Case C-319/05: Action brought on 19 August 2005 by the Commission of the European Communities against the Federal Republic of Germany
Date: 2005-10-15
Institutions: Court of Justice
Subjects: European Commission, Germany, action for failure to fulfil an obligation, bulb vegetable, drugs classification, medicinal product, pharmaceutical legislation

15.10.2005

EN

Official Journal of the European Union

C 257/5

Pleas in law and main arguments

According to the European Commission, the rule laid down in
Article 10(1)(9) of the EStG is incompatible with the freedom
to provide services and the rights to freedom of movement
provided for in the EC Treaty.

Under Article 10(1)(9) of the EStG, taxable persons in Germany
are able to deduct from their taxable income 30 % of the fees
paid to state-approved or recognised private schools as special
expenses from the overall amount of their taxable income. It is
not possible to deduct tax in respect of school fees paid to
private schools established in another Member State.

The Commission considers that the general exclusion of foreign
private schools from that tax reduction is discriminatory. In its
view, the tax disadvantage in respect of foreign private schools
also infringes the freedom of foreign schools to provide services
and the freedom of taxable persons established in Germany
who wish to send their children to a foreign private school.

Foreign private schools are moreover required to set up in
Germany if they wish to avoid a competitive disadvantage
through the less favourable tax treatment of their customers.
That constitutes an inadmissible restriction on freedom of
establishment.

the restriction on the possibility of deduction tax
Finally,
infringes the right to freedom of movement of citizens from
other EU Member States who wish to move to Germany, but
who at the same time wish to continue having their children
educated in their country of origin. The same applies in respect
of German nationals who live in another Member State, but
who are still subject to unlimited tax liability in Germany. They
too are placed at a disadvantage if they wish to send their chil-
dren to a private school outside Germany.

Action brought on 19 August 2005 by the Commission of
the European Communities against the Federal Republic of
Germany

(Case C-319/05)

(2005/C 257/09)

(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 19 August 2005 by the Commission of the European

Communities, represented by Bruno Stromsky and Bernhard
Schima, acting as Agents, with an address for service in Luxem-
bourg.

The Commission of the European Communities claims that the
Court should:

1. declare that, by classifying a garlic preparation in capsule
form, which does not fall under the definition of a medicinal
product by virtue of its designation, as a medicinal product,
the Federal Republic of Germany has failed to fulfil its obli-
gations under Articles 28 and 30 EC;

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

Pleas in law and main arguments

By its action, the Commission challenges the classification by
the German authorities of a garlic preparation in capsule form
as a medicinal product.

The Commission takes the view that the product is not a
medicinal product. Garlic is a widely available foodstuff. The
sale of garlic is not to be restricted on grounds of health
protection. The product is not a medicinal product by virtue of
its designation, because it is not indicated or recommended for
treating or preventing illnesses and, furthermore, it is not typi-
cally presented as a medicinal product.

In addition, it is not a medicinal product by virtue of its func-
tion. The mildly preventive effect of garlic against athero-
sclerosis does not lend the product any medicinal characteristic.
In the first place, such an effect can be produced by the
consumption of garlic foodstuffs in various forms. Secondly,
other foodstuffs, such as for example various types of fish, can
guard against atherosclerosis. Thirdly, various foodstuffs which
are entirely general in nature reduce the risk of various illnesses
(tomatoes, broccoli, cocoa etc). The Commission takes the view
that this health-beneficial effect cannot result in such foodstuffs
being termed medicinal products.

Likewise,
the risks involved in consuming garlic in certain
situations do not justify the product at issue being classified as
a medicinal product. Those risks can be dealt with by less
restrictive measures.

The product at
issue is therefore not a medicinal product
within the meaning of Community law. Therefore the fact that
it is classified as a medicinal product in Germany constitutes a
barrier to the free movement of goods. It is not clear how that
barrier can be justified on the grounds of protection of public
health.