OS ECJ-TF 4/2017 on the Decision of the Court of Justice of the European Union of 9 February 2017 in X (Case C-283/15) ('Pro-Rata Personal Deductions'), Concerning Personal and Family Tax Benefits in Multi-State Situations
European Taxation, vol. 58, n. 4 (2018)
12 Pages Posted: 20 Aug 2020 Last revised: 17 Oct 2020
Date Written: February 22, 2018
This article deals with the decision taken by the Court of Justice of the European Union in X (Case C-283/15), on 9 February 2017. In general terms, the Court followed the Opinion of Advocate General Wathelet of 7 September 2016.
The case concerned tax legislation permitting the deduction of "negative income" relating to a dwelling. The issue was whether the fundamental freedoms must be interpreted as precluding a Member State from refusing the benefit of that deduction in respect of a self-employed non-resident in circumstances in which that person receives 60% of his total income within that Member State, and 40% within a non-Member State. Therefore, he does not receive income that enables him to qualify for an equivalent right to deduct within the Member State where his dwelling is located.
Having recognized that the freedom of establishment applies to the case, the First Chamber confirmed the right of that person to a deduction of "negative income" relating to his dwelling. Subsequently, it held that a self-employed person can claim an equivalent right of deduction in any Member State of activity within which that person receives income, in proportion to the share of that income received within each Member State of activity.
A "Member State of activity" is any Member State that has the power to tax such income from the activities of a non-resident as is received within its territory, irrespective of where the activities are actually performed.
Finally, the Court stated that the fact that the non-resident taxpayer concerned receives part of his taxable income within a third country rather than a Member State is not relevant.
Keywords: Taxation, Tax law, European taxation
JEL Classification: K33, K34, F13, E62, D78, E62, F02, F23, F42, H20, H22, H23, H25, H26, H87, O19, O23, O24
Suggested Citation: Suggested Citation