CJEU  to give preliminary ruling on requirement for advance ruling where non-resident entities involved.

In the Euro Park Service case, the French Administrative Supreme Court referred a question to the Court of Justice of the European Union, for a preliminary ruling, on the compatibility of the provisions of Section 210 C of the French Tax Code with the European law. This section implements Directive 90/434/EEC (the Mergers Directive) which provides for  the tax neutrality of mergers, and transactions treated as such, involving companies established in different Member States on the same basis as domestic transactions.

However, although the French Tax Authorities have a certain power of control over domestic transactions, the benefit of the favorable tax regime is only available if an advance tax ruling from the French Tax Authorities is obtained when the merging company or the beneficiary of the partial contribution of assets is a non-resident company.

Questioned on the compliance of this difference in treatment with European law, the Court of Justice will first have to decide if the implementation of the anti-abuse clause by a Member State can be challenged on the basis of the European Union's primary law. Only if it gives an affirmative answer to this question would the Court of Justice then have to determine whether the advance tax ruling procedure applicable to contributions to non-resident entities, excluding contributions involving French legal entities, is compatible with the freedom of establishment principle.

Although the Court of Justice is frequently called on to give its opinion on tax obstacles related to tax bases and tax rates, preliminary rulings dealing with indirect discrimination regarding specific procedural rules are quite rare. Therefore, particular attention should have to be paid to the Court of Justice's decision, which should be handed down in the coming months.