Case C-425/11

Katja Ettwein

v

Finanzamt Konstanz

(Request for a preliminary ruling from the Finanzgericht Baden-Württemberg)

‛Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons — Equal treatment — Self-employed frontier workers — Nationals of a Member State of the Union — Business income received in that Member State — Transfer of residence to Switzerland — Refusal of a tax advantage in that Member State because of the transfer of residence’

Summary — Judgment of the Court (Third Chamber), 28 February 2013

1. International agreements — EC-Switzerland Agreement on the free movement of persons — Scope — Self-employed frontier workers — Concept — Differences as against the concept of self-employed person

   (EC-Switzerland Agreement on the free movement of persons, Annex I, Arts 12(1) and 13(1))

2. International agreements — EC-Switzerland Agreement on the free movement of persons — Equal treatment — Tax advantages — Nationals of a Member State receiving all their taxable income there but resident in Swiss territory — Legislation of the Member State of taxation refusing those nationals a tax advantage on the sole ground of their residence in Switzerland — Not permissible

   (EC-Switzerland Agreement on the free movement of persons, Art. 1(a) and Annex I, Arts 9(2), 13(1) and 15(2))

1.  See the text of the decision.

   (see paras 33-40)

2.  Article 1(a) of the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons and Articles 9(2), 13(1) and 15(2) of Annex I to that Agreement must be interpreted as precluding legislation of a Member State which refuses the benefit of joint taxation with the use of the ‘splitting’ method, provided for by that legislation, to spouses who are nationals of that State and subject to income tax in that State on their entire taxable income, on the sole ground that their residence is situated in the territory of the Swiss Confederation.

   A self-employed frontier worker enjoys, in the host Member State, the same tax advantages as self-employed persons pursuing their activity in that country and residing there.

   The taxpayer’s personal ability to pay tax, as a result of taking into account all his income and his personal and family circumstances, can indeed be assessed most easily in his State of residence, in which the major part of his income will normally be concentrated, and from that point of view the situations of residents and non-residents are as a general rule not comparable.

   However, the position is different in a case in which the non-resident receives no significant income in his State of residence and obtains the major part of his taxable income from an activity pursued in another State, with the result that the State of residence is not in a position to grant him the advantages resulting from the taking into account of his personal and family circumstances. In that case, a non-resident taxpayer, whether employed or self-employed, who receives all or almost all of his income in the State in which he pursues his business activity is objectively in the same situation, as regards income tax, as a resident of that State who pursues comparable activities there. Those two categories of taxpayers are, in particular, in comparable situations with regard to the taking into account of their personal and family circumstances. Such taking into account is not possible in the State of residence of frontier workers where they do not receive income there.

   (see paras 43, 46, 47, 52, operative part)