Keywords

Summary



Keywords

Free movement of capital – Restrictions – Tax legislation – Tax on the transfer of immovable property

(Art. 56 EC; EEA Agreement, Art. 40)

Summary

A Member State does not fail to fulfil its obligations under Articles 18 EC, 43 EC and 56 EC and under Articles 31 and 40 of the Agreement on the European Economic Area (EEA) by keeping in force legislation under which, for the calculation of a tax advantage upon the purchase of immovable property intended as a new principal residence, the amount of registration duties paid upon the purchase of a previous principal residence is taken into account only if the latter was situated in a particular region of that State and not if it was situated in another Member State or in a Member State of the European Free Trade Association.

Admittedly, such legislation constitutes a restriction within the meaning of Article 56 EC since as a result of the exclusion from the benefit of the tax advantage of nationals of Member States other than the Member State concerned who move the place of their principal residence from another Member State to the territory of a region of the Member State concerned and who use the funds obtained on the sale of their previous principal residence to finance the acquisition of their new immovable property situated in that region, it cannot be ruled out that the fact that registration duties paid in another Member State cannot be offset may, in certain cases, discourage individuals exercising their right of free movement from purchasing immovable property in the region concerned.

In particular, the difference in treatment thus introduced concerns objectively comparable situations since, as regards the registration duties at issue, the only difference between the situation of non‑residents, including nationals who have availed themselves of their right to move freely in the European Union, and that of residents in the region concerned, whether nationals or nationals of another Member State, who acquire a new principal residence in that region stems from the place of their previous principal residence. In either situation, those persons will have acquired immovable property in the region concerned in order to establish themselves there and, at the time of purchasing their previous principal residence, some will have paid, in the State in which that residence was located, a tax similar in nature to the registration duties, while others will have paid those duties in the region at issue.

However, that restriction on the free movement of capital is justified by reasons which relate to the safeguarding of the cohesion of the tax system. Since the Member State concerned has no power of taxation on a purchase transaction which was carried out previously in another Member State by persons who decide to establish their new principal residence in the region at issue, the configuration of that tax advantage reflects a logical symmetry. If those persons were to benefit from the portability system upon acquiring a property in the region concerned, they would derive an undue advantage from a tax system to which their previous immovable property acquisition outside the Member State at issue was not subject. It follows that, under such a system, there is a link between the tax advantage and the initial levy. That system involves, first, one and the same taxpayer, who has already paid the duties at issue and who is eligible for the offset and, second, an advantage awarded within the context of the same taxation.

Furthermore, the restriction at issue is appropriate to achieve such an objective, in that it operates in a perfectly symmetrical manner, as only the registration duties previously paid under the national tax system may be offset. Similarly, that restriction is entirely proportionate to the objective pursued, since the rule at issue limits the amount which may be offset against the registration duties payable by the person who purchases a new principal residence in the region concerned to a specific maximum. In providing for such a limitation, the system at issue retains its character as a tax advantage and is not in the nature of a disguised exemption.

In so far as the provisions of Article 40 of the EEA Agreement have the same legal scope as the substantially identical provisions of Article 56 EC, all the foregoing considerations may be transposed, mutatis mutandis , to Article 40 of the EEA Agreement.

(see paras 42, 44-45, 59-60, 73-75, 80-83)