On October 26, 2016 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Wathelet in Case C-14/16, Euro Park Service, having assumed the rights and obligations of Cairnbulg Nanteuil versus Ministre des finances et des comptes publics (ECLI:EU:C:2016:806) was published.
This request for a preliminary ruling of December 16, 2015 by the Conseil d’État (Council of State) (France), lodged at the Court Registry on January 11, 2016, is concerned with the interpretation of Article 49 TFEU and Article 11 of Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States.
The request was made in proceedings between the company governed by Luxembourg law Euro Park Service (‘Euro Park’), successor in law to the French company SCI Cairnbulg Nanteuil (‘SCI Cairnbulg Nanteuil’), and the French tax authority (‘the tax authority’) concerning the imposition of supplementary corporation tax assessments, the additional contribution for that tax and the corresponding penalties. According to the French tax authority, those taxes and penalties arise from the fact, first, that SCI Cairnbulg Nanteuil had not sought the ministerial approval provided for under French law in the case of transfers to a foreign company and, secondly, that, in any event, that approval would not have been granted to it since the company’s dissolution was not justified for commercial reasons, but had the objective of evading or avoiding tax.
The referring court considers that in order to resolve the dispute before it, it is necessary to ascertain, in particular, whether Article 49 TFEU precludes national legislation which, for the purpose of preventing tax evasion and avoidance, systematically imposes a condition that the use of the common system of taxation applicable to mergers and operations treated as such is to be subject to a process of prior approval only for transfers made to foreign legal persons.
The dispute in the main proceedings and the questions referred for a preliminary ruling
· Euro Park was the shareholder of SCI Cairnbulg Nanteuil and is its successor in law.
· On 26 November 2004, SCI Cairnbulg Nanteuil was ‘wound up without going into liquidation ... by and for the benefit of its sole shareholder ...’. At that time, SCI Cairnbulg Nanteuil opted to use the special system for mergers provided for in Article 210 et seq. of the CGI. Consequently, it did not, for the financial year ending 26 November 2004, declare for the purposes of corporation tax the net capital gains and profits generated by all the assets which it transferred to Euro Park Service.
· It is clear from the order for reference that those transfers, made up of immovable property, were valued at their net accounting value, that is to say EUR 9 387 700, in the notarial instrument of 19 April 2005 by which the transfer of the whole of the assets of SCI Cairnbulg Nanteuil to Euro Park Service was recorded. On the same day, the latter transferred that immovable property to SCI IBC Ferrier for the sum of EUR 15 776 600, corresponding to its market value as at 26 November 2004.
· Following a tax inspection, the tax authority called into question SCI Cairnbulg Nanteuil’s use of the special system for mergers. According to that authority, SCI Cairnbulg Nanteuil had not sought the ministerial approval provided for under the CGI and that approval would not, in any event, have been granted, since the operation at issue could not be justified for commercial reasons, but had the objective of evading or avoiding tax.
· Consequently, Euro Park, the successor in law to Cairnbulg Nanteuil, was made liable for the additional tax and the tax contributions, together with the penalties laid down in Article 1729 of the CGI in the event of a deliberate infringement.
· Euro Park requested the tribunal administratif de Paris (Administrative Court, Paris) (France) to order the cancellation of those taxes and penalties. By judgment of 6 July 2011, the tribunal administratif de Paris (Administrative Court, Paris) rejected that request. By judgment of 11 April 2013, the cour d’appel de Paris (Court of Appeal, Paris) (France) upheld the judgment of the tribunal administratif de Paris (Administrative Court, Paris). Euro Park brought an appeal in cassation before the Conseil d’État (Council of State). In that context, the Conseil d’État (Council of State) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘1. When national legislation of a Member State makes use, in domestic law, of the option under Article 11(1) of [Directive 90/434], is there scope for the measures adopted for the implementation of that option to be reviewed in the light of primary EU law?
2. If so, must the provisions of Article 49 TFEU be interpreted as precluding national legislation, aimed at preventing tax evasion or avoidance, from imposing a condition that the use of the common system of taxation applicable to mergers and transactions treated as such is to be subject to a process of prior approval only as regards transfers made to foreign legal persons, but not transfers made to legal persons incorporated under national law?’
· Written observations were submitted by Euro Park, the French Government and the European Commission. Those parties presented oral argument at the hearing on September 7, 2016
Conclusion
The Advocate General invites the Court to answer the second question referred by the Conseil d’État (Council of State) (France) as follows:
Article 49 TFEU and Article 11(1)(a) of Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States preclude national legislation, aimed at preventing tax evasion or avoidance, from imposing a condition that the use of the common system of taxation applicable to mergers and transactions treated as such is to be subject to a process of prior approval such as that at issue, which applies only to transfers made to foreign legal persons, but not to transfers made to legal persons incorporated under national law and requires the taxpayer, as a matter of course, to provide proof that an operation is genuine and proper, even where there is no evidence whatsoever of tax evasion or tax avoidance.
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