Opinion of Advocate General Kokott in the case Trustees of the P Panayi Accumulation & Maintenance Settlements.
Kokott proposes that the Court should reply to the request for a preliminary ruling from the First-tier Tribunal (Tax Chamber) of the United Kingdom as follows:
(1) The answer to Questions 1 and 3 must be that a trust may rely on the fundamental freedoms provided for in Article 54 TFEU even though it has no legal personality under national law. The foregoing is subject to the condition that the trust is able to engage in economic transactions in its own right and to that extent benefits from and is subject to its own rights and obligations under national law. Taxing the unrealised capital gains accruing to a trust (as such or in the person of the trustees) on the ground that national law deems the place of effective management to have been transferred to another Member State constitutes a restriction of the freedom of establishment.
(2) The answer to Questions 2 and 4 must be that that restriction on the freedom of establishment can in principle be justified on the ground of preserving the allocation of the powers of taxation between the Member States. That is the case even where, although the exit State to some extent retains an option to tax, that option no longer lies within the autonomous discretion of that Member State but is essentially dependent on the decisions of the taxable person.
(3) The answer to questions 2 and 5 must be that the proportionality of the taxation of unrealised capital gains must be assessed by reference to the particular situation obtaining at the time of the assessment to tax. It is disproportionate where, as here, there is no option to defer payment and where the tax debt would fall due at a later date if it were not for the exit. This is the case irrespective of whether the assets concerned were disposed of before the due date for payment and without any fall in value. The principle of proportionality does not require the exit State to take account of any subsequent fall in the value of operating assets.