Egon Schempp v Finanzamt München V.
Date: 2005-07-12
15. To assess the scope of application of the Treaty within the meaning of Article 12 EC, that article must be read in conjunction with the provisions of the Treaty on citizenship of the Union. Citizenship of the Union is destined to be the fundamental status of nationals of the Member States, enabling those who find themselves in the same situation to receive the same treatment in law irrespective of their nationality, subject to such exceptions as are expressly provided for (Case C‑184/99 Grzelczyk  [2001] ECR I‑6193, paragraphs 30 and 31, Case C‑148/02 Garcia Avello  [2003] ECR I‑11613, paragraphs 22 and 23, and Case C‑209/03 Bidar  [2005] ECR I‑0000, paragraph 31).
17. As the Court has already held, Article 17(2) EC attaches to the status of citizen of the Union the rights and duties laid down by the Treaty, including the right to rely on Article 12 EC in all situations falling within the material scope of Community law (see Case C‑85/96 Martínez Sala  [1998] ECR I‑2691, paragraph 62).
18. Those situations include those involving the exercise of the fundamental freedoms guaranteed by the Treaty and those involving the exercise of the right to move and reside within the territory of the Member States, as conferred by Article 18 EC ( Bidar , paragraph 33).
19. While in the present state of Community law direct taxation falls within the competence of the Member States, the latter must none the less exercise that competence in accordance with Community law, in particular the provisions of the Treaty concerning the right of every citizen of the Union to move and reside freely within the territory of the Member States, and therefore avoid any overt or covert discrimination on the basis of nationality (see, to that effect, Case C‑279/93 Schumacker  [1995] ECR I‑225, paragraphs 21 and 26, and Case C‑385/00 De Groot  [2002] ECR I‑11819, paragraph 75).
20. However, it also follows from the case-law that citizenship of the Union, established by Article 17 EC, is not intended to extend the material scope of the Treaty to internal situations which have no link with Community law (Joined Cases C‑64/96 and C‑65/96 Uecker and Jacquet  [1997] ECR I‑3171, paragraph 23, and Garcia Avello , paragraph 26).
22. On this point, it must be observed that, contrary to the submissions of the German and Netherlands Governments, the situation of a national of a Member State who, like Mr Schempp, has not made use of the right to freedom of movement cannot, for that reason alone, be assimilated to a purely internal situation (see, to that effect, Case C‑200/02 Zhu and Chen  [2004] ECR I‑0000, paragraph 19).
28. It is settled case-law that the principle of non-discrimination requires that comparable situations must not be treated differently unless such treatment is objectively justified (see Case C‑354/95 National Farmers’ Union and Others  [1997] ECR I‑4559, paragraph 61).
34. It is settled case-law that Article 12 EC is not concerned with any disparities in treatment, for persons and undertakings subject to the jurisdiction of the Community, which may result from divergences existing between the various Member States, so long as they affect all persons subject to them in accordance with objective criteria and without regard to their nationality (see, to that effect, Case C‑137/00 Milk Marque and National Farmers’ Union  [2003] ECR I‑7975, paragraph 124 and the case-law cited there).
45. However, the Court has already held that the Treaty offers no guarantee to a citizen of the Union that transferring his activities to a Member State other than that in which he previously resided will be neutral as regards taxation. Given the disparities in the tax legislation of the Member States, such a transfer may be to the citizen’s advantage in terms of indirect taxation or not, according to circumstances (see, to that effect, Case C‑365/02 Lindfors  [2004] ECR I‑7183, paragraph 34).