Source: All England Reporter
Publisher Citation: [2006] All ER (D) 26 (Sep)
Court: Court of Justice of the European Communities (Second Chamber)

Judges Timmermans (President of Chamber), Schintgen, de Lapuerta, Arestis and Klucka (Rapporteur)

Judgment Dates: 7 September 2006


European Community - Freedom of movement - Persons - Restriction on freedom - Taxation - Taxation of notional increases in value of substantial shareholdings where tax residence transferred to another member state - Whether increases in breach of freedom of movement - EC Treaty, art 43.

The Case

A Community national who had been living in one member state since the transfer of his residence and who held all the shares of companies established in another member state could rely on art43 EC. Article 43 precluded a member state from establishing a system for taxing increases in value in the case of a taxpayer's transferring his residence outside that member state, which made the granting of deferment of the payment of that tax conditional on the provision of guarantees and did not take full account of reductions in value capable of arising after the transfer of residence and which were not taken into account by the host member state. An obstacle arising from a requirement, in breach of Community law, that a guarantee be constituted could not be raised with retroactive effect merely by releasing that guarantee.

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