Luxembourg, 22/07/2004 (Agence Europe) - The Court of Justice has ruled that Belgium is guilty of infringing the provisions of the 1969 Directive on indirect taxation of capital movements. It states that the following taxes are incompatible with EU law: - the tax on stock exchange transactions on applications made in Belgium for new securities issued when a company or investment fund is being set up; - and the tax on the delivery of bearer securities on the physical delivery of bearer securities when new securities are issued in the above case.
The Court recalls that Directive 69/335 prohibits any form of taxation whatsoever on the creation, issue, admission to quotation on a stock exchange, making available on the market or dealing in securities, shares or stocks. One by one it rejects the arguments put forward by the Belgian government when it said that the tax on stock exchange transactions does not come under the scope of the 1969 directive because investors are not capital companies targeted by the directive.
The prohibition on levying taxation other than capital duty and other taxes and duties refers only to the capital transactions expressly listed, without it being necessary to specify the identity of the person liable to the tax, the Court states.
The Court reproaches Belgium for having made an over-wide interpretation of the directive's provision that authorises taxes on the "transfer" of securities. An initial acquisition cannot therefore be considered as "transfer" under Article 12 paragraph 1 of the Directive, the Court concludes.
European judges apply the same reasoning to conclude that the Belgian legislation is not compatible. They refute in passing Belgium's argument that the tax on bearer securities was aimed at discouraging the material delivery of securities.