CJEU – Recent Developments in Direct Taxation 2017

1. S. 188Introduction

In the context of the taxation of income from cross-border employment, the CJEU has repeatedly ruled that, from the perspective of the state of employment, the situations of resident and non-resident taxpayers are, generally not comparable. However, as far as allowances relating to personal and family circumstances that seek to take the taxpayer’s ability to pay tax into account are concerned, there is one specific exception to this rule. It follows from the Schumacker decision from 1995, that comparability does exist where a non-resident taxpayer receives no significant income in his state of residence and obtains the major part of his taxable income from an activity performed in the source state, with the result that the state of residence is not in a position to grant him the benefits that would have resulted from the taking into account of his personal and family circumstances. Under these circumstances, a non-resident taxpayer is objectively comparable to a resident taxpayer, at least insofar as his ability to pay tax is concerned, and should be granted equal treatment under the free movement of persons as guaranteed by Article 45 of the Treaty on the Functionin...