Keywords
Summary

Keywords

Freedom of movement for persons – Workers – Freedom of establishment – Citizens of the European Union – Tax legislation

(Arts 18 EC, 39 EC and 43 EC; EEA Agreement, Arts 28 and 31)

Summary

A Member State which adopts and maintains in force tax provisions which make entitlement to deferral of taxation on capital gains arising from the sale of a private residential property or of a right to reside in a private cooperative property conditional on the newly-acquired residence also being in national territory fails to fulfil its obligations under Articles 18 EC, 39 EC and 43 EC and under Articles 28 and 31 of the EEA Agreement.

A taxable person who decides to sell a residential property that he owns in that Member State in order to transfer his residence to another Member State and to purchase a new property there for the purposes of his accommodation, in the exercise of the right of every citizen of the Union to move and reside freely within the territory of the Member States, which finds specific expression in Article 43 EC with regard to freedom of establishment and in Article 39 EC with regard to freedom of movement for workers, but also of rights conferred by Article 28 of the EEA Agreement in relation to the free movement of workers and by Article 31 of the EEA Agreement on the freedom of establishment, is thereby subjected to less favourable tax treatment than that enjoyed by a person who maintains his residence in the Member State concerned.

The need to maintain the coherence of a tax system cannot justify that difference in treatment since, 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.

Since the provisions of the Treaty and the EEA Agreement on freedom of movement for persons preclude such legislation, there is no need for a separate examination of that legislation in the light of Article 56(1) EC and Article 40 of the EEA Agreement concerning the free movement of capital

(see paras 15, 22, 26, 35, 37, operative part)