CELEX: 62008CC0250
Language: en
Date: 2011-07-21
Title: Opinion of Advocate General Sharpston delivered on 21 July 2011. # European Commission v Kingdom of Belgium. # Failure of a Member State to fulfil obligations - Free movement of persons - Purchase of immovable property intended as a new principal residence - Calculation of a tax advantage - Registration duties - Cohesion of the tax system. # Case C-250/08.

OPINION OF ADVOCATE GENERAL
      Sharpston
      delivered on 21 July 2011 (1)
      
      Case C‑250/08
      European Commission
      v
      Kingdom of Belgium
      
      (Registration duty payable on the purchase of a principal residence – Right to move and reside freely – Freedom of establishment – Free movement of capital – Restrictions)1.        In these proceedings, the Commission claims that Belgian legislation concerning the payment of registration duty within the
         Flemish Region discriminates in particular against citizens of Member States who seek to exercise their rights to move residence,
         to freedom of establishment and to move capital within the European Union. The legislation at issue allows registration duty (2) paid on the purchase of a principal residence in the Flemish Region – but not elsewhere – to be offset against that payable
         on the acquisition of a subsequent principal residence within the same Region.
      
       Legal background
       Relevant provisions of the Treaty and the EEA Agreement
      2.        Article 18(1) EC (now Article 21(1) TFEU) provides:
      
      ‘Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States, subject
         to the limitations and conditions laid down in this Treaty and by the measures adopted to give it effect.’
      
      3.        Article 43 EC (now Article 49 TFEU) states:
      
      ‘Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member
         State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the
         setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member
         State.
      
      Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and
         manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 48 (now Article
         54 TFEU), under the conditions laid down for its own nationals by the law of the country where such establishment is effected,
         subject to the provisions of the Chapter relating to capital.’
      
      4.        Article 31(1) of the EEA Agreement in effect extends those provisions to the whole of the European Economic Area.
      
      5.        Article 56(1) EC (now Article 63(1) TFEU) states:
      
      ‘Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member
         States and between Member States and third countries shall be prohibited.’
      
      6.        Article 40 of the EEA Agreement in effect extends that provision to the whole of the European Economic Area.
      
      7.        Article 6 of the EEA Agreement states that the provisions of the Agreement, in so far as they are identical in substance to
         corresponding rules of the Treaty (and to acts adopted in application of the Treaty), are to be interpreted in conformity
         with the case-law of the Court at the time that the EEA Agreement was signed. (3) The EEA Agreement does not contain a similar provision relating to subsequent case-law of the Court. (4) However, it follows from Article 105 of the EEA Agreement that rules of the Agreement which are identical in substance to
         those of the Treaty should be interpreted uniformly. (5) The Court of Justice has jurisdiction to interpret the EEA Agreement with regard to the territory of the European Union and
         the EFTA Court has jurisdiction to do so as regards its application in the EFTA States. In that respect the Agreement provides
         for cooperation between the Court of Justice and the EFTA Court. (6)
      
      8.        The rules prohibiting restriction on the freedom of establishment set out in Article 31 of the EEA Agreement are identical
         to those imposed by Article 49 TFEU. (7) Furthermore, the provisions concerning the free movement of capital (whose wording is similar but not identical to the corresponding
         provisions of the Treaty on the Functioning of the European Union) must likewise, as far as possible, be interpreted in the
         same way. (8)
      
       Council Directive 88/361/EEC
      9.        The explanatory notes to Annex I of Council Directive 88/361/EEC (9) make it clear that ‘movement of capital’ in that context includes purchases of buildings and land and the construction of
         buildings by private persons for personal use. (10)
      
       National legislation
      10.      Under Article 44 of the Wetboek der registratie‑, hypotheek‑ en griffierechten) (Code of registration duties, mortgage duties
         and registry fees for the Flemish Region; ‘the Wetboek’), registration duty of 10% is levied on the value of all non-gratuitous
         transfers of proprietary or usufructuary rights in immovable property. (11) Under Article 46a, in the case of a purchase of residential property by one or more natural persons for the purpose of establishing
         their principal residence there, the basis of assessment is reduced by EUR 12 500, provided that they do not own any other
         residential property at the time. This abatement in respect of the basis of assessment is available to all first-time buyers
         who are natural persons, irrespective of whether they previously resided in the Flemish Region or elsewhere.
      
      11.      Article 61.3 of the Wetboek provides:
      
      ‘When immovable property used or intended to be used for residential purposes is purchased in a normal sale transaction by
         an individual in order to establish it as his principal residence, his statutory portion of the duty payable … on the acquisition
         of the dwelling previously used as his principal residence, or of the land upon which that dwelling was constructed, is to
         be offset against his statutory portion of the duty payable on the acquisition of the new property, provided that the latter
         acquisition is duly dated within two years of the date of the registration of the document giving rise to the determination
         of the proportional duty on either the resale of the previous dwelling by normal sale transaction, or on the division of joint
         ownership of that dwelling, the individual having relinquished all of his rights.
      
      There can be no offset under this article of duty paid on the acquisition of a property which is not situated in the Flemish
         Region.
      
      The amount to be offset … cannot in any case exceed EUR 12 500 …’
      12.      Article 212a of the Wetboek provides for reimbursement (rather than offset) of registration duty where (i) the preceding property
         is sold within two years after the acquisition of the subsequent property (five years where land is acquired for the purpose
         of constructing a dwelling house) and (ii) the purchaser establishes his principal residence in the new dwelling within two
         years of acquiring it (five years where land is acquired for the purpose of constructing a dwelling house). Again, the preceding
         property must be situated in the Flemish Region, and the amount that may be reimbursed is limited to EUR 12 500.
      
      13.      I shall refer to the system put in place by Articles 61.3 and 212a of the Wetboek jointly as ‘the disputed measure’. Those
         articles, together with the provisions outlined in point 10 above and a number of related procedural provisions, were introduced
         into the Wetboek by an amending decree of 1 February 2002. (12) The explanatory memorandum to the draft decree acknowledged that registration duty often proved an obstacle for people wishing
         to move their place of residence closer to their place of work or to adapt it to changed family circumstances. It stated that
         the aim of the amendment was to ‘promote mobility for all citizens who, for whatever reason (professional, family or other),
         wish to purchase a new principal residence which corresponds better than their current residence to their requirements’. That
         was to be achieved by allowing part of the duty paid on a previous, principal residence (that is, home) up to a maximum of
         EUR 12 500, to be deducted from the duty payable on the subsequent purchase of another home.
      
       The pre-litigation procedure
      14.      Considering the disputed measure to be discriminatory and therefore precluded by the Treaty, the Commission sent the Kingdom
         of Belgium a letter of formal notice on 23 December 2005. The Belgian Government contested the alleged infringement in its
         reply of 22 March 2006.
      
      15.      The Commission was not satisfied with that response and issued a reasoned opinion on 13 July 2006. The Belgian authorities
         confirmed by letter of 13 September 2006 that they considered the disputed measure to be consistent with EU law and in any
         event to be justified in the public interest.
      
      16.      The Commission maintained its view and therefore lodged the present application on 5 May 2008. The Commission asks the Court
         to declare that the Kingdom of Belgium has failed to fulfil its obligations under Articles 18, 43 and 56 of the EC Treaty
         and Articles 31 and 40 of the EEA Agreement in so far as, in the Flemish Region, for the assessment of a tax advantage on
         the purchase of immovable property intended as a new principal place of residence, the amount of registration duty paid upon
         the purchase of a previous principal place of residence is taken into account only where the latter was situated in the Flemish
         Region and not where it was in a Member State other than Belgium or in an EFTA State. The Commission also asks the Court to
         order the Kingdom of Belgium to pay the costs.
      
      17.      The Hungarian Government has intervened in support of Belgium.
      
      18.      At the hearing on 23 September 2010, the Commission and the Belgian and Hungarian Governments submitted oral argument.
      
       Assessment
       Preliminary observations
      19.      A number of preliminary matters require to be clarified before examining the Commission’s application.
      
      20.      First, the Kingdom of Belgium comprises three Communities, three regions and four language areas. (13) The three regions have certain legislative competences; however, those of the Flemish Community and the Flemish Region are
         pooled and exercised jointly by the Flemish Government, which introduced the disputed measure. It is settled case-law, none
         the less, that a Member State may be found liable where a local or regional authority is found to be in breach of EU law. (14)
      
      21.      Second, registration duty in Belgium has already been examined by the Court in the context of an obligation to pay such duty
         following an order by a national court in a contractual dispute. (15) The Court there accepted that the duty payable constituted indirect taxation. In doing so, however, it essentially adopted
         the classification given by the national court. (16) In general terms, the distinction between indirect taxation and direct taxation is this: an indirect tax is included in a
         sum paid by one person to another who accounts for the tax but does not bear the economic burden, whereas a direct tax is
         collected from the person who bears the economic burden. (17) It therefore seems to me that a tax on property transactions the burden of which falls on the purchaser and is collected
         from him is more correctly to be regarded as a direct tax, rather than as indirect taxation.
      
      22.      Third, regardless of whether the registration duty in the present case constitutes direct or indirect taxation, it is clear
         that it is not the subject of EU harmonisation and therefore falls within the competence of the Member States. None the less,
         according to the settled case-law of the Court, Member States must exercise such competence consistently with EU law. (18)
      
      23.      Fourth, the Commission alleges infringement of Articles 18, 43 and 56 EC (and the provisions of the EEA Agreement corresponding
         to the latter two articles). The Belgian Government submits that Article 56(1) EC is the only relevant provision and that
         the present matter should be considered on that basis alone.
      
      24.      Examination of that issue reveals a curious aspect of the Commission’s approach when compared with two other infringement
         actions brought in the same period: Commission v Greece, (19) in which judgment was delivered on 20 January 2011, and Commission v Hungary. (20)Commission v Greece concerned an exemption from property transfer tax for first-time buyers who were either permanently resident in Greece or
         had Greek nationality. Commission v Hungary concerns a measure whereby, in the case of a sale of one residence and the purchase of a new home, property transfer tax
         is charged only on the difference in market value between the two properties, provided that they are both in Hungary.
      
      25.      Clearly there are points of similarity between the contested measures in those cases and the present matter: indeed, the Commission
         alleges discrimination and restriction of Treaty freedoms in all three. However, in those cases the Commission alleged infringement
         of Articles 18, 39 and 43 EC (in Commission v Greece an infringement of Article 12 EC was also alleged), (21) whereas in the present case it claims there is infringement of Articles 18, 43 and 56 EC, together with Articles 31 and 40
         of the EEA Agreement, but does not allege breach of Articles 12 and 39 EC. (22)
      
      26.      Although there are, of course, features which differentiate the measures in issue in each case, the fact remains that the
         Commission’s approach does not appear to be wholly consistent. That said, it is for the Commission to decide how to formulate
         its application in infringement proceedings, and for the Court to determine whether each specific allegation is borne out.
         The Belgian Government’s submission therefore cannot be entertained.
      
       Order of analysis
      27.      It is true that Article 18 EC, which sets out in general terms the right of every EU citizen to move and reside freely within
         the territory of the Member States, finds specific expression in Article 43 EC so far as establishment for the purposes of
         economic activity is concerned. (23) Furthermore, as the Court observed in Konle, (24) the right to acquire, use or dispose of immovable property on the territory of another Member State is the corollary of freedom
         of establishment; and capital movements include investments in such property in the territory of a Member State by non-residents. (25) The Court therefore commonly first considers the more specific provisions, before examining the more general provision. (26)
      
      28.       However, it seems to me that in the present infringement proceedings the Commission’s case, based as it is on legislation
         relating to the purchase of a private residence, must concern primarily the right to move and reside freely in the territory
         of the Member States, guaranteed by Article 18 EC. In so far as such a residence is purchased with funds transferred from
         another State, the transaction requires free movement of the necessary capital, as guaranteed by Article 56 EC. Finally, in
         so far as citizens may exercise (or intend to exercise) an economic activity from or close to their private residence, a question
         may also arise as to the exercise of the right of establishment guaranteed by Article 43 EC.
      
      29.       It therefore seems sensible first to address the Commission’s case under Article 18 EC (which finds no counterpart in the
         EEA Agreement), before turning to consider the arguments relating to freedom of establishment (Article 43 EC; Article 31(1)
         of the EEA Agreement) and free movement of capital (Article 56(1) EC; Article 40 of the EEA Agreement).
      
       Article 18 EC
      30.      A citizen of the Union who exercises the right to move and reside guaranteed by Article 18 EC must be granted in all Member
         States the same treatment in law as that accorded to nationals of those Member States who find themselves in the same situation.
         The Court has held that national legislation which places EU citizens at a disadvantage simply because they have exercised
         their freedom to move and to reside in another Member State is a restriction on the freedoms conferred by Article 18(1) EC
         on every EU citizen. (27)
      
      31.      Discrimination on the basis of residence has been a recurrent theme in the Court’s case-law relating to free movement of workers
         and freedom of establishment, (28) as a form of indirect discrimination on grounds of nationality. Unlike such cases, however, it is not necessary for the purposes
         of Article 18 EC to establish that a measure adversely affects nationals of other Member States more than those of the State imposing the measure – merely that it affects them adversely. (29)
      
      32.      Are EU citizens who move to the Flemish Region from another Member State accorded the same treatment under the disputed measure
         as Belgian nationals who are residents of that region in respect of eligibility for exemption from payment of registration
         duties?
      
      33.      First, it is necessary to identify the correct comparator. Should a comparison be made between Belgian nationals who reside
         in the Flemish Region and all EU citizens who might wish to purchase a home in that region (that is, a comparison on a wide
         basis)?
      
      34.      The former category (Belgians resident in the Flemish Region) would comprise Belgian nationals who are residents of the Flemish
         Region who then (a) sell their home and purchase a replacement residence within that region; or (b) do not own a property
         but purchase one for the first time in the Flemish Region; or (c) sell their home and purchase a replacement residence outside
         the Flemish region (whether elsewhere in Belgium or in another Member State).
      
      35.      The latter category (all EU citizens) would include the following sub-categories: persons who sell their home in another Member
         State and purchase a replacement residence in the Flemish Region; persons who do not own a property in another Member State
         but purchase for the first time in the EU in the Flemish Region; and persons who have left the Flemish Region where they owned
         a property in order to move to another Member State but subsequently decide to return to that Region and buy a property there.
         This final group is subject to particular rules under the disputed national measure: accordingly, I consider it at greater
         length below in points 75 to 79.
      
      36.      Are the two broad categories of home buyer in the same situation, so that it is appropriate to compare them with one another?
      
      37.      In so far as both categories comprise persons who purchase a home within the EU, the answer is ‘yes’.
      
      38.      If the comparison is made on that wide basis, all first-time buyers in the Flemish Region are treated in the same manner whether
         they move to that region from another Member State or whether they move within that region. Neither category of first-time
         buyer is eligible for the offset on that first purchase, although they will both benefit from the abatement in respect of
         the basis of assessment to the registration duty. (30)
      
      39.      Obviously, individuals who subsequently sell their property in the Flemish Region to move to another Member State do not benefit
         from the offset. However, that is merely the consequence of the principle of fiscal territoriality. On the one hand, registration
         duty cannot be levied by the Flemish Region on property purchased in another Member State and therefore the offset is not
         available in such circumstances. On the other hand, nothing obliges Member States to offer such persons a benefit equivalent
         to the offset that they would have received had their next purchase been in the Flemish Region.
      
      40.      Finally, individuals who subsequently sell their property in the Flemish Region to move elsewhere in Belgium are all treated
         alike – they, too, do not benefit from the offset.
      
      41.      However, the Commission contends that the comparison should be made on a narrower basis: between individuals who move to the
         Flemish Region from another Member State, selling their home in order to purchase a (first) principal residence in that region,
         and individuals who remain within the Flemish region who sell their home and buy a replacement residence. The Commission submits
         that there is no objective distinction between such persons. Both move home within the European Union; in both cases registration
         duty is payable at the time the new home is purchased and in both cases the previous home is sold in order to acquire the
         replacement residence in the Flemish Region. Those whose previous home was in the Flemish Region paid registration duty on
         their previous property. Those who move to that region from another Member State have paid registration duty or a comparable
         tax in the State of their former residence. Therefore the two situations are objectively comparable. In substance, the Commission’s
         complaint then seems to be that (unlike their counterparts who move home within the Flemish Region) persons who move to the
         Flemish Region from another Member State do not receive any benefit (that is, offset) in that region for (a comparable) tax
         paid in the Member State from which they have moved. Consequently they suffer a fiscal disadvantage.
      
      42.      In my view, however, even an examination of two such narrowly defined categories does not necessarily lead to the conclusion
         that individuals who move to the Flemish Region from another Member State are in the same situation as persons who move within
         that region.
      
      43.      In order to be considered to be in the same situation, the individual in question must meet the conditions of the disputed
         measure and thus be eligible for the offset. Those conditions are as follows: (a) the previous residence must have been owned
         and sold by that person; (b) he must purchase a replacement residence situated in the Flemish Region; and (c) registration
         duty or an equivalent tax must have been paid by that individual upon the acquisition of the preceding residence.
      
      44.      The first two matters can easily be established. However, the third condition – that the individual in question has paid the
         same or an equivalent tax (to that paid in the Flemish Region) on his preceding home in the Member State which he moves from
         – cannot so readily be assumed to be satisfied.
      
      45.      All Member States have systems for what are commonly described as property transfer taxes. The disputed measure is an example
         of such a tax. However, the basis of taxation, the rates, whether exemptions are available and the schemes for granting relief
         differ from Member State to Member State because such taxes are not the subject of harmonisation within the European Union. (31) Therefore, even where an individual who moves to the Flemish Region from another Member State owned his previous residence
         in that Member State, it does not necessarily follow that he has paid the same or an equivalent duty. For example, his previous
         residence may have qualified for full exemption from property transfer tax in that State: if so, no equivalent tax will have
         been paid. (32)
      
      46.      Furthermore, the question of mutual recognition of such taxes is a matter within the domain of the Member States. Therefore
         it cannot be assumed that payment of registration duty in another Member State is, or need be, recognised as payment of registration
         duty for the purposes of the Flemish Region. This situation has been described as being consistent with EU law as it currently
         stands. (33)
      
      47.      Thus, even if the comparison is made on the narrow basis advocated by the Commission, it cannot be assumed that all individuals
         who move to the Flemish Region from another Member State are in the same situation as persons who move home within that region.
      
       Discrimination against returning residents of the Flemish Region?
      48.      In a series of cases, beginning with D’Hoop, (34) the Court has condemned instances where citizens of the Union receive less favourable treatment in their Member State of
         nationality than they would have received if they had not exercised their right to freedom of movement, stating that ‘it would
         be incompatible with the right of freedom of movement were a citizen, in the Member State of which he is a national, to receive
         treatment less favourable than he would enjoy if he had not availed himself of the opportunities offered by the Treaty in
         relation to freedom of movement’. (35)
      
      49.      Does the disputed measure place residents of the Flemish Region who move to another Member State and return to the Flemish
         Region after a certain period has elapsed at a disadvantage as compared to residents of the Flemish Region who continue to
         reside there, simply because the former have exercised their right to move freely within the European Union? (36)
      
      50.      In my view it does not.
      
      51.      Under the disputed measure, a resident of the Flemish Region who sells his principal residence move to (for example) France
         and subsequently returns to the Flemish region after a period of four years would not be entitled to the offset in respect
         of any principal residence situated in the Flemish Region which he purchases upon his return. However, a resident of the Flemish
         Region who sells his principal residence, stays in the Flemish Region but moves into rented accommodation and then, after
         four years, decides to purchase a replacement principal residence in that region would also not be entitled to the offset.
         The individual who has exercised his right to free movement is in exactly the same position as the one who has not. Both are
         ineligible for the offset because they have not purchased a replacement property within two years, as prescribed by the disputed
         measure. (37)
      
      52.      Thus, any disadvantage follows from the fact that the individual has not purchased a replacement property within two years
         of the sale of his previous principal residence, not from the exercise of free movement rights.
      
      53.      The Commission’s first ground of complaint therefore cannot succeed.
      
       Freedom of establishment (Article 43 EC; Article 31(1) of the EEA Agreement) and free movement of capital (Article 56 (1)
            EC; Article 40 of the EEA Agreement)
       Outline of the arguments
      54.      In essence, the Commission submits that persons selling their existing home in order to buy a new home in the Flemish Region
         are treated more favourably if the existing home is situated in that region than if it is in another Member State or an EFTA
         State; that the two groups of purchasers are objectively comparable, so that the difference in treatment is prohibited – implicitly,
         as indirect discrimination on grounds of nationality and, in any event, as contrary to the principle of equal treatment; and
         that those contemplating a move to the Flemish Region in such circumstances are liable to be deterred from doing so by reason
         of that discrimination, which therefore forms an obstacle to the exercise of their rights to freedom of establishment and
         to free movement of capital.
      
      55.      The Belgian Government, while accepting that there is a difference in treatment, submits that it is not discriminatory because
         the two groups are not comparable: those who have previously paid registration duty in the Flemish Region are objectively
         distinguishable from those who have previously paid a levy in another State. It further submits that, by virtue of the principle
         of fiscal territoriality (or sovereignty), transfers of immovable property can be taxed only by the fiscal authority within
         whose jurisdiction the property lies. As a corollary, the need to maintain cohesion of the tax system means that only duty
         already levied within that jurisdiction can be offset against duty subsequently to be levied there.
      
      56.      Hungary, like the Belgian Government, considers that the disputed measure does not discriminate against nationals of other
         Member States who wish to move to the Flemish Region. Furthermore, the Hungarian Government submits that if the national legislation
         is found to constitute a restriction, it is justified under the principle of fiscal territoriality and for overriding reasons
         in the public interest relating to the coherence of the tax system.
      
      57.      In response to the latter point, the Commission contends that a restriction can be justified by the need to maintain cohesion
         of the tax system only if there is a direct link between the tax advantage concerned and the offsetting of the advantage by
         a particular levy. However, there is no such link between duty paid on the purchase of one property and a reduction of the
         duty payable on the purchase of a subsequent property. The disputed measure merely involves the Flemish authorities forgoing
         a portion of the revenue that would otherwise have been collected on the second transaction.
      
       Analysis
      58.      A number of points are not in dispute between the parties.
      
      59.      First, there is agreement that the competence of a Member State (or of a tax-levying subdivision of a Member State, such as
         the Flemish Region) to tax transfers of immovable property is in principle limited to transactions concerning property within
         its own territory. Thus, whether registration duty is charged on purchases of property within the Flemish Region and, if so,
         at what rate is entirely a matter for the authorities of that region, just as it is entirely for the authorities of other
         Member States to decide whether to impose a levy on purchases within their own territory and, if so, at what level.
      
      60.      Next, it is common ground that persons purchasing a principal residence in the Flemish Region after owning a previous principal
         residence are treated differently according to whether the purchase of the preceding property was subject to registration
         duty in that region or not.
      
      61.      Even if there were no such difference in treatment, it might indeed be the case that the 10% duty levied in the Flemish Region
         might prove an objective deterrent to movement for a potential buyer, as other States charged a levy at a lower rate (or no
         levy at all). However, disparities in rates of taxation as between Member States, resulting from the independent exercise
         of fiscal competence in a field where there is no EU harmonisation, do not fall within the scope of the Treaty provisions
         on freedom of movement, which offer no guarantee that the exercise of such freedoms will be tax-neutral. (38)
      
      62.      Does the difference in treatment constitute discrimination?
      
      63.      The Court has consistently held that the rules regarding equal treatment forbid not only direct discrimination on grounds
         of nationality, but also all forms of indirect discrimination which, by application of other criteria of differentiation,
         lead in fact to the same result. (39) Thus, the Court has stated that: ‘a provision of national law must be regarded as indirectly discriminatory if it is intrinsically
         liable to affect nationals of other Member States more than nationals of the host State and there is a consequent risk that
         it will place the former at a particular disadvantage’. (40)
      
      64.      The Court has also specifically ruled that a law, even if applicable to all, which makes entitlement to a right subject to
         a condition of residence in a region of a Member State, and thereby favours nationals of that Member State over nationals
         of other Member States, runs counter to the principle of non-discrimination. (41)
      
      65.      It is clear that the disputed measure does not discriminate directly on grounds of nationality.
      
      66.      Are the three conditions in the disputed measure which must be satisfied in order for the offset to be available (42) intrinsically liable to affect nationals of other Member States more than Belgian nationals who reside in the Flemish Region,
         so as to place the former at a particular disadvantage and thus constitute indirect discrimination?
      
      67.      It follows from the analysis that I have set out in relation to Article 18 EC (43) that I consider that the answer is ‘no’.
      
      68.      It is relatively easy to establish whether an individual within the Flemish Region who purchases a replacement principal residence
         in that region has paid registration duty on his previous home. However, in the absence of evidence that an equivalent duty
         has been paid (and/or mutual recognition of registration duties between Member States which does not as yet exist), it cannot
         be assumed that all individuals who move to that region from another Member State are in the same position as their counterparts
         who move within the Flemish Region. Therefore, one cannot ask ‘is there unjustified discrimination between those who have
         paid registration duty in the Flemish Region and those who have paid an equivalent levy in another Member State?’ because
         it cannot be assumed that like is being compared with like.
      
      69.      All purchasers are subject to the same obligation to pay the registration duty in the Flemish Region. In that respect, there
         is no objective distinction to be drawn between them.
      
      70.      The question then becomes, how are such purchasers subsequently treated? Is there, at that stage, unjustified discrimination
         between different categories of homebuyers in the Flemish Region?
      
      71.      Looking at the issue in that light, it seems that all those buying a principal residence in the Flemish Region are treated
         in the same way: after they have paid registration duty once, a credit of up to EUR 12 500 will be offset against the amount
         payable on any subsequent purchase of a principal residence in the same region. (44) In the absence of a system of mutual recognition, property transfer taxes paid outside the region may lawfully be ignored.
         There is, true, a difference in treatment between those buying their first principal residence within the Flemish Region and
         those buying a subsequent principal residence there. All other things being equal, however, it seems plausible to suppose
         that the less favourable treatment for first-time buyers would in fact be more likely to affect those already resident in
         that region than those previously resident elsewhere – and thus more likely to effect Belgian nationals than nationals of
         other Member States or of an EFTA State – because, on the whole, people tend to buy their first home in a country or region
         where they are already resident.
      
      72.      Therefore, unlike Commission v Greece, (45) it is not possible to draw a neat distinction here between nationals and non-nationals and to compare the two groups. Nor
         does it necessarily follow that the disputed measure affects nationals of other Member States more than Belgian nationals
         who are residents of the Flemish Region and that the former are placed at a disadvantage.
      
      73.      In so far as an individual moves to the Flemish Region from a Member State that charges a lower rate of duty (tax) on the
         purchase of a principal residence than the 10% rate charged in the Flemish Region, it may indeed be that that rate (which
         is substantial) is considered to be a disadvantage. However, that is a disadvantage borne by all individuals who purchase
         a property in the Flemish Region.
      
      74.      It therefore seems to me that the disputed measure is not indirectly discriminatory.
      
      75.      That said, I should like to draw attention to a different possible restriction on freedom of movement arising out of the disputed
         measure.
      
      76.      A person who has previously owned a principal residence in the Flemish Region may offset (up to) EUR 12 500 of the registration
         duty paid on the purchase of that residence against the registration duty payable on the purchase of a subsequent principal
         residence in that region – but only if the second purchase takes place within a certain period (two or five years, as the
         case may be) of the sale of the preceding property. A resident selling his principal residence to move to another Member State
         or to an EFTA State for any longer period, who then returns to the Flemish Region, will lose the not inconsiderable advantage
         to which he would otherwise have been entitled.
      
      77.      Prima facie, it would seem that that temporal limitation to the availability of the offset might act as a deterrent to freedom
         of movement and residence, because such an individual would not benefit from the offset when he returns to the Flemish Region.
      
      78.      However, the Commission has not focused on that aspect of the disputed measure in its application and the Belgian Government
         has not had an opportunity to consider and respond to a specific complaint made on that basis. I do not therefore consider
         that it is open to the Court to find in favour of the Commission on that ground.
      
       Justification
      79.      In the event that the Court does not share my view, but finds that the disputed measure constitutes a prohibited restriction
         of a free movement right as alleged by the Commission, it becomes necessary to consider the arguments advanced by the Belgian
         Government by way of justification, namely coherence of the tax system and overriding reasons in the public interest.
      
       Coherence of the tax system
      80.      Whilst recognising that the need to maintain the cohesion of a national tax system may justify a restriction on fundamental
         freedoms in the form of differential treatment according to whether a particular event occurs within or outwith the purview
         of that system, the Court has consistently stressed that such justification depends on there being a direct link between the
         tax advantage concerned and the offsetting of that advantage by a particular tax levy. (46) In the present case, the Commission submits that there is no such link; whereas the Belgian Government contends that there
         is a link between the payment of registration duty in respect of the first property and any payment of such duty on a subsequent
         purchase.
      
      81.      In my view, there is no direct link within the meaning of the case-law between the levying of registration duty (or an equivalent
         tax) on the acquisition of one principal residence and a reduction of the amount levied on the acquisition of a subsequent
         principal residence to replace the first (where both properties are situated in the same Member State). The two transactions
         are no doubt linked in the purchaser’s mind as ensuring coherent and continuous accommodation for himself and, where applicable,
         his family. But they are quite independent of each other as taxable events.
      
      82.      The Belgian Government submits that the situation is comparable to that in Bachmann. (47)
      
      83.      In that case, Mr Bachmann had concluded sickness and invalidity insurance contracts, together with a life assurance contract,
         in Germany, where he then worked, before moving to live and work in Belgium, where he continued to pay the necessary premiums
         under those contracts. Belgian law did not allow him to deduct the amount of those premiums from his taxable income, as it
         would have done if the premiums had been paid in Belgium. However, the Belgian Government successfully argued that the exemption
         from taxation of the premiums was offset by taxation of the pensions, annuities or capital sums paid out by the insurers.
         The Court considered that the cohesion of the tax system presupposed that, if a State were obliged to allow the deduction
         of premiums paid in another Member State, it should be able to tax any sums payable by insurers. That could not, however,
         be guaranteed. Consequently, the cohesion of the tax system could not be ensured by measures less restrictive than the Belgian
         rules.
      
      84.      I do not think that the two situations are comparable. 
      
      85.      In Bachmann, there was a clear and direct reciprocal link between the taxation of the benefits and the non-taxation of the premiums.
         Although, as the Belgian Government states, payment of a benefit under an insurance contract is not an automatic result of
         payment of the premiums (indeed, one may well prefer that no benefit should need to be paid), none the less, when a benefit
         is paid, it necessarily presupposes the earlier payment of a premium. Where house purchases are involved, there is no such
         necessary link between one purchase and another. A person (or family) may live only in rented accommodation, may buy one home
         and stay there without moving, may buy a series of successive homes over a lifetime, or may alternate between owned and rented
         accommodation, depending on circumstances. Any purchase of a principal residence to serve as a home is simply a new and separate
         event. If the event is taxed, it is taxed as an individual event, not as part of a chain of events. The Flemish Region remains
         free, in the exercise of its territorial fiscal powers, to vary the rate of registration duty from time to time, or indeed
         to abolish it. The exercise of such powers would not, however, give rise to any incoherence in the system – or to any need
         to reimburse or claw back any duty – because each taxable event is separate from each other taxable event.
      
      86.      The mere fact that the disputed measure makes the amount which can be offset against the registration duty payable on the
         subsequent purchase dependent (in part) on the amount paid or payable on the preceding purchase does not suffice to create
         a link between the two taxable events. The Flemish Government could equally well have achieved the aim pursued by allowing
         a flat-rate deduction of EUR 12 500, or of any other appropriate sum. The only real question it has to determine is how much
         revenue it is willing to forgo in order to achieve that aim.
      
      87.      Indeed, the absence of the necessary direct link between the transactions concerned is confirmed by the disputed measure itself,
         in so far as no offset is possible once a certain period has elapsed between the sale of the preceding property and the purchase
         of the subsequent property. Had there been any direct link of the kind required by the case-law in order successfully to advance
         coherence of the tax system as a justification, it would not disappear in that way. (48)
      
      88.      I conclude that that justification is not made out.
      
       Overriding reasons in the public interest
      89.      The Belgian Government submits that the disputed measure is justified by overriding reasons in the public interest, that it
         is appropriate for securing attainment of the objectives pursued and does not go beyond what is necessary for attaining them.
         In addition to the aim of fostering mobility explicitly set out in the explanatory memorandum to the draft decree introducing
         the disputed measure (which includes the objective of reducing distances travelled between home and work, with beneficial
         effects on health and the environment), the Belgian Government submits that the measure encourages renovation of existing
         homes rather than new building and has a moderating effect on rents.
      
      90.      I confess that I do not find it easy to see how a reduction of registration duty which applies equally to purchases of existing
         residences and to purchases of land for homebuilding will necessarily encourage renovation rather than building. Nor is it
         clear that a reduction on the cost of purchasing a principal residence is likely to have a direct effect on rents (since buying
         to let would appear to be excluded from the offset mechanism). Possibly, in so far as the offset mechanism reduces the overall
         cost of purchasing subsequent principal residences (after the first purchase), it encourages people to buy rather than to
         rent and thus reduces (to some unspecified extent) overall demand for rented accommodation in the Flemish Region. The Belgian
         Government has not offered any further explanation of the ways in which it considers the disputed measure to be appropriate
         for the achievement of those aims.
      
      91.      I can accept that a measure which reduces the amount of duty payable on the purchase of a new principal residence is likely
         to facilitate moving in general, and that that may include moving closer to one’s place of work, with the health and environmental
         benefits attendant thereon. But that begs the question: why not facilitate, in the same way, moving into (or out of) the Flemish
         Region (which would clearly be beneficial in order to limit cross-border commuting)? The disputed measure, however, links
         availability of the offset to sequential purchases within the Flemish Region.
      
      92.      I therefore conclude that the Belgian Government has not established that there are overriding reasons in the public interest
         such as to justify the disputed measure.
      
       Temporal limitation
      93.      Finally and for the sake of completeness, I add that – should the Court grant the Commission’s application – I can see no
         reason for limiting the temporal effect of the judgment. (49) I agree with the Commission that no new interpretation of EU law is involved, and the Belgian Government has provided no
         indication of what the financial consequences of the Court’s ruling might be.
      
      94.      I would add that the Court has never, to my knowledge, limited the temporal effects of its judgment when finding that a Member
         State had failed to fulfil its obligations under the Treaty. Indeed, given the nature of such a finding, which concerns a
         specific moment in time, namely the moment at which the period laid down by the Commission for compliance with its reasoned
         opinion expires, any limitation of temporal effects would appear inappropriate.
      
       Conclusion
      95.      For the reasons that I have given earlier, however, I consider that the disputed measure does not infringe Articles 18, 43,
         and 56 EC and Articles 31 and 40 of the EEA Agreement. I therefore recommend the Court should dismiss the application and,
         as requested by Belgium and in accordance with Article 69(2) of its Rules of Procedure, order the Commission to pay the costs.
      
      1 –	Original language: English.
      
      2 –	‘Registratierechten’ or ‘droits d’enregistrement’; the duty in question is essentially a transfer tax levied on purchases
         of real estate.
      
      3 –	Case C‑345/05 Commission v Portugal [2006] ECR I‑10633, paragraph 39, and Case C‑471/04 Keller Holding [2006] ECR I‑2107, paragraph 48; see also the case-law cited there.
      
      4 –	Opinion 1/92 [1992] ECR I‑2821, see also the Opinion of Advocate General Geelhoed in Case C‑452/01 Ospelt and Schlössle Weissenberg [2003] ECR I‑9743, point 65.
      
      5 –	Commission v Portugal, cited in footnote 3 above, paragraph 40.
      
      6 –	Opinion of Advocate General Geelhoed in Ospelt and Schlössle Weissenberg, cited in footnote 4 above, paragraph 65, and Case C‑321/97 Andersson and Wåkerås-Andersson [1999] ECR I‑3551, paragraph 28.
      
      7 –	Commission v Portugal, cited in footnote 3 above, paragraph 41.
      
      8 –	Ospelt andSchlössle Weissenberg, cited in footnote 4 above, point 69.
      
      9 –      Of 24 June 1988 for the implementation of Article 67 of the Treaty (OJ 1988 L 178, p. 5). At the time of adoption of that
         directive, what is now Article 63(1) TFEU was, essentially, contained in Article 67 of the EEC Treaty.
      
      10 –	Case C‑267/09 Commission v Portugal [2011] ECR I‑0000, paragraph 34.
      
      11 –	Different rates of registration duty or an equivalent tax payable upon the purchase of immovable property apply in different
         Member States, ranging at least from 1% to 10%. The 10% rate in the Flemish Region is reduced to 5% for properties below a
         certain rental value.
      
      12 –	Decreet van het Vlaams Parlement van 1 februari 2002 houdende wijziging van het Wetboek der registratie-, hypotheek- en
         griffierechten. Although the national legislation has subsequently been amended further, these are the relevant provisions
         for the purposes of these infringement proceedings.
      
      13 –	See my Opinion in Case C‑212/06 Government of the French Community and Walloon Government [2008] ECR I‑1683, points 4 to 6. The entities in question are: the Flemish Community, the French Community and the German-speaking
         Community; the Walloon Region, the Flemish Region and the Brussels Region; and the Dutch-speaking area, the French-speaking
         area, the bilingual area of Brussels-Capital and the German-speaking area.
      
      14 –	See, for example, Case C‑423/00 Commission v Belgium [2002] ECR I‑593, paragraph 16.
      
      15 –	Case C‑199/05 European Community v Belgian State [2006] ECR I‑10485.
      
      16 –	See in particular paragraph 17.
      
      17 –	See the Opinion of Advocate General Stix-Hackl in Case C‑475/03 Banco Populare di Cremona [2006] ECR I‑9373, point 54. VAT is, of course, one of the best-known examples of an indirect tax.
      
      18 –	The general obligation of Member States to exercise their sovereignty consistently with EU law in the context of direct
         taxation is set out in Case C‑379/05 Amurta [2007] ECR I‑9569, paragraph 16. See also Case C‑105/07 Lammers & Van Cleeff [2008] ECR I‑173, paragraph 12, and more recently Case C‑10/10 Commission v Austria [2011] ECR I‑0000, paragraph 23.
      
      19 –	Case C‑155/09 [2011] ECR I‑0000.
      
      20 –	Case C‑253/09, currently pending. Advocate General Mazák delivered his Opinion on 9 December 2010.
      
      21 –	Together with the corresponding provisions of the EEA Agreement.
      
      22 –	Earlier cases include Case C‑152/05 Commission v Germany [2008] ECR I‑39 (alleged infringement of Articles 18, 39 and 43 EC) and Case C‑104/06 Commission v Sweden [2007] ECR I‑671 and Case C‑345/05 Commission v Portugal, cited in footnote 3 above (in both cases alleged infringement of Articles 18, 39 and 43 EC and Articles 28 and 31 of the
         EEA Agreement).
      
      23 –	Commission v Sweden, cited in footnote 22 above, paragraph 15.
      
      24 –	Case C‑302/97 [1999] ECR I‑3099, paragraph 22 and the case law cited there. See more recently Case C‑512/03 Blanckaert [2005] ECR I‑7685, paragraph 35.
      
      25 –	See also Case 203/80 Casati [1981] ECR 2595, paragraph 8, where the Court stated that freedom to move certain types of capital (for example, in order
         to purchase immovable property) is, in practice, a pre-condition for the effective exercise of other freedoms guaranteed by
         the Treaty, in particular the right of establishment.
      
      26 –	See, for example, Commission v Greece, cited in footnote 19 above, paragraphs 41 and 42, and the Opinion of Advocate General Mazák in Commission v Hungary, cited in footnote 20 above, point 29. 
      
      27 –	See most recently, Case C‑56/09 Zanotti [2010] ECR I‑0000, paragraph 70. See also Case C‑221/07 Zablocka-Weyhermüller [2008] ECR I‑9029, paragraph 35, and Case C‑544/07 Rüffler [2009] ECR I‑3389, paragraph 66.
      
      28 –	See, for example, Case C‑318/05 Commission v Germany [2007] ECR I‑6957, paragraphs 116 and 117.
      
      29 –	See the Opinion of Advocate General Jacobs in Case C‑224/02 Pusa [2004] ECR I‑5763, points 17 and 18.
      
      30 –	See point 10 above.
      
      31 –	In his Opinion in Commission v Hungary, cited in footnote 20 above, Advocate General Mazák nicely describes the Union as constituting a ‘mosaic of co-existing national
         tax systems’ (point 42).
      
      32 –	By way of illustration: in the United Kingdom stamp duty land tax (SDLT) is a tax payable upon the purchase of land and
         buildings, calculated by reference to the price of the property in question. In principal, SDLT is payable if the purchase
         price is more than GBP 125 000. However, the threshold above which tax is paid is higher for first-time buyers (that is, individuals
         who have never previously owned a property in the UK or anywhere else in the world). A first-time buyer currently does not
         pay SDLT if the purchase price of the property is GBP 250 000 or less. Furthermore, individuals who buy a property in what
         is designated as a ‘disadvantaged’ area may qualify for ‘Disadvantaged Areas Relief’. In such a case the threshold for the
         tax is GBP 150 000. Finally, in October 2007 a relief from the SDLT was introduced for zero-carbon houses. All qualifying
         houses that cost less than GBP 500 000 are exempt from the tax altogether and houses that cost GBP 500 000 or above are entitled
         to a reduction of GBP 15 000 of the tax payable. Against that background, it is plain that one cannot assume that a person
         who sells his previous residence in the United Kingdom, moves to the Flemish Region and purchases a property there will necessarily
         have paid the same or an equivalent duty in his previous State of residence.
      
      33 –	See the Opinion of Advocate General Geelhoed in Case C‑374/04 Test Claimants in Class IV of the ACT Group Litigation [2006] ECR I‑11673, points 43 to 47.
      
      34 –	Case C‑224/98 [2002] ECR I‑6191.
      
      35 –	Paragraph 30. See also, for example, Pusa, cited in footnote 29 above, paragraph 20, Case C‑456/05 Commission v Germany [2007] ECR I‑10517, paragraph 58, and Zanotti, cited in footnote 27 above, paragraph 70.
      
      36 –	See Pusa, cited in footnote 29 above, paragraph 21.
      
      37 –	See point 11 above.
      
      38 –	The parties both refer, in that regard, to the Opinion of Advocate General Geelhoed in Test Claimants in Class IV of the ACT Group Litigation, cited in footnote 33 above, point 46 and the case-law cited there.
      
      39 –	Commission v Greece, cited in footnote 19 above, paragraph 45.
      
      40 –	Case C‑73/08 Bressol and Others [2010] ECR I‑0000, paragraph 41. See also Commission v Greece, cited in footnote 19 above, paragraph 47.
      
      41 –	See, for example, Case C‑274/96 Bickel and Franz [1998] ECR I‑7637, paragraph 26; Case C‑465/05 Commission v Germany, cited in footnote 35 above, paragraph 56; Bressol and Others, cited in footnote 40 above, paragraph 45; and Case C‑137/09 Josemans [2010] ECR I‑0000, paragraphs 58 and 59.
      
      42 –	See point 43 above.
      
      43 –	See points 32 to 47 above.
      
      44 –	It is not entirely clear from the case-file whether the amount which can be offset (up to a maximum of EUR 12 500) is that
         actually paid on the preceding purchase or that which would have been payable without any offset – a distinction which might
         perhaps be significant in the case of a third or subsequent purchase, depending on the price range. However, the uncertainty
         regarding this detail of the mechanism is without significance for the overall analysis.
      
      45 –	Case C‑155/09 cited in footnote 19 above.
      
      46 –	See, for example, Case C‑345/05 Commission v Portugal, cited in footnote 3 above. The parties have discussed Case C‑204/90 Bachmann [1992] ECR I‑249 at some length in that regard.
      
      47 –	Cited in footnote 46, paragraph 21 et seq. See also Case C‑300/90 Commission v Belgium [1992] ECR I‑305, in which judgment was delivered on the same day, paragraph 14 et seq.
      
      48 –	See point 11 above.
      
      49 –	Belgium refers in particular to Case C‑292/04 Meilicke and Others [2007] ECR I‑1835, paragraphs 35 and 36.