In other words it had to satisfy the said test of the mobile

209 B, suite and end. In the Finance Act 2005, the Government relaxed the device fight against tax evasion of undertakings (article 209 (b) of the General Tax Code), several European cases having been favourable to the companies with tax optimization. In a decision of September 12, 2006, the Court of justice of the European Communities (ECJ) has just make useful clarifications to the application by the tax authorities of these rules. This decision in the so-called "cadbury schweppes" illustrates also the interest of the issue: not less than 12 Governments intervened in the proceedings and it took twenty-eight months to the European Court of justice to resolve the dispute.

The conflict presented to the European judges opposed to the IR society Cadbury Schweppes. It had established subsidiaries in Ireland so that certain activities of research funding for the group to benefit from very favourable Irish tax reserved to companies established in the International Financial Services Center in Dublin.

Cadbury Schweppes could not escape to the British legislation on the dry (controlled foreign companies) that showing that the creation of subsidiaries in Ireland had no main or essential purpose the obtaining of a decrease in tax that would have been paid to the United Kingdom on the same operations. In other words, it had to satisfy the said test "of the mobile". The crucial question was whether this legislation could be justified by the objective of the United Kingdom to fight against tax evasion for which the Court had seemed more friendly in the case of Marks & Spencer. This time, it seems more clear: for the Court, the establishment of a subsidiary in a member to be benefit from a more advantageous tax system is not in itself constitute tax evasion. Moreover, the mere fact admitted by the Court to justify the British measure in respect of the fight against tax evasion would be to demonstrate the existence of a "purely artificial montage designed to circumvent tax law".

Clarified policy

And for the European judges, the mere existence of a fiscal goal is not sufficient to establish the existence of such an Assembly. According to the Court, there is artificial mounting if the creation of the subsidiary and, therefore, its operations are devoid of any reality or any economic substance, this subsidiary is for example that a company box letters or a display company. Such a construction would not meet the objective of the community provision invoked, in this case article 43 EC on the freedom of establishment, which "involves the exercise of an economic activity through a stable installation in this State for an indefinite period" or, in other words, "a real implementation of the company concerned in the host Member State and the exercise of effective activity in the. Finally, it will become an issue for the tax administration to require the taxpayer a negative or subjective evidence. It will suffice to establish objective and verifiable elements by third parties, as for example the existence of local, qualified personnel or equipment, that the economic establishment of the subsidiary is real and not fictitious.

The judgment of the Court must therefore clearly a change in British legislation, and especially of the "test of the mobile", which was imposed on companies, to avoid being themselves taxed on profits made by their subsidiaries abroad.

French legislation, it has been recently modified through the new article 209 (b) of the General Code of taxes, which has taken over the traditional of the jurisprudence of the court sentence by exempting the French regulatory equivalent on the dry the companies and their subsidiaries established in the Union European "except in the case of artificial editing designed to circumvent tax law". Only the application of this sentence by French judicial and administrative authorities could still create a problem of compatibility with Community law. They have in any case, at the present time, a line of conduct clarified by the case of Cadbury Schweppes.