in Germany it is absolutely illegal to give any kind of instruction without having an FI rating! And you better not fly in the right seat with a guest in the left or you'll lose all insurance coverage (assuming here a "standard" SEP, there are exceptions to seating like with helicopters). AND, the instruction must be in a registered school, except by transition training.
You can also receive payment in Germany for instructing any time! Many clubs reinburse their instructors perfectly legally... without a CPL. But you do have to report earnings for taxes, but that's a different story.
So, the story is here...
1) instruction ONLY with FI rating!
2) payment permissable with JAA-PPL FI or CAA-PPL FI
3) FI's are always PIC when flying as an instructor, i.e. required training flights, etc. Flying just along for the ride then usually not.
So, that's the way it is here... so I guess this is another area where there is NO European harmony!
Westy