results in unequal treatment by comparison with resident taxpayers and thus creates a hindrance to the freedom of establishment guaranteed by Article 52 of the Treaty (see, by analogy, Case C‑141/99 AMID [2000] ECR I‑11619, paragraph 27 and the case‑law cited).

32In those circumstances, legislation of a Member State, such as the rule resulting from Article 342(2) of the Income Tax Code 1992 and Article 182 of the Royal Decree of 27 August 1993, which lays down minimum tax bases only for non‑resident taxpayers constitutes indirect discrimination on grounds of nationality within the meaning of Article 52 of the Treaty. In fact, even if such legislation provides for a distinction on the basis of residence, in that it denies non-residents certain tax benefits which are, conversely, granted to persons residing within the national territory, it is liable to operate mainly to the detriment of nationals of other Member States, since non-residents are in the majority of cases foreigners (see, by analogy, Schumacker, paragraph 28).

33It is necessary therefore to consider whether that discrimination may be justified.

34The Belgian Government contends that the application of the minimum tax bases only to non-resident taxpayers is justified by the need to ensure the effectiveness of fiscal supervision and that it is consistent with the principle of proportionality. It states that the comparison-based method of taxation laid down for resident taxpayers is not applicable to non‑resident taxpayers owing to difficulties of a practical nature, in particular, the impossibility of having recourse to Directive 77/799.

35In that respect, it must be pointed out that the effectiveness of fiscal supervision constitutes an overriding requirement of general interest capable of justifying a restriction on the exercise of fundamental freedoms guaranteed by the Treaty (see, to that effect, Case C‑254/97 Baxter and Others [1999] ECR I‑4809, paragraph 18 and the case‑law cited).

36However, as appears from paragraph 28 of this judgment, the difficulties of a practical nature on which the Belgian Government relies apply in the same way to resident taxpayers and, as appears from paragraph 29, it is open to the Member State concerned, on the basis of Directive 77/799, to enter into an exchange of information with other Member States.

37It follows that the need to guarantee the effectiveness of fiscal supervision does not justify a difference in treatment, and the treatment applied to non‑resident taxpayers must therefore be identical to that provided for resident taxpayers.

38Having regard to all of the foregoing, the answer to the question referred must be that Article 52 of the Treaty precludes legislation of a Member State, such as the rule resulting from Article 342(2) of the Income Tax Code 1992 and Article 182 of the Royal Decree of 27 August 1993, which lays down minimum tax bases only for non‑resident taxpayers.

39Costs

39Since 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:

Article 52 of the EC Treaty (now, after amendment, Article 43 EC) precludes legislation of a Member State, such as the rule resulting from Article 342(2) of the Income Tax Code 1992 and Article 182 of the Royal Decree of 27 August 1993 implementing the Income Tax Code 1992, which lays down minimum tax bases only for non‑resident taxpayers.

[Signatures]

*

Language of the case: French.