Sabine Hünnebeck v Finanzamt Krefeld.
Date: 2016-06-08
19


With reference to the line of authority established by the judgments of 12 December 2006 in Test Claimants in the FII Group Litigation (C‑446/04, EU:C:2006:774, paragraph 162); of 18 March 2010 in Gielen (C‑440/08, EU:C:2010:148, paragraph 53); and of 28 February 2013 in Beker (C‑168/11, EU:C:2013:117, paragraph 62), the referring court takes the view that, while the Court has not yet ruled on that point, it has nonetheless held that a national law that is optional may be contrary to EU law. Consequently, that court considers it likely that the adoption of Paragraph 2(3) of the ErbStG is not capable of remedying the incompatibility of Paragraph 16(2) of the ErbStG with EU law on the ground, in particular, that that latter provision is automatically applied in the absence of an application by the taxable person.
30


However, it should be borne in mind in that regard that, while questions on the interpretation of EU law referred by a national court, in the factual and legislative context which that court is responsible for defining and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance, the Court may refuse to rule on a question referred for a preliminary ruling by a national court if it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see, to that effect, judgment of 28 February 2013 in Beker, C‑168/11, EU:C:2013:117, paragraph 19 and the case-law cited).
36


In that regard, it must be borne in mind that the national court alone has jurisdiction to find and assess the facts in the case before it and to interpret and apply national law (see the judgment of 11 September 2008 in Eckelkamp and Others, C‑11/07, EU:C:2008:489, paragraph 32 and the case-law cited). It should also be borne in mind that the Court must in principle confine its examination to the matters which the court or tribunal making the reference has decided to submit to it. As regards the application of the relevant national law, the Court must, therefore, proceed on the basis of the situation which that court or tribunal considers to be established and it cannot be bound by suppositions raised by one of the parties to the main proceedings (judgment of 6 March 2003 in Kaba, C‑466/00, EU:C:2003:127, paragraph 41). Consequently, it is for the referring court and not for the Court of Justice to determine the meaning and effect, in German law, of the national legislation at issue and, in particular, the legal consequences for non-resident beneficiaries of the application, at their request, of the higher allowance.
38


According to settled case-law, Article 63(1) TFEU lays down a general prohibition of restrictions on the movement of capital between Member States (see the judgment of 17 September 2015, F.E. Familienprivatstiftung Eisenstadt, C‑589/13, EU:C:2015:612, paragraph 35 and the case-law cited).
40


As regards the question whether the law at issue amounts to a restriction within the meaning of that provision, it should be recalled 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 the judgment of 22 April 2010 in Mattner, C‑510/08, EU:C:2010:216, paragraph 25).
42


As regards the optional nature of that mechanism of taxation, it must be noted that, even if that mechanism were compatible with EU law, it is settled case-law that a national scheme that restricts the freedoms of movement may still be incompatible with EU law even if it is optional in application. The existence of an option which would possibly render a situation compatible with EU law does not, in itself, correct the unlawful nature of a system, such as the system provided for by the contested rules, which still includes a mechanism of taxation that is not compatible with that law. It should be added that this is even more so in the situation where, as in the present case, the mechanism incompatible with EU law is the one which is automatically applied in the case where the taxpayer fails to make a choice (see, to that effect, the judgment of 28 February 2013 in Beker, C‑168/11, EU:C:2013:117, paragraph 62 and the case-law cited).
45


In such circumstances, which it is for the referring court to confirm, it must be held, without it being necessary to rule on the compatibility of a mechanism, such as that laid down in Paragraph 2(3) of the ErbStG, which subjects all transfers made by a non-resident to unlimited tax liability, that the fact of taking into account a longer period for the aggregation of gifts between non-residents than for gifts in respect of which at least one party is a resident is liable, in some circumstances, to lead to the application of the allowance, in the first category of gifts, to a higher taxable value than for the second and, hence, the first category of gifts being subject to higher taxation on those gifts than would have been required for the second category of gifts. Such a mechanism has the effect of restricting the movement of capital because it is liable to reduce the value of a gift which includes such an asset (see, by analogy, the judgment of 22 April 2010 in Mattner, C‑510/08, EU:C:2010:216, paragraph 27).
47


It must be held that such a lack of foreseeability may have the effect of deterring non-residents from acquiring or maintaining property situated in that Member State, given that the later transfer of those assets to other non-residents would place the latter in a position of uncertainty for a longer time as regards the future taxation that might be demanded by that Member State (see, by analogy, the judgment of 15 September 2011 in Halley, C‑132/10, EU:C:2011:586, paragraphs 22 to 25).
51


In so far as that provision of Article 65 TFEU derogates 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 State in which they invest their capital is automatically compatible with the Treaty (see the judgment of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 42 and the case-law cited).
52


The derogation provided for in Article 65(1)(a) TFEU is itself limited by Article 65(3) TFEU, 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 63 [TFEU]’ (see the judgment of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 43 and the case-law cited).
53


A distinction must therefore be made between differing treatment permitted under Article 65(1)(a) TFEU and arbitrary discrimination prohibited under Article 65(3) TFEU. The settled case-law of the Court establishes that, in order for national tax legislation, such as that at issue in the main proceedings — which, as regards the period to be taken into consideration for the application of the allowance on the tax value of immovable property situated in that Member State, draws a distinction according to whether the donor or beneficiary reside in that Member State or are both resident in another Member State — to be capable of being 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, to that effect, the judgment of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 44 and the case-law cited).
54


As regards the legal provisions at issue in the main proceedings, according to the case-file submitted to the Court the amount of the tax on gifts of immovable property in Germany is calculated under the ErbStG on the basis both of the value of the property and of the family relationship, if any, between the donor and the beneficiary. Neither of those criteria depends on the place of residence of the donor or the beneficiary. Therefore, as the Advocate General observes in point 62 of his Opinion, as regards the gift tax payable in respect of immovable property in Germany which is the object of a gift, there is no objective difference justifying unequal tax treatment between a situation in which no party to the gift resides in that Member State and one in which at least one of those parties resides in that State. Therefore, the situation of Ms Hünnebeck’s daughters is comparable to that of any beneficiary who acquires immovable property in Germany by way of a gift from a person resident in Germany with whom there is a parent-child relationship, and also to that of any beneficiary residing in Germany who receives such a gift from such a person who does not reside there (see, by analogy, the judgment of 22 April 2010 in Mattner, C‑510/08, EU:C:2010:216, paragraph 36).
55


The German legislation in principle regards both the beneficiary of a gift between non-residents and the beneficiary of a gift involving at least one resident as taxpayers for the purposes of charging gift tax on gifts of immovable property in Germany. It is only with respect to the period to be taken into account for the allowance against the taxable value that that legislation, for the purposes of calculating that tax, applies different treatment to gifts made between non-residents and those in respect of which at least one party is a resident. By contrast, it is not disputed that the determination of the class and rate of tax is made in accordance with the same rules for both those categories of gifts (see, by analogy, the judgment of 22 April 2010 in Mattner, C‑510/08, EU:C:2010:216, paragraph 37).
56


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, on the one hand, non-resident beneficiaries who have acquired the property from a non-resident donor, and, on the other hand, non-resident or resident beneficiaries who have acquired such property from a resident donor and resident beneficiaries who have acquired it from a non-resident donor, that national legislation cannot — without infringing the requirements of EU law — treat those beneficiaries 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 period to be taken into account for the application of the allowance from which the beneficiary may benefit, the national legislature has, in effect, accepted that there is no objective difference between them in regard to the detailed rules and conditions of charging gift tax such as could justify a difference in treatment (see, by analogy, the judgment of 22 April 2010 in Mattner, C‑510/08, EU:C:2010:216, paragraph 38).
57


Admittedly, as the German Government argues in essence, the taxable value of the gift to a non-resident beneficiary, where he is partially subject to gift tax in Germany, is, in principle, less than that of a resident or non-resident beneficiary who is wholly subject to that tax in that Member State (see, by analogy, the judgment of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 52).
58


However, that fact cannot call into question the foregoing considerations, as is clear from the case-law of the Court (see, inter alia, the judgment of 3 September 2014 in Commission v Spain, C‑127/12, not published, EU:C:2014:2130, paragraphs 77 and 78), a fortiori since the period to be taken into account for the application of the tax-free allowance provided for in the legislation at issue in the main proceedings does not vary at all in relation to the amount of the taxable value of the gift, but remains the same regardless of that latter amount.
59


It follows that, as the relevant period to be taken into account for the application of the tax-free allowance does not depend on the amount of the taxable value but applies to the beneficiary in his capacity as a taxable person, the characteristics pertaining to the tax liability of the non-resident beneficiary who receives a gift from a non-resident donor are not such as to make the situation of that beneficiary, as regards that period, objectively different from that of a non-resident beneficiary who receives a gift from a resident donor or from that of a resident beneficiary who receives a gift from a non-resident donor (see, by analogy, the judgment of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 55).
62


In the first place, as regards the ground based on the need to safeguard the coherence of the German tax system, it should be recalled that the Court has, it is true, held that that ground may justify a restriction on the exercise of the fundamental freedoms guaranteed by the Treaty. However, in order for such a justification to be accepted, a direct link must be established between the granting of the tax advantage concerned and the offsetting of that advantage by a particular tax charge (see the judgment of 22 April 2010 in Mattner, C‑510/08, EU:C:2010:216, paragraph 53 and the case-law cited).
63


In the present case, it suffices to state that, while the German Government merely submits, in very general terms, that Paragraph 2(3) of the ErbStG led to ‘a complete alteration’ of the personal gift tax regime for non-resident beneficiaries and all the advantages and disadvantages resulting from one or the other of the two personal tax regimes in respect of which the non-resident beneficiary could opt ‘to be compensated’, it fails to demonstrate how the aggregation of the gifts over a period of 20 years, where the beneficiary seeks to avail of the higher tax-free allowance, might be considered to be an appropriate means by which to achieve the objective of safeguarding the coherence of the German tax system. In that regard, it must be noted that the tax advantage derived from taking into account, for the application of the higher allowance, a period of 10 years preceding the gift in respect of which at least one resident in Germany is a party is not offset by any particular tax relating to gift tax (see, by analogy, the judgments of 22 April 2010 in Mattner, C‑510/08, EU:C:2010:216, paragraph 54, and of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 60).
65


As regards, in the second place, the justification based on the principle of territoriality and the alleged need to ensure a balanced allocation of the Member States’ powers to impose taxes, it should be recalled that that is a legitimate objective recognised by the Court (judgment of 7 November 2013 in K, C‑322/11, EU:C:2013:716, paragraph 50 and the case-law cited).
66


However, it must be observed that, in the present case, the unequal treatment as regards the period to be taken into account for the application of the higher tax-free allowance results from the application of the German legislation in question alone (see, to that effect, the judgment of 11 September 2008 in Arens-Sikken, C‑43/07, EU:C:2008:490, paragraph 41). Furthermore, the German Government fails to demonstrate that that difference in treatment is necessary in order to safeguard the power of the Federal Republic of Germany to impose taxes. Thus, the German Government is wrong to rely on such a justification.