CELEX: 62008CJ0510
Language: en
Date: 2010-04-22
Title: Judgment of the Court (Second Chamber) of 22 April 2010.#Vera Mattner v Finanzamt Velbert.#Reference for a preliminary ruling: Finanzgericht Düsseldorf - Germany.#Free movement of capital - Articles 56 EC and 58 EC - Gift tax - Land on which a building has been constructed - Allowance to be set against the taxable value - Different treatment of residents and non-residents.#Case C-510/08.

Case C-510/08
      Vera Mattner
      v
      Finanzamt Velbert
      (Reference for a preliminary ruling from the Finanzgericht Düsseldorf)
      (Free movement of capital – Articles 56 EC and 58 EC – Gift tax – Land on which a building has been constructed – Allowance to be set against the taxable value – Different treatment of residents and non-residents)
      Summary of the Judgment
      Free movement of capital – Restrictions – Tax on gifts
      (Arts 56 EC and 58 EC)
      Article 56 EC in conjunction with Article 58 EC must be interpreted as precluding legislation of a Member State which provides
         that, for the calculation of gift tax, the allowance to be set against the taxable value in the case of a gift of immovable
         property in that State is smaller where the donor and the donee were resident in another Member State on the date of the gift
         than the allowance which would have applied if at least one of them had been resident in the former Member State on that date.
      
      Where that national legislation makes the application of an allowance against the taxable value of the immovable property
         concerned dependent on the place of residence of the donor and the donee on the date of the gift, the greater tax burden on
         the gift between non-residents constitutes a restriction on the free movement of capital.
      
      That difference in treatment cannot be justified on the ground that it relates to situations which are objectively different.
         Where national legislation places on the same footing, for the purposes of taxing immovable property acquired by gift which
         is located in the Member State concerned, non-resident donees who have acquired the property from a non‑resident donor, on
         the one hand, and non-resident or resident donees who have acquired it from a resident donor and resident donees who have
         acquired it from a non-resident donor, on the other, it cannot without infringing the requirements of European Union law treat
         those donees differently in connection with that tax as regards the application of an allowance against the taxable value
         of the immovable property. There is no objective difference between those two classes of persons in regard to the detailed
         rules and conditions of charging gift tax which could justify a difference in treatment.
      
      In addition, the Member State in which the immovable property which is the subject of the gift is located cannot, in order
         to justify a restriction on the free movement of capital arising from its own legislation, rely on the possibility, beyond
         its control, of the donee benefiting from a similar allowance by another Member State, such as that in which the donor and
         the donee resided on the date of the gift, which might wholly or partly offset the loss incurred by the donee as a result
         of the smaller allowance when calculating the gift tax payable in the former Member State. That is all the more the case if
         the Member State in which the donor and the donee reside applies a smaller allowance than that granted by the Member State
         in which the immovable property which is the subject of the gift is situated, or sets the value of that property at a higher
         figure than that determined by the latter State.
      
      Moreover, the risk of circumvention of the tax provisions on inheritance by making multiple simultaneous gifts or by transmitting
         the entirety of a person’s assets by means of successive gifts over a period of time cannot justify a limitation of the allowance
         applicable to the taxable value, where that risk is purely hypothetical. As regards possible future gifts, although the Member
         State in which immovable property which is the subject of a gift is located is indeed entitled to make sure that the tax rules
         relating to inheritance are not circumvented by split gifts between the same persons, the risk of circumvention concerning
         gifts between persons who are not resident in that Member State exists just as much in the case of gifts involving a resident.
         Since, in order to prevent such split gifts, the national legislation provides with respect to gifts involving a resident
         not for the application of an allowance at a lower rate but, at most, for the full-rate allowance laid down for such gifts
         to apply only once to the taxable value produced by the aggregation of the gifts in question, the application of a reduced
         allowance where the gift is effected between non-residents cannot be regarded as an appropriate means of attaining the objective
         of avoiding such circumvention.
      
      Nor can the legislation at issue be justified by the need to preserve the coherence of the national tax system, since the
         tax advantage resulting, in the Member State in which the immovable property which is the subject of a gift is located, from
         the application of a full allowance to the taxable value where that gift involves at least one resident of that State is not
         offset in that State by any particular tax charge in the context of gift tax.
      
      (see paras 28, 35, 38, 42, 44, 46, 48-51, 54-56, operative part)
JUDGMENT OF THE COURT (Second Chamber)
      22 April 2010 (*)
      
      (Free movement of capital – Articles 56 EC and 58 EC – Gift tax – Land on which a building has been constructed – Allowance to be set against the taxable value – Different treatment of residents and non-residents)
      In Case C‑510/08,
      REFERENCE for a preliminary ruling under Article 234 EC from the Finanzgericht Düsseldorf (Germany), made by decision of 14
         November 2008, received at the Court on 24 November 2008, in the proceedings
      
      Vera Mattner
      v
      Finanzamt Velbert,
      THE COURT (Second Chamber),
      composed of J.N. Cunha Rodrigues, President of the Chamber, P. Lindh, A. Rosas, U. Lõhmus and A. Ó Caoimh (Rapporteur), Judges,
      Advocate General: P. Mengozzi,
      Registrar: B. Fülöp, Administrator,
      having regard to the written procedure and further to the hearing on 11 February 2010,
      after considering the observations submitted on behalf of:
      –        Finanzamt Velbert, by F.‑D. Rilinger and G. Köhler, acting as Agents,
      –        the German Government, by M. Lumma and C. Blaschke, acting as Agents,
      –        the Commission of the European Communities, by R. Lyal and W. Mölls, acting as Agents,
      having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
      gives the following
      Judgment
      1        This reference for a preliminary ruling concerns the interpretation of Articles 39 EC, 43 EC, 56 EC and 58 EC relating to
         freedom of movement for workers, freedom of establishment and free movement of capital.
      
      2        The reference was made in the course of proceedings between Ms Mattner and Finanzamt Velbert (Velbert Tax Office, ‘the Finanzamt’)
         (Germany) concerning the calculation of the gift tax due on the gift of a piece of land in Germany on which a house had been
         built.
      
       Legal context 
       European Union law
      3        Under Article 1 of Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (article
         repealed by the Treaty of Amsterdam) (OJ 1988 L 178, p. 5):
      
      ‘1.      Without prejudice to the following provisions, Member States shall abolish restrictions on movements of capital taking place
         between persons resident in Member States. To facilitate application of this Directive, capital movements shall be classified
         in accordance with the Nomenclature in Annex I.
      
      2.      Transfers in respect of capital movements shall be made on the same exchange rate conditions as those governing payments relating
         to current transactions.’
      
      4        The capital movements listed in Annex I to Directive 88/361 include, under heading XI, personal capital movements, among which
         are gifts and endowments.
      
       National legislation
      5        The Law on inheritance and gift tax (Erbschaftsteuer- und Schenkungssteuergesetz), in the version published on 27 February
         1997 (BGBl. 1997 I, p. 378), as last amended by the Law of 10 October 2007 (BGBl. 2007 I, p. 2332), which was applicable at
         the material time, (‘the ErbStG’) provides as follows:
      
      ‘Paragraph 1 Taxable events
      
      (1)      Inheritance tax (gift tax) shall apply to
      1.      acquisitions on death;
      2.      gifts inter vivos;
      
      3.      ...
      (2)      Unless provided otherwise, the provisions of the present law governing acquisitions on death shall apply also to gifts ...
      Paragraph 2 Personal liability to tax
      
      (1)      Liability to tax arises
      1.      in the cases referred to in Paragraph 1(1), points 1 to 3, where the deceased at the date of his death, the donor at the date
         of making the gift or the acquirer at the date on which the tax arises ... is a resident, in relation to the entirety of the
         assets.
      
      Persons regarded as residents are
      (a)      natural persons having a permanent residence or their habitual residence within the country,
      (b)      German nationals who have resided abroad continuously for not more than five years and do not have a permanent residence within
         the country.
      
      ...
      3.      in all other cases, in relation to an acquisition which consists of assets within the country within the meaning of Paragraph
         121 of the Law on valuation [(Bewertungsgesetz, “the BewG”)].
      
      …
      Paragraph 14 Taking into account of previous acquisitions
      
      Multiple acquisitions of assets from the same person within ten years are aggregated in such a way that the earlier acquisitions
         are added to the latest acquisition at their earlier value. From the tax for the total amount there is deducted the tax which
         would have been chargeable for the earlier acquisitions according to the personal circumstances of the acquirer and on the
         basis of the provisions in force at the time of the latest acquisition. In lieu of the tax in accordance with the second sentence,
         the tax actually payable for the earlier acquisitions included in the calculation is to be deducted, if it is greater. …
      
      Paragraph 15 Tax classes 
      
      (1)      According to the personal relationship between the acquirer and the deceased or donor, the following three tax classes are
         distinguished:
      
      Tax class I:
      1.      …
      2.      children and step-children …
      ...
      Paragraph 16 Allowances
      
      (1)      Exempt from tax, in the cases provided for in Paragraph 2(1), point 1, are acquisitions
      1.      ...
      2.      by children within the meaning of tax class I, point 2, ... in the amount of EUR 205 000;
      (2)      In lieu of the tax-free amount under subparagraph (1), in the cases provided for in Paragraph 2(1), point 3, a tax-free amount
         of EUR 1 100 applies.
      
      …
      Paragraph 19 Tax rates
      
      (1)      Inheritance tax is charged according to the following percentages:
      
               Value of the taxable acquisition … not exceeding EUR
            
            
               Percentage in tax class
            
          
            
                I … …
            
         
               52 000
            
            
                7 … …
            
         
               256 000
            
            
                11 … …
            
         …’
      6        Paragraph 121 of the BewG, in the version of 1 February 1991 (BGBl. 1991 I, p. 230), as last amended by the Law of 13 December
         2006 (BGBl. 2006 I, p. 2378), headed ‘Assets within the country’, provides:
      
      ‘Assets within the country comprise:
      ...
      2.      immovable property within the country;
      …’.
       The main proceedings and the question referred for a preliminary ruling
      7        By a notarised act of 23 May 2007, Ms Mattner, a German national who has lived in the Netherlands for more than 35 years,
         acquired by gift from her mother, who is also a German national and has lived in the Netherlands for more than 50 years, a
         piece of land on which a house had been built, in Düsseldorf (Germany), worth EUR 255 000.
      
      8        By a tax notice dated 24 January 2008, the Finanzamt claimed gift tax in the amount of EUR 27 929 from Ms Mattner in respect
         of the gift she had received. That figure was obtained by deducting an allowance of EUR 1 100 from the value of the land and
         applying a rate of 11% to the resulting taxable value.
      
      9        By decision of 23 May 2008, the Finanzamt dismissed Ms Mattner’s objection to the tax notice.
      
      10      Ms Mattner brought proceedings in the Finanzgericht Düsseldorf (Finance Court, Düsseldorf), seeking to obtain the benefit
         of the EUR 205 000 allowance applicable to gifts to children where the donor or the donee is resident in the national territory
         at the date of the gift.
      
      11      The referring court considers that Paragraph 16(2) of the ErbStG restricts the free movement of capital within the meaning
         of Article 56(1) EC, in that the amount of the allowance in question depends on the place of residence of the donor or the
         donee. Thus in the case pending before that court, if Ms Mattner or her mother were resident in Germany, Ms Mattner would
         have been able to claim the allowance of EUR 205 000 provided for in Paragraph 16(1)(2) of the ErbStG, as a result of which
         the taxable value would have been limited to only EUR 50 000 and the tax due would, in view of the 7% rate applicable under
         Paragraph 19(1) of the ErbStG, have been EUR 3 500 instead of EUR 27 929.
      
      12      The referring court is not convinced that that restriction on the free movement of capital is justified, since in its view
         the situation of a person with unlimited tax liability in Germany to whom land in Germany has been transferred without payment
         and that of a person with limited tax liability in that State to whom a similar transfer has been made are objectively comparable.
      
      13      The referring court observes that the Bundesfinanzhof (Federal Finance Court) has admittedly, in a judgment of 21 September
         2005, held that in principle the differences between taxpayers who have unlimited liability to inheritance tax and those who
         have limited liability to that tax are so significant that the national legislature is not obliged to treat those two classes
         of taxpayers in the same way when granting them personal allowances. While the former are subject to inheritance tax on the
         entirety of the assets transferred, the tax liability of the latter extends only to ‘assets within the country’ as defined
         in Paragraph 121 of the BewG. The taxable value to which the allowance is to be applied therefore differs considerably, as
         a general rule, depending on whether liability to tax is unlimited or limited.
      
      14      However, the referring court is uncertain whether such considerations can apply in the case of gift tax, since in that case
         only the assets gifted are subject to tax, and the taxable value is therefore no different whether the taxpayer has unlimited
         or limited tax liability. It also considers that the different treatment of taxpayers according to whether they have unlimited
         or limited tax liability does not appear capable of being justified by an overriding reason in the general interest.
      
      15      The referring court is also uncertain whether Paragraph 16(2) of the ErbStG is compatible with Articles 39 EC and 43 EC, in
         that the consequences of the tax legislation concerning gifts are among the considerations which a national of a Member State
         may take into account when deciding to make use of his freedom of movement in accordance with the EC Treaty.
      
      16      In those circumstances, the Finanzgericht Düsseldorf decided to stay the proceedings and refer the following question to the
         Court for a preliminary ruling:
      
      ‘Are Articles 39 EC and 43 EC and Article 56 EC in conjunction with Article 58 EC to be interpreted as precluding a national
         provision of a Member State on the charging of gift tax which, where land within the country is acquired by a non‑resident
         person, provides for an allowance of only EUR 1 100 for the non‑resident acquirer, whereas on the gifting of the same land
         an allowance of EUR 205 000 would be granted if the donor or the acquirer were resident in the Member State in question at
         the time of the gift?’
      
       Consideration of the question referred
      17      By its question the referring court asks essentially whether Articles 39 EC, 43 EC, 56 EC and 58 EC must be interpreted as
         precluding legislation of a Member State, such as that at issue in the main proceedings, which provides that, for the calculation
         of gift tax, the allowance to be set against the taxable value in the case of a gift of immovable property in that State is
         smaller where the donor and the donee are resident in another Member State on the date of the gift than the deduction which
         would have applied if at least one of them had been resident in the former Member State on that date.
      
      18      According to settled case-law, Article 56(1) EC lays down a general prohibition on restrictions on the movement of capital
         between Member States (Case C‑11/07 Eckelkamp and Others [2008] ECR I‑6845, paragraph 37; Case C‑43/07 Arens‑Sikken [2008] ECR I‑6887, paragraph 28; and Case C‑67/08 Block [2009] ECR I‑883, paragraph 18).
      
      19      In the absence of a definition in the Treaty of ‘movement of capital’ for the purposes of Article 56(1) EC, the Court has
         previously recognised the nomenclature which forms Annex I to Directive 88/361 as having indicative value, even though that
         directive was adopted on the basis of Articles 69 and 70(1) of the EEC Treaty (later Articles 69 and 70(1) of the EC Treaty;
         articles repealed by the Treaty of Amsterdam), it being understood that, in accordance with the introduction to that annex,
         the list it contains is not exhaustive (see, inter alia, Case C‑513/03 van Hilten-van der Heijden [2006] ECR I‑1957, paragraph 39; Eckelkamp and Others, paragraph 38; Arens-Sikken, paragraph 29; and Block, paragraph 19). Gifts and endowments appear under heading XI, ‘Personal capital movements’, of Annex I to Directive 88/361
         (Case C‑318/07 Persche [2009] ECR I‑359, paragraph 24).
      
      20      Like the tax charged on inheritances, which consist in the transfer to one or more persons of assets left by a deceased person
         and likewise fall under that heading of Annex I to the directive (see, inter alia, Case C‑256/06 Jäger [2008] ECR I‑123, paragraph 25; Eckelkamp and Others, paragraph 39; Arens-Sikken, paragraph 30; Block, paragraph 20; and Case C‑35/08 Busley and Cibrian Fernandez [2009] ECR I‑0000, paragraph 18), the tax treatment of gifts, whether they are gifts of money, immovable property or movable
         property, therefore comes under the Treaty provisions on the movement of capital, except where their constituent elements
         are confined within a single Member State (see, to that effect, Persche, paragraph 27).
      
      21      A situation in which a person resident in the Netherlands makes a gift to another person also resident in the Netherlands
         of land in Germany cannot be regarded as a purely domestic situation.
      
      22      Consequently, the gift at issue in the main proceedings constitutes a transaction which is a movement of capital within the
         meaning of Article 56(1) EC.
      
      23      In those circumstances, since there is nothing in the order for reference which could connect the dispute in the main proceedings
         with freedom of movement for workers or freedom of establishment, there is no need to consider whether Articles 39 EC and
         43 EC apply (see, to that effect, Busley and Cibrian Fernandez, paragraph 19).
      
      24      It must therefore be examined, first, whether, as submitted by Ms Mattner in the main proceedings and the Commission of the
         European Communities in its written observations before the Court, national legislation such as that at issue in the main
         proceedings constitutes a restriction on the movement of capital.
      
      25      It follows from the Court’s case-law on inheritance that national provisions which determine the value of immovable property
         for the purposes of calculating the amount of tax payable when it is acquired as a gift not only may be capable of discouraging
         the purchase of immovable property in the Member State concerned but may also have the effect of reducing the value of a gift
         by a resident of a Member State other than that in which the property is located (see, to that effect, Jäger, paragraph 30; Eckelkamp and Others, paragraph 43; and Arens-Sikken, paragraph 36).
      
      26      In the case of gifts, it follows from that case-law that the measures prohibited by Article 56(1) EC as being restrictions
         on the movement of capital include those whose effect is to reduce the value of a gift by a resident of a Member State other
         than that in which the property concerned is located and which taxes the gift of that property (see, by analogy, van Hilten-van der Heijden, paragraph 44; Jäger, paragraph 31; Eckelkamp and Others, paragraph 44; Arens-Sikken, paragraph 37; and Block, paragraph 24).
      
      27      In the present case, national provisions such as those at issue in the main proceedings, in so far as they provide that a
         gift of immovable property located in the Federal Republic of Germany qualifies for a smaller allowance against the taxable
         value where the donor and the donee reside in another Member State than would apply if one of them were resident in German
         territory, with the result that gifts in the first category are subject to gift tax that is higher than the tax payable on
         the second category of gifts, have the effect of restricting the movement of capital by reducing the value of a gift which
         includes such property (see, by analogy, Eckelkamp and Others, paragraph 45).
      
      28      Where those provisions make the application of an allowance against the taxable value of the immovable property concerned
         dependent on the place of residence of the donor and the donee on the date of the gift, the greater tax burden on the gift
         between non-residents constitutes a restriction on the free movement of capital (see, by analogy, Eckelkamp and Others, paragraph 46).
      
      29      Next, it must be examined whether the restriction on the free movement of capital that has thus been found to exist may be
         justified in the light of the provisions of the Treaty.
      
      30      The Finanzamt and the German Government submit essentially that a gift from a non-resident donor to a non-resident donee and
         a gift involving a resident, whether as donor or donee, are objectively different situations. While in the former case the
         donee is subject in Germany to limited tax liability relating solely to the assets in Germany, in the latter case he is subject
         in that State to unlimited tax liability relating to the entirety of the assets transferred, regardless of where the property
         is located. In accordance with Case C‑279/93 Schumacker [1995] ECR I‑225, different treatment of that kind does not constitute discrimination for the purposes of Articles 56 EC
         and 58 EC, since it is in principle for the Member State in whose territory an unlimited tax obligation arises to assess all
         the personal characteristics of the taxpayer.
      
      31      In this respect, it should be recalled that, under Article 58(1)(a) EC, Article 56 ‘shall be without prejudice to the rights
         of Member States … to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the
         same situation with regard to their place of residence or with regard to the place where their capital is invested’.
      
      32      In so far as that provision of Article 58 EC is a derogation from the fundamental principle of the free movement of capital,
         it must be interpreted strictly. It cannot therefore be interpreted as meaning that all tax legislation which draws a distinction
         between taxpayers on the basis of their place of residence or the Member State in which they invest their capital is automatically
         compatible with the Treaty (see Jäger, paragraph 40; Eckelkamp and Others, paragraph 57; and Arens-Sikken, paragraph 51).
      
      33      The derogation in Article 58(1)(a) EC is itself limited by Article 58(3) EC, which provides that the national provisions referred
         to in paragraph 1 of that article ‘shall not constitute a means of arbitrary discrimination or a disguised restriction on
         the free movement of capital and payments as defined in Article 56’.
      
      34      A distinction must therefore be drawn between the unequal treatment permitted under Article 58(1)(a) EC and the arbitrary
         discrimination prohibited under Article 58(3) EC. According to the case-law, in order for national tax legislation such as
         that at issue in the main proceedings – which, for the purposes of calculating gift tax, distinguishes as to the amount of
         the allowance applicable to the taxable value of immovable property located in the Member State concerned according to whether
         the donor or the donee resides in that State or they both reside in another Member State – to be regarded as compatible with
         the Treaty provisions on the free movement of capital, the difference in treatment must concern situations which are not objectively
         comparable or be justified by overriding reasons in the general interest. In order to be justified, moreover, the difference
         in treatment between those two categories of gifts must not go beyond what is necessary in order to attain the objective of
         the legislation in question (see Case C‑319/02 Manninen [2004] ECR I‑7477, paragraph 29; Eckelkamp and Others, paragraphs 58 and 59; and Arens-Sikken, paragraphs 52 and 53).
      
      35      Contrary to the submissions of the Finanzamt and the German Government, that difference in treatment cannot be justified on
         the ground that it relates to situations which are objectively different.
      
      36      According to the case-file submitted to the Court, the amount of the tax on gifts of immovable property in Germany is calculated
         pursuant to the ErbStG on the basis both of the value of the property and of the family relationship, if any, between the
         donor and the donee. Neither of those criteria depends on the place of residence of the donor or the donee. Consequently,
         as regards the amount of gift tax payable in respect of immovable property in Germany which is the subject of a gift, there
         cannot be any objective difference justifying the unequal tax treatment of the situation in which neither person resides in
         that Member State and that in which at least one of them resides there. Ms Mattner’s situation is therefore comparable to
         that of any donee who acquires immovable property in Germany by gift from a person resident in Germany with whom there is
         a family link, and also to that of a donee residing in Germany who makes that acquisition from such a person who is not resident
         there (see, to that effect, Jäger, paragraph 44; Eckelkamp and Others, paragraph 61; and Arens-Sikken, paragraph 55).
      
      37      The German legislation in principle regards both the recipient of a gift between non-residents and the recipient of a gift
         involving at least one resident as taxpayers for the purposes of charging gift tax on gifts of immovable property in Germany.
         Only with respect to the allowance applied to the taxable value does that legislation, for the purposes of calculating the
         tax on gifts of immovable property in Germany, apply different treatment to gifts between non-residents and gifts involving
         a resident. By contrast, the determination of the class and rate of tax, laid down in Paragraphs 15 and 19 of the ErbStG,
         follows the same rules for both categories of gifts (see, by analogy, Eckelkamp and Others, paragraph 62, and Arens-Sikken, paragraph 56).
      
      38      Where national legislation places on the same footing, for the purposes of taxing immovable property acquired by gift which
         is located in the Member State concerned, non-resident donees who have acquired the property from a non‑resident donor, on
         the one hand, and non-resident or resident donees who have acquired it from a resident donor and resident donees who have
         acquired it from a non-resident donor, on the other, it cannot without infringing the requirements of European Union law treat
         those donees differently in connection with that tax as regards the application of an allowance against the taxable value
         of the immovable property. By treating gifts to those two classes of persons in the same way except in relation to the amount
         of the allowance the donee may benefit from, the national legislature accepted that there is no objective difference between
         them in regard to the detailed rules and conditions of charging gift tax which could justify a difference in treatment (see,
         by analogy, Eckelkamp and Others, paragraph 63, and Arens-Sikken, paragraph 57).
      
      39      It must be examined, finally, whether the restriction on the movement of capital which is the result of legislation such as
         that at issue in the main proceedings may be objectively justified by an overriding reason in the general interest.
      
      40      In the first place, the Finanzamt submits that if the ErbStG provided in such a case for the application of the same allowance
         to gifts between non-residents and gifts involving a resident, Ms Mattner would be able, by making use of the same tax advantages
         in her Member State of residence, in which she has unlimited tax liability, to benefit from multiple allowances.
      
      41      On this point, the Court has already held, in its case-law on the free movement of capital and inheritance tax, that a national
         of a Member State cannot be deprived of the possibility of relying on the provisions of the Treaty on the ground that he is
         profiting from tax advantages which are legally provided for by the rules in force in a Member State other than his State
         of residence (Case C‑364/01 Barbier [2003] ECR I‑15013, paragraph 71, and Eckelkamp and Others, paragraph 66).
      
      42      In any event, the Member State in which the immovable property which is the subject of the gift is located cannot, in order
         to justify a restriction on the free movement of capital arising from its own legislation, rely on the possibility, beyond
         its control, of the donee benefiting from a similar allowance by another Member State, such as that in which the donor and
         the donee resided on the date of the gift, which might wholly or partly offset the loss incurred by the donee as a result
         of the smaller allowance when calculating the gift tax payable in the former Member State (see, by analogy, Eckelkamp and Others, paragraph 68, and Arens‑Sikken, paragraph 65).
      
      43      A Member State cannot rely on the existence of an advantage granted unilaterally by another Member State – in this case the
         Member State in which the donor and the donee reside – to escape its obligations under the Treaty, in particular under the
         Treaty provisions on the free movement of capital (see Eckelkamp and Others, paragraph 69, and Arens-Sikken, paragraph 66).
      
      44      That is all the more the case if, as the German Government submitted at the hearing, the Member State in which the donor and
         the donee reside applies a smaller allowance than that granted by the Member State in which the immovable property which is
         the subject of the gift is situated, or sets the value of that property at a higher figure than that determined by the latter
         State.
      
      45      Moreover, it appears from the case-file submitted to the Court that, in calculating the tax on gifts, the national legislation
         at issue in the main proceedings purely and simply excludes the full-rate allowance where the donor and donee are not resident
         in the Member State in which the property gifted is situated, without taking into consideration the possible grant of a similar
         allowance in another Member State, such as that in which the donor and the donee reside, or the method of determining the
         value of the property in the latter Member State.
      
      46      In the second place, the Finanzamt and the German Government submit that the national legislation at issue in the main proceedings,
         by essentially treating inheritances and gifts in the same way, is intended to ensure that the persons concerned do not have
         the possibility of circumventing the tax provisions on inheritance by making multiple simultaneous gifts or by transmitting
         the entirety of a person’s assets by means of successive gifts over a period of time. That, in particular, is the aim of Paragraph
         14 of the ErbStG, which provides in essence that gifts between the same persons during a period of 10 years are to be aggregated
         for the purposes of applying inheritance and gift taxes.
      
      47      The Finanzamt and the German Government therefore submit that, even if it is conceded that in the present case the gift relates
         only to a single parcel of land, it is legitimate for that legislation, in order to determine the reduction applicable to
         a gift between non-residents, to be based on the principle that the donor still has assets, in her Member State of residence
         or in other States, which she transferred to Ms Mattner at the same time, or which she might subsequently transfer to her,
         without it being possible to subject them to gift tax in Germany. There is no reason why a Member State such as the Federal
         Republic of Germany, which exercises its right of taxation with respect solely to certain individual assets, should grant
         an allowance appropriate to the transfer of the entirety of the assets. It is thus not for that Member State but for the Member
         State in which the donor and Ms Mattner reside to take account, in the context of unlimited tax liability, of the personal
         situation of Ms Mattner.
      
      48      In this respect, it does not appear from the case-file submitted to the Court that Ms Mattner, in the present case, received
         other assets as gifts from the same donor during the period of 10 years prior to the gift at issue in the main proceedings,
         so that the risk of circumvention which could arise from the existence of earlier or simultaneous gifts between the same persons
         is purely hypothetical and cannot therefore, in a case such as that in the main proceedings, justify a limitation of the allowance
         applicable to the taxable value.
      
      49      Moreover, as regards possible future gifts, although the Member State in which immovable property which is the subject of
         a gift is located is indeed entitled to make sure that the tax rules relating to inheritance are not circumvented by split
         gifts between the same persons, the risk of circumvention alleged to exist in the present case concerning gifts between persons
         who are not resident in that Member State exists just as much in the case of gifts involving a resident.
      
      50      It should be observed here that Paragraph 14 of the ErbStG, which is intended to prevent such split gifts by aggregating,
         for the purpose of calculating the tax due, the gifts effected during a 10-year period, provides with respect to gifts involving
         a resident not for the application of an allowance at a lower rate but, at most, for the full-rate allowance laid down for
         such gifts to apply only once to the taxable value produced by the aggregation of the gifts in question.
      
      51      It follows that the application of a reduced allowance such as that laid down by the national legislation at issue in the
         main proceedings where the gift is effected between persons who are not resident in the Member State in which the property
         which is the subject of the gift is located cannot be regarded as an appropriate means of attaining the objective of that
         legislation.
      
      52      In the third place, at the hearing, the German Government referred to the need to preserve the coherence of the German tax
         system, submitting that it is logical to reserve the tax advantage resulting from the application of the full allowance to
         the taxable value of a gift to taxpayers who have unlimited tax liability in the Member State in which the property which
         is the subject of the gift is located, since that system, by taxing the worldwide assets of the taxpayer, is less advantageous
         overall than the system applicable to taxpayers who have limited tax liability in that State.
      
      53      On this point, it should be recalled that the Court has indeed held that the need to preserve the coherence of a tax system
         may justify a restriction on the exercise of the fundamental freedoms guaranteed by the Treaty. However, for such a justification
         to be accepted, a direct link has to be established between the granting of the tax advantage concerned and the offsetting
         of that advantage by a particular tax charge (see Manninen, paragraph 42, and Case C‑182/08 Glaxo Wellcome [2009] ECR I‑0000, paragraphs 77 and 78).
      
      54      In the present case, it suffices to state that the tax advantage resulting, in the Member State in which the immovable property
         which is the subject of a gift is located, from the application of a full allowance to the taxable value where that gift involves
         at least one resident of that State is not offset in that State by any particular tax charge in the context of gift tax.
      
      55      The legislation at issue in the main proceedings cannot therefore be justified by the need to preserve the coherence of the
         German tax system.
      
      56      The answer to the referring court’s question is therefore that Article 56 EC in conjunction with Article 58 EC must be interpreted
         as precluding legislation of a Member State, such as that at issue in the main proceedings, which provides that, for the calculation
         of gift tax, the allowance to be set against the taxable value in the case of a gift of immovable property in that State is
         smaller where the donor and the donee were resident in another Member State on the date of the gift than the allowance which
         would have applied if at least one of them had been resident in the former Member State on that date.
      
       Costs
      57      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
         the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
         of those parties, are not recoverable.
      
      On those grounds, the Court (Second Chamber) hereby rules:
      Article 56 EC in conjunction with Article 58 EC must be interpreted as precluding legislation of a Member State, such as that
            at issue in the main proceedings, which provides that, for the calculation of gift tax, the allowance to be set against the
            taxable value in the case of a gift of immovable property in that State is smaller where the donor and the donee were resident
            in another Member State on the date of the gift than the allowance which would have applied if at least one of them had been
            resident in the former Member State on that date.
      [Signatures]
      * Language of the case: German.