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Welte v Finanzamt Velbert

In Welte v Finanzamt Velbert (C-181/12) a property situated in Germany was part of the estate of a Swiss national. Her widower also a Swiss national had been assessed to German inheritance tax without the benefit of the €500 000 tax-free allowance which would have been available had he or the deceased been resident in Germany.

Mr Welte appealed the assessment on the ground that the relevant provision of German law was in breach of the principle of freedom of movement of capital (article 56 of the TFEU) and the case was referred to the CJEU for a preliminary ruling.

The CJEU noted that legislation which reduces the value of an inheritance can be in breach of article 56.

The issue was therefore whether German residents and non-residents were in ‘objectively different situations.’ The German government submitted that a German resident would have been taxed in Germany...

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