Case C‑326/12

Rita van Caster

and

Patrick van Caster

v

Finanzamt Essen-Süd

(Request for a preliminary ruling from the Finanzgericht Düsseldorf)

‛Reference for a preliminary ruling — Free movement of capital — Article 63 TFEU — Taxation of income from investment funds — Investment fund’s obligations to communicate and publish certain information — Flat-rate taxation of income from investment funds which do not comply with communication and publication obligations’

Summary — Judgment of the Court (First Chamber), 9 October 2014

Free movement of capital and liberalisation of payments — Restrictions — Tax legislation — Income tax — Taxation of income from investment funds — National legislation prescribing obligations to communicate and publish information on resident and non-resident investment funds — Flat-rate taxation of the income from those funds in case of non-compliance with those obligations — Restriction — Justification — Conditions — National legislation not allowing the taxpayer to provide evidence or information that could prove the actual size of that income — Not permissible

(Art. 63 TFEU)

Article 63 TFEU must be interpreted as precluding national legislation which provides that the failure by a non-resident investment fund to comply with the obligations to communicate and publish certain information required by that legislation, which are applicable without distinction to resident and non-resident investment funds alike, resulting in the flat-rate taxation of the income which the taxpayer earns from that investment fund, since that legislation does not allow the taxpayer to provide evidence or information that could prove the actual size of that income.

By their nature, those obligations are unlikely to be complied with by an investment fund which is not active in the market of the Member State of taxation and does not actively target that market. Since such funds are generally non-resident funds, such national legislation in the main proceedings is likely to deter a investor resident in the Member State of taxation from acquiring holdings in a non-resident investment fund, since such an investment is likely to expose such an investor to a disadvantageous flat-rate tax without offering him the opportunity to produce evidence or information which could demonstrate the actual size of that investor’s income

Such legislation constitutes, therefore, a restriction on the free movement of capital which is prohibited, in principle, by Article 63 TFEU.

It is true that both the need to guarantee the effectiveness of fiscal supervision and the need to ensure effective collection of tax constitute overriding reasons in the public interest capable of justifying such a restriction.

However, national legislation which indiscriminately prevents taxpayers who have acquired holdings in non-resident investment funds from adducing evidence which satisfies criteria, in particular those of presentation, other than those laid down for national investments by the first Member State, goes beyond what is necessary to ensure effective fiscal supervision.

In fact, it is not a priori inconceivable that those taxpayers may be able to provide relevant documentary evidence enabling the tax authorities of the Member State of taxation to ascertain, clearly and precisely, the information required to establish correctly the taxation of the income from investment funds. While those taxpayers themselves may not have all of the information required it is conceivable that they can obtain that information from the non-resident investment fund concerned and send it to the tax authorities.

(see paras 36-38, 46, 49-51, 58 and operative part)

Case C‑326/12

Rita van Caster

and

Patrick van Caster

v

Finanzamt Essen-Süd

(Request for a preliminary ruling from the Finanzgericht Düsseldorf)

‛Reference for a preliminary ruling — Free movement of capital — Article 63 TFEU — Taxation of income from investment funds — Investment fund’s obligations to communicate and publish certain information — Flat-rate taxation of income from investment funds which do not comply with communication and publication obligations’

Summary — Judgment of the Court (First Chamber), 9 October 2014

Free movement of capital and liberalisation of payments — Restrictions — Tax legislation — Income tax — Taxation of income from investment funds — National legislation prescribing obligations to communicate and publish information on resident and non-resident investment funds — Flat-rate taxation of the income from those funds in case of non-compliance with those obligations — Restriction — Justification — Conditions — National legislation not allowing the taxpayer to provide evidence or information that could prove the actual size of that income — Not permissible

(Art. 63 TFEU)

Article 63 TFEU must be interpreted as precluding national legislation which provides that the failure by a non-resident investment fund to comply with the obligations to communicate and publish certain information required by that legislation, which are applicable without distinction to resident and non-resident investment funds alike, resulting in the flat-rate taxation of the income which the taxpayer earns from that investment fund, since that legislation does not allow the taxpayer to provide evidence or information that could prove the actual size of that income.

By their nature, those obligations are unlikely to be complied with by an investment fund which is not active in the market of the Member State of taxation and does not actively target that market. Since such funds are generally non-resident funds, such national legislation in the main proceedings is likely to deter a investor resident in the Member State of taxation from acquiring holdings in a non-resident investment fund, since such an investment is likely to expose such an investor to a disadvantageous flat-rate tax without offering him the opportunity to produce evidence or information which could demonstrate the actual size of that investor’s income

Such legislation constitutes, therefore, a restriction on the free movement of capital which is prohibited, in principle, by Article 63 TFEU.

It is true that both the need to guarantee the effectiveness of fiscal supervision and the need to ensure effective collection of tax constitute overriding reasons in the public interest capable of justifying such a restriction.

However, national legislation which indiscriminately prevents taxpayers who have acquired holdings in non-resident investment funds from adducing evidence which satisfies criteria, in particular those of presentation, other than those laid down for national investments by the first Member State, goes beyond what is necessary to ensure effective fiscal supervision.

In fact, it is not a priori inconceivable that those taxpayers may be able to provide relevant documentary evidence enabling the tax authorities of the Member State of taxation to ascertain, clearly and precisely, the information required to establish correctly the taxation of the income from investment funds. While those taxpayers themselves may not have all of the information required it is conceivable that they can obtain that information from the non-resident investment fund concerned and send it to the tax authorities.

(see paras 36-38, 46, 49-51, 58 and operative part)