Case C-152/05: Action brought on 5 April 2005 by the Commission of the European Communities against the Federal Republic of Germany
Date: 2005-05-28
Institutions: Court of Justice
Subjects: European Commission, Germany, action for failure to fulfil an obligation, family benefit, free movement of workers, right of establishment, social security legislation

C 132/18

EN

Official Journal of the European Union

28.5.2005

Action brought on 5 April 2005 by the Commission of the
European Communities against the Federal Republic of
Germany

(Case C-152/05)

(2005/C 132/33)

(Language of the case: German)

An action against
the Federal Republic of Germany was
brought before the Court of Justice of the European Commu-
nities on 5 April 2005 by the Commission of the European
Communities, represented by R. Lyal and K. Gross, with an
address for service in Luxembourg.

The Commission claims that the Court should:

1. declare that by excluding, in the first sentence of Paragraph
2(1) of the Eigenheimzulagengesetz (Law on allowances for
owner-occupied homes), the grant, to persons subject to
unlimited taxation, of owner-occupied home allowance in
respect of properties situated in other Member States irre-
spective of whether comparable assistance can be claimed
there, the Federal Republic of Germany has failed to fulfil its
obligations under Articles 18, 39 and 43 of the EC Treaty;

2. order the Federal Republic of Germany to pay the costs.

Pleas in law and main arguments

In the European Commission's view, the owner-occupied home
allowance granted by the German State has discriminatory
features. Persons subject to unlimited taxation in Germany who
acquire a flat or house for the purpose of habitation in
Germany are entitled to owner-occupied home allowance.
Persons subject to unlimited taxation in Germany who live
outside Germany and want to acquire a property there for the
purpose of habitation are, by contrast, not granted owner-occu-
pied home allowance.

Three groups of people are placed at a disadvantage by the
German rules: (i) State employees who are resident abroad; (ii)
frontier workers at least 90 % of whose income is subject to
German income tax; and (iii) diplomats and European Union
officials from Germany.

The Commission regards this, according to the status of the
affected group of persons, as infringing freedom of movement
for workers (Article 39 EC), freedom of establishment (Article
43 EC) or freedom of movement under Article 18 EC. All the
cases have a sufficient cross-border element
to justify the
applicability of the relevant Treaty provision.

from advantages financed out of taxation in the same way as a
person resident in Germany. It is necessary to avoid a situation
where the persons concerned are not granted advantages
connected with their personal situation either in the State
where they reside or in the State where they pursue their occu-
pation.

In practice it is not very likely that a person subject to unlim-
ited taxation in Germany will subject to unlimited taxation in
another State. Account can be taken of that exceptional situa-
tion by prohibiting concurrent receipt of the German owner-
occupied home allowance and comparable foreign assistance.

The restriction of owner-occupied home allowance to proper-
ties situated in Germany is not justified. The housing situation
in Germany can also be improved if, for example, frontier
workers acquire residential property not far over the border
instead of moving to Germany. The German Government did
not explain adequately in the pre-litigation procedure what
purpose is ultimately served by limiting the assistance to
German territory. Even if it were permissible for a Member
State to promote housing construction in its territory alone,
the German rules are not in themselves logical. If the Federal
Republic of Germany wishes to promote every form of housing
construction in Germany, it is not evident why the assistance is
restricted to persons subject to unlimited taxation in Germany.
Persons subject to limited taxation in Germany can also acquire
residential accommodation there and thus promote housing
construction.

Community law does not in any way require that the acquisi-
tion of second homes in other Member States be supported
financially. It is for the national legislature alone to determine
the scope of the assistance. Its freedom of decision is, however,
limited by the fundamental
freedoms enshrined in the EC
Treaty.

Action brought on 5 April 2005 by the Commission of the
European Communities against the Hellenic Republic

(Case C-156/05)

(2005/C 132/34)

(Language of the case: Greek)

The Commission considers that the decision of the Court of
Justice in Case C-279/93 Schumacker can be transposed to the
present instance. Every person who is subject to unlimited taxa-
tion in Germany — and thus in principle pays tax on his
worldwide income in Germany and in this way participates in
the financing of Germany society — must be able to benefit

An action against the Hellenic Republic was brought before the
Court of Justice of the European Communities on 5 April 2005
by the Commission of the European Communities, represented
by Eleni Tserepa-Lacombe and Nicola Yerrell, of
its Legal
Service, with an address for service in Luxembourg.