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Preliminary ruling requested from ECJ regarding Belgian anti-abuse provision concerning exceptional and gratuitous advantages

On 14 June 2008, reference was made to the European Court of Justice (ECJ) by the Belgian Court of First Instance (Tribunal de Première Instance) of Mons in the case of Societe De Gestion Industrielle (SGI) v. Belgian State (C-311/08).

(a) Facts. SGI granted exceptional or gratuitous advantages to a non-resident related company. As a result, SGI's tax base was increased by the value of those advantages. However, if those advantages had been granted to a related company resident in Belgium, SGI's tax base would not have been affected.

(b) Legal Background. Under Art. 26 of the Belgian Income Tax Act (ITA), exceptional or gratuitous advantages granted to a related company are generally included in the tax base of the resident recipient. However, if the recipient is a non-resident related company, the value of the advantages at issue is included in the tax base of the Belgian company granting these advantages.

(c) Issue. The issue was whether or not Art. 26 of the ITA is compatible with Arts. 12 (non-discrimination), 43 (freedom of establishment) and 56 (free movement of capital) of the EC Treaty.

(d) Decision. The Court observed that exceptional or gratuitous advantages granted to a resident related company are generally not included in the tax base of the company granting those benefits. In contrast, if such advantages are granted to a non-resident related company, they are always included in the tax base of the Belgian company granting the advantages.

The national court thus requested the ECJ to answer the following question:

-   "Does Article 43 of the EC Treaty in conjunction with Article 48 and, as appropriate, Article 12 of the Treaty, preclude legislation of a Member State which, like that at issue, results in taxation of a company resident in Belgium on an exceptional or gratuitous advantage which it granted to a company established in another Member State with which the Belgian company is, directly or indirectly, in a relationship of interdependence, whereas in identical circumstances the company resident in Belgium may not be taxed on an exceptional or gratuitous advantage where that advantage is granted to another company established in Belgium with which the Belgian company is, directly or indirectly, in a relationship of interdependence?
-   Does Article 56 of the EC Treaty, in conjunction with Article 48 and, as appropriate, Article 12 of the Treaty, preclude legislation of a Member State which, like that at issue, results in taxation of the company resident in Belgium on an exceptional or gratuitous advantage which it granted to a company established in another Member State with which the Belgian company is, directly or indirectly, in a relationship of interdependence, whereas in identical circumstance the resident Belgian company cannot be taxed on an exceptional or gratuitous advantage where that advantage is granted to another company established in Belgium with which the Belgian company is, directly or indirectly, in a relationship of interdependence?"

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