Commission of the European Communities v Federal Republic of Germany.
Date: 2009-09-10
39. According to settled case-law, the concept of social advantage covers all the advantages which, whether or not linked to a contract of employment, are generally granted to national workers primarily because of their objective status as workers or by virtue of the mere fact of their ordinary residence on the national territory, and the extension of which to migrant workers therefore seems likely to facilitate their mobility within the Community (Case C-85/96 Martínez Sala [1998] ECR I‑2691, paragraph 25, and Case C-287/05 Hendrix  [2007] ECR I‑6909, paragraph 48). It is noteworthy in this respect that the Court has already held that the term ‘social advantage’ within the meaning of Article 7(2) of Regulation No 1612/68 includes income guaranteed to elderly people by the legislation of a Member State (see Case 261/83 Castelli  [1984] ECR 3199, paragraph 11, and Case 157/84 Frascogna  [1985] ECR 1739, paragraph 22).
52. In this respect, it should be borne in mind that Article 7(2) of Regulation No 1612/68 provides that a worker who is a national of a Member State is to enjoy, in the territory of another Member State, the same social and tax advantages as national workers. According to settled case-law, cross-border workers may rely on the provisions of Article 7 of Regulation No 1612/68 on the same basis as any other worker to whom that article applies ( Geven , paragraph 15).
53. According to the Court’s settled case-law, the equal treatment rule laid down both in Article 39 EC and in Article 7 of Regulation No 1612/68 prohibits not only overt discrimination on grounds of nationality but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result (see, in particular, Case C-57/96 Meints  [1997] ECR I-6689, paragraph 44, and Case C-35/97 Commission v France  [1998] ECR I‑5325, paragraph 37).
54. Unless it is objectively justified and proportionate to the aim pursued, a provision of national law must be regarded as indirectly discriminatory if it is intrinsically liable to affect migrant workers more than national workers and if there is a consequent risk that it will place the former at a particular disadvantage ( Meints , paragraph 45, and Commission v France , paragraph 38).
63. It suffices to point out in that regard that, on the assumption that such discrimination when granting a social advantage may be justified by reasons of fiscal coherence, that justification cannot be accepted in the present case since fiscal coherence is ensured on the basis of bilateral conventions to prevent double taxation concluded by the Federal Republic of Germany with other Member States (see, by analogy, Wielockx , paragraph 25).
65. As regards, in the third place, the grant of the derived savings-pension bonus to the spouse of the beneficiary, in accordance with Paragraph 79 of the EStG, it should be recalled that, according to the case-law of the Court, the spouse of a worker who falls within the scope of Regulation No 1612/68 is an indirect beneficiary of the equal treatment granted to migrant workers by Article 7(2) of that regulation and may consequently ask to benefit from the derived savings-pension bonus if the bonus constitutes a social advantage for that migrant worker (see, to that effect, Case C-212/05 Hartmann  [2007] ECR I-6303, paragraph 25).
67. It is clear from a reading of Paragraph 79 in conjunction with Paragraph 26(1) of the EStG that a worker’s spouse must also be fully liable to German tax in order to obtain the derived bonus. Given that, in the present case, the requirement of full liability to German tax amounts to a residence requirement pursuant to Paragraph 1 of the EStG, such a requirement would operate to the detriment of, in particular, cross-border workers who, by definition, are resident in a Member State where, as a general rule, the members of their family are also resident ( Meeusen , parag raph 24).
79. Whilst it is certainly true, as the Federal Republic of Germany submits, that neither German workers nor cross-border workers may use that capital to acquire or construct, outside Germany, a dwelling and that Paragraph 92a of the EStG is not specifically directed at non-residents, the fact remains that non-residents are more likely to be interested in purchasing a dwelling outside Germany than residents (see, to that effect, Ritter-Coulais , paragraph 36).
82. As regards, in the first place, the aim of ensuring an adequate supply of housing, it should be pointed out that, on the assumption that such an aim constitutes an overriding reason in the public interest, the requirement, laid down in Paragraph 92a of the EStG, that the dwelling to be acquired or constructed must be situated in Germany on any view goes beyond what is necessary to achieve the desired objective since that objective could be just as easily attained if cross-border workers continue to establish their residence in another Member State rather than in Germany (see, to that effect, Case C-152/05 Commission v Germany  [2008] ECR I-39, paragraphs 27 and 28).
84. As regards, in the second place, protection of the national social security system, it is apparent from Case C-208/05 ITC  [2007] ECR I‑181, paragraph 43, that the risk of seriously undermining the financial balance of the social security system may constitute an overriding reason in the public interest. However, such a risk has not been established in the present case. The Federal Republic of Germany has merely stated that, if beneficiaries own a dwelling, there is no risk that during their retirement they will have to bear the costs of rent and will not have to resort to social security benefits. In addition, that objective can be attained in the same way if the capital of the savings-pension is able to be used for the acquisition of a dwelling outside Germany.
98. In the first place, as regards the part of the complaint relating to the discriminatory nature of the obligation to reimburse on termination of full liability to taxation, it should be borne in mind that, according to the case-law, the general prohibition of all discrimination on grounds of nationality laid down by Article 12 EC applies independently only to situations governed by Community law for which the EC Treaty lays down no specific rules of non-discrimination (see, inter alia, Case 305/87 Commission v Greece  [1989] ECR 1461, paragraphs 12 and 13, and Case C-443/06 Hollmann [2007] ECR I-8491, paragraph 28).
99. In relation to the right of freedom of movement for workers, the principle of non-discrimination was implemented by Article 39 EC and Article 7 of Regulation No 1612/68 (see, to that effect, Case C‑94/07 Raccanelli [2008] ECR I‑5939, paragraph 45).
106. In the second place, as regards the part of the complaint relating to the deterrent nature of the obligation to reimburse on termination of full liability to German tax, it should first be borne in mind that, according to settled case-law, Article 18 EC, which sets out generally the right of every citizen of the Union to move and reside freely within the territory of the Member States, finds specific expression in Article 39 EC in relation to freedom of movement for workers ( Hendrix , paragraph 61 and the case-law cited).
107. Next, provisions preventing or deterring a national of a Member State from leaving his country of origin, and thus from exercising his right to freedom of movement, therefore constitute an obstacle to that freedom, even if they apply without regard to the nationality of the workers concerned (see ITC , paragraph 33, and Case C-345/05 Commission v Portugal [2006] ECR I-10633, paragraph 16).
108. It would be incompatible with the right to freedom of move ment were a worker or a person seeking employment, 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 ( ITC , paragraph 34).
113. The Federal Republic of Germany further submits that the obligation to reimburse is justified in the light of the coherence of its tax system. However, since fiscal coherence is ensured on the basis of bilateral conventions to prevent double taxation concluded by that State with other Member States, the Federal Republic of Germany may not usefully rely on that justification (see, to that effect, Wielockx , paragraph 25).