Luxemburg, 12/10/2006 (Agence Europe) - In conclusions on the German Einkommensteuergesetz, made public on 5 October, Advocate General Christine Stix-Hackl proposes not to limit the temporal effects of the judgment the Court has been called on to make in a case regarding the compatibility of this regulation, which has now been abolished, on taxation of dividends with Community law. According to Ms Stix-Hackl, Germany has not adduced sufficient evidence of serious economic repercussions that would result from compensation of the plaintiffs.
The Einkommensteuergesetz is a mechanism, no longer applicable since 2001, which allowed German taxpayers to deduct a percentage of dividends paid to them by German companies. It did not apply to dividends paid by companies established in other Member States. Hence the request from the Finanzgericht Köln for the Court to give a preliminary ruling.
In conclusions presented in November 2005, Advocate General Antonio Tizzano took the view that the German tax rules were incompatible with the free movement of capital. However, he considered that the conditions for a limitation of the temporal effects of such a ruling were met. In view of the amount of the reimbursement proposed at the time, there would be a risk of serious economic repercussions if there were no limitation of temporal effects. In addition, he stressed that the scope of the provisions on the free movement of capital in relation to tax mechanisms such as that at issue was not entirely clear. In view of the importance of the question of a possible limitation of the temporal effects, the case was assigned to the Grand Chamber, which decided to reopen the oral procedure.
Mme Stix-Hackl has now put a second opinion before the Court. She points out that a limitation of the temporal effects of a judgment may only be ordered exceptionally, where there is a risk of serious economic repercussions and there was objective, significant uncertainty regarding the implications of Community law provisions. She is of the opinion that Germany “has not adduced sufficient evidence that a finding of incompatibility by the Court would create the risk of serious economic repercussions” and that “the level of budgetary repercussions is not in itself sufficient evidence of such a risk”. Finally, the Advocate General points to the possibility Member States have, even in the absence of a limitation of the temporal effects, of laying down appropriate time limits for bringing a claim in the interests of legal certainty in order to protect both the taxpayer and the authorities. (ol)