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Parliamentary questions
28 November 2007
Answer given by Mr Figel' on behalf of the Commission

The Honourable Member is referring to the European Court of Justice (ECJ) rulings in cases C‑76/05 and C‑318/05. The cases concern income tax legislation and tax deductibility limited to school fees paid to national private establishments.

In particular, in Germany school fees for attending a private school are covered by tax allowances for dependent children. German legislation limits the tax deductibility of school fees to those arising from attendance at certain German private schools and leads to a more favourable tax position for the taxpayers concerned. The national legislation at issue does not provide for tax relief when the school attended is a private school situated in another Member States (MS). The ECJ examined whether courses provided by a private school established in another MS constitute services normally provided for remuneration, within the meaning of Article 50 of the EC Treaty. It ruled that by generally excluding school fees for attending a school situated in another MS from the tax deduction for special expenses under the German law on income tax, Germany has failed to fulfil its obligations under Articles 18, 39, 43, 49 of the EC Treaty.

The Commission wishes to draw the attention of the Honourable Member to the distinction between education offered by private and by public institutions. The ECJ excludes from the concept of services within Article 50 of the EC Treaty courses provided by establishments forming part of a system of public education and financed entirely or mainly by private funds (cases Humbel and Edel, C‑263/86 and Wirth, C‑109/92), because the Member State does not become involved in gainful activities and activities for remuneration, which is the essential characteristic of services. By contrast, courses provided by establishments financed essentially by private funds constitute services within the meaning of Article 50 of the EC Treaty. In cases C‑76/05 and C‑318/05, to which the Honourable Member refers, the ECJ found that the German legislation, which concerns private schools, constitutes an obstacle to the freedom to provide services. The Treaty precludes the application of national rules which have the effect of making the provision of services between MS more difficult than the provision of services purely within a MS.

The Honourable Member refers to the payment of maintenance grants to Maltese students studying in other EU countries. The case law to which the Honourable Member refers is therefore not relevant to the issue under examination. The Commission wishes to inform the Honourable Member that the ECJ issued a ruling on 23 October 2007 in joint cases C‑11 and C‑12/06 which refers directly to the issue raised. In this case the ECJ stated that where a MS provides for a system of education or training grants which enables students to receive such grants if they pursue studies in another MS, it must ensure that the detailed rules of the award of those grants do not create an unjustified restriction on freedom of movement. The ruling does not impose on Member State the obligation to introduce grants which enable the student to pursue his/her studies in another Member State. This decision falls entirely within national competence because it is part of the organisation of the education system for which the Member States are entirely responsible, according to Article 149 of the EC Treaty. Therefore, in conformity with Article 149 of the EC Treaty and the relevant jurisprudence of the ECJ, it is entirely a matter for the Member State concerned, in the present case Malta, to decide whether to introduce or not portable grants for Maltese students wishing to pursue their studies in another Member State. However, should Malta decide to introduce such a system, it must ensure that the detailed rules for the award of the grants do not create unjustified restrictions on freedom of movement.

OJ C 191, 29/07/2008
Last updated: 15 January 2008Legal notice