Hans Eckelkamp and Others v Belgische Staat.
Date: 2008-09-11
27. In that regard, it should be recalled that, in proceedings under Article 234 EC, which are based on a clear separation of functions between the national courts and the Court of Justice, any assessment of the facts in the case is a matter for the national court. Similarly, it is solely for the national court, before which the dispute has been brought and which must assume responsibility for the forthcoming judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of Community law, the Court is in principle bound to give a ruling (Case C‑145/03 Keller  [2005] ECR I‑2529, paragraph 33, and Case C‑119/05 Lucchini  [2007] ECR I‑6199, paragraph 43).
28. The Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of Community law that is sought bears no relation to the facts of the main action or to its subject-matter, 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‑379/98 PreussenElektra  [2001] ECR I‑2099, paragraph 39; Case C‑390/99 Canal Satélite Digital  [2002] ECR I‑607, paragraph 19; and Lucchini , paragraph 44).
32. However, 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 Case C‑262/96 Sürül  [1999] ECR I‑2685, paragraph 95). It is for that court, not for the Court of Justice, to determine the scope and effect under Belgian law of a mortgage mandate and the consequences of such a mandate in regard to an immovable property left by way of inheritance and situated in Belgium.
34. Moreover, the system of references for a preliminary ruling is based on a dialogue between one court and another, the initiation of which depends entirely on the national court’s assessment as to whether a reference is appropriate and necessary (see Case C‑2/06 Kempter [2008] ECR I‑0000, paragraph 42). While it is true that the national court found that the declaration made by the heirs became final on expiry of the statutory period for filing such declarations, it is nevertheless possible to glean from the question referred the factors necessary for an interpretation of Community law which the national court considers might usefully be applied in order to resolve, in accordance with that law, the dispute before it (see, to that effect, Case 132/81 Vlaeminck  [1982] ECR 2953, paragraphs 13 and 14).
37. Article 56(1) EC lays down a general prohibition on restrictions on the movement of capital between Member States (Joined Cases C‑463/04 and C‑464/04 Federconsumatori and Others  [2007] ECR I‑0000, paragraph 19 and the case-law cited).
38. In the absence of a definition in the EC Treaty of ‘movement of capital’ for the purposes of Article 56(1) EC, the Court has previously recognised the nomenclature annexed to Directive 88/361 as having indicative value, even though the latter was adopted on the basis of Articles 69 and 70(1) of the EEC Treaty (subsequently, Articles 69 and 70(1) of the EC Treaty, repealed by the Treaty of Amsterdam), subject to the qualification, contained in the introduction to the nomenclature, that the list set out therein is not exhaustive (see, in particular, Case C‑513/03 van Hilten‑van der Heijden [2006] ECR I‑1957, paragraph 39; Case C‑452/04 Fidium Finanz  [2006] ECR I‑9521, paragraph 41; Federconsumatori and Others , paragraph 20; and Case C‑256/06 Jäger [2008] ECR I‑0000, paragraph 24).
39. In that regard, the Court – noting, in particular, that inheritances consisting in the transfer to one or more persons of assets left by a deceased person or, in other words, a transfer to the heirs of ownership of the various items of property, rights, and so on which make up those assets fall under heading XI of Annex I to Directive 88/361, entitled ‘Personal capital movements’ – has held that an inheritance is a movement of capital for the purposes of Article 56 EC, except in cases where its constituent elements are confined within a single Member State (see Case C‑364/01 Barbier  [2003] ECR I‑15013, paragraph 58; Hilten‑van der Heijden , paragraph 42; and Jäger , paragraph 25).
43. In that regard, it should be borne in mind that the effect of national rules which determine the value of immovable property for the purposes of assessing the amount of tax payable when it is acquired through inheritance may be not only to discourage the purchase of immovable property situated in the Member State concerned, but also to reduce the value of the inheritance of a resident of a Member State other than that in which that property is situated (see, to that effect, Barbier , paragraph 62, and Jäger , paragraph 30).
44. As regards inheritances, the case-law has confirmed that the measures prohibited by Article 56(1) EC as being 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 State other than the Member State in which the assets concerned are situated and which taxes the inheritance of those assets ( van Hilten‑van der Heijden , paragraph 44, and Jäger , paragraph 31).
45. In the present case, the national rules at issue in the main proceedings – in so far as they result in an inheritance consisting of immovable property situated in the Kingdom of Belgium being subject to transfer duties that are higher than the inheritance duties payable if the person whose estate is being administered had, at the time of death, been residing in that Member State – have the effect of restricting the movement of capital by reducing the value of an inheritance which includes such an asset.
46. Where those rules make the deductibility of certain debts secured on the immovable property in question dependent on the place where, at the time of death, the person whose estate is being administered was residing, the greater tax burden to which the inheritance of non-residents is consequently subject constitutes a restriction on the free movement of capital.
47. That conclusion cannot be called into question by the Belgian Government’s argument that the Code does not constitute a restriction inasmuch as there is an objective difference between the situations of residents and non-residents as regards the assessment of inheritance and transfer duties, since only the Member State in which the person whose estate is being administered was residing can, logically, be in a position to take account, in the assessment of inheritance tax, of all components of the estate: assets, liabilities, movable property and immovable property. That circumstance is irrelevant in the light of the criteria resulting from the case-law referred to in paragraphs 43 and 44 of the present judgment (see also, to that effect, Jäger , paragraph 34).
50. Similarly, in relation to Articles 49 EC and 50 EC, the Court has already held that national rules which, in matters of taxation, refuse to allow non-residents to deduct business expenses which are directly linked to the activity that generated the taxable income in the Member State concerned, while allowing residents to do so, risk operating mainly to the detriment of nationals of other Member States and are contrary to those articles (see, to that effect, Case C‑234/01 Gerritse  [2003] ECR I‑5933, paragraphs 27 and 28).
52. However, according to the wording of the question referred by the national court, a debt secured by a mortgage mandate relating to an immovable property constitutes a charge on that property. In proceedings under Article 234 EC, the Court of Justice is empowered to rule on the interpretation or validity of Community provisions only on the basis of the facts which the national court puts before it (see, to that effect, Case C‑235/95 Dumon and Froment  [1998] ECR I‑4531, paragraph 25).
57. That provision of Article 58 EC, in so far as it is a derogation 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 based on their place of residence or the Member State in which they invest their capital is automatically compatible with the Treaty (see Jäger , paragraph 40).
58. The derogation provided for in Article 58(1)(a) EC is itself limited by Article 58(3) EC, 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 56’ (see Case C‑35/98 Verkooijen [2000] ECR I‑4071, paragraph 44; Case C‑319/02 Manninen [2004] ECR I‑7477, paragraph 28; and Jäger , paragraph 41). Moreover, in order to be justified, the difference in treatment established in relation to inheritance and transfer duties payable in respect of an immovable property situated in the Kingdom of Belgium between the person who, at the time of death, was residing in that Member State and the person who, at the time of death, was residing in another Member State, must not go beyond what is necessary to achieve the objective pursued by the legislation at issue.
59. A distinction must therefore be made between the unequal treatment permitted under Article 58(1)(a) EC and the arbitrary discrimination prohibited under Article 58(3) EC. According to the case-law, in order for national tax legislation such as that at issue in the main proceedings – which, for the purposes of assessing inheritance tax, makes a distinction with regard to the deductibility of debts secured on an immovable property situated in the Member State concerned according to whether the person whose estate is being administered was residing in that Member State or in another Member State at the time of death – to be considered compatible with the provisions of the Treaty 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 (see Verkooijen , paragraph 43; Manninen , paragraph 29; and Jäger , paragraph 43).
61. Subject to the investigations to be undertaken by the national court as to the nature and effect of a mortgage mandate and as to whether the mandate at issue in the main proceedings constitutes a charge on the immovable property in question – as it would appear on the basis of the case-file – the assessment of inheritance and transfer duties is, under that legislation, directly linked to the value of that immovable property. In that case, there cannot objectively be any difference in situation such as to justify unequal tax treatment so far as concerns the level of inheritance and transfer duties payable in relation to, respectively, an immovable property situated in Belgium which belongs to a person residing in that Member State at the time of death, and an immovable property belonging to a person residing in another Member State at the time of death. Accordingly, the situation of Ms Eckelkamp’s heirs is comparable to that of any heir whose inheritance includes an immovable property situated in Belgium and left by a person who was residing in that State at the time of death (see, to that effect, Jäger , paragraph 44).
62. As the appellants in the main proceedings have stated, the Belgian legislation deems, in principle, both the heirs of resident persons and the heirs of persons who were non-resident at the time of death to be taxable persons for the purposes of collecting inheritance and/or transfer duties on immovable properties situated in Belgium. It is only in respect of the deduction of debts from the inheritance of non-residents that non-residents and residents are treated differently.
63. Where national legislation places the heirs of a person who, at the time of death, had the status of resident and those of a person who, at the time of death, had the status of non-resident on the same footing for the purposes of taxing an inherited immovable property which is situated in the Member State concerned, that legislation cannot, without giving rise to discrimination, treat those heirs differently in the taxation of that property so far as concerns the deductibility of charges secured on it. By treating the inheritances of those two categories of persons in the same way (except in relation to the deduction of debts) for the purposes of taxing their inheritance, the national legislature has in fact admitted that there is no objective difference between them in regard to the detailed rules and conditions relating to that taxation which could justify different treatment (see, by analogy, in relation to the right of establishment, Case 270/83 Commission  v France  [1986] ECR 273, paragraph 20, and Case C‑170/05 Denkavit Internationaal and Denkavit France  [2006] ECR I‑11949, paragraph 35; and, in relation to the free movement of capital and inheritance duties, Case C‑43/07 Arens-Sikken  [2008] ECR I‑0000, paragraph 57).
66. In that regard, it must be borne in mind, first of all, that the Court has, in its case-law on the free movement of capital and inheritance duties, held that a citizen cannot be deprived of the right to rely on the provisions of the Treaty on the ground that he is profiting from tax advantages which are legally provided for by the rules in force in a Member State other than his State of residence ( Barbier , paragraph 71).
68. The Member State in which the immovable property included in the estate is situated cannot, in order to justify a restriction on the free movement of capital arising from its legislation, rely on the existence of a possibility, beyond its control, of a tax credit being granted by another Member State – such as the Member State in which the person whose estate is being administered was residing at the time of death – which could, wholly or partly, offset the loss incurred by that person’s heirs as a result of the fact that, in the Member State in which the property inherited is situated, debts secured on that property are not deductible for the purposes of assessing transfer duties (see, to that effect, Arens‑Sikken , paragraph 65).
69. A Member State cannot rely on the existence of a tax advantage granted unilaterally by another Member State – in the present case, the Member State in which the person concerned was residing at the time of her death – in order to escape its obligations under the Treaty and, in particular, under the Treaty provisions relating to the free movement of capital (see, to that effect, Case C‑379/05 Amurta [2007] ECR I‑0000, paragraph 78).