European Commission v Republic of Hungary.
Date: 2011-12-01
42. In that connection, it should be noted that, regardless of whether, in the present case, the tax in question constitutes direct or indirect taxation, the tax has not been harmonised within the European Union and therefore falls within the competence of the Member States, which, according to settled case-law, must exercise that competence consistently with EU law (see, in particular, with regard to direct taxation, Case C-334/02 Commission  v France [2004] ECR I-2229, paragraph 21; Case C-155/09 Commission  v Greece  [2011] ECR I‑0000, paragraph 39; and Case C-10/10 Commission  v Austria  [2011] ECR I-0000, paragraph 23).
44. As regards the complaint alleging infringement of Articles 18 EC, 39 EC and 43 EC, it should be recalled 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 39 EC with regard to freedom of movement for workers and in Article 43 EC with regard to freedom of establishment (see Case C-345/05 Commission  v Portugal  [2006] ECR I-10633, paragraph 13; Case C-104/06 Commission  v Sweden  [2007] ECR I-671, paragraph 15; Case C-152/05 Commission  v Germany  [2008] ECR I-39, paragraph 18, and Commission  v Greece , paragraph 41).
46. The Treaty provisions on freedom of movement for persons are intended to facilitate the pursuit by EU nationals of occupational activities of all kinds throughout the European Union, and they preclude measures which might place those nationals at a disadvantage when they wish to pursue an economic activity in the territory of another Member State (see Case C-464/02 Commission  v Denmark  [2005] ECR I-7929, paragraph 34 and case-law cited; Commission  v Portugal , paragraph 15; Commission  v Sweden , paragraph 17; Commission v Germany , paragraph 21; and Commission v Greece , paragraph 43).
47. The freedom of establishment conferred on nationals of one Member State in the territory of another Member State includes in particular access to and exercise of activities of self-employed persons under the same conditions as are laid down by the law of the Member State of establishment for its own nationals (see, inter alia, Case 270/83 Commission  v France  [1986] ECR 273, paragraph 13; Case C-47/08 Commission  v Belgium  [2011] ECR I-0000, paragraph 79; and, to the same effect, Case C-161/07 Commission  v Austria [2008] ECR I-10671, paragraph 27). In other words, Article 43 EC prohibits a Member State from laying down in its laws conditions for the pursuit of activities by persons exercising their right of establishment there which differ from those laid down for its own nationals (Case C‑161/07 Commission  v Austria , paragraph 28, and Case C-47/08 Commission  v Belgium , paragraph 79).
50. In that connection, it should be recalled that it is settled case-law that discrimination can arise only through the application of different rules to comparable situations or the application of the same rule to different situations (see, inter alia, Schumacker , paragraph 30; Case C‑383/05 Talotta  [2007] ECR I‑2555, paragraph 18; and Case C-182/06 Lakebrink and Peters-Lakebrink  [2007] ECR I-6705, paragraph 27).
51. Accordingly, a difference in treatment between two categories of taxable person may be categorised as discrimination within the meaning of the Treaty provided that the situations of those categories of taxable person are comparable in the light of the taxation rules concerned.
55. Admittedly, the Court has held, in relation to direct taxes, that the situations of residents and of non-residents in a Member State are generally not comparable, because 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 has his usual abode ( Schumacker , paragraphs 31 and 32; Case C-391/97 Gschwind  [1999] ECR I-5451, paragraph 22; and Case C‑169/03 Wallentin [2004] ECR I-6443, paragraph 15).
56. 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 situations of residents and 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; Gschwind , paragraph 23; Case C-234/01 Gerritse  [2003] ECR I‑5933, paragraph 44; and Wallentin , paragraph 16).
59. In such circumstances, acceptance of the proposition that a Member State may freely apply a different treatment solely by reason of the fact that an EU citizen’s first principal residence is situated in another Member State would deprive the rules relating to the freedom of movement for persons of all meaning (see, to that effect, Case 270/83 Commission  v France,  paragraph 18, Joined Cases C‑397/98 and C‑410/98 Metallgesellschaft and Others  [2001] ECR I‑1727, paragraph 42; and Case C-418/07 Papillon  [2008] ECR I-8947, paragraph 26).
61. That being the case, it should be recalled that in order to establish whether discrimination exists, the comparability of a Community situation with a purely domestic situation must be examined also by taking into account the objective pursued by the national provisions at issue (see, in particular, Papillon , paragraph 27).
69. Ac cording to well-established case-law, national measures which are liable to hinder or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty may nevertheless be allowed provided that they pursue an objective in the public interest, are appropriate for attaining that objective and do not go beyond what is necessary to attain the objective pursued (see, in particular, Commission  v Greece , paragraph 51).
70. It is appropriate therefore to examine whether the difference in treatment between those two categories of taxpayer may be justified by an overriding reason in the public interest, in particular the need to preserve the coherence of the tax system.
71. The Court has already accepted that the need to preserve the coherence of a tax system may justify legislation restricting fundamental freedoms (see, inter alia, Bachmann , paragraph 21; Manninen , paragraph 42; Case C-157/07 Krankenheim Ruhesitz am Wannsee-Seniorenheimstatt  [2008] ECR I-8061, paragraph 43; and Case C-182/08 Glaxo Wellcome  [2009] ECR I-8591, paragraph 77).
72. However, for an argument based on such a justification to succeed, a direct link must be established between the tax advantage concerned and the offsetting of that advantage by a particular tax levy (see, in particular, Manninen , paragraph 42; Case C-524/04 Test Claimants in the Thin Cap Group Litigation  [2007] ECR I‑2107, paragraph 68; and Amurta , paragraph 46).
74. By contrast, when the property sold is situated in a Member State other than Hungary, the Republic of Hungary has no power to tax the transaction entered into in that other Member State by the person deciding to purchase a property in Hungary for his principal residence. In those circumstances, by providing that only those who have already paid the tax at issue on the purchase of such property in Hungary may benefit from the tax advantage in question when purchasing property of the same nature, the configuration of the tax advantage in question reflects a logic of symmetry within the meaning of the case-law (see, to that effect, Krankenheim Ruhesitz am Wannsee-Seniorenheimstatt , paragraph 42).
77. In that context, it should be noted that the two requirements that the levy be identical and applied to one and the same person have been found to be sufficient to establish the existence of such a link (see, inter alia, Case C-35/98 Verkooijen  [2000] ECR I-4071, paragraph 58; Case C‑168/01 Bosal  [2003] ECR I-9409, paragraphs 29 and 30; and Krankenheim Ruhesitz am Wannsee-Seniorenheimstatt , paragraph 42). In addition, it must be noted that the Commission has not expressly disputed that the tax advantage in question is granted to the same taxpayer in relation to the same tax.
79. However, in order for that restriction to be justified on that basis, it must also be appropriate and proportionate to the objective pursued, as noted in paragraph 69 above.
80. In that respect, it should be noted that, in the light of the Court’s case-law, the restriction in question is appropriate to achieve such an objective, in that it operates in a symmetrical manner, since only the difference in value between the property sold which is situated in Hungary and the value of the property purchased may be taken into account in the tax system at issue (see, to that effect, Krankenheim Ruhesitz am Wannsee-Seniorenheimstatt , paragraph 44).
81. In addition, the restriction in question is proportionate to the objective pursued. It should be remembered, first, that the objective of the legislation at issue is to avoid – upon the purchase of a second principal residence in Hungary – the double taxation of the capital invested in the purchase of the previous residence that has been sold. Second, as noted in paragraph 74 above, the Republic of Hungary has no power to tax real property transactions carried out in other Member States.
83. While the property transactions carried out in other Member States might also have been subject to similar or even identical taxes to that at issue, it must be noted, however, that in the current stage of the development of EU law, the Member States enjoy a certain autonomy in the area of taxation provided they comply with EU law, and are not obliged therefore to adapt their own tax systems to the different systems of tax of the other Member States in order, inter alia, to eliminate the double taxation (see, by analogy, Case C-298/05 Columbus Container Services  [2007] ECR I-10451, paragraph 51, and Case C-67/08 Block  [2009] ECR I-883, paragraph 31).
86. As regards persons not resident in Hungary and not pursuing an economic activity there, it should be recalled that national legislation which places certain nationals of the Member State concerned at a disadvantage simply because they have exercised their freedom to move and to reside in another Member State constitutes a restriction of the freedoms conferred by Article 18(1) EC on every citizen of the Union (see Case C‑406/04 De Cuyper [2006] ECR I‑6947, paragraph 39; Case C‑192/05 Tas-Hagen and Tas  [2006] ECR I-10451, paragraph 31; and Joined Cases C-11/06 and C-12/06 Morgan and Bucher  [2007] ECR I‑9161, paragraph 25).
88. However, the Court has held that such a restriction can be justified in the light of EU law if it is based on objective considerations of public interest independent of the nationality of the persons concerned and if it is proportionate to the legitimate objective pursued by the provisions of national law (see De Cuyper,  paragraph 40; Tas-Hagen and Tas , paragraph 33; and Morgan and Bucher , paragraph 33).
89. In that connection, it should be noted that the same conclusion as that reached in paragraphs 69 to 85 above for justifying the restriction in relation to Articles 39 EC and 43 EC applies, for the same reasons, to the complaint alleging infringement of Article 18 EC (see Case C-522/04 Commission  v Belgium  [2007] ECR I-5701, paragraph 72; Commission  v Germany , paragraph 30; and Commission  v Greece , paragraph 60).
The complaints alleging infringement of the provisions of the EEA Agreement
91. It is to be noted, in that regard, that the rules prohibiting restrictions on freedom of movement and freedom of establishment laid down in Articles 28 and 31 of the EEA Agreement have the same legal scope as the substantially identical provisions of Articles 39 EC and 43 EC (see, in particular, Case C-522/04 Commission  v Belgium , paragraph 76).