ECJ helds that § 16 of the German inheritance tax law

ECJ helds that § 16 of the German inheritance tax law

The ECJ has held that the § 16 of German inheritance and gift tax law breaches the provisions on the free movement of capital contained in article 56 of the EC Treaty. Under German tax law, a tax exemption on gifts of up to €500 000 is granted to German residents (depending on the degree of kinship), whereas this exemption is only €2 000 if both the donor and the donee are not resident in Germany. Equivalent provisions also apply in the case of gift tax. The ECJ considers that these provisions are discriminatory and constitute an unjustified restriction on the free movement of capital, as provided for in Article 63 of the Treaty on the Functioning of the European Union and Article 40 of the European Economic Area Agreement. Such provisions could dissuade citizens living abroad from investing in property located in Germany.

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