Opinion of the Advocate General — ECLI:EU:C:2023:721
Date: 2023-09-28
Language of the case: German
Subject matter: Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary C-536/22 – 1 
Case C-536/22 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
10 August 2022 
Referring court: 
Landgericht Ravensburg (Germany) 
Date of the decision to refer: 
8 August 2022 
Applicants: 
MW 
CY 
Defendant: 
VR Bank Ravensburg-Weingarten eG 
  
Subject matter of the main proceedings 
Action for repayment of compensation for early repayment of a loan, in the 
context of a consumer credit agreement relating to immovable property 
Subject matter and legal basis of the request 
Interpretation of EU law, Article 267 TFEU 
Questions referred for a preliminary ruling 
1. Must the concept of ‘fair and objective compensation … for possible costs 
directly linked to the early repayment’ in Article 25(3) of Directive 
2014/17/EU be interpreted as meaning that the compensation also covers the 
creditor’s loss of profit, in particular the future interest payments lost as a 
result of the early repayment? 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-536/22 
 
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2. If Question 1 is answered in the affirmative: 
Does EU law, specifically Article 25(3) of Directive 2014/17/EU, contain 
guidelines for the calculation of the income which the creditor receives from 
its reinvestment of a consumer loan relating to immovable property which 
has been repaid early – income to be taken into account in the context of loss 
of profit – and if so, what are those guidelines? 
In particular: 
a) Must the national rules for that calculation be linked to the manner in 
which the creditor actually uses the amount which was repaid early? 
b) May a national rule allow the creditor to calculate the compensation 
for early repayment on the basis of a notional reinvestment in safe 
capital market securities with maturities corresponding to the term of 
the credit agreement (‘asset/liability method’)? 
3. Does the scope of Article 25 of Directive 2014/17/EU also cover the case 
where the consumer first terminates a consumer credit agreement relating to 
immovable property on the basis of a right of termination provided for by 
the national legislature before repaying the loan to the creditor early? 
Provisions of European Union law relied on 
Directive 2014/17/EU of the European Parliament and of the Council of 
4 February 2014 on credit agreements for consumers relating to residential 
immovable property and amending Directives 2008/48/EC and 2013/36/EU and 
Regulation (EU) No 1093/2010 (OJ 2014 L 60, p. 34), Article 25(3) 
Provisions of national law relied on 
Bürgerliches Gesetzbuch (Civil Code; ‘the BGB’), in particular Paragraph 252, 
Paragraph 490(2), Paragraph 500(2), Paragraph 502, Paragraph 812 
Succinct presentation of the facts and procedure in the main proceedings 
1 On 11 January 2019, the applicants concluded a consumer credit agreement 
relating to immovable property (‘the credit agreement’) with the defendant for a 
net loan amount of EUR 236 000.00 for the purpose of purchasing a rented 
apartment. According to the credit agreement, the borrowing rate of the loan is 
fixed until 30 January 2029. 
2 The credit agreement states that the borrower may discharge fully or partially his 
or her liabilities early during the period of the fixed borrowing rate only if he or 
she has a legitimate interest in doing so. 
VR BANK RAVENSBURG-WEINGARTEN 
 
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3 According to the credit agreement, compensation is payable in the event of early 
repayment of the loan. In that respect, the credit agreement states that the bank is 
to be compensated for the damage which it suffers as a result of the early 
repayment. The credit agreement further provides that the calculation of that 
damage is to be based on the asset/liability method, which has been found to be 
permissible by the Bundesgerichtshof (Federal Court of Justice, Germany) and in 
which it is assumed that the funds released by the repayment are invested in 
mortgage bonds for a period corresponding to the term of the credit agreement. In 
that calculation, account must be taken of, inter alia, the damage caused by the 
deterioration in interest, representing the financial disadvantage arising from the 
early repayment of the loan, that is to say the difference between the remunerative 
interest under the agreement and the yield of mortgage bonds with maturities 
corresponding to the remaining term of the loan to be repaid. In addition, 
according to the credit agreement, reasonable compensation is payable for the 
administrative expenses associated with the early repayment of the loan. 
4 By contract of sale of 19 May 2020, the applicants sold the rented immovable 
property for a purchase price of EUR 255 000.00. One of the applicants, a fixed-
term soldier, had been transferred by his employer. The applicants terminated the 
credit agreement on 30 June 2020. By letter of 9 June 2020, the defendant notified 
the applicants of the compensation for early repayment, in the amount of 
EUR 27 614.17, which it was claiming due to the early repayment of the loan on 
30 June 2020. The applicants paid that compensation for early repayment. 
5 By letter of 19 April 2021, the applicants demanded that the defendant repay the 
compensation for early repayment, and they seek repayment of that amount by the 
present action. 
6 The applicants take the view that the defendant is not entitled to payment of the 
compensation for early repayment because the credit agreement does not contain 
sufficient information concerning, inter alia, the calculation of the compensation 
for early repayment. They submit that, in addition, it follows from Directive 
2014/17 that compensation for early repayment can serve only as compensation 
for costs actually incurred and cannot include losses of interest or profit suffered 
by the creditor. The applicants further consider that a hypothetical calculation 
based on formulae deriving from financial mathematics is impermissible. 
7 The defendant takes the view that the agreement contains all the information 
prescribed by law to a sufficient extent. With regard to the amount of 
compensation claimed, the defendant refers to settled case-law of the Federal 
Court of Justice, according to which, in the case where a loan secured by a charge 
on immovable property is paid off for good reason, the creditor is entitled to the 
losses connected directly with the early repayment if, at the time of repayment, the 
borrower owes interest at a fixed borrowing rate. The defendant submits that 
banks usually have to refinance themselves when granting loans and enter into 
long-term commitments of their own with the refinancer. 
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Succinct presentation of the reasoning in the request for a preliminary ruling 
8 The decisive question for the resolution of the dispute in the main proceedings is 
whether the applicants are entitled, under Paragraph 812 of the BGB (which 
governs entitlement to restitution in the event of unjust enrichment), to repayment 
of the compensation for early repayment which they had paid. This would be the 
case if the defendant had not been entitled to compensation for early repayment. 
Question 1 
9 The defendant’s entitlement to payment of compensation for early repayment 
could arise from Paragraph 502(1) of the BGB. However, if that provision were 
incompatible with EU law, in particular with Article 25(3) of Directive 2014/17, 
in so far as the creditor is granted full compensation for his or her loss, including 
loss of profit, as compensation for early repayment, the defendant would not be 
entitled to the loss of profit. The action for repayment of the compensation for 
early repayment would have to be upheld in that respect. 
10 Paragraph 252 of the BGB provides that the damage to be compensated also 
includes loss of profit. 
11 In accordance with Paragraph 500(2), the borrower may discharge fully or 
partially his or her obligations under a consumer credit agreement early at any 
time (first sentence). However, in the case of a consumer credit agreement for 
which a fixed borrowing rate has been agreed, this is possible during the period of 
the fixed borrowing rate only where the borrower has a legitimate interest in doing 
so (second sentence). 
12 Under Paragraph 502(1) of the BGB, the creditor is entitled to ‘reasonable 
compensation for early repayment’ where the loan is repaid early. That provision 
has also applied to consumer credit agreements relating to immovable property 
since Directive 2014/17 was transposed into German law. However, 
Paragraph 502 of the BGB does not define exactly what is meant by reasonable 
compensation for early repayment. 
13 The German legislature refrained from expressly transposing the requirements 
contained in the first and second sentences of Article 25(3) of Directive 2014/17, 
under which only ‘objective’ compensation may be claimed and the compensation 
‘shall not exceed the financial loss of the creditor’. 
14 The national case-law proceeds on the assumption that the damage suffered by the 
creditor pursuant to Paragraph 502(1) of the BGB must continue to be determined 
in accordance with principles of compensation law, with the result that the interest 
lost by the creditor is recoverable as lost profit in accordance with Paragraph 252 
of the BGB, even following the transposition of Directive 2014/17. 
15 The referring court considers that various indications for interpretation can be 
derived from the wording and scheme of Article 25 of Directive 2014/17. 
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16 In accordance with the second sentence of Article 25(1) of Directive 2014/17, 
Member States must ensure that, in the event of early repayment, the consumer is 
entitled to a reduction in the total cost of the credit, such reduction consisting of 
the interest and the costs for the remaining duration of the contract. This is likely 
to mean that the interest and the costs for the remaining duration of the contract 
are to cease to exist. 
17 A further argument militating against taking into account the interest that would 
have accrued in the absence of the early repayment is that, in accordance with the 
first sentence of Article 25(3) of Directive 2014/17, only costs directly linked to 
the early repayment of the loan can be claimed. It would appear to be doubtful 
whether that is to be understood as referring to interest which would have accrued 
only in the absence of the early repayment. 
18 Furthermore, the restrictive wording ‘for possible costs’ in the first sentence of 
Article 25(3) of Directive 2014/17 might also preclude interest from being taken 
into account (recital 66 of that directive contains the similar restriction ‘potential 
costs’). This is because, in the event of early repayment, the creditor necessarily – 
not only possibly – loses entitlement to further interest payments. 
Question 2 
19 If EU law, in particular Article 25(3) of Directive 2014/17, does not preclude the 
bank’s entitlement to full compensation, including loss of profit, in accordance 
with Paragraph 502(1) of the BGB, but cannot be reconciled with the method for 
calculating the abovementioned entitlement to compensation, approved by the 
national case-law, the action would likewise have to be upheld, since entitlement 
to payment of compensation for early repayment is excluded under point 2 of 
Paragraph 502(2) of the BGB where the consumer was not informed of the 
method of calculation upon conclusion of the contract. Point 2 of 
Paragraph 502(2) of the BGB provides that entitlement to compensation for early 
repayment is excluded where, ‘in the contract, the information concerning the 
term of the contract, the borrower’s right of termination or the calculation of the 
compensation for early repayment is insufficient’. In the present case, the 
defendant informed the applicants merely of a calculation according to the 
‘asset/liability method’. Therefore, the defendant could not subsequently calculate 
its losses according to a different method. 
20 From the point of view of the referring court, various factors regarding the 
calculation of the compensation for early repayment can be inferred from 
Article 25 of Directive 2014/17. 
21 The requirement of ‘objective’ compensation in the first sentence of Article 25(3) 
of Directive 2014/17 militates in favour of the view that only actual costs 
concretely incurred can be included in the calculation. Therefore, a fictitious 
calculation based on values deriving from financial mathematics or on statistical 
values might be impermissible. This might also be supported by the wording 
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‘where justified’ in the first sentence of Article 25(3) of Directive 2014/17, 
especially in so far as that additional element relates to the requirement of 
objectivity in the English version (‘objective compensation, where justified’) and 
French version (‘objective, lorsque cela s’avère justifié’). 
22 By contrast, the wording of the second sentence of Article 25(4) of Directive 
2014/17 militates in favour of fictitious losses also being compensable. According 
to that provision, the information provided to the borrower must ‘quantify the 
implications … of discharging … obligations prior to the expiry of the credit 
agreement and clearly set out any assumptions used. Any assumptions used shall 
be reasonable and justifiable.’ It might be concluded from that wording that the 
compensation also includes factors determined by means of assumptions. 
Question 3 
23 The defendant’s entitlement to compensation for early repayment could also arise 
from the third sentence of Paragraph 490(2) of the BGB because the applicants 
not only repaid the loan early, but also gave notice of termination beforehand. If 
Question 3 is answered in the negative, the defendant would be entitled to the loss 
of profit. If Question 3 were to be answered in the affirmative, on the other hand, 
the same questions would arise in the context of the interpretation of 
Paragraph 490(2) of the BGB as arise in relation to the application of 
Paragraph 502(1) of the BGB (Questions 1 and 2). 
24 Under Paragraph 490(2) of the BGB, the borrower may terminate a credit 
agreement early where the borrowing rate is fixed and the loan is secured by, inter 
alia, a charge on immovable property, if his or her ‘legitimate interests’ so require 
(first sentence). Such an interest exists, in particular, where the borrower has a 
need to put to a different use the property used to secure the loan (second 
sentence). The borrower must compensate the creditor for the damage caused to 
the latter as a result of the early termination (third sentence). In accordance with 
settled case-law of the Federal Court of Justice, the calculation of that 
compensation for early repayment is likewise subject to the principles of 
compensation law, with the result that a loss of profit must also be compensated, 
in accordance with Paragraph 252 of the BGB. 
25 In the context of national law, it is disputed whether the requirements relating to 
the right of termination under Paragraph 490(2) of the BGB are stricter than those 
relating to early repayment under Paragraph 500 of the BGB and whether 
Article 25 of Directive 2014/17 also has an impact on the interpretation of 
Paragraph 490 of the BGB. The prevailing view to date is that, for the purposes of 
the interpretation of the concept of ‘legitimate interest’ within the scope of 
Paragraph 490(2) of the BGB, there must be a connection with the preservation of 
the borrower’s economic freedom of action with regard precisely to the 
immovable property used to secure the loan. By contrast, against the background 
of an interpretation in conformity with the directive, it is assumed that other 
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legitimate interests (for example, divorce or unemployment) can also justify early 
repayment within the framework of Paragraph 500 of the BGB. 
26 The referring court takes the view that there is good reason to assume that 
Article 25 of Directive 2014/17 is also applicable where the consumer terminates 
the consumer credit agreement relating to immovable property in accordance with 
Paragraph 490(2) of the BGB before repaying the loan early. Article 25 of 
Directive 2014/17 is intended to ensure a minimum standard of consumer 
protection in the event of early repayment. The circumstance of whether a right of 
termination existing under the national legislation is additionally exercised before 
such repayment cannot play a role in that regard. As a general rule, a consumer 
will not even know that his or her national law contains different provisions for 
those two situations. Even if he or she is aware of the two possibilities, he or she 
may possibly terminate ‘just to be on the safe side’. If the directive were not 
applied to those cases, many consumers would not benefit from their right to early 
repayment of the loan under Article 25 of Directive 2014/17. 
27 This would be the case, in particular, if the Court, in answering Questions 1 and 2, 
were to conclude that the principles hitherto applied under national law with 
regard to the calculation of compensation for early repayment within the 
framework of Paragraphs 500 and 502 of the BGB are wholly or partly 
incompatible with Article 25 of Directive 2014/17. If the compensation for early 
repayment in the case where the right of early termination under Paragraph 490(2) 
of the BGB is exercised were calculated differently than in the context of early 
repayment under Paragraphs 500 and 502 of the BGB, the result would be that a 
consumer who terminates his or her loan early might be worse off than a 
consumer who exercises his or her right of early repayment without terminating 
the loan. Due to the objective of consumer protection pursued by that right, it 
would therefore appear necessary for Article 25 of Directive 2014/17 also to apply 
in the case where termination is declared before the loan is repaid.