Judgment — ECLI:EU:C:2009:33
Date: 2009-01-27
Language of the case: German
Court formation: Grand Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Free movement of capital;Approximation of laws
Concepts: Free movement of capital and freedom of payments
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary of the Judgment 1. Free movement of capital – Provisions of the Treaty – Scope (Arts 56 EC and 58 EC) 2. Free movement of capital – Restrictions – Tax legislation – Income tax (Art. 56 EC) 1. Where a taxpayer claims, in a Member State, the deduction for tax purposes of gifts to bodies established and recognised as charitable in another Member State, such gifts come within the compass of the Treaty provisions relating to the free movement of capital, even if they are made in kind in the form of everyday consumer goods. Indeed, national legislation can come within the compass of Articles 56 EC to 58 EC even if it concerns the transfer of assets which can include both sums of money and movable and immovable property. Like the tax levied on inheritances, the tax treatment of gifts in money or in kind therefore comes within the compass of the Treaty provisions on the movement of capital, except in cases where the constituent elements of the transactions concerned are confined within a single Member State. (see paras 26-27, 30, operative part 1) 2. Article 56 EC precludes legislation of a Member State by virtue of which, as regards gifts made to bodies recognised as having charitable status, the benefit of a deduction for tax purposes is allowed only in respect of gifts made to bodies established in that Member State, without any possibility for the taxpayer to show that a gift made to a body established in another Member State satisfies the requirements imposed by that legislation for the grant of such a benefit. Since the possibility of obtaining a deduction for tax purposes can have a significant influence on the donor’s attitude, the inability in the Member State of taxation to deduct gifts to bodies recognised as charitable if they are established in other Member States is likely to affect the willingness of taxpayers in the former Member State to make gifts for their benefit and constitutes, therefore, a restriction on the free movement of capital prohibited, as a rule, by Article 56 EC. Admittedly, it is permissible for a Member State, as part of its legislation relating to the deduction for tax purposes of gifts, to apply a difference in treatment between national bodies recognised as charitable and those established in other Member States if the latter bodies pursue objectives other than those advocated by its own legislation. In that regard, it is not a requirement under Community law for Member States automatically to confer on foreign bodies recognised as having charitable status in their Member State of origin the same status in their own territory. However, a body which is established in one Member State but satisfies the requirements imposed for that purpose by another Member State for the grant of tax advantages, is, in respect of the grant by the latter Member State of tax advantages intended to encourage the charitable activities concerned, in a situation comparable to that of bodies recognised as having charitable purposes which are established in the latter Member State. Furthermore, since nothing prevents the tax authorities of the Member State of taxation from requiring a taxpayer, wishing to obtain the deduction for tax purposes for gifts made for the benefit of bodies established in another Member State, to provide the relevant evidence, that Member State of taxation cannot invoke the need to safeguard the effectiveness of fiscal supervision to justify national legislation which absolutely prevents the taxpayer from producing such evidence. In that context, before granting a tax exemption to a body established and recognised as having charitable status in another Member State, a Member State is authorised to apply measures enabling it to ascertain in a clear and precise manner whether the body meets the conditions imposed by national law in order to be entitled to the exemption and to monitor its effective management. On the other hand, any administrative disadvantages arising from the fact that such bodies may be established in another Member State are not sufficient to justify a refusal on the part of the authorities of the State concerned to grant such bodies the same tax exemptions as are granted to national bodies of the same kind. The same applies in the case of the taxpayer who claims a tax deduction in a Member State for a gift to a body established and recognised as charitable in another Member State. Moreover, the tax authorities concerned may, pursuant to Directive 77/799 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation, call upon the authorities of another Member State in order to obtain all the information that may be necessary to effect a correct assessment of a taxpayer’s liability to tax. However, that directive does not in any way affect the powers of the competent authorities of the donor’s Member State to assess in particular whether the conditions to which that legislation subjects the grant of a tax advantage are fulfilled. Thus, as regards a body established and recognised as having charitable status in another Member State, the donor’s Member State must allow identical tax treatment to that applied to gifts made to national bodies only if that body satisfies the requirements laid down by the legislation of that latter Member State for the grant of tax advantages, among which are the pursuit of objectives identical to those promoted by the tax law of that Member State. It is for the competent national authorities, including the national courts, to establish whether, under the rules of national law, compliance with the requirements imposed by the donor’s Member State for the grant of the tax advantage in question has been proved. Finally, a Member State cannot exclude the grant of tax advantages for gifts made to a body established and recognised as charitable in another Member State on the sole ground that, in relation to such bodies, the tax authorities of the former Member State are unable to check, on-the-spot, compliance with the requirements which their tax legislation imposes. As regards charitable bodies in a non-member country, it is, as a rule, legitimate for the Member State of taxation to refuse to grant such a tax advantage if, in particular, because that non-member country is not under any international obligation to provide information, it proves impossible to obtain the necessary information from that country. (see paras 38-39, 47-48, 50, 55-56, 60-61, 63, 66, 70, 72, operative part 2)