Berlin under fire over tax law

Germany must abolish taxes levied on the property or stock options of former residents, the European Commission said on Monday.

If Berlin fails to heed the Brussels warning it could face action in the European Court of Justice.

Currently anyone who has paid German tax for ten years and who has held a more than a one per cent holding in a German company in the last five years must pay income tax on unrealised capital gains such as a house or an investment fund if they leave Germany.
But German residents only have to pay tax if they realise their gains.

Under EU rules this law prevents the free movement of people within the EU and Germany has two months to scrap it.

If Berlin does not comply Brussels could put the case to the European Court of Justice which could ultimately result in daily fines.

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