CJEU – Recent Developments in Direct Taxation 2015

I. S. 108Introduction

On 19 June 2015, Luxembourg’s Tribunal administratif, the court of first instance for tax matters (hereinafter, the domestic court), lodged a request for a preliminary ruling with the Court of Justice of the European Union (hereinafter, the CJEU) concerning the compatibility of Luxembourg’s general tax credit for pensioners with the Free Movement of Workers. The domestic tax credit provision does not explicitly address cross-border cases; rather, it simply provides that to be eligible to receive the EUR 300 tax credit for pension income, the taxpayer’s pension income must be subject to tax in Luxembourg and the taxpayer must hold a fiche de retenue d’impôt (a withholding tax card). A taxpayer receiving only foreign pension income will not be able to provide the Luxembourg tax authority with such a withholding tax card, so that such a taxpayer will not be able to claim the tax credit. The domestic court seeks guidance from the CJEU as to the compatibility of this provision with EU Law.

The CJEU is expected to find the domestic tax provision incompatible with the free movement of workers, rejecting the Luxembourg government’s defence that the purported disadvantage the ...