C-1/93

HALLIBURTON SERVICES v STAATSSECRETARIS VAN FINANCIËN

OPINION OF MR ADVOCATE GENERAL LENZ delivered on 10 February 1994 *

Mr President, 3. The acquisition was part of a transaction Members of the Court, in which Halliburton Company Germany GmbH transferred its undertaking, in so far as it was operated by its facilities in the Netherlands, to the plaintiff. The purpose was a reorganization of the international Halliburton Group whereby the 'Dutch' part of the German company was to be transferred to a Netherlands company. A — Introduction Within the group, Halliburton Inc. incorpo­ rated in the USA holds all the shares in the transferor (Halliburton Company Germany GmbH). Indirectly, namely via its wholly- owned subsidiary Halliburton Oilfield Ser­ vices BV, it also holds all the shares in the transferee (Halliburton Services BV). 1. This case arises from a reference to the Court for a preliminary ruling by the Hoge Raad der Nederlanden, made on a proposal from the Advocate General in the case, on the compatibility of an aspect of the Nether­ lands land transfer tax with Article 52 et seq. of the EEC Treaty.

4. In view of those circumstances, the plain­ tiff takes the view that the acquisition of immovable property in question should be exempt from land transfer tax.

2. The plaintiff in the main proceedings, Halliburton Services BV, which is established in the Netherlands, challenges a notice from the Netherlands Tax Administration by which the latter subsequently levied land transfer tax on the plaintiff in respect of the 5. In that respect Article 15 of the Nether­ acquisition in the Netherlands of immovable lands Wet op Belastingen van Rechtsverkeer property from Halliburton Company Ger­ (Law on the taxation of legal transactions) many GmbH. provides that the acquisition of immovable property 'on the internal reorganization of public limited companies and private limited * Original language: German. companies' is exempt from land transfer tax.

(4) "Companies" means public companies limited by shares and private companies limited by shares.' Where a Member State imposes a charge on the transfer of immovable property in that State or rights in rem relating thereto and allows relief where the transfer is part of an internal reorganization — see Articles 2 and 15(l)(h) of the Wet op Belastingen van 6. The plaintiff takes the view that the Rechtsverkeer (Law on the taxation of legal restriction of the exemption to public limited transactions) in conjunction with Article 5 of companies and private limited companies the relevant implementing regulation (Uitvoe­ (incorporated under Netherlands law) is ille­ ringsbesluit van Rechtsverkeer, 1986 version) gal. — is it compatible with Article 7 of the Treaty establishing the European Economic Community, in conjunction with Articles 52 to 58 inclusive, for relief to be available if the transferor is a company incorporated under the laws of that Member State — in this case 7. In relation to that argument, the Hoge a 'naamloze vennootschap' or a 'besloten Raad first considered the significance of the vennootschap met beperkte aansprakelijk­ legal form of the parent company for the heid' (a public or private limited company) purposes of the tax exemption sought by the — but not if it is a similar company incorpo­ plaintiff. It found that it would be contrary rated under the laws of, and established in,

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HALLIBURTON SERVICES v STAATSSECRETARIS VAN FINANCIEN

another Member State — in this case a concerned through a branch or agency. The 'Gesellschaft mit beschränkter Haftung'? Court has further observed that the seat of companies serves as the connecting factor with the legal system of a particular State, like nationality in the case of natural per­ 3 sons. B — Analysis

1 — Sec the judgment in Case 2/74 Reyners v Belgium [1974] 2 — Judgment in Case 270/83 Commission v France [1986] ECR 631, paragraphs 15 and 16, and the judgment in ECR 273, paragraph 18; likewise the judgment in Case Case 305/87 Commission v Greece [1989] ECR 1461, para­ C-330/91 Commmbank [1993] ECR I-4017, paragraph 13. graph 28. 3 — Sec the previous footnote.

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15. The Netherlands Government takes a which intends to set up a branch must also different view. It observes that neither the consider the costs and risks associated with acquisition of the establishment by the trans­ the disposal of assets which comprise the feror nor its operation is adversely affected. whole or part of that branch. That normally includes the real property of a business, for it is part of its 'permanent presence', which distinguishes activities connected with an establishment from those related to the pro­ 4 vision of services. A business of that kind must consider the need to dispose of such property if there is a change in economic cir­ cumstances in relation to the time when the 16. Furthermore it is not the transferor but establishment was set up. Burdens which the transferee who is liable for the land arise in that connection therefore affect, if transfer tax. As regards the effect, if any, of only indirectly, the 'taking up' of activities as the tax on the purchase price, it contends self-employed persons within the meaning of that (even in relation to the situation on the Article 52 and thus, so far as concerns com­ acquisition of the property by the transferor) panies from other Member States, their pre­ the effect is the result not of the tax provi­ viously defined freedom to set up branches. sion itself but of an agreement between the parties. In the oral procedure it further pointed out that in the transaction under consideration the reorganization of the group was the primary object, and was not frustrated by the contested provision.

21. The special feature of the sale at issue in the present case namely that it was part of the reorganization of a group — and in any 24. (aa) In that respect it must be stated that case had to be in order to qualify for tax the refusal to grant tax relief in the case of a exemption — does not remove it from the sale by the transferor brings disadvantages. scope of Article 52. The basic freedom guar­ It cannot be denied that the taxing of the anteed by that provision applies to all com­ purchaser normally leads to pressure on the panies having their seat in a Member State, purchase price. It is therefore, to use the whether or not they belong to a group. For words of the Court in the Kraus judgment, the purposes of that provision, therefore, it is 'likely to hinder or render less attractive the irrelevant what economic considerations exercise by Community nationals of the inspired the sale (covered by Article 52) or basic freedoms guaranteed by the Treaty'. 7 which company instigated it (the subsidiary or the parent company).

25. In that respect the causal link through which the disadvantage affects the company concerned is irrelevant. On that point I would refer to the Segers judgment 8which 22. In the result, sales of land for the pur­ was concerned with discrimination against poses of the Netherlands tax rule in a situa­ the staff of the branch of a company having its seat in another Member State.

6 — Sec also the Council's General Programme for the abolition of restrictions on freedom of establishment (OJ, English Spe­ cial Edition, Second Scries IX, p. 7) and paragraph 22 of the 7 — Judgment in Case C-19/92 Kraus v Land Baden- judgment in Commission v Greece, ibid, (footnote 1): the Wiirttemberg [1993] ECR I-1663, paragraph 32. right to acquire, use or dispose of immovable property on 8 — Case 79/85 Segers v Bedrtļfsverenigmg voor Banken Verzek­ the territory of a Member State is the corollary of freedom eringswezen, Groothandel en Vrije Beroepen [1986] ECR of establishment. 2375.

27. It follows from the provisions cited at the beginning of this Opinion, as interpreted 30. (cc) Should the Court have doubts as to by the Hoge Raad in the order of reference, whether the Hoge Raad is proceeding on the that if the other conditions for tax exemption assumption that the German company is are fulfilled, such exemption is granted comparable to one of the two forms in where the disposal is by a public or private which a company may be constituted under limited company having its seat in the Neth­ the Netherlands legislation, that would in no erlands but not if the transferor is a company way preclude an infringement of Article 52. which is incorporated under the law of another Member State and has its seat there. That constitutes discrimination which is pro­ hibited by Article 52 if the companies excluded from the benefit of exemption are on the same footing, from the point of view 31. According to the Netherlands legisla­ of the scheme and purpose of that provision, tion, tax exemption is denied from the outset as the Netherlands companies qualifying for if the transferor does not have its seat in the exemption. Netherlands but in another Member State. From the point of view of the scheme and purpose of the rule, whether the transferor is comparable to a public or private limited company incorporated under Netherlands law is, according to that legislation, irrele­ vant.

28. According to the wording and context of the question referred for a preliminary rul­ ing, that condition is fulfilled in the case of the German transferor. The Hoge Raad assumes for the purposes of that question 32. In that regard, the Netherlands Govern­ that the transferor is a company from ment observed that tax exemption is granted only if the companies concerned belong to the same 'group'. That term presupposes that 9 — See the wording of Article 52. the companies involved have a certain struc-

34. The Netherlands Government added that tax relief in the case of companies from 33. So far as the equal treatment of compa­ other Member States could be granted only nies having their seat in another Member if the relevant legislative provisions were har­ State is concerned, the Netherlands Govern­ monized at Community level. As yet Com­ ment submits that it would be difficult to munity law provided no uniform definition verify whether such a company had the same of the term 'group', which was therefore still characteristics as a public or private limited a matter for the Member States. company incorporated under Netherlands law. In answer to a question from the Court regarding the structural characteristics which a company having its seat in another Mem­ ber State had to have in order to be assimi­ lated to the companies incorporated under Netherlands law, the Netherlands Govern­ ment specified the following four criteria: 35. In response to that argument, the Com­ mission and, in the oral procedure, the plain­ tiff in the main proceedings relied on the following directives:

— it must be a legal person;

— Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital; 0

— the capital must be in the form of shares; 10 — OJ, English Special Edition 1969 (II), p. 412.

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OPINION OF MR LENZ — CASE C-l/93

40. That does not, however, mean that in a situation such as this the national authorities 11 — OJ 1989 L 395, p. 40; this is the Twelfth Council Company can refuse the tax relief sought merely Law Directive. because there is no relevant Community leg­ 12 — OJ 1990 L 225, p. 1. 13 — OJ 1990 L 225, p. 6. islation on the equivalence of like forms of

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HALLIBURTON SERVICES v STAATSSECRETARIS VAN FINANCIËN

42. That in itself, however, is not sufficient to relieve a Member State of the obligation to make a comparison. That proposition may be inferred from the case-law of the Court 43. The Court has laid down a similar prin­ concerning a similar case: the practice of a ciple in relation to the provision of services, profession in a Member State depends on a professional qualification, but there is no Community legislation providing for the 14 — Judgment in Case C-340/89 Vhssopouhn [1991] ECR mutual recognition of qualifications in the I-2357, paragraphs 16 and 17; in Case C-104/91 Agmrre Borrell and Others [1992] ECR I-3003, paragraphs 11 and field in question. In such a case Article 52

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namely that freedom to provide services may of origin. On the contrary, it is possible to be restricted by provisions which are justi­ propound the rule that it is obliged to under­ fied by the general interest but only take such verification and must accordingly accept the additional administrative costs involved.

'in so far as that interest is not safeguarded by the provisions to which the provider of a service is subject in the Member State of his 15 establishment.'

15 — See the judgment in Case 279/80 Webb [1981] ECR 3305, 17 — For the sake of completeness, it should be noted that the paragraph 17; in Case 205/84 Commission v Germany Agreement of 29 February 1968 (pursuant to Article 220 of [1986] ECR 3755, paragraph 27. the Treaty) on the mutual recognition of companies and 16 — Paragraph 47 of the judgment in Commission v Germany, legal persons (Bundesgesetzblatt 1972 II, p. 370) has not as cited in the previous footnote. yet entered into force.

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HALLIBURTON SERVICES v STAATSSECRETARIS VAN FINANCIEN

purposes from Community legislation in Hoge Raad, the transferor is a company other sectors, even if they are limited to spe­ from another Member State 'corresponding' cific matters. to a public or private limited company under Netherlands law. That would clearly be a case of unlawful discrimination.

48. As regards two of the four criteria which 18 the transferor must satisfy, I should like, by way of example, to refer to Direc­ 50. Freedom of establishment would also be tive 89/667. It is clear from Article 2 that the impaired if, although equivalence between capital of companies which, like the GmbH the form in which the transferor was consti­ under German law, fall within the directive's tuted and the form of the two Netherlands scope is divided into company shares. Fur­ companies had yet to be established, no pro­ thermore, it is apparent from the fifth recital vision were made for verifying such equiva­ in the preamble to the directive that the lia­ lence or such verification were refused on bility of shareholders is in principle limited other grounds. to their shareholding.

OPINION OF MR LENZ — CASE C-1/93

acquisition is part of an internal reorganization of a group if the companies within it are constituted in one of the specified legal forms, it is contrary to Articles 52 and 58 of the EEC Treaty for relief to be granted where the transferor is a company incorporated under the law of that Member State but not if the transferor is a sim­ ilar company incorporated under the law of, and established in, another Member State.

If the transferor is a company incorporated under the law of, and established in, another Member State and it applies for such tax relief, the first Member State must examine whether the features of the transferor correspond to those of the compa­ nies constituted in the prescribed legal forms.

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