Case C-494/03
Senior Engineering Investments BV
v
Staatssecretaris van Financiën
(Reference for a preliminary ruling from the
Hoge Raad der Nederlanden)
(Directive 69/335 – Indirect taxes on the raising of capital – National rules taxing a (subsidiary) company by way of capital duty in respect of a contribution made by its parent company (the grandparent company) in favour of its subsidiary (a sub-subsidiary company) – Capital duty – Increase of capital – Payment ‘to the share premium account’ – Increase in the assets of the company – Increase in the value of shares – Provision of services by a member – Payment made by a member of a member – Payment to a subsidiary – ‘Real recipient’ – Levying of capital duty once only (in the Community) – Article 52 of the EC Treaty (now, after amendment, Article 43 EC) – Freedom of establishment – National practice exempting a (subsidiary) capital company from taxation only if its subsidiary (sub-subsidiary company) is also established in that Member State)
Summary of the Judgment
1.Tax provisions – Harmonisation of laws – Indirect taxes on the raising of capital –Capital duty levied on capital companies
(Council Directive 69/335, Art. 4(2)(b) and (c))
2.Tax provisions – Harmonisation of laws – Indirect taxes on the raising of capital – Capital duty levied on capital companies
(Council Directive 69/335, sixth recital, Arts 2(1) and 4(2)(b))
1.The ‘increase in the capital’ referred to in Article 4(1)(c) of Directive 69/335 concerning indirect taxes on the raising of capital, as amended by Directive 85/303, means a formal increase of a company’s capital by means either of an issue of new shares or by an increase in the nominal value of the existing shares.
On the other hand, and to the extent to which the assets of the company are defined as all the property which the members have contributed, together with any increase in its value, the ‘increase in the assets’ within the meaning of Article 4(2)(b) of the directive includes, in principle, every kind of increase in the net assets of a capital company.
The fact that a contribution was paid not by a member of the capital company in question but by the parent company of that company, and thus by a member of a member, does not prevent that contribution from being deemed a ‘provision of services by a member’ within the meaning of Article 4(2)(b) of that directive, since the contribution in question was paid by the grandparent company to the sub-subsidiary in order to increase the value of the shares in the latter, and that increase was primarily in the interests of its sole member, the subsidiary. The contribution must thus be attributed to the subsidiary.
(see paras 33-34, 39)
2.Article 4(2)(b) of Directive 69/335 concerning indirect taxes on the raising of capital, as amended by Directive 85/303 of 10 June 1985, read in conjunction with Article 2(1) thereof and the sixth recital in its preamble, precludes a Member State from levying duty on a (subsidiary) capital company in respect of a contribution paid by its parent company (the grandparent company) to its subsidiary (a sub-subsidiary) where, under the directive, the contribution at issue is subject to capital duty payable by the sub-subsidiary.
Given that a contribution to a company may be taxed only once (in the Community), that contribution cannot be subject to taxation a second time, payable on that occasion by the subsidiary.
In that connection, it is of little importance that the contribution in question may possibly have also increased the assets of the subsidiary, since such an increase cannot constitute anything more than an automatic and incidental economic repercussion of the contribution made to the sub-subsidiary company and is not therefore attributable to a second separate contribution which could, as such, be subject to tax. Similarly, it is of little importance that the Member State with authority to tax the sub-subsidiary did not in fact do so. Member States are free to exempt contributions to companies from capital duty, without such exemption entailing the consequence that another Member State is entitled to tax them.
(see paras 40-44, operative part)