16.6.2014

EN

Official Journal of the European Union

C 184/11

(Case C-112/14)

2014/C 184/14

Language of the case: English

Parties

Applicant: European Commission (represented by: R. Lyal, L. Armati, agents)

Defendant: United Kingdom of Great Britain and Northern Ireland

The applicant claims that the Court should:

—declare that by adopting and maintaining tax legislation concerning attribution of gains to members of non-resident companies which provides for a difference in treatment between domestic and cross-border activities, the United Kingdom has failed to fulfil its obligations under Article 63 TFEU and Article 40 EEA or, in the alternative, Article 49 TFEU and Article 31 EEA;

—order United Kingdom of Great Britain and Northern Ireland to pay the costs.

Pleas in law and main arguments

The national legislation in issue

Section 13 of the Taxation of Chargeable Gains Act 1992 provides that where certain types of non-resident company earn profits, those profits are immediately taxable in the hands of shareholders and other participators who are residents of the United Kingdom, whether or not the latter in fact receive any income.

The main argument

UK residents are liable for tax on the profits of certain non-resident companies in which they are participators, while would not be so liable if the companies concerned were resident in the United Kingdom. That difference in taxation is likely to discourage UK taxpayers from investing in such non-resident companies, contrary to Article 63 TFEU and Article 40 EEA.

The measure in issue may prevent certain types of tax avoidance and abuse. However, its application is not limited to hypotheses of tax avoidance or abuse and the measure is therefore not justified.