Oppenheimer v Cattermole (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 05 February 1975 |
| Date | 05 February 1975 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)-
COURT OF APPEAL-
HOUSE OF LORDS-
Income tax, Schedule D - Foreign possessions - Double taxation relief - German government pension for past services - Paid to British subject of German origin - Whether German nationality deemed to be retained - Double Taxation Relief (Taxes on Income) (Federal Republic of Germany) Order 1955 (S.I. 1955 No. 1203), Sch., arts. II(3), IX(1) and XXI(3); Double Taxation Relief (Taxes on Income) (Federal Republic of Germany) Order 1967 (S.I. 1967 No. 25), Sch., arts. II(3), IX(2) and XXIII(3).
The Appellant in the first case was a German subject by birth. Having been persecuted as a Jew by the National Socialist regime, he emigrated in April 1939 to England, where he had since resided. In 1948 he was naturalised as a British subject. From 1953 onwards he was in receipt of pensions paid out of the public revenue of the Federal Republic of Germany in respect of his work in Germany prior to emigration. The double taxation conventions between the United Kingdom and Germany provided that such pensions should be exempt from United Kingdom tax unless paid to a national of the United Kingdom who was not also a German national. It was common ground that under the conventions the meaning of "German national" fell to be determined according to English law.
The only facts found as regards German municipal law for the purposes of the proceedings below the House of Lords were as follows. A German decree of 1941 provided that Jews of German nationality who were then resident abroad should lose that nationality. In 1968 the Federal German Constitutional Court decided that the decree of 1941 was absolutely void ab initio (it was initially found that the decision had no retrospective effect, but on the remission mentioned below that finding was withdrawn). Under a German law of 1913, which was in force at all material times, a German who was neither domiciled nor ordinarily resident in Germany lost his German nationality if, without first obtaining permission to retain it, he had acquired another nationality.
The Appellant was assessed to income tax under Case V of Schedule D for the years 1953-54 to 1967-68 in respect of his German pensions. On appeal, he contended that they were exempt under the double taxation conventions on the ground that English law did not recognise the 1941 decree, either (a) as being
foreign legislation changing the national status of an enemy alien in wartime or (b) because it was penal and confiscatory in character, and accordingly in English law he remained a German national after 1941. For the Crown it was contended (inter alia) that under English law the question whether an individual was a national of a foreign state fell to be determined by reference to the municipal law of that state, and even if the Appellant remained a German national after 1941 he ceased to be so, under the law of 1913, on acquiring British nationality in 1948. The Special Commissioners held that under German law, and also under English law, the Appellant was not a German national after 1948 at latestThe facts in the second case were similar to those in the first case. On appeal, the Appellant contended that she had not ceased to possess German nationality, and, alternatively, (a) that the payments were in the nature of capital compensation for loss of her career; (b) that they were specifically exempted from German tax and so exempt under s. 22, Finance Act 1961, from United Kingdom tax. The Special Commissioners dismissed the appeal.
In the High Court and above the Appellant maintained her original contentions except that she conceded that the payments were not specifically exempted from German tax; she contended that they were indistinguishable from analogous payments which were so exempted, and, as further alternatives, that the payments did not arise from foreign possessions, or were exempt from United Kingdom tax as ex gratia payments.
The House of Lords remitted the first case to the Special Commissioners for further evidence and findings on the German law. The Commissioners then recited a provision of the Basic Law of the Federal Republic, enacted in 1949, whereunder former German citizens who had been deprived of their nationality between 30th January 1933 and 8th May 1945 for political, racial or religious reasons were entitled to be renaturalised on application, and were to be treated as not having been so deprived if they took up residence in Germany after 8th May 1945 and expressed no wish to the contrary. The Commissioners also recited the decision of the Constitutional Court in 1968 above mentioned, whereunder the 1941 decree was declared to have been absolutely void ab initio, so that a German Jewish refugee who died on or before 8th May 1945 was held never to have lost his German nationality, and a decision of the same Court in 1958 whereunder a German Jewish refugee who had been naturalised abroad in 1946 and later resumed residence in Germany was held to be a German national under the Basic Law, on the ground that in 1946 he could not rely on his German nationality. The Commissioners concluded (a) that, while the Appellant was not deprived of his German citizenship by the decree of 1941, the effect of that decree and the Basic Law was that he was not regarded by German law as having German nationality at the material times since he had neither applied for it nor resumed residence in Germany; (b) that, if and so far as he was a German national up to the time of his naturalisation as a British subject in 1948, he then lost that nationality under the law of 1913, although he could have regained it in the manner provided by the Basic Law.
Held, (1) that English law refers the question whether a person is a national of another state to the municipal law of that state (although, per Lords Hodson, Cross of Chelsea and Salmon, the decree of 1941 by itself constituted so grave an infringement of human rights that it should not be regarded as a law at all);
(2) that, irrespective of the effect of the law of 1913, the Appellants must be regarded as having lost their German nationality under the Basic Law of 1949 since they had not taken the appropriate steps to assert it under that law;
(3) that the second Appellant's remaining contentions failed.
Oppenheimer v. Cattermole (H.M. Inspector of Taxes)
CASE
Stated under the Taxes Management Act 1970, s. 56, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the High Court of Justice.
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 19th January 1970 Meier Oppenheimer (hereinafter called "the Appellant") appealed against assessments to income tax in the sum of £800 for each of the years 1953-54 to 1967-68 inclusive.
2. Shortly stated, the question for our decision was whether certain pension payments received by the Appellant from German public funds qualified for exemption from income tax under the terms of the Double Taxation Relief Conventions made between the United Kingdom and the Federal Republic of Germany.
3. We heard evidence from Dr. Ernst Josef Cohn, a Doctor of Laws of the University of Breslau, formerly Professor of Law at the said University, and an Honorary Professor of Laws in the University of Frankfurt-am-Main.
4. The following documents were proved or admitted before us:
(2) Copy of the Appellant's certificate of naturalisation as a British subject, dated 24th May 1948, and of his oath of allegiance, dated 4th June 1948.
(3) Copies of correspondence in German (with English translation in some cases) between the Appellant and authorities of the Government of the Federal Republic of Germany.
(4) Text, with English translation, of part of a decree of 25th November 1941 of the National Socialist Government of Germany, and summary (in English) of the provisions of the said decree. An agreed translation of the relevant portions of the said decree is annexed hereto, marked "A", and forms part of this Case(1).
(5) Text, with English translation, of section 25 of the German Nationality Law of 22nd July 1913. An agreed translation of the relevant portion of the said law is annexed hereto, marked "B", and forms part of this Case(1).
Copies of such of the above as are not annexed hereto as exhibits are available for inspection by the Court if required.
5. As a result of the evidence, both oral and documentary, adduced before us we find the following facts proved or admitted:
(2) The Appellant was born in Germany in 1896. From 1919 to 1938 he was a teacher at a Jewish orphanage at Fürth, Bavaria. On his release in December 1938 from a period of detention in the concentration camp at Dachau he resumed teaching until, in April 1939, he emigrated to England, where he has since resided. He became a naturalised British subject in 1948. The certificate of naturalisation issued to the Appellant shows in the particulars relating to him "Nationality-German".
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(3) In 1953 the Appellant was notified by the German Federal Department for Compensation to Employees of Jewish Religious Communities that he had been awarded a pension (the "first pension") with effect from 1st October 1952.
In April 1961 he attained the age of 65, and was awarded a pension (the "second pension") under the provisions of section 25(1) of the "Angestelltenversicherungsgesetz in der Fassung vom 23.2.1957" ("A.V.G.") with effect from 1st April 1961, from which date the first pension was abated by 87.8 per cent. The provisions of section 25(1) of the A.V.G. provide: "An insured person who has reached the age of 65 shall receive a retirement pension, on condition that the qualifying period has been completed." Both the first pension and the second pension were payable out of public funds of the Federal Republic of Germany. -
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