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OPINION OF ADVOCATE GENERAL

WATHELET

delivered on 18 February 2016 (1)

Case C-479/14

Sabine Hünnebeck

v

Finanzamt Krefeld

(Request for a preliminary ruling from the Finanzgericht Düsseldorf (Finance Court, Düsseldorf, Germany))

(Reference for a preliminary ruling — Free movement of capital — Articles 63 TFEU and 65 TFEU — National legislation on the taxation of gifts — Gift of immovable property situated in the national territory — National legislation providing for a tax allowance of EUR 400 000 for residents and EUR 2 000 for non-residents — Existence of an optional scheme allowing any person resident in a Member State of the European Union to benefit from the higher allowance)





I –  Introduction

1.        The present request for a preliminary ruling concerns the interpretation of Articles 63(1) TFEU and 65 TFEU with regard to the calculation of the transfer duties payable in respect of the gift of a piece of land in Germany, when neither the donor nor the recipient of the gift resides in that Member State.

2.        In the judgments in Mattner (C-510/08, EU:C:2010:216) and Commission v Germany (C-211/13, EU:C:2014:2148), the Court held that legislation of a Member State which makes an allowance to be set against the taxable value of the gift dependent on the place of residence of the donee and the donor at the time of the donation, or on where the immovable property which is the subject of the gift is located, constitutes a restriction on the free movement of capital where it leads to gifts involving non-residents or immovable property situated in another Member State being subject to a higher tax liability than those involving only residents or assets situated in the Member State of taxation.

3.        The present case concerns the question of the compatibility with EU law of the amendment to the German legislation at issue in the those two cases and in accordance with which the higher tax allowance reserved for German residents is applicable to a gift between non-residents of an asset situated in Germany if the donee requests that the gift be subject to the tax scheme for residents (unlimited tax liability).

II –  Legal framework

A –    EU law

4.        Article 63(1) TFEU provides that ‘all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited’.

5.        Article 65 TFEU provides:

‘1.      The provisions of Article 63 shall be without prejudice to the right of Member States:

(a)      to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;

(b)      to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.

2.      The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with the Treaties.

3.      The measures and procedures referred to in paragraphs 1 and 2 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.

4.      In the absence of measures pursuant to Article 64(3), the Commission or, in the absence of a Commission decision within three months from the request of the Member State concerned, the Council, may adopt a decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties in so far as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.’

B –    German law

6.        The following provisions of the German Law on inheritance and gift tax (Erbschaftsteuer- und Schenkungsteuergesetz), in the version published on 27 February 1997 (BGBl. 1997 I, p. 378), as last amended by Paragraph 11 of the Law of 7 December 2011 (BGBl. 2011 I, p. 2592, (‘the ErbStG’) state:

‘Paragraph 1 — Taxable events

1.      Inheritance (or gift) tax shall apply to

1)      transfers on death;

2)      gifts inter vivos;

3)      restricted gifts;

...

2.      Unless provided otherwise, the provisions of the present Law relating to the transfer of assets on death shall apply also to gifts and restricted gifts, and the provisions relating to gifts shall apply also to restricted gifts inter vivos.

Paragraph 2 — Personal liability to tax

1.      Liability to tax arises

1)      in the cases referred to in Paragraph 1(1), points 1 to 3, in relation to the entirety of the transferred assets (unlimited tax liability), where the deceased, on the date of death, the donor, on the date of making the gift, or the recipient, on the date of the chargeable event (Paragraph 9), is a resident. The following persons are regarded as residents:

a)      natural persons whose permanent residence or habitual residence is in Germany,

b)      German nationals who have resided abroad continuously for not more than five years without a permanent residence in Germany,

...

3)      in all other cases, subject to subparagraph (3), in relation to transferred assets which are domestic assets within the meaning of Paragraph 121 of the Law on valuation [Bewertungsgesetz, “the BewG”] (limited tax liability). ...

3.      At the recipient’s request, the entirety of the assets transferred, including assets which are domestic assets within the meaning of Paragraph 121 of the [BewG] (subparagraph 1, point 3), shall be treated as subject to unlimited tax liability if the deceased, on the date of death, the donor, on the date of execution of the gift, or the recipient, on the date of the chargeable event (Paragraph 9) is resident in a Member State of the European Union or in a State to which the Agreement on the European Economic Area applies. Multiple transfers from a single person in the ten years preceding and ten years following the transfer of the assets shall also be treated as subject to unlimited tax liability and aggregated in accordance with Paragraph 14. ...

Paragraph 14 — Taking into account of previous transfers

1.      Multiple transfers of assets from a single person to the same recipient within a period of ten years shall be aggregated by adding to the value of the latest transferred asset the values of the previously transferred assets on the date of their transfer. From the transfer duties on the total amount shall be deducted the duties which would have been payable on the previously transferred assets, having regard to the personal circumstances of the recipient and on the basis of the provisions applicable on the date of the last transfer.

Paragraph 15 — Tax classes

1.      According to the personal relationship between the recipient and the deceased or donor, the following three tax classes are distinguished:

Tax class I:

1)      the spouse and partner,

2)      the children and stepchildren,

...

Article 16 — Allowances

1.      Exempt in the event of unlimited tax liability (Paragraph 2(1), point 1, and (3)) are transfers of assets to

1)      a spouse or partner in the amount of EUR 500 000;

2)      to children within the meaning of tax class I.2 and to the children of deceased children within the meaning of tax class I.2 in the amount of EUR 400 000;

...

2.      In the event of limited tax liability (Paragraph 2(1), point 3), the amount of the allowance provided for in subparagraph 1 shall be replaced by the amount of EUR 2 000.’

7.        Paragraph 121 of the BewG, entitled ‘Domestic assets’, in the version published on 1 February 1991 (BGBl. 1991 I, p. 230), as last amended by Paragraph 10 of the Law of 7 December 2011, provides:

‘Domestic assets include:

1)      domestic agricultural and forestry assets;

2)      domestic land assets;

...’

III –  The dispute in the main proceedings and the question referred for a preliminary ruling

8.        Ms Hünnebeck and her two daughters are German nationals and reside in Gloucestershire (United Kingdom). Ms Hünnebeck has not lived in Germany since 1996. Her daughters have never lived in Germany.

9.        Ms Hünnebeck was a 50% co-owner of a piece of land in Düsseldorf (Germany). By an agreement of 20 September 2011 certified by a notary, she transferred that co-ownership share to her daughters, each of them receiving 50%. It was stipulated that Ms Hünnebeck would be liable for any gift tax which might become payable. On 12 January 2012, the guardian of Ms Hünnebeck’s two daughters, who were minors, approved the agreement of 20 September 2011.

10.      By two decisions of 31 May 2012, the Finanzamt Krefeld (Tax Office, Krefeld) set the amount of the transfer duties payable by Ms Hünnebeck in respect of the acquisition of a share of the land at issue, by each of her daughters, at EUR 146 509 per share. When calculating the transfer duties, the Finanzamt Krefeld deducted from the taxable value of each share the personal allowance of EUR 2 000 granted to persons with limited tax liability.

11.      Ms Hünnebeck lodged an administrative challenge seeking to obtain application of the personal allowance of EUR 400 000 available to persons with unlimited tax liability (residents).

12.      The Finanzamt Krefeld rejected that application, maintaining that Paragraph 2(3) of the ErbStG makes it possible for persons with unlimited tax liability and those with limited tax liability (non-residents) to be treated equally.

13.      The Finanzgericht Düsseldorf (Finance Court, Düsseldorf, Germany), before which the action between Ms Hünnebeck and the Finanzamt Krefeld has been brought, raises the question of whether Paragraph 16(2) of the ErbStG — even in the light of Paragraph 2(3) of the ErbStG — is compatible with Article 63(1) TFEU read in conjunction with Article 65 TFEU.

14.      It notes that, in the judgment in Mattner, (2) the Court had already held that Paragraph 16(2) of the ErbStG, in the version in force at the material time, which was worded in almost identical terms to the relevant provision at issue in the main proceedings, was incompatible with EU law. In the light of that judgment alone, the action brought by Ms Hünnebeck should therefore be upheld.

15.      Under Paragraph 2(1), point 3, read in conjunction with Paragraph 16(2) of the ErbStG, the allowance of EUR 2 000, linked to the fact that Ms Hünnebeck and her daughters resided in the United Kingdom on the date of the gift, is less than the allowance of EUR 400 000 that, under Paragraph 2(1), point 1(a), read in conjunction with Paragraph 15(1) and Paragraph 16(1), point 2, of the ErbStG, would have been applied if at least one of them had resided in Germany on that date.

16.      However, the Finanzgericht Düsseldorf (Finance Court, Düsseldorf) asks whether the provision contained in Paragraph 2(3) of the ErbStG, adopted by the German legislature following the judgment in Mattner (3) in order to make German national law consistent with EU law, may change that conclusion.

17.      The Finanzgericht Düsseldorf (Finance Court, Düsseldorf) observes that the Court did not give a ruling on that issue in the action for failure to fulfil obligations concerning Paragraph 16(2) of the ErbStG brought by the European Commission against the Federal Republic of Germany and giving rise to the judgment in Commission v Germany (C-211/13, EU:C:2014:2148) but has none the less already held that a national provision whose application is optional may be contrary to EU law. (4) Therefore, the Finanzgericht Düsseldorf (Finance Court, Düsseldorf, Germany) considers that the addition of Paragraph 2(3) of the ErbStG may not have remedied the incompatibility of Paragraph 16(2) of the ErbStG with EU law, inter alia, since that paragraph applies automatically in the absence of a request made by the taxpayer.

18.      In addition, the Finanzgericht Düsseldorf (Finance Court, Düsseldorf) observes that it is also questionable whether the rule set out in Paragraph 2(3) of the ErbStG and applicable on request is compatible with EU law for the following reasons.

19.      First, under the first sentence of Paragraph 2(3) of the ErbStG, the recipient can make a request only if, at the time of the transfer, the deceased, the donor or the recipient was resident in the territory of a Member State of the European Union or in a State to which the Agreement on the European Economic Area of 2 May 1992 (5) applies. However, in paragraphs 27 to 40 of its judgment in Welte (C-181/12, EU:C:2013:662), the Court extended, in accordance with the free movement of capital, its case-law concerning the calculation of inheritance tax to situations involving third States. Since, from the point of view of the free movement of capital, gifts are comparable to inheritances, the compatibility of the first sentence of Paragraph 2(3) of the ErbStG is therefore called into question.

20.      Secondly, in the case of multiple transfers from a single person in the ten years preceding and ten years following the transfer of the assets, the second sentence of Paragraph 2(3) of the ErbStG requires that those multiple transfers also be treated as subject to unlimited tax liability and aggregated in accordance with Paragraph 14 of the ErbStG. That provision therefore renders Paragraph 14 of the ErbStG applicable for twenty years, whereas the first sentence of Paragraph 14(1) of the ErbStG lays down a period of only ten years for the persons with unlimited tax liability referred to in Paragraph 2(1), point 1, of the ErbStG. It is therefore conceivable that, in the event of a move to or a departure from Germany, taxpayers who have requested to have unlimited tax liability under Paragraph 2(3) of the ErbStG may be placed at a disadvantage compared with persons with unlimited tax liability under Paragraph 2(1), point 1, of the ErbStG.

21.      In those circumstances, the Finanzgericht Düsseldorf (Finance Court) decided to stay the proceedings and refer the following question to the Court for a preliminary ruling:

‘Must Article 63(1) TFEU, read in conjunction with Article 65 TFEU, be interpreted as precluding legislation of a Member State which provides that, for the calculation of gift tax, the allowance to be set against the taxable value in the case of a gift of real property situated in that Member State is lower in the case where the donor and the recipient had their place of residence in another Member State on the date of execution of the gift than the allowance which would have been applicable if at least one of them had had his or her place of residence in the former Member State on that date, even if other legislation of the Member State provides that, on the application of the recipient of the gift, the higher allowance is to be applied, on condition that account is taken of all assets transferred gratuitously by the donor ten years prior to and within ten years following the date of execution of the gift?’

IV –  Procedure before the Court

22.      Written observations were submitted by Ms Hünnebeck, the German Government and the Commission. They also all presented oral argument at the hearing on 16 December 2015.

V –  Analysis

23.      By its question, the referring court is asking the Court to determine, in essence, whether the treatment of residents and non-residents laid down by legislation such as that at issue in the main proceedings constitutes an infringement of Articles 63 TFEU and 65 TFEU despite the legislative amendment made in Germany following the judgment in Mattner. (6)

A –    Arguments of the parties

24.      Ms Hünnebeck and the Commission submit that the national legislation at issue in the main proceedings is contrary to Articles 63 TFEU and 65 TFEU.

25.      Relying on the judgments in Mattner (C-510/08, EU:C:2010:216) and Commission v Germany (C-211/13, EU:C:2014:2148), Ms Hünnebeck and the Commission submit that discrimination is not eliminated by the fact that the persons concerned have an option that may result in equal treatment, in particular where, in the absence of a request to exercise that option, the discriminatory provision applies automatically.

26.      Even if that option is, in itself, sufficient in this particular case to eliminate that discrimination, further arbitrary discrimination prohibited by Article 65(3) TFEU arises from Paragraph 2(3) of the ErbStG. Ms Hünnebeck and the Commission submit that a non-resident taxable person exercising the option provided for in Paragraph 2(3) of the ErbStG would be subject to unlimited tax liability both for the ten years preceding the gift and for the ten years following it, whereas residents must accept an aggregation of the value of all of the assets received gratuitously from the same person only in the ten years preceding the last transfer and may subsequently, in accordance with Paragraph 14 of the ErbStG, deduct the tax already paid in respect of the previous transfers.

27.      Ms Hünnebeck claims that, in any event, in the present case it was impossible for her to exercise the right of option, laid down in Paragraph 2(3) of the ErbStG, since exercising that right would have involved completely unpredictable future taxation and treatment which is less favourable than that of residents.

28.      According to the German Government, the national legislation at issue in the main proceedings, as amended following the judgment in Mattner (C-510/08, EU:C:2010:216), complies with Articles 63 TFEU and 65 TFEU.

29.      The German Government considers that the introduction of Paragraph 2(3) of the ErbStG eliminates the discrimination found in the judgments in Mattner (C-510/08, EU:C:2010:216) and Commission v Germany (C-211/13, EU:C:2014:2148) since the allowance to be set against the taxable value applicable to a gift of immovable property situated in Germany is the same where the donor and donee reside in Germany or in another Member State, since taxable persons residing in other Member States of the European Union or the European Economic Area (EEA) are free to choose to be subject to unlimited tax liability scheme applicable to residents.

30.      Moreover, where a non-resident taxable person opts for the unlimited tax liability scheme, the overall value of the advantage provided for in Paragraph 14 of the ErbStG is limited, contrary to the referring court’s submissions, to a period of ten years calculated retroactively from the date of the transfer in question. In that regard, there is therefore no discrimination between resident taxable persons and non-resident taxable persons.

B –    Assessment

31.      As the Court has already given a ruling on the German legislation at issue in the main proceedings in the cases giving rise to the judgments in Mattner (C-510/08, EU:C:2010:216) and Commission v Germany (C-211/13, EU:C:2014:2148), (7) it must be examined whether the amendments made to that legislation by the Law of 7 December 2011 and in particular the introduction of Paragraph 2(3) of the ErbStG have remedied the incompatibility found by the Court.

32.      I would note, very briefly, that, in accordance with that case-law, national measures ‘the effect of which is to reduce the value of the inheritance or the gift of a resident of a State other than that in which the inheritance or the gift is taxed or of a resident of a State other than that in which the assets concerned are situated and which taxes the inheritance or gift of those assets’ constitute restrictions on the free movement of capital. (8)

33.      Accordingly, the Court has held that ‘legislation of a Member State which makes the application of an allowance to be set against the taxable value of the inheritance or the gift dependent on the place of residence of the deceased and the heir at the time of the death or on the place of residence of the donor and the donee at the time of the gift, or on place where the immovable property which is the subject of the inheritance or gift is located, constitutes a restriction on the free movement of capital where it leads to inheritances or gifts involving non-residents or immovable property situated in another Member State being subject to a higher tax liability than those involving only residents or assets situated in the Member State of taxation’. (9)

34.      Under Paragraph 2(3) of the ErbStG, which was introduced by the Federal Republic of Germany in order to comply with the judgment in Mattner (C-510/08, EU:C:2010:216), persons with limited tax liability, including non-residents, may choose to make gifts which are taxable in Germany subject to the unlimited tax liability scheme laid down for residents, resulting, as regards the main proceedings, in the application of the allowance of EUR 400 000 provided for by Paragraph 16(1), point 2, of the ErbStG and not the allowance of EUR 2 000 provided for by Paragraph 16(2) for non-resident taxable persons.

35.      The two questions are therefore, first, whether that option offered to a non-resident taxable person eliminates the restriction on the free movement of capital found by the Court in the judgments in Mattner (C-510/08, EU:C:2010:216) and Commission v Germany (C-211/13, EU:C:2014:2148) and, secondly, whether the procedures for exercising that option (10) and its consequences (11) are themselves free from restrictions on the free movement of capital.

1.      The possibility offered to non-residents to choose the inheritance and gift tax scheme that is in principle reserved for residents

36.      The German Government submits that the ability to opt for the unlimited tax liability introduced by Paragraph 2(3) of the ErbStG precludes any discrimination, since, where that option is taken up, resident and non-resident taxable persons are treated in the same way.

37.      On the basis of the case-law of the Court, I do not share the German Government’s view.

38.      In the judgment in Gielen (C-440/08, EU:C:2010:148), in which the non-resident taxable person could avoid a discriminatory tax regime by opting for one which was ostensibly not discriminatory (in that case the regime applicable to residents), the Court held in paragraph 51, following the concurring Opinion of Advocate General Ruiz-Jarabo Colomer, (12) that ‘such a choice is not ... capable of remedying the discriminatory effects of the first of those two tax regimes’ or of ‘validat[ing] a tax regime which, in itself, remains contrary to Article 49 TFEU by reason of its discriminatory nature’. (13) Referring to paragraph 162 of the Grand Chamber judgment in Test Claimants in the FII Group Litigation (C-446/04, EU:C:2006:774), the Court added that ‘the fact that a national scheme which restricts the freedom of establishment is optional does not mean that it is not incompatible with EU law’. (14)

39.      In paragraph 62 of the judgment in Beker (C-168/11, EU:C:2013:117), the Court added that that case-law was particularly applicable in a situation where, ‘as in the present case, the mechanism incompatible with EU law is one which is automatically applied where the taxpayer fails to make a choice’. Those principles seem to me to be fully applicable in the present case. In order to avoid a scheme that discriminates against them, non-residents may, as in the case that gave rise to the judgment in Gielen (C-440/08, EU:C:2010:148), opt for a scheme which is ostensibly not discriminatory (15) and in principle applies only to residents, since, as in the judgment in Beker (C-168/11, EU:C:2013:117), it is the mechanism incompatible with EU law which is applied automatically where the non-resident taxpayer fails to choose the other scheme.

40.      However, I cannot give a definitive opinion on that point without mentioning the recent judgment in Hirvonen (C-632/13, EU:C:2015:765), given without an Opinion by a Chamber of three Judges on 19 November 2015.

41.      The case giving rise to that judgment concerned a Swedish law having the objective of eliminating the restriction on non-resident taxable persons found in the judgment in Wallentin (C-169/03, EU:C:2004:403) by enabling those taxable persons to opt for the tax scheme applicable to residents rather than the scheme of taxation at source which was applicable to them in principle and which had been the subject-matter of that judgment.

42.      Having held that that latter scheme was more favourable overall for non-residents, (16) the Court held that ‘in matters of taxation of income, the refusal to grant non-resident taxpayers who obtain the majority of their income from the source State and who have opted for the taxation at source regime the same personal deductions as those granted to resident taxpayers under the ordinary taxation regime, does not constitute discrimination contrary to Article 21 TFEU where the non-resident taxpayers are not subject to an overall tax burden greater than that placed on resident taxpayers and on persons in a similar situation whose circumstances are comparable to those of non-resident taxpayers’, (17) taking the view that that factor ‘distinguishes the facts of the main proceedings from the specific facts of the case which gave rise to the judgment in Gielen (C-440/08, EU:C:2010:148)’. (18)

43.      I think I am able to infer from the judgment in Hirvonen (C-632/13, EU:C:2015:765) that the conclusion of the Court, which was probably preoccupied by the concern of not allowing a non-resident taxable person to cherry pick, or to claim to his benefit, the most favourable elements of the two separate taxation regimes, was determined by the fact that the taxation regime that applied to non-residents was more favourable overall than the regime reserved in principle for residents.

44.      However, it is clear from the settled case-law that, in the examination of the compatibility of a direct taxation measure with fundamental freedoms, the question of whether or not discrimination exists does not depend on the overall outcome for the taxpayer. As the Court held in paragraph 44 of the judgment in Gielen (C-440/08, EU:C:2010:148), ‘a difference in treatment as between the two categories of taxpayer [namely residents and non-residents] may constitute discrimination for the purposes of the FEU Treaty where there is no objective difference between those categories such as to justify different treatment in that regard’. (19)

45.      Therefore, the existence of a difference in treatment may be assessed only in relation to the specific tax advantage granted to one of the two categories of taxpayer and refused to the other and not in relation to the overall tax burden of the taxpayer in question.

46.      In any event, I do not think that the Court’s finding in paragraphs 43 and 49 of its judgment in Hirvonen (C-632/13, EU:C:2015:765) can be sufficient to derogate from the case-law of the Court arising from the judgments in Test Claimants in the FII Group Litigation (C-446/04, EU:C:2006:774, paragraph 162), Gielen (C-440/08, EU:C:2010:148, paragraphs 49 to 54) and Beker (C-168/11, EU:C:2013:117, paragraph 62).

47.      In that regard, I do not concur with the argument put forward by the Commission at the hearing that the case giving rise to the judgment in Hirvonen (C-632/13, EU:C:2015:765) concerned only the existence of two separate taxation regimes — one for residents and one for non-residents — each of which was compatible with EU law, which is not the case in the present proceedings and would explain the distinction made in that judgment.

48.      This disregards the fact that, in its judgment in Wallentin (C-169/03, EU:C:2004:403), the Court held that the scheme deemed to be more favourable overall in the judgment in Hirvonen (C-632/13, EU:C:2015:765) was in fact discriminatory. As Advocate General Mengozzi states in point 60 of his Opinion in Beker (C-168/11, EU:C:2012:452), the question was whether ‘the possibility given to the taxpayer to opt for a legal regime which is generally less advantageous, but not incompatible with Union law, renders the tax system under consideration compatible as a whole’. The Court’s answer was clearly that it did not.

49.      I also infer from the Opinion of Advocate General Mengozzi that, in that case, as in the case giving rise to the judgment in Hirvonen (C-632/13, EU:C:2015:765), the Court found itself faced with a possibility of opting for a tax system that was ‘less advantageous’ overall. That did not prevent the Court from finding that there was a restriction on the free movement of capital.

50.      In the present case, although opting for the tax system reserved for residents enables a higher allowance to be obtained, it is also linked to unlimited tax liability, the consequences of which may differ greatly depending on the specific situation of the various taxpayers since, as the Commission submitted at the hearing, it leads to the taxation over a period of twenty years of all assets transferred gratuitously and situated not only in Germany but anywhere in the world, with the risk of double taxation.

51.      Therefore, I consider that the fact that Paragraph 2(3) of the ErbStG enables non-resident taxpayers to benefit from the allowance reserved for resident taxpayers by opting for the inheritance and gift tax scheme for residents has not remedied the incompatibility of Paragraph 16(2) of the ErbStG with the free movement of capital found in the judgments in Mattner (C-510/08, EU:C:2010:216) and Commission v Germany (C-211/13, EU:C:2014:2148).

2.      The procedures for exercising the option offered to non-residents to choose the inheritance and gift tax scheme for residents and the consequences of that choice

52.      Since the referring court doubts whether the rule set out in Paragraph 2(3) of the ErbStG is compatible with the free movement of capital, it must be examined whether the procedures for exercising the option offered by that provision (20) and the consequences of its exercise (21) establish a new restriction on the free movement of capital.

53.      As regards, first, the procedures for exercising that option, the referring court considers that, since that option is available only for taxable persons residing in the territory of Member States of the EU or the EEA, it is contrary to the judgment in Welte (C-181/12, EU:C:2013:662), which extended the principles set out in the judgment in Mattner (C-510/08, EU:C:2010:216) to taxable persons residing in a third country.

54.      In paragraph 68 of the judgment in Welte (C-181/12, EU:C:2013:662), the Court held that ‘Articles [63 TFEU] and [65 TFEU] must be interpreted as precluding legislation of a Member State relating to the calculation of inheritance tax which provides that, in the event of inheritance of immovable property in that State, in a case where ... the deceased and the heir had a permanent residence in a third country, such as the Swiss Confederation, at the time of the death, the tax-free allowance is less than the allowance which would have been applied if at least one of them had been resident in that Member State at that time’.

55.      As the Commission submits, it is clear that restricting the option introduced by Paragraph 2(3) of the ErbStG to taxable persons residing in the territory of Member States of the EU or the EEA only and excluding residents of third countries is contrary to the free movement of capital. No justification for that restriction has been put forward. It should be noted, however, that that issue does not arise in the case at issue in the main proceedings since Ms Hünnebeck and her daughters reside in a Member State of the EU.

56.      Secondly, with regard to the consequences of exercising the option at issue, it must be noted that the second sentence of Paragraph 2(3) of the ErbStG makes subject to unlimited tax liability ‘multiple transfers from a single person in the ten years preceding and ten years following the transfer of the assets’ in respect of which the option to be subject to the inheritance and gift tax scheme for residents has been exercised. According to the referring court, for residents, Paragraph 14 of the ErbStG limits that period to the ten years preceding the transfer of the assets.

57.      The German Government disputes that interpretation by the referring court, submitting that, in both cases, the overall value of the relevant assets received is limited to a period of ten years, calculated retroactively from the date of the transfer of the assets.

58.      In that regard, 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’. (22)

59.      Therefore, it is not for the Court, in the context of the system of judicial cooperation established by Article 267 TFEU, to verify or call into question the accuracy of the interpretation of national law made by the referring court, as such interpretation falls within the latter’s exclusive jurisdiction.

60.      In accordance with the case-law of the Court, ‘national measures the effect of which is to reduce the value of the inheritance or the gift of a resident of a State other than that in which the inheritance or the gift is taxed or of a resident of a State other than that in which the assets concerned are situated and which taxes the inheritance or gift of those assets constitute restrictions on the free movement of capital’. (23)

61.      In my view, in the present case there is an indisputable difference in treatment between residents and non-residents, since the period to be taken into account for transfers which is laid down for non-residents (ten years before and after the transfer) is considerably longer than the period laid down for residents (ten years before the transfer). In the case of multiple transfers, that difference in treatment could easily lead to non-residents being taxed more heavily.

62.      Moreover, since the amount of the gift tax in respect of immovable property in Germany is calculated pursuant to the ErbStG on the basis both of the value of the property and of the family relationship, if any, between the donor and the donee, there is no objective difference justifying the unequal tax treatment of the situation in which neither person resides in that Member State and that in which at least one of them resides there. (24)

63.      In that regard, non-resident taxable persons find themselves a fortiori in a situation comparable to that of resident taxable persons since the German legislation at issue places them on the same footing for the purposes of taxing immovable property acquired by gift and located in Germany. As the Court held in paragraph 50 of the judgment in Commission v Germany (C-211/13, EU:C:2014:2148), ‘by treating gifts to or inheritances of those two categories of taxpayer in the same way except in relation to the amount of the allowance granted to the recipient, the national legislature accepted that there is no objective difference between them as regards the detailed rules and conditions of charging gift tax or inheritance tax which could justify a difference in treatment’. The same is true with regard to the period to be taken into account for previous transfers.

64.      Paragraph 2(3) of the ErbStG therefore establishes a second restriction on the free movement of capital.

65.      According to the German Government, that restriction is justified by overriding reasons in the public interest, and in particular the balanced allocation of the Member States’ power to impose taxes and the cohesion of the German tax system.

66.      As regards the balanced allocation of the Member States’ power to impose taxes, the German Government gives no explanation as to how that allocation would be compromised if the German authorities applied to residents and non-residents the same period to be taken into account for transfers.

67.      As regards the cohesion of the German tax system, the German Government considers that, in exercising the option to be subject to the tax scheme for residents offered by Paragraph 2(3) of the ErbStG, non-resident taxable persons opt for unlimited tax liability with the consequence that the taxable value includes the entirety of the national and foreign assets. The German Government infers from this that the tax advantage resulting from the application of the higher allowance in Paragraph 16(1) of the ErbStG is offset by a particular tax charge by way of gift tax.

68.      However, none of those arguments relates to the difference — to the detriment of non-residents — in the period to be taken into account for asset transfers. More precisely, contrary to the requirements of the relevant settled case-law, (25) the German Government does not demonstrate the existence of a direct link between the granting of a tax advantage and the longer period to be taken into account for transfers, where the gift involves non-resident donees and donors.

69.      The arguments based on the cohesion of the tax system must therefore be rejected.

VI –  Conclusion

70.      In the light of the foregoing considerations, I propose that the Court should answer the question referred by the Finanzgericht Düsseldorf (Finance Court, Düsseldorf) as follows:

(1)      Articles 63 TFEU and 65 TFEU must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which provides that, for the calculation of gift tax, the allowance to be set against the taxable value in the case of a gift of immovable property situated in that Member State is lower in the case where the donor and the donee had their place of residence in another Member State on the date of execution of the gift than the allowance which would have been applicable if at least one of them had had his or her place of residence in the former Member State on that date, even if that legislation provides that, on the application of the donee, the higher allowance may be applied if that person chooses the unlimited tax liability scheme reserved for residents.

(2)      Articles 63 TFEU and 65 TFEU must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which provides that, for the calculation of gift tax in respect of immovable property in that Member State, donees residing in third countries may apply for the higher allowance to be set against the taxable value only if the donor or the donee is resident in that State.

(3)      Articles 63 TFEU and 65 TFEU must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which provides that, for the calculation of gift tax, in the case of a gift of immovable property situated in that Member State, account is to be taken of all assets received gratuitously from the donor in the ten years preceding and the ten years following the gift, where the donor and the donee had their place of residence in another Member State on the date of execution of the gift, whereas if one of them had been resident in the former Member State on that date, account would be taken of only the ten years preceding the gift.

1 –      Original language: French.

2 –      C-510/08, EU:C:2010:216.

3 –      Ibid.

4 –      See judgments in Test Claimants in the FII Group Litigation (C-446/04, EU:C:2006:774, paragraph 162); Gielen (C-440/08, EU:C:2010:148, paragraph 53) and Beker (C-168/11, EU:C:2013:117, paragraph 62).

5 –      OJ 1994 L 1, p. 3.

6 –      C-510/08, EU:C:2010:216.

7 –      That legislation and the equivalent legislation of other Member States have also been analysed by the Court in the cases giving rise to the judgments in Jäger (C-256/06, EU:C:2008:20); Welte (C-181/12, EU:C:2013:662); Commission v Spain (C-127/12, EU:C:2014:2130) and Q (C-133/13, EU:C:2014:2460).

8 –      Judgment in Commission v Germany (C-211/13, EU:C:2014:2148, paragraph 41). See also, to that effect, judgments in Jäger (C-256/06, EU:C:2008:20, paragraph 31); Mattner (C-510/08, EU:C:2010:216, paragraph 26); Welte (C-181/12, EU:C:2013:662, paragraph 23) and Commission v Spain (C-127/12, EU:C:2014:2130, paragraph 57).

9 –      Judgment in Commission v Spain (C-127/12, EU:C:2014:2130, paragraph 58). See also, to that effect, judgments in Mattner (C-510/08, EU:C:2010:216, paragraph 28) and, in relation to inheritance, Welte (C-181/12, EU:C:2013:662, paragraph 25).

10 –      That choice is offered only to non-resident taxable persons established in other Member States of the EU or the EEA and not third countries.

11 –      Paragraph 2(3) of the ErbStG seems to apply the choice of opting for the unlimited tax liability scheme to any other asset transfers by the same person in the ten years preceding and ten years following the transfer of assets in respect of which the choice was made.

12 –      C-440/08, EU:C:2009:661.

13 –      Judgment in Gielen (C-440/08, EU:C:2010:148, paragraph 52).

14 –      Ibid. (paragraph 53).

15 –      See points 52 to 69 of this Opinion.

16 –      See judgment in Hirvonen (C-632/13, EU:C:2015:765, paragraph 43).

17 –      Ibid. (paragraph 49). Emphasis added.

18 –      Ibid. (paragraph 39).

19 –      Judgment in Gielen (C-440/08, EU:C:2010:148, paragraph 44). Emphasis added. See also, to that effect, judgments in Talotta (C-383/05, EU:C:2007:181, paragraph 19) and Renneberg (C-527/06, EU:C:2008:566, paragraph 60).

20 –      That choice is offered only to non-resident taxable persons established in other Member States of the EU or the EEA and not third countries.

21 –      See footnote Error! Bookmark not defined. of this Opinion.

22 –      Judgment in Eckelkamp and Others (C-11/07, EU:C:2008:489, paragraph 32). See also, to that effect, judgment in Sürül (C-262/96, EU:C:1999:228, paragraph 95).

23 –      Judgment in Commission v Spain (C-127/12, EU:C:2014:2130, paragraph 57). See also, to that effect, judgment in Mattner (C-510/08, EU:C:2010:216, paragraph 26).

24 –      See judgments in Mattner (C-510/08, EU:C:2010:216, paragraph 36) and Commission v Germany (C-211/13, EU:C:2014:2148, paragraph 49).

25 –      See judgments in Manninen (C-319/02, EU:C:2004:484, paragraph 42); Glaxo Wellcome (C-182/08, EU:C:2009:559, paragraphs 77 and 78); Mattner (C-510/08, EU:C:2010:216, paragraph 53) and Commission v Germany (C-211/13, EU:C:2014:2148, paragraphs 55 and 56).