Case Law: Peterbroeck

2 Colum. J. Eur. L. 179 (1995)

Marta Pertegás Sender. Assistant, Center for International and Foreign Law, Katholieke Universiteit Leuven.

Peterbroeck, Van Campenhout & CeSCS v. Belgium, Case C-312/93, December 14, 1995, 1995 E.C.R. 1-4599.

Interpretation of Community Law; Article 177; Power of a national court to consider of its own motion whether national law is compatible with Community law.

Facts and Procedure

The principle of cooperation by the Member States under Article 5 of the EC Treaty has many facets. In Peterbroeck, the Court of Justice just discovered another aspect, related to the procedural law of the Member States.

The case originated from a tax dispute concerning the applicable rate of non-resident tax in Belgium. In the 1974 tax year, a Dutch company, Continentale & Britse Trust BV (hereinafter “CBT”), drew an active partner’s income    from a Belgian  partnership  with  limited  liability, Peterbroeck, Van Campenhout & Cie (hereinafter “Peterbroeck”). When CBT was charged a non-resident tax at the rate of 44.9 per cent on this income by the Belgian authorities, Peterbroeck, as CBT’s legal representative in Belgium, lodged a complaint with the Belgian Regional Director of Direct Contributions (hereinafter “the Director”). Peterbroeck argued that it had been taxed at a tax rate higher than that applicable to companies residing in Belgium, which at the time did not exceed 42 per cent.

The Director rejected those arguments, a decision which Peterbroeck brought to the Belgian Court of Appeal. At this stage, Peterbroeck submitted new arguments for being taxed on an equal footing with companies residing in Belgium. The first claim was that the failure to levy the tax at the rate applicable to companies resident in Belgium represented an obstacle to Article 52 of the EC Treaty, which provides for the fundamental freedom of establishment. Introducing a new argument at the appeal stage is indeed possible under the applicable provisions of the Belgian Income Tax Code (Code des impbts sur les revenus). The taxable person is given the right to submit new arguments, which concern the infringement of a law or a procedural requirement, in the transitional period from the administrative stage to the judicial stage. Still, there is a time-limit for the submission of new arguments: 60 days from the lodging by the Director of a certified copy of the contested decision with all documents relating to the taxpayer’s objection. The claim based on Article 52 was submitted by Peterbroeck after the expiry of the 60 day time-limit. After this time-limit, not only are new arguments submitted by the taxable person inadmissible, but the Court of Appeal is also prevented from examining those arguments of its own motion. However, the case law of the Cour de Cassation allows three exceptions to this rule. Two exceptions are principles of national law: the objection that the imposition of the tax in question is time-barred, and the objection that the matter in dispute is res judicata may be raised by the taxpayer even after the expiry of the 60 day time-limit. Furthermore, the time-limit is irrelevant if the taxable person was not able to submit arguments earlier for reasons of force majeure.

The Belgian Court of Appeal then presented request for a preliminary ruling to the Court of Justice, namely whether an argument based on Community law may also be the foundation for an exception to a national procedural rule, such as the one contained in the Belgian Income Tax Code. Before entering in the substantive aspects of the case, it is relevant to stress that the present case was submitted twice for an oral hearing” and that Advocate General Jacobs gave two Opinions to the Court. The reason for the re-opening of the oral procedure was the request of the Dutch Hoge Raad for a preliminary ruling in a case which raised issues similar to the ones in Peterbroeck. Thus, in both cases, the national courts sought guidance as to whether new arguments based on Community law can be raised by the parties or considered by the judge of his own motion when the possibility is foreclosed by national procedural rules.