On June 5, 2018 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Mengozzi in the Case C-135/17, X-GmbH versus Finanzamt Stuttgart-Körperschaften (ECLI:EU:C:2018:389) was published. Unfortunately the opinion is not available in the English language. It is however available in several other languages, like a.o. German, French and Italian.
Questions referred for a preliminary ruling
1. Is Article 57(1) EC (now Article 64(1) TFEU) to be interpreted as meaning that a restriction in a Member State which existed on 31 December 1993 in respect of the movement of capital to and from third countries involving direct investments not affected by Article 56 EC (now Article 63 TFEU) even if the national law in force at the relevant date restricting the movement of capital to and from third countries essentially applied only to direct investments but was extended after that date to cover also investment holdings in foreign companies below the shareholding threshold of 10%?
2. If the first question is to be answered in the affirmative: Is Article 57(1) EC to be interpreted as meaning that a national-law restriction in respect of the movement of capital to or from third countries involving direct investments to be regarded as applicable on the relevant date of 31 December 1993, if later national law substantially corresponding to the restriction in force at the relevant date enters into force, the restriction existing at the relevant date being nevertheless substantially amended for a short time by legislation which formally entered into force but was in practice never applied due to the fact that it was replaced by the legislation at present in force before it could be applied to a specific case for the first time?
If either of the first two questions is to be answered in the negative: Does Article 56 EC preclude legislation of a Member State under which the basis of assessment to tax of a taxable person resident in that Member State, which holds at least 1% of the shares in a company established in another State (in the present case, Switzerland), includes positive income earned by that company derived from capital investments pro rata, in the amount of the shareholding, where such income is taxed at a lower rate than in the Member State?
In his conclusion the Advocate General suggests that the Court answers the questions referred by the Bundesfinanzhof as follows:
Article 57 (1) EC must be interpreted as meaning that national legislation which, on December 31, 1993, provided that direct investments in a foreign company, residing in a third country, were taxed at the level of a taxpayer in a Member State from a 10% holding, and the effects of which continued after December 31, 1993, until such legislation was replaced by another national regulation which, in the case of direct investment, was essentially identical to the regulation that was in force on December 31, 1993 falls within the scope of that article.
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