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Business, Economy, Euro
Taxation and Customs Union

Direct tax cross-border problems affecting citizens

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There is no EU law that states how people moving from one country to another within the EU should be taxed.

For example, the rules about taxation on pensions differ between Member States. These differences can create problems for people who have worked in one Member State but retired in another, in some cases leading to pensioners being taxed twice on their income.

The application by Member States of their taxing rules in parallel is not in itself contrary to EU law even if this leads to double taxation. However, Member States' taxing rights should not conflict with EU law by, for example, discriminating on the basis of nationality or introducing unjustified restrictions to the exercise of the EU Treaty freedoms.

To explore how taxation and double taxation issues can be addressed, the Commission has published a Communication concerning cross-border tax obstacles for individuals. Some issues that cause problems for individuals are mentioned there.

Suggestions to national tax administrations

In this Communication, The Commission listed some suggestions made by stakeholders about how cross-border tax problems could be tackled. These included:

  • Setting up central one-stop-shops in tax administrations where cross border workers and investors could seek reliable tax information, as well as directly pay taxes and receive all tax certificates necessary for claiming relief;
  • Promoting better interaction between the different pension taxation regimes;
  • Translating information into other EU official languages and making greater use of IT;
  • Encouraging Member States to adopt special rules for frontier workers and cross-border workers that take account of the interaction of tax and social security systems in different Member States.

The European Commission’s own actions

The Commission for its part

  • Proposes to pursue complaints actively and ensure greater availability of information for citizens on the results of complaints about EU countries’ tax laws and infringement cases in the tax field;
  • Proposes to provide easier access to the Commission's Europe Direct and Your Europecitizens' advice services, and ensure that these services can better deal with tax related questions and that citizens can more directly get help and advice;
  • Has proposed solutions concerning the cross-border problems for EU citizens in the fields of passenger car taxation in a Communication of 2012 and concerning online purchases of goods and services (see Communication of 2011);
  • Is currently assessing the state of play regarding the tax obstacles facing individuals who are active across borders within the EU and may come up with more concrete proposals for solutions when it has completed its examination;
  • Is also currently examining possible solutions to double taxation problems that are not currently resolved by bilateral tax treaties. The Commission identified possible solutions to double taxation in a Communication in 2011, including a Member States’ Forum, a code of conduct or a binding arbitration mechanism which it is currently researching in detail. Furthermore, the Commission adopted a Recommendation addressed to Member States on how to eliminate double taxation of inheritances in 2011.