C‑443/06, Hollmann v Ministério Público

Mrs Hollmann had resided in Germany since the time of the facts in the case in the main proceedings.

Following the death of her husband, in 1998 Mrs Hollmann inherited immovable property situated in Portugal.


She was taxed on the basis of tax on inheritance and donations on the value of that asset. Article 43(2) of the Personal Income Tax Code limitted the incidence of the tax to 50% of capital gains realised by persons residing in Portugal.

According to the tax authorities, Mrs Hollmann was not entitled to rely on the favourable tax provisions of Article 43(2) of the CIRS on the ground that she was residing in a Member State of the European Union which was not Portugal.

The referring Court thus asked whether Article 43(2) of the Personal Income Tax Code infringed Articles 12, 18, 39, 43 and 56 EC by excluding from that limitation capital gains realised by a person residing in another Member State of the European Union?

The Court held that as regards Article 39 EC and 43 EC, it was apparent from the decision to refer that Mrs Hollmann sold her immovable property situated in Portugal, the transaction which gave rise to the taxation in dispute in the case in the main proceedings, neither with the aim of carrying out a professional activity in the territory of the Community nor with a view to establishing herself in a Member State other than Germany to carry out an economic activity.


In relation to Article 18 EC, there was no evidence in that decision to support the conclusion that the applicant in the case in the main proceedings sold her immovable property with a view to exercising the right which she is granted under that provision.

Consequently, she could not rely on Articles 18 EC, 39 EC and 43 EC in the present case (see also Case C‑345/05 Commission v Portugal (2006)).

The Court furthermore held that Article 12 EC applied independently only to situations governed by Community law for which the Treaty lays down no specific rules of non-discrimination (see, inter alia, Joined Cases C‑397/98 and C‑410/98 Metallgesellscahft and Others (2001), and Case C‑422/01 Skandia and Ramstedt (2003)).

It pointed out that Article 56 EC, in particular, contained a specific rule of non‑discrimination in relation to the free movement of capital (see also Case C‑222/04 Cassa di Risparmio di Firenze [2006], paragraph 99).

The Court held that Article 56 EC must be interpreted as precluding national legislation, such as that in dispute in the main proceedings, which subjected capital gains resulting from the transfer of immovable property situated in a Member State, in this case Portugal, where that transfer was made by a resident of another Member State, to a tax burden greater than that which would be applicable for the same type of transaction to capital gained realised by a resident of the State in which that immovable property was situated.

The Court held that that legislation could not be justified under Article 58 EC.

The Court reiterated that the need to maintain the coherence of a tax system could justify a restriction on the exercise of the fundamental freedoms guaranteed by the Treaty. However, for an argument based on such reasoning 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 Case C‑471/04 Keller Holding [2006] and Case C‑347/04 Rewe Zentralfinanz [2007]

The Court held that there was no such link in the present case.

Text of judgment