B and Others () and horizontale) (Judgment) French Text [2020] EUECJ C-749/18 (14 May 2020)

B and Others () and horizontale) (Judgment) French Text [2020] EUECJ C-749/18 (14 May 2020)

Articles 49 and 54 TFEU preclude national legislation that allows only vertical fiscal integration (between a resident parent or local branch of a non-resident parent and its resident subsidiaries) but not horizontal integration between resident subsidiaries of a non-resident parent. Such legislation constitutes a restriction on the freedom of establishment, as it treats cross-border groups less favorably than purely domestic groups, without objective justification. Furthermore, requiring dissolution of an existing vertical group (with adverse tax consequences) before forming a horizontal group also constitutes an unjustified restriction. However, the principles of equivalence and...

Citation
[2020] EUECJ C-749/18
Parties
Applicant: B e.a.; Respondent: Administration des contributions directes
Jurisdiction
European Union
Judgment Date
14 May 2020
Procedural Posture
Preliminary Reference (renvoi Préjudiciel) / Judgment on Reference From Cour Administrative (luxembourg)
Outcome
Reference answered; national legislation partially incompatible with EU law.
Legal Topics
Freedom of Establishment, Corporate Taxation, Group Taxation, Non Discrimination, Procedural Requirements
European Union Law Tax Law Freedom of Establishment Corporate Taxation Group Taxation Non Discrimination Procedural Requirements

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Parties

B e.a.

Applicant

Administration des contributions directes

Respondent

Procedural Posture

Preliminary Reference (renvoi Préjudiciel) / Judgment on Reference From Cour Administrative (luxembourg)

Legal Issues

  1. 1 Whether Articles 49 and 54 TFEU preclude national legislation allowing only vertical fiscal integration and not horizontal integration between subsidiaries of a non-resident parent company
  2. 2 Whether requiring dissolution of a vertical integration before forming a horizontal group, with adverse tax consequences, is compatible with EU law
  3. 3 Whether a procedural deadline for applying for group taxation is contrary to EU law in light of the principles of equivalence and effectiveness

Ratio Decidendi

Articles 49 and 54 TFEU preclude national legislation that allows only vertical fiscal integration (between a resident parent or local branch of a non-resident parent and its resident subsidiaries) but not horizontal integration between resident subsidiaries of a non-resident parent. Such legislation constitutes a restriction on the freedom of establishment, as it treats cross-border groups less favorably than purely domestic groups, without objective justification. Furthermore, requiring dissolution of an existing vertical group (with adverse tax consequences) before forming a horizontal group also constitutes an unjustified restriction. However, the principles of equivalence and...

Court Disposition

Reference answered; national legislation partially incompatible with EU law.

Orders

  • Articles 49 and 54 TFEU preclude legislation allowing only vertical, not horizontal, fiscal integration between subsidiaries of a non-resident parent.
  • Articles 49 and 54 TFEU preclude legislation requiring dissolution of a vertical group (with adverse tax consequences) before forming a horizontal group with the same integrating subsidiary.