Keywords
Summary

Keywords

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1. Freedom of movement for persons ° Employed persons ° Equal treatment ° Remuneration ° Income tax ° Income received within the territory of a Member State by a national of another Member State ° Power of the first State to lay down conditions for liability to tax and the manner in which tax is to be levied ° Limits

(EEC Treaty, Art. 48)

2. Freedom of movement for persons ° Employed persons ° Equal treatment ° Remuneration ° Income tax ° Non-resident working as an employed person in the territory of a Member State ° Heavier taxation than that imposed on residents ° Permissible ° Exception ° Non-resident who obtains the major part of his income from the work in respect of which he is taxed

(EEC Treaty, Art. 48)

3. Freedom of movement for persons ° Employed persons ° Equal treatment ° Remuneration ° Income tax ° National rules under which the benefit of procedures for the annual adjustment of deductions at source is conditional upon residence ° Not permissible

(EEC Treaty, Art. 48)

Summary

1. Although direct taxation does not as such fall within the purview of the Community, the powers retained by the Member States must nevertheless be exercised consistently with Community law.

Accordingly, Article 48 of the Treaty must be interpreted as being capable of limiting the right of a Member State to lay down conditions concerning the liability to taxation of a national of another Member State and the manner in which tax is to be levied on the income received by him within its territory, since that article does not allow a Member State, as regards the collection of direct taxes, to treat a national of another Member State employed in the territory of the first State in the exercise of his right of freedom of movement less favourably than one of its own nationals in the same situation.

2. Although Article 48 of the Treaty does not in principle preclude the application of rules of a Member State under which a non-resident working as an employed person in that Member State is taxed more heavily on his income than a resident in the same employment, the position is different in a case where the non-resident receives no significant income in the State of his residence and obtains the major part of his taxable income from an activity performed in the State of employment, with the result that the State of his residence is not in a position to grant him the benefits resulting from the taking into account of his personal and family circumstances. There is no objective difference between the situations of such a non-resident and a resident engaged in comparable employment such as to justify different treatment as regards the taking into account for taxation purposes of the taxpayer' s personal and family circumstances.

It follows that Article 48 of the Treaty must be interpreted as precluding the application of rules of a Member State under which a worker who is a national of, and resides in, another Member State and is employed in the first State is taxed more heavily than a worker who resides in the first State and performs the same work there when the national of the second State obtains his income entirely or almost exclusively from the work performed in the first State and does not receive in the second State sufficient income to be subject to taxation there in a manner enabling his personal and family circumstances to be taken into account.

3. Article 48 of the Treaty must be interpreted as precluding legislation of a Member State on direct taxation under which the benefit of procedures such as annual adjustment of deductions at source in respect of wages tax and the assessment by the administration of the tax payable on remuneration from employment is available only to residents, thereby excluding natural persons who have no permanent residence or usual abode on its territory but receive income there from employment.