C-420/98

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of the different language versions of the Article 2 Directive are at variance, giving rise to problems of interpretation. Some of the relevant passages are therefore set out below in several languages. Exchange on request

'Article 1

General provisions

Article 3

OPINION OF MR ALBER — CASE C-420/98

the information referred to in Article 1(1), (e) information forwarded to the one of which it has knowledge, to the compe- Member State by the competent tent authority of any other Member State authority of the other Member State concerned, in the following circumstances: has enabled information to be obtained which may be relevant in assessing liability to tax in the latter Member State.

(a) the competent authority of the one Member State has grounds for suppos- ing that there may be a loss of tax in the other Member State; (2) ...

(b) a person liable to tax obtains a reduc- tion in or an exemption from tax in the (3) The competent authorities of the Mem- one Member State which would give ber States may forward to each other in rise to an increase in tax or to liability any other case, without prior request, to tax in the other Member State; the information referred to in Arti- cle 1(1) of which they have knowl- edge.'

(c) business dealings between a person liable to tax in a Member State and a person liable to tax in another Member 4. It should first be mentioned that the State are conducted through one or German and English texts of Article 4(1) more countries in such a way that a concerning forwarding of information saving in tax may result in one or the employ the wording 'soll... Auskünfte... other Member State or in both; erteilen' and 'shall... forward the informa- tion', whilst the French and Dutch versions use 'inform' ('communique' and 'deelt... mede').

(d) the competent authority of a Member State has grounds for supposing that a saving of tax may result from artificial transfers of profits within groups of 5. The situation referred to under Arti- enterprises; cle 4(1)(a) — the supposed loss of tax — is I - 2852

2 — Emphasis added in each case. 3 — OJ 1975 C .15, p. 1.

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concerning particular cases and — under the sixth recital — exchange, even without any request, any information which appears relevant for the correct assessment of taxes, 'in particular where... such trans- actions [artificial transfers of profits] are carried out between enterprises in two Member States through a third country in order to obtain tax advantages...'.

b) a tax reduction, remission, refund or exemption is granted in the Nether- lands which may affect the levying of tax in the State where the competent authority is located.'

II — National law

10. The appellant, who has been married 12. By judgment of 19 November 1998, since 1974, is separated from his wife, who the referring court therefore submitted to left the Netherlands in 1983 and settled in the Court of Justice the following ques­ Spain, where she bought a house. The tions: appellant continued to pay maintenance to her after her departure. Upon inspection of his tax return for 1988 — which estab­ lished that, as a result of the maintenance payments to his wife, he had obtained considerable tax reductions — the respon­ dent decided, on 2 December 1992, to 1. Must the words 'a loss of tax' in inform the competent Spanish authorities Article 4(1)(a) of Directive 77/799/ of the maintenance payments from 1987 to EEC be interpreted as meaning that 1991 which were made through the inter­ the loss of tax in question must be mediary of a Swiss bank. The appellant covered by an express measure on the lodged an objection to that decision, which part of the competent authority of was dismissed on 25 May 1993. By written another Member State? communication of 22 June 1993 the appel­ lant then lodged an appeal against that decision at the referring court.

2. How should the word 'abnormaal' in the Dutch version of that provision be interpreted in that connection? 11. The referring court considers that, on account of the divergent wordings of the Directive, there is a lack of clarity both as regards the meaning of 'abnormaaľ ľ anor­ males' and as to whether that provision presupposes an express act on the part of 3. If Article 4(1)(a) is not applicable, can an authority of another Member State. The Article 4(3) of the Directive give rise to

14. By its first two questions, the referring court ultimately seeks to ascertain whether it is necessary, with regard to the obligation 16. In its observations, the Netherlands to forward information, on the one hand, Government first of all compares the for the loss of tax to result from an express Dutch, French, English and German ver- act on the part of the competent authority sions of Article 4(1)(a) of the Directive. It of another Member State — by which a concludes that the different versions do formal tax assessment is presumably correspond as regards the notion of suppo- meant ·— or whether it is sufficient that — sition of a loss of taxes. It follows that it is without the forwarded information —· a not necessary to establish whether there has tax reduction could arise or could have actually been a reduction in taxes. arisen. On the other hand, the court wishes to ascertain whether the term 'abnormal' tax reduction means a reduction 'against the rules' — i.e. an unjustified tax abate- ment — or whether — in accordance with current usage — abnormal should be equa- 17. With regard to the divergences between ted with unusual or excessive. In this the language versions of the Directive over I - 2856

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the term 'abnormal tax reduction', the 19. The Netherlands Government therefore Netherlands Government, like the other reaches the conclusion that Article 4(1)(a) parties, makes reference to the consistent of the Directive does not require the case-law of the Court of Justice, whereby authorities of the Member Slate providing the different language versions of a Com- the information to establish in advance that munity text must be given a uniform a reduction in taxes is covered by an interpretation and, in the case of divergence express measure on the part of the compe- between the versions, the provision in tent authority. The authorities forwarding question must be interpreted by reference the information merely have to carry out a to the purpose and general scheme of the 'marginal control' in order to ascertain rules of which it forms part. 5 whether a loss of tax 'exists' in another Member State.

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22. As far as the interpretation of the term reveal its objective to be combating tax 'abnormaal' is concerned, the French Gov- evasion and tax avoidance and — indir- ernment also points out that it is apparent ectly — the promotion of the principle of from the general scheme of the Directive fair taxation. This means that each person that nowhere does the notion arise that it is must pay the taxes which are fair in view of necessary to quantify the supposed tax his situation. This in turn gives rise to the fraud or tax avoidance. Similarly, even general rule, under Article 1(1) of the where the idea of an increase in tax or a Directive, that the Member States must saving in tax is associated with situations of exchange any information that may enable tax exemption or tax reduction — as in them to effect a correct assessment of taxes. Article 4(1)(b)-(d) — no specific amount is mentioned.

23. However, this does not mean that there 25. The Commission also refers to the are no obligations for the competent autho- significance of the system of mutual assis- rities under Article 4(1)(a). On the con- tance under Directive 77/799 which fol- trary, they have to 'indicate the evidence' lows from the case-law. Thus, the Court which gives rise to the supposition that has rejected discriminatory national tax there is fraud or tax avoidance in another measures which were regarded as necessary Member State. The exchange of informa- in order to obtain precise information, tion is thus linked to an actual situation in referring to the possibilities of mutual which such evidence exists. assistance under the Directive. 7

27. The Commission lastly considers the argument mentioned in the order for refer- ence that a broad interpretation of Arti- cle 4(1)(a) raises doubts as to the signifi- 30. In conclusion, the Commission argues cance of the other situations described in that the supposition required in Arti- Article 4(1). In the opinion of the Commis- cle 4(1)(a) could be regarded as existing sion, Articles 4(1)(b), (c) and (d) are so where the absence of certain information in specific that they continue to retain their the Member State could result in a person significance. liable to tax enjoying an unjustified tax advantage. This is the case in particular where tax evasion is possible. In this connection, it is not necessary for the loss of tax to be covered by an express measure on the part of the competent authorities.

Definition of the term 'abnormaal' for supposing that there may be an abnor- mal exemption from tax within the frame- work of a directive which was adopted to prevent tax evasion and to enable the correct assessment of taxes, that term can 32. Since the different language versions only mean a loss of tax in accordance with are at variance, the question arises how the normal linguistic usage of the other Article 4(1)(a) is to be interpreted. The versions. Court has consistently held that the differ- ent language versions of a Community text must be given a uniform interpretation; 'in the case of divergence between the versions the provision in question must therefore be interpreted by reference to the purpose and general scheme of the rules of which it 35. As the Commission rightly contends, forms part'. 9 this follows from the interpretation of the term 'abnormaal'. Abnormal things are those which are not in keeping with a norm — including a legal norm. An abnor- mal exemption from tax, as is mentioned in certain language versions of the Directive, 33. Under Article 1(1), the purpose of the would not therefore be an excessive tax Directive is to enable a correct assessment exemption ·— as might at first be of taxes on income and on capital to be assumed — but one which is not consistent effected, regulating as it does the forward- with tax legislation or is not provided for ing of all information which may be by that legislation. This is fully consistent relevant to such an assessment. The recitals with the term 'Steuerverkürzung' in the of the Directive also provide indications as German version of the Directive. to its purpose. Particular mention should be made of the first, second and third recitals in this regard. According to those recitals, the Directives seeks to combat interna- tional tax evasion and avoidance, which constitute violations of the principle of fair taxation. 36. In this regard, one must also concur with the French Government, which points out that the terms 'reduction in tax' and 'saving in tax' in the other circumstances referred to in Article 4(1) likewise do not indicate any amounts. 34. If some of the language versions of Article 4(1) state that a spontaneous exchange of information is to be effected where the competent authority has grounds

38. An express measure on the part of the competent authority presumably means assessment to a particular amount of tax, or a reduction in tax actually being granted. It is clear from the wording of the contested provision alone that there is E — Question 3 no such requirement. Under the Directive, the information must be forwarded if the competent authority has 'grounds for sup- posing that there may be a loss of tax'. It is not therefore sufficient merely to suppose that the taxes were not (or could not be) Submissions of the parties assessed correctly in another Member State. The actual situation in the other Member State does not need to be examined. This means that the authority is not required to examine whether the tax reduction or 41. The Netherlands Government consid- remission is covered by an express measure ered this question in particular in the oral on the part of the authorities of the other procedure in order to reply to the Com- Member State. In that case, the loss of taxes mission's written observations. On the one would no longer be supposed, since the hand, it argued that, in view of the authorities would not only know that it proposed answer to Questions 1 and 2, it existed, but even how it arose. was actually no longer necessary to answer the third question.

42. On the other hand, it stated that the answer to the third question was clear from the wording and scheme of Article 4 of the 39. It must therefore be concluded that Directive. Article 4(1) indicates the circum- Article 4(1 )(a) must be interpreted as stances in which there is an obligation to meaning that there must be 'grounds for exchange information. Regard must always supposing that there may be a loss of tax', be had in this connection to the objective of but there need not be any express measure the Directive, which is to combat tax on the part of the competent authorities of evasion and avoidance. In the light of the the other Member State. objective of the Directive, it might also be

43. In the oral procedure, it argued further in this connection that Article 4(3) provides that the legislature of the Member States has conferred upon the competent autho- rities the power to forward information in 47. The authorities have been given the precisely these circumstances too. Arti- relevant powers and, therefore, the obliga- cle 4(3) lays down an obligation, it being tion under the Directive has been fulfilled, for the competent authority to assess whe- with the result that Article 13(1)(a) is not ther or not an obligation exists in the relevant in this instance. Consequently, the specific case. Netherlands Government argues that Arti- cle 4(3) requires the Member States, in implementing the Directive, to make provi- sion for information also to be forwarded where necessary in circumstances other than those described in Article 4(1) in order to achieve the aims of the Directive. 44. Contrary to the Commission, the Neth- erlands Government takes the view that that obligation has been transposed into Netherlands law. In this connection it cites Article 7(l)(d) of the WIB, under which the Minister (for Finance) may forward infor- 48. With regard to the Commission's obser- mation — in addition to the circumstances vation that, if such an interpretation is referred to in the Directive when he must adopted, it is difficult to see why the do so — whenever he considers it necessary referring court asked the third question at for the purposes of assessing tax liability. all, the Netherlands Government points out that it is for the national court to decide which questions it considers to be necessary to decide a case and therefore refer for a preliminary ruling.

52. Article 13(1)(a) of the WIB does not appear to grant the discretion provided for in the Directive. However, it is uncertain 50. The Commission, like the Netherlands how the wording 'any obligation imposed Government, points out that, if the first by' the Directive in Article 13(1)(a) should two questions are answered as it proposes, be understood. It could apply to the the third question is no longer of impor- obligation on the Member States to imple- tance to the present dispute. For the sake of ment the Directive in a certain way or the completeness it nevertheless makes submis- obligation on the competent authorities to sions on Question 3. It points out, first of forward certain information. all, that this question — like the first two questions — must be understood in con- junction with Article 13(1)(a) of the WIB. That provision appears to prohibit the forwarding of information where there is no obligation to that effect under the Directive. The question therefore arises whether Article 13 is inconsistent with the correct transposition of Article 4(3) of the Directive in Article 7 of the WIB. It is 53. In this connection, the Commission there — that is to say, in national law observes that national law must be inter- rather than in the Directive — that the preted as far as possible in the light of the essential problem which has prompted the wording and purpose of directives. 10 Such national court to refer the question lies. an interpretation could consist in constru- ing Article 13(1)(a) of the WIB in such a way that the Minister need not forward any information where this docs not follow from obligations or powers of the autho- rities laid down by the national legislature to fulfil the transposition obligations under the Directive.

55. The Commission points out, lastly, that where the authorities are accorded a mea- Conclusion sure of discretion, that discretion must also be exercised, 1 1and, as the Court has held, the authorities cannot confine themselves to applying predetermined general criteria but must subject each particular case to a 'general' examination. 12 The authority is 57. One must concur with the view of the also required to draw the consequences Netherlands Government and of the Com- stemming from that assessment, with the mission that it is actually no longer neces- result that, under certain circumstances, an sary to answer the third question. The obligation to forward information might consequence of the interpretation of Arti- also exist. cle 4(1) of the Directive proposed under Questions 1 and 2, based on the informa- tion provided by the referring court, is that there is an obligation to forward informa- tion under Article 4(1) in the present case. For the sake of completeness, the third question will nevertheless be considered. It should, however, be borne in mind that the 56. In conclusion, the Commission asserts Court has jurisdiction only to interpret that it can essentially concur with the Community law, whereas it is for the interpretation put forward by the Nether- referring court to interpret national — in lands Government. Nevertheless, there is a this case Netherlands — provisions. certain lack of clarity and, consequently, the Court should indicate to the referring court what the scope of Article 4(3) of the Directive is. It is not for the Court of Justice, but the national court, to interpret

F — Conclusion

60. In the light of the foregoing, I propose that the Court give the following answers to the questions referred by the national court:

(1) The words 'a loss of tax' in Article 4(1)(a) of Directive 77/799/EEC must be interpreted as meaning that the reduction in or remission of tax in question need not necessarily be covered by an express measure on the part of the competent authority of another Member State, but rather that a supposition that the tax may be lost is sufficient.

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(2) The word 'abnormal' in some of the language versions of Article 4(1)(a) of Directive 77/799 is to be interpreted as meaning an unjustified reduction in or exemption from tax.