In Case C‑788/19

10By its action, the Commission submits that the Kingdom of Spain has failed to fulfil its obligations under Articles21, 45, 49, 56 and 63 TFEU and Articles28, 31, 36 and 40 of the EEA Agreement on account of the consequences attached by its legislation to the failure to comply with, or the partial or late compliance with, the obligation to declare overseas assets or rights by means of ‘Form 720’.

11It should be recalled that when a national measure concerns several of the freedoms of movement guaranteed by the Treaties, the Court will in principle examine the measure in dispute in relation to only one of those freedoms if it appears, in the light of the subject matter of that measure, that the other freedoms are entirely secondary in relation to that freedom and may be considered together with it (see, to that effect, concerning a measure relating to both free movement of capital and freedom of establishment, judgments of 13November 2012, Test Claimants in the FII Group Litigation, C‑35/11, EU:C:2012:707, paragraphs89 to 93, and of 28February 2013, Beker and Beker, C‑168/11, EU:C:2013:117, paragraphs25 to 31 and, concerning a measure relating to both the free movement of capital and the freedom to provide services, judgment of 26May 2016, NN (L) International, C‑48/15, EU:C:2015:356, paragraph39).

12Under the national legislation at issue in the present case, Spanish residents who fail to declare or who make a partial or late declaration of assets and rights held abroad are liable for additional assessment of the tax due on the amounts corresponding to the value of those assets or of those rights, including where they have been acquired during a period that is already time-barred, and to the imposition of a proportional fine and specific flat-rate fines.

13Such legislation, which relates generally to the ownership of assets or rights abroad by Spanish residents, without that ownership necessarily taking the form of acquisitions of shareholdings in the capital of entities established abroad or being principally motivated by the wish to receive financial services abroad, falls within the scope of the free movement of capital. Although that legislation may also affect the freedom to provide services and the freedom of establishment, those freedoms appear, however, to be secondary in relation to the free movement of capital, to which they may be linked. The same is true, in any event, of the freedom of movement of workers.

14It should also be noted that the Commission has not adduced sufficient evidence to enable the Court to assess how the national legislation at issue affects the freedom of movement of Union citizens or the free movement of workers guaranteed in Articles21 and 45 TFEU.

15It follows from the foregoing that the complaints raised by the Commission must be considered in terms of the free movement of capital guaranteed in Article63 TFEU and in Article40 of the EEA Agreement, the legal scope of which is essentially the same (see, to that effect, judgments of 11June 2009, Commission v Netherlands, C‑521/07, EU:C:2009:360, paragraph33, and of 5May 2011, Commission v Portugal, C‑267/09, EU:C:2011:273, paragraph51).

The existence of a restriction on the movement of capital

Arguments of the parties

16According to the Commission, the legislation at issue, which has no equivalent in respect of assets or rights held by taxpayers on the national territory, establishes a restriction on the free movement of capital in that it has the effect of deterring Spanish residents from transferring their assets abroad. It submits that, as the Court has already acknowledged in its judgment of 11June 2009, X and Passenheim-van Schoot (C‑155/08 and C‑157/08, EU:C:2009:368, paragraphs36 to 40), there is no objective difference between taxpayers resident in Spain depending on whether their assets are located on or outside Spanish territory.

17The Kingdom of Spain, for its part, considers that persons who conceal their assets for tax reasons cannot rely on the free movement of capital. It also submits that the penalties for failure to comply with the obligation to provide information cannot be regarded as imposing restrictions on that freedom, since they are necessary in order to ensure the effectiveness of that obligation. In any event, in its view, in the light of the possibility of fiscal supervision, taxpayers whose assets are located on Spanish territory are not in the same situation as taxpayers whose assets are located outside Spanish territory.

Findings of the Court

18According to the settled case-law of the Court, measures imposed by a Member State which are such as to discourage, prevent or limit the opportunities of investors from that State to invest in other States constitute, inter alia, restrictions on the movement of capital within the meaning of Article63(1) TFEU (see, to that effect, judgments of 26September 2000, Commission v Belgium, C‑478/98, EU:C:2000:497, paragraph18; of 23October 2007, Commission v Germany, C‑112/05, EU:C:2007:623, paragraph19; and of 26May 2016, NN (L) International, C‑48/15, EU:C:2016:356, paragraph44).

19In the present case, the obligation to declare overseas assets or rights by means of ‘Form 720’ and the penalties for failure to comply with or for partial or late compliance with that obligation, which do not have an equivalent in respect of assets or rights located in Spain, establish a difference in treatment between Spanish residents according to the location of their assets. That obligation is likely to deter, prevent or restrict the opportunities for residents of that Member State to invest in other Member States and therefore constitutes, as the Court has already held with regard to legislation the objectives of which are to guarantee the effectiveness of fiscal supervision and to combat tax evasion linked to the concealment of assets abroad, a restriction on the free movement of capital, within the meaning of Article63(1) TFEU and Article40 of the EEA Agreement (see, to that effect, judgment of 11June 2009, X and Passenheim-van Schoot, C‑155/08 and C‑157/08, EU:C:2009:368, paragraphs36 to 40).

20The fact that that legislation is aimed at taxpayers who conceal their assets for tax reasons is not such as to call that conclusion into question. The fact that legislation aims to guarantee the effectiveness of fiscal supervision and to prevent tax evasion cannot preclude a finding that there is a restriction on the movement of capital. Those objectives are only among the overriding reasons in the public interest capable of justifying the imposition of such a restriction (see, to that effect, judgments of 11June 2009, X and Passenheim-van Schoot, C‑155/08 and C‑157/08, EU:C:2009:368, paragraphs45 and 46, and of 15September 2011, Halley, C‑132/10, EU:C:2011:586, paragraph30).

Justification for the restriction on the free movement of capital

Arguments of the parties

21If the contested legislation were to be regarded as a restriction on the movement of capital, the Commission and the Kingdom of Spain agree that such a restriction could be justified by the need to guarantee the effectiveness of fiscal supervision and by the objective of preventing tax evasion and avoidance. The Commission submits, however, that that legislation goes beyond what is necessary to attain those objectives.

Findings of the Court

22As stated in paragraph20 of this judgment, the need to guarantee the effectiveness of fiscal supervision and the objective of preventing tax evasion and avoidance are among the overriding reasons in the public interest capable of justifying the imposition of a restriction on the freedoms of movement (see, to that effect, judgments of 11June 2009, X and Passenheim-van Schoot, C‑155/08 and C‑157/08, EU:C:2009:368, paragraphs45 and 46, and of 15September 2011, Halley, C‑132/10, EU:C:2011:586, paragraph30).

23With regard to capital movements, Article65(1)(b) TFEU provides moreover that Article63 TFEU is to be without prejudice to the right of Member States to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation.

24In the present case, since the level of information available to the national authorities concerning assets held by their tax residents abroad is, overall, lower than that available to them concerning assets located on their territory, even taking into account the existence of mechanisms for the exchange of information or for administrative assistance between the Member States, the legislation at issue appears appropriate for ensuring the attainment of the objectives pursued. It must, however, be ascertained whether it goes beyond what is necessary to achieve those objectives.