Ulrich Schröder v Finanzamt Hameln.
Date: 2011-03-31
17. In that regard, it should be recalled that the Court may reject a reference for a preliminary ruling submitted by a national court only where it is quite obvious that the interpretation of European Union law that is sought is unrelated 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, inter alia, Case C‑415/93 Bosman  [1995] ECR I‑4921, paragraph 61, and Case C‑97/09 Schmelz [2010] ECR I‑0000, paragraph 29).
18. With regard, more particularly, to the information that must be provided to the Court in an order for reference, that information does not serve only to enable the Court to provide answers which will be of use to the referring court; it must also enable the governments of the Member States, and other interested parties, to submit observations in accordance with Article 23 of the Statute of the Court of Justice. For those purposes, it is necessary that the national court should define the factual and legislative context of the questions which it is asking or, at the very least, explain the factual circumstances on which those questions are based (see, to that effect, Case C‑345/06 Heinrich  [2009] ECR I‑1659, paragraphs 30 and 31, and Case C‑42/07 Liga Portuguesa de Futebol Profissional and Bwin International [2009] ECR I‑7633, paragraph 40).
19. However, in view of the division of responsibilities between the national courts and the Court of Justice on which the procedure referred to in Article 267 TFEU is based, the referring court cannot be required to make all the findings of fact and of law required by its judicial function before it may bring the matter before the Court. It is sufficient that both the subject-matter of the dispute in the main proceedings and the main issues raised for the European Union legal order may be understood from the reference for a preliminary ruling, in order to enable the Member States to submit their observations in accordance with Article 23 of the Statute of the Court of Justice and to participate effectively in the proceedings before the Court ( Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 41, and Case C‑439/08 VEBIC  [2010] ECR I‑0000, paragraph 47).
21. Those elements are sufficient to explain the subject-matter of the dispute in the main proceedings and the main issues raised by it for the European Union legal order and to enable the Court to provide an answer which will be of use to the referring court. It should also be pointed out that the French Government and the European Commission have been able to submit to the Court detailed written observations on the question referred.
22. In the light of the foregoing, the reference for a preliminary ruling must be regarded as admissible.
Substance
25. With regard to Article 63 TFEU, it is settled case-law that, in the absence of a definition in the Treaty of ‘movement of capital’ within the meaning of Article 63(1) TFEU, the nomenclature which constitutes Annex I to Directive 88/361 retains an indicative value, even though that directive was adopted on the basis of Articles 69 and 70(1) of the EEC Treaty (Articles 67 to 73 of the EEC Treaty were replaced by Articles 73b to 73g of the EC Treaty, which themselves became Articles 56 EC to 60 EC), it being understood that, according to the third paragraph of the introduction to that annex, the nomenclature which it contains is not exhaustive as regards the notion of movements of capital (see, inter alia, Case C‑318/07 Persche  [2009] ECR I‑359, paragraph 24 and the case-law cited; Case C‑182/08 Glaxo Wellcome  [2009] ECR I‑8591, paragraph 39; Case C‑35/08 Busley and Cibrian Fernandez [2009] ECR I‑9807, paragraph 17; and Case C‑25/10 Missionswerk Werner Heukelbach  [2011] ECR I‑0000, paragraph 15).
26. In that regard, the Court has already held that inheritances and gifts, which fall under section XI of Annex I to Directive 88/361, entitled ‘Personal Capital Movements’, constitute movements of capital within the meaning of Article 63 TFEU, except in cases where their constituent elements are confined within a single Member State (see, to that effect, Persche , paragraph 27; Busley and Cibrian Fernandez , paragraph 18; and Missionswerk Werner Heukelbach , paragraph 16).
28. As regards Article 18 TFEU, which lays down a general prohibition of all discrimination on grounds of nationality, it should be noted that that provision applies independently only to situations governed by European Union law for which the Treaty does not lay down any specific rules of non-discrimination (see, inter alia, Case C‑443/06 Hollmann  [2007] ECR I‑8491, paragraph 28 and the case-law cited; Case C‑311/08 SGI  [2010] ECR I‑0000, paragraph 31; and Missionswerk Werner Heukelbach , paragraph 18).
29. Since the Treaty provisions on the free movement of capital are applicable and provide specific rules on non-discrimination, Article 18 TFEU is not applicable to the main proceedings (see Hollmann , paragraph 29, and Missionswerk Werner Heukelbach , paragraph 19).
30. Second, it should be noted that the measures prohibited by Article 63(1) TFEU, as restrictions on the movement of capital, include those which are liable to discourage non-residents from making investments in a Member State or from maintaining such investments (see, to that effect, Case C‑377/07 STEKO Industriemontage  [2009] ECR I‑299, paragraphs 23 and 24 and the case-law cited).
32. Less favourable tax treatment reserved for non-residents alone might deter them from acquiring or retaining immovable property situated in Germany (see, by analogy, Case C‑512/03 Blanckaert [2005] ECR I‑7685, paragraph 39). It might also deter German residents from naming, as beneficiaries of an anticipated succession inter vivos , persons resident in a Member State other than the Federal Republic of Germany (see, by analogy, Missionswerk Werner Heukelbach , paragraph 25).
34. It is true that, according to Article 65(1)(a) TFEU, Article 63 TFEU is without prejudice to the right of Member States to distinguish, in their tax law, between taxpayers who are not in the same situation with regard to their place of residence.
35. However, it is important to distinguish unequal treatment permitted under Article 65(1)(a) TFEU from arbitrary discrimination or disguised restrictions prohibited under Article 65(3) TFEU. In order for national tax legislation such as that at issue in the main proceedings, which distinguishes between resident and non-resident taxpayers, to be regarded as compatible with the Treaty provisions on the free movement of capital, the difference in treatment must relate to situations which are not objectively comparable or must be justified by an overriding reason in the public interest. Moreover, in order to be justified, the difference in treatment must not go beyond what is necessary in order to attain the objective of the legislation in question (see Persche , paragraph 41, and Case C‑510/08 Mattner  [2010] ECR I‑0000, paragraph 34).
37. In that regard, it is settled case-law that, in relation to direct taxes, the situations of residents and non-residents within a State are not, as a rule, comparable, since the income received in the territory of a Member State by a non-resident is in most cases only a part of his total income, which is concentrated at his place of residence, and because a non-resident’s personal ability to pay tax, determined by reference to his aggregate income and his personal and family circumstances, is easier to assess at the place where his personal and financial interests are centred, which in general is the place where he is habitually resident (Case C‑279/93 Schumacker  [1995] ECR I‑225, paragraphs 31 and 32; Case C‑234/01 Gerritse  [2003] ECR I‑5933, paragraph 43; and Case C‑562/07 Commission  v Spain  [2009] ECR I‑9553, paragraph 46).
38. Furthermore, the fact that a Member State does not grant to a non-resident certain tax benefits which it grants to a resident is not, as a rule, discriminatory, having regard to the objective differences between the situation of residents and that of non-residents, from the point of view both of the source of their income and of their personal ability to pay tax or their personal and family circumstances ( Schumacker , paragraph 34; Gerritse , paragraph 44; and Commission  v Spain , paragraph 47).
40. However, the Court has held, in relation to expenses, such as business expenses which are directly linked to an activity which has generated taxable income in a Member State, that residents and non-residents of that State are in a comparable situation, with the result that legislation of that State which denies non-residents, in matters of taxation, the right to deduct such expenses, while, on the other hand, allowing residents to do so, risks operating mainly to the detriment of nationals of other Member States and therefore constitutes indirect discrimination on grounds of nationality (see Gerritse , paragraphs 27 and 28; Case C‑346/04 Conijn  [2006] ECR I‑6137, paragraph 20; Case C‑290/04 FKP Scorpio Konzertproduktionen  [2006] ECR I‑9461, paragraph 49; Case C‑345/04 Centro Equestre da Lezíria Grande  [2007] ECR I‑1425, paragraph 23; Case C‑11/07 Eckelkamp and Others  [2008] ECR I‑6845, paragraph 50; and Case C‑43/07 Arens-Sikken  [2008] ECR I‑6887, paragraph 44).
43. Those arguments cannot be accepted. Even assuming that the amount of an annuity, such as that paid by Mr Schröder, is determined on the basis of the ability of the debtor to pay and the recipient’s personal needs, the fact remains that the existence of a direct link within the meaning of the case-law cited in paragraph 40 of the present judgment results, not from a correlation, of whatever kind, between the amount of the expenditure in question and that of the taxable income, but from the fact that that expenditure is inextricably linked to the activity which gives rise to that income (see, in that regard, Centro Equestre da Lezíria Grande , paragraph 25).
44. Thus, the Court has taken the view that expenses occasioned by the activity in question are directly linked to that activity (see, to that effect, Gerritse , paragraphs 9 and 27, and Centro Equestre da Lezíria Grande , paragraph 25) and are, thus, necessary in order to carry out that activity. Likewise, such a direct link was accepted with regard to costs incurred in obtaining tax advice required in order to prepare a tax return, the duty to file such a return resulting from the receipt of income in the Member State concerned (see Conijn , paragraph 22).