CJEU – Recent Developments in Direct Taxation 2015

I. S. 62Case C-479/14 (Hünnebeck)

A. Facts of the Case

The taxpayer, Mrs. Hünnebeck, lived together with her daughters in the United Kingdom. She transferred her share in the ownership of a plot of land situated in Germany to her daughters. This transfer was subject to the German gift tax. As non-residents, Mrs. Hünnebeck’s daughters were only entitled to a small exemption amount of EUR 2,000 each. Residents are entitled to an exemption of EUR 400,000 if they receive property from their parents. However, residents are subject to gift tax on the worldwide assets they receive within a period of ten years starting with the date the first asset is transferred while non-residents are only taxed on assets they receive which are situated in Germany and future transfers are not taking into account.

Mrs. Hünnebeck paid the gift tax for which she was jointly liable with her daughters. She could have opted for the regime as a resident and then benefitted from the high exemption amount for resident taxpayers. However, she did not exercise this option probably because she wanted to avoid worldwide gift and inheritance liability for a period of ten years. She argued that even as a non-resident she was e...