C-7/74

JUDGMENT OF THE COURT OF 3 JULY 1974 1

Reiniera Charlotte Brouerius van Nidek

v Inspecteur der Registratie en Successie (preliminary ruling requested by the Gerechtshof 's-Gravenhage)

Case 7/74

Summary

1. European Communities — Privileges and Immunities — Officials — Survivors' pensions — National taxes — Exemption (Protocol on the Privileges and Immunities of the European Communities, second paragraph of Article 13)

REINIERA CHARLOTTE BROUERIUS VAN NIDEK, widow of Eduard Rudolph von Geldern, Charles Melottestraat 14, Hoeilaart (Belgium)

and

THE INSPECTEUR DER REGISTRATIE EN SUCCESSIE (Inspector of Registration and Succession) at Rijswijk (Netherlands)

on the interpretation of the second paragraph of Article 13 of the Protocol on the Privileges and Immunities of the European Communities annexed to the Treaty establishing a Single Council and a Single Commission of the European Communities,

THE COURT

composed of R. Lecourt, President, A. M. Donner, M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars (Rapporteur), P. Pescatore, H. Kutscher, C. Ó Dálaigh, A. J. Mackenzie Stuart, Judges,

concerns death duties. Under the (a) Is the second paragraph of Article 13 Netherlands Succession Law ('Succes of the Protocol on the Privileges and siewet' of 28 June 1956, Stb. 362) private Immunities of the European pensions arising out of contract are Communities applicable to a pension included at their capital value in the granted by the European Communi aggregate amount subject to succession ties to the vidow of one of their duty whereas pensions of a public law officials? nature and private pensions under a (b) If so, do the national taxes from pension scheme are not. which this pension is exempt The same law, however, creates, as include, in principle, death duties? between spouses (in particular), an (c) If this question also must be exemption from succession duty on answered in the affirmative, does the acquisitions up to a total of Fl. 250 000. exemption also preclude the capital However, in order to prevent two value of the pension right (purchase exemptions from being enjoyed price of an annuity)1 from being cumulatively, the law provides that the taken into account in the assessment, capital value of public law pensions and or does the exemption not affect private pensions under a pension such an indirect incidence on the scheme, although exempted from

prescribed in Article 32 (2) of the constitutes an infringement of the second Netherlands Succession Law? paragraph of Article 13 of the Protocol on the Privileges and Immunities, under The judgment making the reference was which officials and other servants of the registered at the Court on 31 January 1974. Communities 'shall be exempt from national taxes on salaries, wages and Under Article 20 of the Statute of the emoluments paid by the Communities', Court of Justice of the European the appellant in the main action Economic. Community, the Inspector of appealed to the Gerechtshof at The Registration and Succession at Rijswijk, Hague against the rejection of her the Netherlands Government, the

JUDGMENT OF 3. 7. 1974 — CASE 7/74

death duties. the position taken by the Inspector of The purpose of Article 13 is to avoid the Registration and Succession. It considers discrimination which might arise from that the first question calls for an imposing national taxes on the incomes affirmative answer, having regard to of officials and other servants of the Article 2 (b) of Regulation No 549/69 of European Communities and to make the Council dated 25 March 1969 (OJ them liable to a Community tax. No L 74 of 27 March 1969, p. 1), which such reason exists in the case of death specifies that 'the provisions of the duties. second paragraph of Article 13 of the The context of the second paragraph of Protocol on the Privileges and Article 13 is conducive to this same Immunities of the Communities shall

paragraph. But there is no Community 13, and Article 14, on the other. It also tax on acquisitions on death, and death emphasizes the difference in terminology duties cannot, in the ordinary use of employed in the English and French language, be considered as a tax on texts of the second paragraph of Article salaries, wages and emoluments. 13 ('taxes', 'impots') and the first The conclusion to be drawn is that paragraph of Article 14 ('death duties', Netherlands succession duty must be 'droits de succession'). applied to Community survivors' The answer to the third question is pensions, since the Protocol on the accordingly negative, the capital value of Privileges and Immunities does not the pension being, in any case, exempt exclude it. It would not be right to take from succession duty or not falling account of the statement by the Salaries, within its field of application.

admitted that the second paragraph of The Commission goes on to cite the Article 13 exempts pensions from Court's judgments of 8 February 1968 succession duty, the setting-off of (Case 32/67 Van Leeuwen v City of pensions against the exemption of Fl. Rotterdam, Rec. 1968, p. 70) and 25 250 000 falls within the fiscal domain February 1969 (Case 23/68 Klomp v reserved for the national legislature Inspektie der Belastingen, Rec. 1969, p. under the terms of Article 14 of the 49), where it was said that the Protocol on the Privileges and expression 'national taxes on salaries, Immunities. wages and emoluments paid by the Communites' covered national taxes on salary 'in whatever form and under C — Observations of the Commission .whatever description they are levied'. In conformity with these judgments, death The Commission proposes an affirmative duties, being a charge intended to answer to the first question. It relies provide for the general expenses of the upon the provisions of Article 2 of public authorities, form part of the national taxes from payment of which Regulation No 549/69 and of Article 2 the survivor's pension is exempted. of Regulation No 260/68 of the Council dated 29 February 1968 (OJ L 56 of 4 The Commission accordingly proposes March 1968, p. 8) laying down the an affirmative answer to the second conditions and procedure for applying question. the tax for the benefit of the European Taking the third and fourth questions Communities, under which persons together, the Commission believes that receiving disability, retirement or they form one whole, raising the survivors' pensions paid by the question whether the capital value of the Communities are subject to the Community survivor's pension should be Community tax. taken into account either for inclusion in The Commission holds that the the total taxable estate, or for deduction exemption granted under the second from the surviving spouse's exemption paragraph of Article 13 applies equally from succession duty. to death duties. This appears firstly from The Commission believes that the the general term 'national taxes' used in present dispute is comparable to Case the said Article, where there is nothing 6/60, in which the Court ruled that 'the to justify a restrictive interpretation. The Protocol on the Privileges and Commission then refers to the Court's Immunities of the European Coal and judgment of 16 December 1960 (Case Steel Community precludes the Member 6/60 Humblet v Belgian State, Rec. 1960, States from making any tax assessment p. 1153) where it was held that the On a Community official either wholly expression 'shall be exempt from all or partly based on the receipt of salary taxes on salaries' employed in Article 11 paid by the Community to that official'. (b) of the Protocol on the Privileges and The Court goes on to specify that Immunities of the ECSC indicated 'taking the said salary into account in

establishing the rate of tax applicable to assess the duty payable on the other an official's other income is similarly elements in the estate. forbidden by the Protocol'. In the Commission's view, the exemption The Commission accordingly proposes an affirmative answer to the third and provided for by the second paragraph of fourth questions. Article 13, accorded, like the other privileges and immunities, under the terms of Article 18 of the Protocol, solely in the interests of the D — Observations of the Council Communities, rests on two principles. Firstly, the Communities have an interest The Council, which examined the first in the exemption because otherwise they question only, proposes that it be could not fix the effective salary of the answered in the affirmative. officials, a right deriving from Article 24 In this connexion, it refers firstly to the of the Treaty establishing a Single above-cited Article 2 (b) of Regulation Council and a Single Commission. No 549/69 of the Council of 25 March Secondly, the exemption from national 1969. The thesis that pensions are taxes is needed to ensure equality similarly covered by the exemption in between the salaries of officials of

principles. Regarding the first, to take The Council goes on to note that the into account the Community survivor's exemption provided for by the second pension would result in an indirect tax paragraph of Article 13 of the Protocol on this pension. The pension thus is the corollary of the liability to cannot be aggregated with the estate, because it would increase the rate of Community tax provided for by the first paragraph of Article 13. In this respect, succession duty. A set-off against the Fl. 250 000 exemption would similarly the assimilation, from the fiscal point of view, of the survivor's pension to the result in increasing the taxable portion of the estate which would then be other Community emoluments such as retirement and invalidity pensions is subject to a higher rate of duty. clearly formulated in Article 2 of As regards the second principle, the Regulation No 260/68 of the Council of inclusion of the Community survivor's 29 February 1968 (OJ L 56 of 4 March pension for the assessment of national 1968, p. 8). succession duty clearly encails disparity of treatment for officials of different A negative answer by the Court to the first question would not only entail the nationalities, because of the existence of partial annulment of Regulation No different systems of levying succession 549/69 but would also run counter to

BROUERIUS VAN NIDEK v INSPECTEUR DER REGISTRATIE

official himself, but equally to the In the course of the oral procedure, on 8 various social security benefits stemming May 1974, Reiniera Charlotte Brouerius from his position. This principle is only van Nidek, represented by S. van den valid for benefits and emoluments Bergh of the Amsterdam Bar, the stemming from the official position, Inspecteur der Registratie en Successie, which explains why Article 14 makes represented by A.W. B. M. Hendriks, other income subject to the legislation of the Commission, represented by its agent the last domicile for tax purposes. The Jürgen Utermann and the Council, survivor's pension, since it derives from represented by its agent Gijs Peeters, made oral observations. the official position, enjoys exemption under the second paragraph of Article The Advocate-General delivered his 13. opinion on 11 June 1974.

Law

1 By judgment dated 30 January 1974 the Gerechtshof te 's-Gravenhage referred to the Court four questions relating to the interpretation of the second paragraph of Article 13 of the Protocol on the Privileges and Immunities of the European Communities annexed to the Treaty establishing a Single Council and a Single Commission of the European Communities (hereinafter called 'the Protocol').

2 Under this provision, officials and other servants of the Communities 'shall be exempt from national taxes on salaries, wages and emoluments paid by the Communities'.

3 The questions have been referred in order to ascertain whether, and if so to what extent, that provision must be considered in applying the Netherlands law on succession duty (Successiewet) to the survivor's pension enjoyed by the widow of an official of the European Communities.

9 The second question asks whether death duties are in principle included among the national taxes from which the survivor's pension is exempt under the second paragraph of Article 13.

10 This second paragraph cannot be read in isolation from the first, which provides that, in accordance with the conditions and procedure laid down by the Council, officials and other servants of the Communities shall be liable to a tax for the benefit of the Communities on salaries, wages and emoluments paid to them by the Communities.

11 It is as a result of this liability that the second paragraph exempts salaries, wages and emoluments from national taxes, so that the Article taken as a whole ensures a uniform treatment of the said salaries, wages and emoluments for all the officials and servants of the Communities, preventing, firstly and chiefly, their effective remuneration from differing according to their national­ ity or fiscal domicile as a result of the assessment of different national taxes, and secondly preventing this remuneration from being inordinately taxed as a result of double liability.

BROUERIUS VAN NIDEK v INSPECTEUR DER REGISTRATIE

12 The exemption provided by the second paragraph of Article 13 therefore only covers national taxes of a similar nature to those levied by the Community on the same sources of, income.

13 The Community tax is a periodic tax on income whereas death duties are levied once only on an estate at the time of. transmission.

THE COURT

in answer to the questions referred to it by the Gerechtshof te 's-Gravenhage by judgment of that court dated 30 January 1974 hereby rules:

OPINION OF MR REISCHL — CASE 7/74

1. The second paragraph of Article 13 of the Protocol on the Privileges and Immunities of the European Communities applies to the survivor's pension granted to the widow of an official or other servant under the Staff Regulations of Officials and Other Servants of the Communities.

2. Death duties, in so far as no discrimination is made between persons entitled under officials or servants of the Communities and other taxpayers, do not constitute 'national taxes on salaries, wages and emoluments paid by the Communities' mentioned in the second paragraph of Article 13 of the Protocol on the Privileges and Immunities.

Lecourt Donner Sørensen Monaco Mertens de Wilmars

Mr President, Mr Eduard Rudolph von Geldern, Members of the Court, Director-General in the General Secretariat of the Council of Ministers, By an order dated 30 January 1974 the died in December 1971, resident in Gerechtshof of The Hague has referred a Belgium. He left a widow and three series of questions on the interpretation children. Under his will his estate was of Article 13 of the Protocol on the divided equally between his three Privileges and Immunities of the children, subject to the widow's life European Communities dated 8 April interest in the net estate. Besides this the 1965. widow was entitled to a life assurance, a These questions relate to the following pension resulting from a pension scheme facts. of a former private employer of the

1 — Translated from the German.