European Commission v Hellenic Republic.
Date: 2016-05-26
9


The Commission goes on to submit that the spouses or children of deceased persons who do not have any other immovable property find themselves in an objectively comparable situation, whether they are resident or non-resident. The Commission refers to the judgment of 22 April 2010 in Mattner (C‑510/08, EU:C:2010:216, paragraph 36), in which the Court held that there was no objective difference between residents and non-residents justifying unequal tax treatment since the amount of tax on gifts is calculated on the basis of the value of immovable property and the family relationship between the donor and the donee, neither of those criteria being dependent on their place of residence. Similarly, according to the Commission, the inheritance tax provided for under the Greek legislation at issue is based on the value of the immovable property which is the subject-matter of the inheritance, and on the family relationship between the deceased person and the heirs, and on whether or not the heirs own other immovable property, without taking into consideration the question of whether the property at issue is or will in fact become the primary residence of the heirs.
18


In the second place, the Hellenic Republic argues, as regards Article 65(1)(a) TFEU and the case-law of the Court on direct taxation, particularly the judgments of 6 June 2000 in Verkooijen (C‑35/98, EU:C:2000:294, paragraph 43), of 7 December 2004 in Manninen (C‑319/02, EU:C:2004:484, paragraphs 28 and 29), and of 25 October 2012 in Commission v Belgium (C‑387/11, EU:C:2012:670, paragraph 45), that, as regards the exemption from inheritance tax relating to immovable property considered to be the primary residence, the situation of heirs who are permanently resident in Greece is not objectively comparable to that of heirs who are not permanently resident in that Member State. Whereas resident heirs would not have adequate immovable property in Greece and would have housing needs in that Member State, which property acquired by inheritance could cover or supplement, non-resident heirs would, as a general rule, have a primary residence outside Greece and would not be relying on property received by inheritance and located in Greece in order to satisfy their housing needs.
25


According to the Court’s settled case-law, the tax levied on inheritances, which consist of the transfer to one or more persons of assets left by a deceased person, comes within the scope of the FEU Treaty provisions on movements of capital, save where the constituent elements of inheritances are confined to a single Member State (judgments of 23 February 2006 in van Hilten-van der Heijden, C‑513/03, EU:C:2006:131, paragraph 42; of 17 January 2008 in Jäger, C‑256/06, EU:C:2008:20, paragraph 25; of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 20; and of 3 September 2014 in Commission v Spain, C‑127/12, not published, EU:C:2014:2130, paragraph 53 and the case-law cited).
28


It is apparent from the Court’s settled case-law that, with regard to inheritances, the measures which Article 63 TFEU prohibits as constituting restrictions on the movement of capital include those the effect of which is to reduce the value of the inheritance of a resident of a Member State other than the Member State in which the assets concerned are situated and which taxes the transfer of those assets by way of inheritance (see, inter alia, judgments of 11 December 2003 in Barbier, C‑364/01, EU:C:2003:665, paragraph 62, and of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 23 and the case-law cited).
29


The legislation of a Member State under which the application of an exemption from inheritance tax depends on the place of residence of the deceased person or of the beneficiary at the time of the death, in the case where it leads to inheritances involving non-residents being subject to a higher tax liability than those involving residents alone, constitutes a restriction on the free movement of capital (see, to that effect, judgments of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraphs 25 and 26, and of 3 September 2014 in Commission v Spain, C‑127/12, not published, EU:C:2014:2130, paragraph 58).
34


That provision, in so far as it derogates from the fundamental principle of the free movement of capital, 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 FEU Treaty. That derogation is itself circumscribed by Article 65(3) TFEU, which provides that the national provisions referred to in Article 65(1) TFEU ’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]’. A distinction must therefore be drawn between unequal treatment permitted under Article 65 TFEU and arbitrary discrimination prohibited under Article 65(3) TFEU (judgment of 3 September 2014 in Commission v Spain, C‑127/12, not published, EU:C:2014:2130, paragraphs 71 to 73).
35


In that regard, it is clear from the case-law of the Court that, in order for national tax legislation which, for the purposes of calculating inheritance tax, discriminates between residents and non-residents to be capable of being regarded as compatible with the FEU Treaty provisions on the free movement of capital, that difference in treatment must relate to situations which are not objectively comparable or be justified by an overriding reason in the public interest. Such national legislation must be appropriate for securing the attainment of the objective pursued and must not go beyond what is necessary in order to attain it (see, to that effect, judgments of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 44 and the case-law cited, of 3 April 2014 in Commission v Spain, C‑428/12, not published, EU:C:2014:218, paragraph 34, and of 4 September 2014 in Commission v Germany, C‑211/13, not published, EU:C:2014:2148, paragraph 47). Furthermore, national legislation will be appropriate for guaranteeing attainment of the objective pursued only if it genuinely reflects a concern to attain it in a consistent and systematic manner (judgment of 4 September 2014 in API and Others, C‑184/13 to C‑187/13, C‑194/13, C‑195/13 and C‑208/13, EU:C:2014:2147, paragraph 53 and the case-law cited).
36


As regards, first, the comparability of the situations at issue, it must be noted that where, for the purposes of taxing immovable property acquired by inheritance and located in the Member State concerned, national legislation places non-resident and resident heirs on the same footing, it cannot, without infringing the requirements of EU law, treat those heirs differently in connection with that tax in respect of that immovable property. By treating inheritances of those two classes of persons in the same way except in relation to the exemption which an heir may receive, the national legislature acknowledges that there is no objective difference between them as regards the detailed rules and conditions for charging inheritance tax such as to justify a difference in treatment (see, to that effect, judgment of 17 October 2013 in Welte, C‑181/12, EU:C:2013:662, paragraph 51 and the case-law cited).
42


In that regard, the Hellenic Republic’s arguments set out in paragraphs 19 and 22 of the present judgment must also be rejected. It must be borne in mind that the reasons that may be invoked by a Member State by way of justification must be accompanied by an analysis of the appropriateness and proportionality of the restrictive measure adopted by that State and by specific evidence substantiating its arguments (judgment of 21 January 2016 in Commission v Cyprus, C‑515/14, EU:C:2016:30, paragraph 54 and the case-law cited). The Hellenic Republic has not substantiated the arguments on which it relied, nor has it demonstrated that it would be impossible to check that the non-resident heir meets the conditions in order to be granted the exemption at issue.
43


Furthermore, contrary to the Hellenic Republic’ submissions, the contested national legislation cannot be justified on grounds of a need to prevent a reduction in tax revenues which would, according to that Member State, occur if the exemption from inheritance tax at issue were extended to non-residents. It is clear from settled case-law that such a need is neither among the objectives stated in Article 65 TFEU nor an overriding reason in the public interest capable of justifying a restriction on a freedom instituted by the FEU Treaty (see, inter alia, judgments of 7 September 2004 in Manninen, C‑319/02, EU:C:2004:484, paragraph 49, of 27 January 2009 in Persche, C‑318/07, EU:C:2009:33, paragraph 46, and of 10 February 2011 in Missionswerk Werner Heukelbach, C‑25/10, EU:C:2011:65, paragraph 31).
47


Suffice it in this regard to take note of the settled case-law of the Court, according to which the question whether a Member State has failed to fulfil obligations must be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion, and the Court cannot take account of any subsequent changes (see, inter alia, judgments of 4 September 2014 in Commission v Greece, C‑351/13, not published, EU:C:2014:2150, paragraph 20, of 5 February 2015 in Commission v Belgium, C‑317/14, EU:C:2015:63, paragraph 34, and of 14 January 2016 in Commission v Greece, C‑66/15, not published, EU:C:2016:5, paragraph 36).
48


Irrespective of that omission, it must be noted that, in so far as the provisions of Article 40 of the EEA Agreement have the same legal scope as the substantially identical provisions of Article 63 TFEU, all of the foregoing considerations, concerning the existence of a restriction on the basis of Article 63 TFEU, may, in circumstances such as those in the present case, be transposed mutatis mutandis to Article 40 of the EEA Agreement (see, by analogy, judgment of 1 December 2011 in Commission v Belgium, C‑250/08, EU:C:2011:793, paragraph 83 and the case-law cited).