Opinion of the Advocate General — ECLI:EU:C:2013:384
Date: 2013-06-12
Language of the case: German
Subject matter: Free movement of capital
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary — Judgment of the Court (Third Chamber), 17 October 2013 1. Free movement of capital and liberalisation of payments — Liberalisation of capital movements — Directive 88/361– Scope (Art. 56(1) EC; Council Directive 88/361, Annex I) 2. Free movement of capital and liberalisation of payments — Restrictions — Inheritance tax — National legislation on the calculation of inheritance tax granting an allowance for an immovable property in that Member State — Different treatment of residents and non-residents — Lower allowance for non-residents — Not permissible — Justifications — None (Arts 56 EC and 58 EC) 3. Free movement of capital and liberalisation of payments — Restrictions on movements of capital to and from non-Member States — Restrictions on capital movements involving direct investments which existed on 31 December 1993 — Definition — Investments in real estate within the context of an inheritance — Not included (Arts 56 EC and 57(1) EC; Council Directive 88/361, Annex I) 1. See the text of the decision. (see paras 18-21) 2. Articles 56 EC and 58 EC must be interpreted as precluding legislation of a Member State relating to the calculation of inheritance tax which provides that, in the event of inheritance of immovable property in that State, in a case where the deceased and the heir had a permanent residence in a third country, such as the Swiss Confederation, at the time of the death, the tax-free allowance is less than the allowance which would have been applied if at least one of them had been resident in that Member State at that time. Firstly, that national legislation constitutes a restriction on the free movement of capital within the meaning of Article 56(1) EC. Secondly, where, for the purposes of taxing immovable property acquired by inheritance and located in the Member State concerned, national legislation places on the same footing (i) non-resident heirs who have acquired the property from a non-resident deceased and (ii) non-resident or resident heirs who have acquired it from a resident deceased and resident heirs who have acquired it from a non-resident deceased it cannot, without infringing the requirements of EU law, treat those heirs differently in connection with that tax as regards the application of a tax-free allowance in respect of the immovable property. By treating inheritances of those two classes of persons in the same way except in relation to the amount of the allowance which an heir may receive, the national legislature accepted that there was no objective difference between them as regards the detailed rules and conditions of charging inheritance tax which could justify a difference in treatment. However, just as the status of a taxable person does not in any way depend on the place of residence — the legislation at issue subjecting any acquisition of an immovable property located in that Member State to inheritance tax whether the deceased and heir be resident or non-resident — the aim of partial exemption of the estate affects all those subject to inheritance tax in the Member State in the same way, whether they be resident or non-resident, since that exemption aims to reduce the total amount of the inheritance. In that regard, as the amount of the tax-free allowance does not depend on the amount of the taxable value but is granted to the heir in his capacity as a taxable person, the fact that the non-resident heir of a non-resident deceased has limited tax liability does not, for the purposes of that allowance, make the situation of that heir objectively different from that of the non-resident heir of a resident deceased or from that of the resident heir of a resident or non-resident deceased. (see paras 26, 51, 53, 55, 68, operative part) 3. Investments in real estate of a ‘patrimonial’ nature concerning the house of the parents of the deceased, made for private purposes unconnected with the carrying out of an economic activity do not fall within the scope of Article 57(1) EC. Under that provision, Article 56 EC is to be without prejudice to the application to third countries of any restrictions which exist on 31 December 1993 under national or EU law adopted in respect of the movement of capital to or from third countries involving direct investment — including in real estate — establishment, the provision of financial services or the admission of securities to capital markets. In that regard, Article 57(1) EC, which sets out a restrictive list of movements of capital to which Article 56(1) EC may not apply, does not mention inheritances. Such a provision, in so far as it is an exception to the fundamental principle of the free movement of capital, must be interpreted strictly. However, while inheritances come under heading XI of Annex I to Directive 88/361 for the implementation of Article 67 of the Treaty, entitled ‘Personal capital movements’, both ‘direct investments’ and ‘investments in real estate’ come under separate headings, namely headings I and II of that Annex respectively. Accordingly, it is apparent from the very title of heading II of Annex I to Directive 88/361 that the ‘investments in real estate’ referred to in that heading do not include the direct investments referred to in heading I of that Annex. In those circumstances, Article 57(1) EC, in referring to ‘direct investment — including in real estate’, concerns only investments in real estate that constitute direct investments coming under heading I of Annex I to Directive 88/361. (see paras 28, 29, 31, 33-35)