On January 21, 2016 on the website of the Court of Justice of the European Union the Opinion of Advocate General Bobek in Case C-48/15 État belge versus  was published (ECLI:EU:C:2016:45).

Facts, procedure and questions referred

·        NN (L) International (the respondent) is an investment company with variable share capital. Its registered office is in Luxembourg. According to the order for reference submitted by the cour d’appel de Bruxelles (Court of Appeal, Brussels), the respondent duly filed its annual tax declaration for the net amounts invested in Belgium in 2005. The respondent also paid the tax within the prescribed period.

·        In the proceedings at first instance, the respondent challenged the legality of the annual tax and sought the reimbursement of that tax which amounted to EUR 185 739.34. The respondent maintained that the annual tax infringed Directive 69/335 and Directive 85/611, together with the provisions of the Treaty concerning the freedom to provide services and the free movement of capital. In the alternative, the respondent claimed that the annual tax was contrary to Article 22 of the Convention signed by Belgium and the Grand Duchy of Luxembourg on 17 September 1970 for the avoidance of double taxation and governing certain other issues in respect of tax on income and capital (‘the Double Taxation Convention’). The court at first instance upheld the alternative claim. It stated that the annual tax infringed Article 22 of the Double Taxation Convention, considering it to be a tax on wealth. Consequently, it declared that the annual tax was not payable by NN (L) International. However, the first instance court declared the plea based on the infringement of Directive 69/335 to be unfounded. It did not rule on the other pleas based on the infringement of the Treaty and Directive 85/611.

·        The Belgian tax authority brought an appeal against the first instance decision. It maintained that the tax at issue was not covered by the Double Taxation Convention and that Article 160 et seq. of the Inheritance Tax Code was compatible with the aforementioned provisions of EU law. NN (L) International sought confirmation of the first instance decision and made a cross-appeal, in the alternative, in respect of the first instance court’s decision to reject the claim based on the infringement of Directive 69/335 and not to rule on the claims based on the infringement of the other provisions of EU law.

·        In those circumstances, the cour d’appel de Bruxelles (Court of Appeal, Brussels) decided to stay the proceedings and to refer the following questions for a preliminary ruling:

(1)   Must Council Directive 69/335 … concerning indirect taxes on the raising of capital, and more specifically Articles 2, 4, 10 and 11 thereof read together, be interpreted as precluding provisions of national law, such as Articles 161 and 162 of the Belgian Inheritance Tax Code, amended by the Programme Law of 22 December 2003, concerning the tax on undertakings for collective investment, in so far as that tax is imposed annually on undertakings for collective investment established as companies with share capital in another Member State and marketing their units in Belgium, on the total amount of their units subscribed in Belgium reduced by the amount of repurchases or refunds of those subscriptions, with the consequence that the sums collected in Belgium by such undertakings for collective investment are subject to that tax while they remain at the disposal of those undertakings?

(2)   Must Articles 49 to 55 and 56 to [60] of the EC Treaty, read, if appropriate, in conjunction with Articles 10 and 293, second indent, of the EC Treaty be interpreted as precluding a Member State from modifying unilaterally the criterion on the basis of which a tax is imposed, as provided for by Article 161 et seq. of the Belgian Inheritance Tax Code, in order to replace a personal criterion for taxation, based on the domicile of the taxpayer and laid down in international tax law, with an alleged criterion of actual connection, which is not laid down in international tax law, account being taken of the fact that in order to establish its fiscal sovereignty the Member State adopts a specific penalty, such as that laid down by Article 162(3) of the Belgian Inheritance Tax Code, as regards foreign operators only?

(3)   Must Articles 49 and 56 of the EC Treaty, read, if appropriate, in conjunction with Articles 10 and 293, second indent, of the EC Treaty, be interpreted as precluding an imposition of tax, such as that described above, which, inasmuch as it takes no account of the tax already imposed in the Member State of origin of the undertakings for collective investment established in another Member State, represents an additional pecuniary burden likely to impede the marketing of their units in Belgium?

(4)   Must Council Directive 85/611 … on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, read, if appropriate, in conjunction with Articles 10 and 293, second indent, of the EC Treaty, be interpreted as precluding an imposition of tax, as described above, inasmuch as it prejudices the principal aim of the directive of facilitating the marketing of units of undertakings for collective investment in the European Union?

(5)   Must Articles 49 and 56 of the EC Treaty be interpreted as precluding the administrative burdens incurred by the levying of taxation such as that described above on undertakings for collective investment that market their units in Belgium?

(6)   Must Articles 49 and 56 of the EC Treaty be interpreted as precluding a provision of national law, such as Article 162(2) of the Belgian Inheritance Tax Code, inasmuch as that provision imposes a specific penalty on undertakings for collective investment established in another Member State that market their units in Belgium, namely the prohibition, ordered by a court, of making future investments of its units in Belgium in the event of failure to submit their declarations by 31 March each year or if they fail to pay the tax described above?

·        Written observations were submitted by NN (L) International, the Belgian Government and the European Commission. The parties participating in the written stage presented oral argument at the hearing on 28 October 2015.

Conclusion

In view of the foregoing, I recommend to the Court to answer the questions referred to it by the cour d’appel de Bruxelles (Court of Appeal, Brussels) as follows:

·        Council Directive 69/335 of 17 July 1969 concerning indirect taxes on the raising of capital does not preclude the levying of a tax on UCIs established in another Member State such as the annual tax on UCIs at issue in the main proceedings.

·        Council Directive 85/611 of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities should be interpreted as not precluding the imposition of a tax, such as the annual tax on UCIs at issue in the main proceedings.

·        Article 56(1) EC does not preclude tax legislation of a Member State such as the legislation at issue in the main proceedings, which subjects resident and non-resident UCIs to an annual tax on the basis of the net amounts subscribed in its territory.

·        Article 49 EC does preclude a sanction such as that provided for in Article 162(2) of the Belgian Inheritance Tax Code, consisting of a potential prohibition, by court order, on the marketing of units in the territory of a Member State in the future, which is applicable only to foreign UCIs.

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