ECJ: Tax advice to residents by foreign consultants

In its ruling of 17.12.2015 (Case C-342/14), the European Court of Justice (ECJ) ruled that foreign tax consulting companies are authorised to provide tax advice in Germany. According to the Advocate General’s opinion to the ECJ, this requires “the recognition of the company and the appointment of its management bodies as tax advisors” (StB) – and only in other EU countries. It is not decisive whether there are possibly no regulations abroad, i.e. no special tax advisor examination or admission procedure.


In the present case, a person acting for the British StB company had lost his StB licence in Germany. For example, you can also open an office in Switzerland as a chartered accountant, tax advisor or auditor without an examination and licence. The normal citizen in Switzerland receives tax advice free of charge from the tax office – in the Netherlands, when moving to Switzerland, a house call is made by a tax official as a citizen service.


No consistent consumer protection through German tax consulting law (StBerG)

The Advocate General refers to the numerous persons who are allowed to act as tax advisors and representatives under § 4 StBerG – without a StB examination. For example, the intermediary of contracts under the Housing Construction Premium Act may assist in filling out the premium application, § 4 No.12 StBerG. The case before the ECJ concerned a British corporation as a StB, with branches in Belgium and the Netherlands, which operates for tax purposes for German clients without crossing the border.

The StB company successfully challenged a violation of the freedom to provide services under Article 56 of the Treaty on the Functioning of the EU (TFEU). Until then, the Federal Fiscal Court interpreted § 3a StBerG in such a way that foreign StBs are only authorised to provide temporary services if they enter the country to do so. In this case, however, registration in the country is required, and for this purpose, proof of liability insurance, among other things.


National discrimination through EU law

Previously, the Federal Court of Justice (BGH, judgement by default of 26 January 2006, file no. IX ZR 225/04) had determined that the partnership of a foreign StB with a domestic StB does not create a power of the foreigner to provide tax advice in Germany. If only one StB of the partnership is without a domestic license, the contract with such a law firm is null and void, § 5 StBerG, § 134 BGB. The BGH had left open how the case would be decided if it were a supra-local partnership – consisting of law firms in different countries.

Already in its judgement of 11.12.2003 (Case C-215/01), the ECJ allowed longer and more frequent activities of craftsmen without a master craftsman’s title with regard to the EU freedom to provide services and freedom of establishment. Foreigners do not have to pay a minimum wage either. Even the tendering of public contracts with minimum wage requirements violates EU law (judgement of 18.09.2004, ref. C-549/13).

The Federal Court of Justice had also rejected the settlement of debts from abroad (Federal Court of Justice, ruling of 5 October 2006, file no. I ZR 7/04): A Dutchman had not been admitted under Sections 305 et seq. InsO. This is in line with the line taken by the ECJ, which, in its judgement of 12 December 1996 (Case C-3/95), considered the German ban on judicial collection of receivables under the Legal Advice Act – even in the case of foreign companies – to be in conformity with EU law.


Financial services including tax advice from one source?

Employees have always been allowed to provide their employer with tax and legal advice. If an insurance broker or other financial service provider is employed on a temporary or short-term basis, he may, for example, draw up pension schemes in the occupational pension scheme or prepare the entrepreneurial will – without any StB examination or state examination. Even 2000 years ago, wage labourers in the vineyard were sometimes only hired in the late afternoon – paying them the full daily wage was rather unusual.

The ECJ shows financial service providers the way to transfer their registered office to a more liberal foreign country in order to offer various bundled services from a single source from there. Then – the forbidden claims settlement (BGH, judgement of 14.01.2016, Az. I ZR 107/14), the forbidden activity as a tariff change broker (LG Saarbrücken, judgement of 17.05.2016, Az. 14 O 152/15) as well as the not permitted collection of premiums and refunds (§§ 4, 5, 10 RDG, § 134 BGB), including the tax consultation forbidden with us – could be legal abroad, because not regulated, thus everyone is allowed.

Then, in addition to an online portal for mediation by a robot, it would be an option to also offer advice from abroad.


Avoiding discrimination against nationals

A restriction of professional activity in Germany for EU foreigners in the free movement of services is only permissible if it can be justified by considerations of the general interest. This is not the case, for example, with the separation of health and other non-life insurance lines, nor with the limitation of the maximum actuarial interest rate in life insurance. Therefore, foreign health insurers in Germany may also offer other non-life insurance policies and EU life insurers may offer more than the maximum actuarial interest rate according to the Insurance Supervision Act (VAG).

State regulation of gambling and sports betting also does not apply to providers who are already allowed to operate in other EU countries. The reasoning that this is necessary to combat gambling addiction for reasons of public interest is not convincing in the EU, because this objective is not pursued efficiently at all in Germany. Discrimination against German nationals is very often defended or even demanded by those affected – for example, in the case of the maximum actuarial interest rate in life insurance by the German Insurance Association and the Association of Actuaries, as well as in the case of restrictions on commissions in health insurance and the ban on commission payments.

If this were based on considerations of the general interest, the legislator would regulate this in the Insurance Contract Act instead of in the ISA only for insurers domiciled in Germany and thus make it binding for all insurance contracts concluded in Germany. However, it cannot do so under EU law because no general interest can be stated at all – thus the legislator shows its intention to discriminate against nationals. The same applies to the limitation of maximum indemnity and of acquisition costs, which also do not apply to EU cross-border insurers in Germany.

In this respect, from an EU point of view, all these cases merely constitute discrimination against nationals which is not recognised in the EU. There is therefore every reason to see such discrimination for what it is – and, where possible, to avoid it by relocating to other EU countries.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm


by courtesy of (published on 26.08.2016)




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Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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