Skip to main content
Λογότυπος της Ευρωπαϊκής Επιτροπής
Taxation and Customs Union

EU individuals rights under EU law

The application by EU countries of their taxing rules in parallel is not in itself contrary to EU law even if this leads to double taxation. However, EU countries are required to provide “equal treatment” to all EU citizens in tax matters. In other words, EU countries’ 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.

The fundamental Treaty "freedoms" consist of the free movement of people, goods and capital and the freedom to provide services. An “unjustified” restriction is a condition or prohibition imposed by the tax law of the EU country which cannot be justified by serious public interest considerations such as preventing tax fraud or keeping tax system consistent.

The Court of Justice of the EU has in many cases ruled that elements of EU countries’ tax laws contravened EU law. Examples of the effect of these judgments are set out below:

Where you believe that your rights have been infringed, you should follow the procedure.

If the EU country does not change its law, the European Commission, as guardian of the Treaties, may launch legal proceedings against the country that could end at the Court of Justice.

But note that any action taken by the Commission against an EU country may not have an automatic or immediate impact on your individual rights as a complainant. A court judgment merely obliges the EU country to amend its law in line with EU law and may prevent unequal treatment in the future but will not necessarily resolve cases such as yours that have already occurred. Please be advised, therefore, that even if you decide to file a complaint with the Commission you should in parallel start or continue to pursue your case with national authorities or courts.

Examples of effect of Court judgments

Discrimination regarding the freedom of movement of cross-frontier workers:

Where an EU citizen who lives in one EU country earns all or almost all of his income in another EU country and receives no significant income in the country of his residence, the country where he or she works should treat him/her as it would treat a resident taxpayer for tax purposes. This means that it should give him/her the same tax reliefs, tax exemptions and allowance as it would give to a resident. This follows from the Court of Justice's decision in the Schumacker case (C-279/93). The justification for this rule is that citizens who earn all or nearly all of their income in another EU country would be subject to much higher taxation than a resident of that other country if he did not get tax allowances and reliefs there. As little or no tax would be owed by such a person in his country of residence, there would be no benefit to him from getting personal allowances in his country of residence to offset against this very high taxation.

This principle was further developed in the Gschwind case (C-391/97), where a Dutch resident earned 58% of the household's aggregated income in Germany; his wife earned the other 42% in the Netherlands. As a married man, he claimed the benefit of joint tax assessment in Germany in respect of his income from Germany. The German law at that time allowed such a joint assessment under certain conditions; among others 90% of the household income had to be earned in Germany. The Court decided that German rules do not discriminate against frontier workers. Therefore a conclusion could be drawn from the Gschwind case coupled with the Schumacker case that non-residents obtaining 90% or more of their total income in the state of employment should normally be entitled to the same tax treatment as residents but this would not necessarily be the case if they earn as little as 58% of household income in another state.

Discrimination against students and pensioners: Students or pensioners earning all or almost all of their income in an EU country in which they are not resident should be treated for tax purposes by that country as if they were residents of that country and get the same deductions and allowances as residents of that country. Hence, pensioners earning all or almost all of their income in a country in which they are not resident should be treated for tax purposes by that country as if they were residents of that country and get the same deductions and allowances as residents of that country. This conclusion is supported by the judgment of the Court of Justice in the case C-520/04 Turpeinen. The Schumacker principle has been further confirmed and explained in later judgments such as Wallentin C-169/03 concerning a student earning all his income outside his EU country of residence.

Unjustified restrictions on the freedom of movement of capital of persons receiving dividends: An EU country cannot impose higher taxation on dividends which are paid by a resident company to a person resident in another EU country ("outbound dividends") than it imposes on dividends paid by a resident company to a person resident in that country ("domestic dividends"). This rule prevails unless the other EU country where the recipient of the "outbound dividends" is resident compensates for the higher taxation imposed in the first country. Similarly, an EU country cannot tax dividends coming from another EU country ("inbound dividends") at a higher rate than domestic dividends.

Unjustified restrictions on free movement of persons selling houses and discrimination of persons and buying houses: Some EU countries allowed exemptions from capital gains tax on the sale of properties in those countries if the vendors buy replacement properties in those countries. However, they did not allow the exemptions if the vendors bought the replacement properties in other EU countries. This was an obstacle to the right to move and reside freely within the EU. Most of the EU countries in question have now changed their law.

Similarly, some EU countries allowed tax incentives for the acquisition or construction of owner-occupied dwellings only if the dwellings were located in those countries. The Court declared the practices discriminatory.

For more information on individuals' rights and further examples read the Commission working paper on removing cross-border tax obstacles to EU citizens.

Frequently Asked Questions

National Tax Authorities web site

Double tax Treaties concluded by EU countries