Opinion of the Advocate General — ECLI:EU:C:2024:583
Date: 2024-07-04
Language of the case: Croatian
Procedure: Reference for a preliminary ruling
Origin: Croatia

Summary C-277/23–1 
Case C-277/23 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
28 April 2023 
Referring court:  
Ustavni sud Republike Hrvatske (Croatia) 
Date of the decision to refer:  
18 April 2023 
Appellant:  
E.P. 
Other party to the proceedings:  
Ministarstvo financija Republike Hrvatske, Samostalni sektor za 
drugostupanjski upravni postupak 
  
Subject matter of the main proceedings 
The constitutional complaint brought by the Croatian national, E.P., against, inter 
alia, the decision of the Porezna uprava Ministarstva financija Republike Hrvatske 
(Tax Administration of the Finance Ministry of the Republic of Croatia), in which 
that authority calculated her liability to pay income tax and the local income tax 
supplement for 2014 without recognising her right to a personal allowance for her 
dependent child, A.B, who, as a student, was exercising the right to move and 
reside freely in another Member State for the purpose of education and, in the 
academic year 2014/2015, received student mobility support from the Finnish 
university of Y via non-repayable Erasmus+ funds to stay in another Member 
State of the European Union (Finland) and study for a Master’s Degree, in excess 
of the maximum limit stipulated in Croatian law for the purposes of exercising the 
right to increase the annual basic personal income tax allowance for a dependent 
family member. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-277/23 
 
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Subject matter and legal basis of the request  
Request for interpretation of EU law pursuant to Article 267 of the Treaty on the 
Functioning of the European Union, seeking interpretation of Articles 18, 20 and 
21 and the second indent of Article 165(2) TFEU, as well as of Article 67 of 
Regulation (EC) No 883/2004 of the European Parliament and of the Council of 
29 April 2004 on the coordination of social security systems (OJ L 166, 
29.4.2002, p. 1) (‘Regulation No 883/2004’). 
Questions referred for a preliminary ruling 
I. Should Articles 18, 20, 21 and the second indent of Article 165(2) of the 
Treaty on the Functioning of the European Union (OJ 2016 C 202, p. 1) be 
interpreted as precluding legislation of a Member State under which a parent loses 
the right to increase the annual basic income tax allowance for a dependent child 
who, as a dependent student having exercised his or her right freely to move and 
reside in another Member State for the purpose of study, has availed himself or 
herself, on the basis of national implementing acts, of the measures provided for 
in Article 6(1)(a) of Regulation (EU) No 1288/2013 of the European Parliament 
and of the Council of 11 December 2013 establishing ‘Erasmus +’: the Union 
programme for education, training, youth and sport and repealing Decisions 
No 1719/2006/EC, No 1720/2006/EC and No 1298/2008/EC (OJ 2013 L 347, 
p. 50) for the purpose of facilitating mobility from a Member State with lower or 
middle average living costs to a Member State with higher average living costs, as 
determined according to the criteria of the European Commission set out in 
Article 18(7) of that regulation, when that child receives student mobility support 
which exceeds a certain fixed limit? 
II. Should Article 67 of Regulation (EC) No 883/2004 of the European 
Parliament and of the Council of 29 April 2004 on the coordination of social 
security systems (OJ 2002 L 166, p. 1) be interpreted as precluding legislation of a 
Member State under which a parent loses the right to increase the annual basic 
income tax allowance for a dependent student who, while studying in another 
Member State, availed himself or herself of the student mobility support provided 
for in Article 6(1)(a) of Regulation (EU) No 1288/2013 of the European 
Parliament and of the Council of 11 December 2013 establishing ‘Erasmus+’: the 
Union programme for education, training, youth and sport and repealing Decisions 
No 1719/2006/EC, No 1720/2006/EC and No 1298/2008/EC (OJ 2013 L 347/50)? 
Provisions of European Union law relied on  
Articles 6(e), 18, 20(2)(a), 21(1) and the second indent of Article 165(2) TFEU 
Articles 6(1)(a), 18(7), 27(12), 35 and 36(3) of Regulation (EU) No 1288/2013 of 
the European Parliament and of the Council of 11 December 2013 establishing 
‘Erasmus +’: the Union programme for education, training, youth and sport and 
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repealing Decisions No 1719/2006/EC, No 1720/2006/EC and No 1298/2008/EC 
(OJ 2013 L 347, p. 50) 
Articles 2(2), 3(1), 7(1)(c) and 24 of Directive 2004/38/EC of the European 
Parliament and of the Council of 29 April 2004 on the right of citizens of the 
Union and their family members to move and reside freely within the territory of 
the Member States amending Regulation (EEC) No 1612/68 and repealing 
Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 
75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ 2004 L 158, p. 77) 
Article 1(a) and (z) and Articles 2, 7 and 67 of Regulation No 883/2004 
Provisions of national law relied on  
Ustav Republike Hrvatske (Constitution of the Republic of Croatia) 
1 According to Article 14 of the Ustav Republike Hrvatske (Constitution of the 
Republic of Croatia) (Narodne novine, nos 56/90, 135/97, 8/98, 113/00, 124/00, 
28/01, 41/01, 55/01, 76/10, 85/10, 5/14; ‘the Constitution’), everyone in the 
Republic of Croatia enjoys rights and freedoms regardless of, inter alia: their 
social origin, their social position or any other attributes. Everyone is equal before 
the law. 
2 Article 48 of the Constitution guarantees the right to property, while Article 51 
provides that everyone is obliged to contribute to public finances according to 
their economic ability and that the tax system is based on the principles of equality 
and justice. 
3 According to Article 64 of the Constitution, parents have the duty to raise, 
maintain and educate their children and have the right and freedom independently 
to decide how to bring up their children. 
4 Article 141c of the Constitution addresses certain issues of EU law, such as the 
principles of equivalence, primacy and direct applicability of EU law, and 
Article 141d sets out the rights of Croatian citizens as citizens of the EU, 
including the right to move and reside freely within the territory of any Member 
State and how to exercise those rights. 
Zakon o porezu na dohodak iz 2004 (Income Tax Law of 2004) 
5 Title I, entitled ‘Basic Provisions’ of the Income Tax Law (Narodne novine, nos 
177/04, 73/08, 80/10, 114/11, 22/12, 144/12, 43/13, 120/13, 125/13 and 148/13; 
‘ZPD/04’), in the version applicable to the facts of the main proceedings, includes 
Chapter 4, entitled ‘Taxable basis’, Article 6(1) of which stipulates that the 
taxable amount for a resident shall be the total amount of income from 
employment, self-employment in accordance with paragraph 3 of that article, 
property and property rights, capital, insurance and other income that the resident 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-277/23 
 
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has earned at home or abroad (unlimited tax liability), less the personal allowance 
referred to in Article 36 and/or Article 54 of the Income Tax Law. 
6 Chapter 8 of that title, entitled ‘Income tax exempt proceeds’, contains 
Article 10(1)(12), (13), (14), (18) and (20), which provides that income tax is not 
payable, inter alia, on scholarships paid to pupils in formal education at secondary 
schools, colleges and higher educational institutions, up to a certain limit; on 
scholarships for students in formal education at colleges and higher educational 
institutions, undertaking doctoral studies and post-doctoral traineeships, for which 
funds are planned in the Croatian state budget; and on scholarships awarded from 
the EU budget, under separate international agreements, to students in formal 
education at higher educational institutions; for sports scholarships payable to 
training athletes under separate regulations, up to a certain limit; for scholarships 
for students selected in public competitions which all students may enter under 
identical conditions; for formal education at higher education institutions paid for 
by foundations, foundations established for a specific period of time, institutions 
and other entities registered in Croatia for educational or scientific and research 
purposes operating under specific regulations, established with the intention of 
granting scholarships; and on income deriving from non-reimbursable benefits 
from EU funds and programmes received through bodies accredited in Croatia in 
accordance with EU rules for promoting mobility within the framework of EU 
programmes and funds for education and vocational training, in accordance with 
the Commission’s Financial Regulation, up to specified amounts. 
7 Title IV of ZPD-a/04, entitled ‘Personal allowance or untaxed portion of income’, 
includes paragraph 1 of Article 36, which provides, inter alia, that the total amount 
of income earned by a resident in accordance with Article 5 of that Law is reduced 
by a basic personal allowance of HRK 2 200.00 for each month of the tax period 
being assessed. Article 36(2)(2) provides, inter alia, that residents can increase the 
personal allowance referred to in paragraph 1 if they have dependent children, by 
an amount equal to 0.5 of the basic personal allowance for the first child and 0.7 
for the second. Article 36(3) provides, inter alia, that during the tax accounting 
period, a resident is entitled to the personal allowances set out in paragraphs 1 and 
2 when determining the advance payment of income tax on paid employment 
pursuant to Article 45 of the Law. Article 36(4) provides, inter alia, that dependent 
immediate family members and dependent children are natural persons whose 
taxable receipts, non-taxable receipts and other receipts that are not considered 
income within the meaning of the law in question do not exceed, on an annual 
basis, five times the basic allowance referred to in paragraph 1 of the article. 
Article 36(5) provides that, as an exception to paragraph 4, receipts received under 
separate legislation from social assistance, child allowance, maternity benefits, 
namely the newborn layette benefit, and survivor’s pensions following the death 
of a parent shall not be taken into account in determining the personal allowance 
for immediate family members and dependent children. Lastly, Article 36(7) 
provides that ‘children’ within the meaning of paragraph 2 are defined as children 
maintained by, inter alia, their parents, as well as children who have completed 
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their formal education, until they take up their first job, if they are registered with 
the Hrvatski zavod za zapošljavanje (Croatian Employment Service). 
8 Title VII of ZPD/04, entitled ‘Special concessions, exemptions and incentives’, 
contains Section 2, entitled ‘Concessions for areas covered by aid […]’, 
Article 54(1) of which provides, inter alia, that taxpayers who are residents who 
have their home in local government territorial units classified as assisted areas in 
accordance with separate regulations on regional development in Croatia are, by 
derogation from Article 36(1), subject to a monthly basic allowance of 2 700.00 
HRK if their place of residence is in a group II-assisted area. Article 54(2) 
provides, inter alia, that the allowance for residents for dependent family members 
and children is calculated by applying the factor defined in Article 36(2)(2) to the 
basic personal allowance set out in Article 54(1), provided that those family 
members and children are also residents of the assisted area referred to in 
paragraph 54(1). 
Zakon o porezu na dohodak iz 2016 (Income Tax Act of 2016) 
9 Article 14, entitled ‘Determination of the personal allowance’, of the Zakon o 
porezu na dohodak (Income Tax Act) (Narodne novine, nos 115/16, 106/18, 
121/19, 32/20, 138/20 and 151/22; ‘ZPD/16’) provides in paragraph 1 that the 
basic personal allowance is set at EUR 331.81. Paragraph 2 specifies that the basic 
personal allowance and parts of the personal allowance for dependent immediate 
family members and children are calculated by applying certain factors and the 
basic allowance referred to in paragraph 1. Paragraph 4 of that article provides 
that a resident may increase the basic personal allowance set out in paragraph 2 by 
a factor of, inter alia, 0.7 for dependent immediate family members and for the 
first dependent child, amounting to EUR 232.27, and of 1.0 for a second 
dependent child, amounting to EUR 331.81. Paragraph 8 of this article states that 
the taxpayer’s personal allowance is the basic personal allowance plus the 
personal allowance to which the taxpayer is entitled under the terms of the 
ZPD/16. 
10 Article 17 ZPD/16, entitled ‘Conditions for granting the personal allowance’, 
provides that dependent immediate family members and dependent children are 
deemed to be individuals whose taxable receipts, non-taxable receipts and other 
receipts that are not considered income within the meaning of ZPD/16 shall not 
exceed, on an annual basis, six times the amount of the basic personal allowance 
referred to in Article 14(3). Article 17(2)(10) provides that, by way of exception 
to Article 17(1), when determining entitlement to the personal allowance for 
dependants, no account shall be taken of receipts obtained under separate social 
assistance legislation, including scholarships, study awards for pupils and students 
paid from the budget, and non-repayable funds paid from the budget, European 
Union funds and programmes and other international funds and programmes 
regulated by separate legislation and international agreements, for the purposes of 
education and vocational training. 
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Zakon o suzbijanju diskriminacije (Law on combating discrimination) 
11 Article 1 of the Zakon o suzbijanju diskriminacije (Law on combating 
discrimination) (Narodne novine, nos 85/08 and 112/12; the ‘ZSD’), entitled ‘Aim 
of the law’, states that the Law provides for the protection and promotion of 
equality, creates conditions for equal opportunities and regulates protection 
against discrimination on the basis of, inter alia, ethnic or social origin, financial 
status, education, social status, marital or family status, or age. Discrimination is 
defined as putting any person, as well as persons who have family or other ties to 
that person, in a less favourable position on the basis of, inter alia, the 
aforementioned considerations. 
12 Article 2 of the ZSD, entitled ‘Direct and indirect discrimination’, provides that 
direct discrimination is conduct based on one of the grounds listed in Article 1(1) 
of the ZSD which places, has placed or could place a person in a less favourable 
situation in relation to another person in a comparable situation and also that 
indirect discrimination occurs when an apparently neutral provision, criterion or 
practice places or may place such persons in a less favourable situation in relation 
to persons in a comparable situation for one of the reasons listed in Article 1(1) of 
the ZSD, unless such provision, criterion or practice can be objectively justified 
by a legitimate aim and the means of achieving that aim are appropriate and 
necessary. 
13 Article 8 of the ZSD, entitled ‘Scope of application’, provides that the Law is 
applicable to the conduct of all state bodies, local and district (regional) 
government bodies, legal persons exercising public authority and all legal and 
natural persons, particularly in the fields of education, science and sport. 
14 Article 9 of the ZSD, entitled ‘Prohibition of discrimination and exceptions to the 
prohibition of discrimination’, provides that discrimination in all its forms is 
prohibited and provides that, by way of exception, placing a person in a less 
favourable position, including where social policy measures are applied in favour 
of more disadvantaged individuals or households, does not constitute 
discrimination, provided that such measures do not lead to direct or indirect 
discrimination on grounds of gender, sexual orientation, race, colour, ethnicity, 
religious belief or disability. 
Succinct presentation of the facts and procedure in the main proceedings 
15 The appellant is a Croatian national, and as such is liable to pay income tax and a 
local income tax supplement. She is a resident in an assisted area of Croatia, 
classified in group II according to the Decision on the classification of local and 
district (regional) government authority by level of development (Narodne novine, 
no 158/13), and is therefore entitled to the tax concessions set out in Title VII, 
Chapter 2 ZPD/04. The appellant is married, is the mother of two dependent 
children and derives her income mainly from paid employment. In previous tax 
periods, until 2014, she had exercised her right to increase her basic allowance for 
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a dependent child, who at the time in question was a second-level student at Y 
University. 
16 On 8 December 2014, the Erasmus+ Study Tour Agreement – Academic Year 
2014/15 (the ‘Erasmus+ Agreement’) was concluded with the University of 
Y. Article 3.5 of this agreement sets the student mobility support for a dependent 
child granted for a five-month second-level study stay in another Member State of 
the European Union, specifically Finland, at EUR 2 300.00, or EUR 460.00 per 
30 days or ‘one month of mobility in Finland’. Before leaving to study in Finland 
at the end of 2014, Y University paid the dependent child an advance for this 
support of EUR 1 840.00 from the Erasmus+ programme, an amount which, at the 
relevant conversion rate, indisputably exceeds the regulatory limit of 
HRK 11 000.00. 
17 When the appellant submitted her income tax return for 2014, instead of being 
refunded the income tax and local income tax supplement, as she was expecting, 
she was assessed as owing a shortfall in the income tax and local income tax 
supplement on the sole basis that for the period from 1 January to 31 December 
2014, pursuant to Article 36(4) and (5) ZPD/04, she was not entitled to a personal 
allowance for a dependent family member – her child A.B. – as the receipts for 
2014 exceeded HRK 11 000.00. 
18 Specifically, the tax assessment of the Porezna uprava Ministarstva financija 
Republike Hrvatske (Croatian tax office) dated 27 July 2015 (‘the tax decision at 
issue’) states that, in 2014, the appellant received income from wages totalling 
HRK 218 409.00 and other income totalling HRK 3 674.59, resulting in a total 
annual income of HRK 223 083.78, which was reduced by her annual basic 
allowance of HRK 48 600.00 to a basic taxable income of HRK 174 483.78. By 
applying a progressive income tax rate of 12%, 25% and 40%, plus the local 
income tax supplement of 5%, the total income tax liability amounted to 
HRK 50 521.51 and the local income tax supplement to HRK 2 525.08. As 
HRK 48,487.25 of income tax and of local income tax supplement had previously 
been paid through deductions from her remuneration for 2014, the decision at 
issue required the appellant to pay the difference of HRK 4 560.34. Although the 
appellant claimed she had two children, namely two dependent family members, it 
is not possible to establish how the tax office had calculated the total annual basic 
allowance of HRK 48 600.00 on the basis of the disputed tax assessment. 
19 The appellant lodged an appeal against the assessment with the Samostalni sektor 
za drugostupanjski upravni postupak Ministarstva financija Republike Hrvatske 
(Independent administrative appeals office of the Ministry of Finance of the 
Republic of Croatia), which the latter dismissed as unfounded in its decision of 
17 July 2019 (‘the second instance decision’). 
20 The appellant then challenged the disputed second instance decision in 
administrative proceedings before the Upravni sud u Osijeku (Osijek 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-277/23 
 
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Administrative Court, Croatia), which, in its judgment of 30 January 2020 (‘the 
first instance judgment’), dismissed the complaint as unfounded. 
21 The appellant subsequently lodged an appeal against the first instance judgment 
with the Visoki upravni sud Republike Hrvatske (the Administrative Court of 
Appeal of the Republic of Croatia, Croatia), which the latter dismissed in its 
judgment of 20 January 2021 (‘the judgment of the Administrative Court of 
Appeal’). 
22 The appellant filed a constitutional complaint against the judgment of the 
Administrative Court of Appeal with the Ustavni sud Republike Hrvatske 
(Constitutional Court of the Republic of Croatia, Croatia), which requested a 
preliminary ruling. 
The essential arguments of the parties in the main proceedings 
23 In her appeal in the second-instance administrative proceedings, the appellant 
alleged a breach of the principle of non-discrimination established by EU law, the 
Convention for the Protection of Human Rights and Fundamental Freedoms, and 
the ZSD, based on her child’s status as a beneficiary of the Erasmus+ student 
mobility programme. 
24 Her plea was essentially that the interpretation under which she lost the right to an 
increased basic allowance for a dependent child is unreasonable because student 
mobility support from the Erasmus+ programme, as targeted and non-refundable 
funding from an EU programme, should be classified as social assistance paid on 
the basis of separate legislation within the meaning of Article 36(5) ZPD/04, and 
should therefore not be taken into account when determining the tax allowance. 
She explained that the support is determined in accordance with the Commission’s 
criteria, so that the mobility costs of students are only partially subsidised in 
accordance with the level of economic and social development of the host 
Member State. She argued that this support constituted neither taxable receipts of 
the child nor income by which the appellant would be relieved of her obligation to 
contribute to maintenance or which would significantly relieve her of that 
obligation, as she paid EUR 390.00 per month for her student accommodation in 
Finland alone, leaving only EUR 70.00 of the amount of student mobility support 
for her child at the end of the month, while food, transport and other living costs 
are much higher in Finland than if the child had studied in Croatia. Therefore, the 
appellant argued that the mere fact that she benefited from measures to promote 
student mobility within the EU placed her in a less favourable position and, in 
particular, that it put her in a less favourable position than tax residents in Croatia 
whose children received support under the Erasmus+ programme to study in other 
EU Member States, such as Bulgaria or Hungary, where the corresponding student 
mobility support was EUR 360.00 per month. In those cases, the advance payment 
amounting to 80% of the support was less than the aforementioned 
HRK 11 000.00, which meant that the parents of those students, unlike the 
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appellant, did not lose their right to increase the basic allowance for a dependent 
child. 
25 With regard to the disproportionate nature of the financial burden that this tax 
measure has imposed on her, the appellant explained that the described tax 
treatment of student mobility support has resulted in her forfeiting, in addition to 
the tax difference of HRK 4 560.34 that she must pay, the right to a rebate of 
overpaid tax, which had previously amounted to HRK 4 500.00, as a resident of a 
group II-assisted area of Croatia, resulting in a total loss, due to the contested tax 
measure, in excess of HRK 9 000.00, in addition to the other expenses she has 
incurred in connection with her child’s studies in Finland. 
26 During the second-instance administrative proceedings, the Ministarstvo financija 
(Croatian Ministry of Finance) indicated that it could not be claimed that the 
parents of children who receive a ‘scholarship’ are put at a disadvantage, since the 
payment of Erasmus+ funds is not listed among the receipts that are disregarded 
when determining the status of a dependent family member pursuant to 
Article 36(5) ZPD/04. 
27 During the administrative court proceedings, the appellant additionally pointed out 
that in 2018 the legislature amended Article 36(5) ZPD/04, specifying in 
Article 17(2) ZPD/16 that scholarships and non-repayable funds paid from the 
budget or European Union funds and programmes for educational purposes are 
not counted when determining the basic allowance for dependent family members. 
She also referred to recital 40 of Regulation No 1288/2013, which recommends 
that non-repayable funds and financial support paid under the Erasmus+ 
programme be exempted from taxation or ‘social costs’. She also highlighted a 
violation of the obligation set out in Article 141c Ustav (the Constitution). 
28 The Ministarstvo financija emphasised in the administrative court proceedings 
that it considers the complaint unfounded for the reasons mentioned in the 
disputed second instance decision. 
29 In its first instance judgment, the Osijek Administrative Court dismissed the 
complaint because it classified support for student mobility under the Erasmus+ 
programme as a ‘scholarship’ and stated that scholarships are not listed in 
Article 36(5) ZPD/04 as receipts that are not counted when determining the basic 
allowance for dependent family members. With regard to the allegation of 
discrimination, after examining Articles 2 and 9 of the ZSD, the court concluded 
that the limit set out in Article 36(4) ZPD/04 (HRK 11 000.00) constitutes a social 
policy measure that is not discriminatory, as it has a legitimate aim and the means 
of achieving that aim are appropriate and necessary. With regard to the claims of 
subsequent amendments to the law regarding the tax treatment of the parents of 
children receiving this support, the court held that this provision was not in force 
at the time of the tax decision at issue, and with regard to recital 40 of Regulation 
1288/2013, it held that the provision had no binding legal force. 
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30 In her appeal against the first instance judgment, the appellant reiterated the pleas 
she raised at the earlier stages of the proceedings, stressing in particular that the 
judgment failed to carry out a test of discrimination on the basis of the 
circumstances of the particular case and failed to demonstrate the legitimate 
objective pursued by the tax measure. 
31 The Administrative Court of Appeal dismissed the appeal, essentially repeating 
the findings of the first instance judgment regarding the interpretation of 
Article 36(4) and (5) ZPD/04 and, in addition, with regard to the allegation of a 
violation of the prohibition on discrimination, pointed out that, in the 
administrative court proceedings, the appellant had not relied on the specific 
ground of discrimination defined in the ZSD, that – with regard to the direct 
application of EU law – recital 40 of Regulation No 1288/2013 does not impose 
any obligations on the legislature as regards the fiscal treatment of mobility 
support for Erasmus+ students, and, lastly, that the EU Directive governing the 
rights of students from third countries who are in the EU for the purpose of their 
studies is not applicable in the appellant’s case. 
32 The appellant filed a constitutional appeal with the Constitutional Court against 
the judgment of the Administrative Court of Appeal, claiming that the challenged 
individual acts violate her right to a fair trial guaranteed by Article 29(1) of the 
Constitution and Article 6(1) ECHR and the right to respect for property 
guaranteed by Article 48(1) of the Constitution and Article 1 of Protocol No 1 to 
the ECHR, in the light of the constitutional guarantee of equality before the law 
(prohibition of discrimination) contained in Article 14 of the Constitution and 
Article 14 of the ECHR, and the constitutional guarantee of the legality of 
individual acts of state administrative bodies contained in Article 19(1) of the 
Constitution. 
33 The appellant also alleges the incorrect or unreasonable application of 
Article 36(1) and (4) ZPD/04, according to which she lost the right to an increase 
in the basic allowance for a dependent child because Erasmus+ student mobility 
support had been paid in excess of the specified limit. She submits that, in her 
case, the courts should apply Article 36(5) ZPD/04, in respect of which the courts 
have given specific reasons for considering it inapplicable in her case, having 
established that ‘scholarships’ do not fall within the category of benefits pursuant 
to Article 36(5) ZPD/04 which should be ignored when calculating the limit 
referred to in Article 36(1) and (4) ZPD/04. 
Succinct presentation of the reasoning in the request for a preliminary ruling  
34 In the absence of any relevant case-law of the Court (within the meaning of the 
CILFIT criteria) concerning the allegation of a breach of the prohibition of 
discrimination or the disproportionate nature of tax measures in relation to the 
mobility of Erasmus+ students throughout the EU, the Constitutional Court cannot 
determine whether EU law, and which specific provisions of EU law, are 
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applicable in this case. For this reason, the Constitutional Court, which in its case-
law already found a violation of Article 141c of the Constitution when the courts 
failed to apply the applicable EU law when deciding on the constitutional or 
statutory rights of the appellant, is unable to rule on the alleged violation of 
Article 141c of the Constitution or on the alleged violations of Article 48(1) of the 
Constitution and Article 1 of Protocol No 1 to the ECHR (considered alone or in 
conjunction with Article 14 of the Constitution and Article 14 ECHR) without 
obtaining a preliminary ruling from the European Court of Justice. 
A) CONTENTIOUS ISSUES CONCERNING THE APPLICATION OF 
ARTICLES 18, 20 and 21 TFEU 
1. Do Articles 18, 20 and 21 TFEU and related secondary legislation apply to 
the appellant? 
35 In the present case, it is undisputed that the appellant’s child benefited from 
subjective rights granted directly by EU law, namely: 
– the right, under national measures implementing Regulation No 1288/2013, 
to benefit from student mobility by going to study in Finland and to receive 
support from Erasmus+ funding in the amount set out in the Erasmus+ 
agreement in accordance with the criteria of the National Executive Agency 
as previously established by the Commission in implementing Article 18(7) 
of the said regulation, 
– but also the right of an EU citizen to move and reside freely in another 
Member State for the purpose of education under Articles 20(2)(a) and 21(1) 
TFEU and Article 7(1)(c) of Directive 2004/38. 
36 In Cases C-523/11, C-585/11, C-275/12 and C-359/13, the Court accepted that, as 
regards obstacles imposed by national law to access to education in another 
Member State, pupils and students may also rely on Articles 20 and 21 TFEU in 
claims against the State of which they are nationals and in which they have their 
domicile or habitual residence. In addition, in Case C-75/11, which concerned 
reduced transport fares for students in Austria, it was established that students 
may rely on the principle of non-discrimination in Article 18 TFEU when 
exercising the rights guaranteed by Article 21 TFEU (see judgment of 4 October 
2012, Commission v Austria, C-75/11, EU:C:2012:605, paragraphs 36-41). 
37 On the other hand, the appellant, who claims that the courts violated their 
obligation to apply EU law directly and to protect subjective rights arising 
therefrom under Article 141c of the Constitution, did not personally benefit from 
the said fundamental rights of students, nor was the tax measure at issue, obliging 
her to pay the amount of the tax liability, adopted ‘in implementation’ of EU 
legislation, such as Regulation No 1288/2013. She also does not fall within the 
scope of Directive 2004/38, in accordance with Articles 2(2) and 3(1), as she is 
not a family member accompanying a student while studying in another Member 
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State (judgment of 5 May 2011, McCarthy, C-434/09, EU:C:2011:277, 
paragraphs 30-43). 
38 However, the appellant does not dispute this at all. She claims to have ‘been 
penalised’ by the fact that her child exercised the right of student mobility that she 
enjoyed under the Erasmus+ agreement implementing Regulation No 1288/2013, 
or the fundamental right to move and reside in another Member State for the 
purpose of education under Articles 20(2)(a) and 21(1) TFEU and Article 7(1)(c) 
of Directive 2004/38. She therefore believes that she has been discriminated 
against under Article 18 TFEU on account of the aforementioned status conferred 
on her child by EU law. 
39 Consequently, whether the appellant can rely directly on the aforementioned 
provisions of EU law is a moot point, and the circumstances of the case may 
indicate a purely internal situation not falling within the scope of the FEU Treaty. 
40 However, such an interpretation in a situation such as the present one could lead 
to a patently unreasonable result, as it may exclude (circumvent) the jurisdiction 
of the Court of Justice in relation to a number of national measures which might 
constitute obstacles to the exercise of the fundamental freedoms guaranteed by the 
FEU Treaty or impede the implementation of EU regulations simply because the 
obstacle in question is regulated by national law in such a way that it does not 
technically directly concern an individual who can rely on the direct effect of 
provisions of primary and secondary EU law, but a member of that individual’s 
family, whose legal position is assigned the factual and legal effects of the 
exercise of subjective rights guaranteed by EU law (Opinion of 27 January 2005, 
Schempp, C-403/03, EU:C:2005:62, point 15). 
41 The above can best be seen in the appellant’s case here: if a particular tax measure 
required her dependent child to pay tax on Erasmus+ student mobility support, or 
if she lost her right to any tax allowance by virtue of receiving that support, the 
student would be able to invoke the direct effect of Articles 20(2)(a) and 21(1) 
TFEU in tax and administrative court proceedings. However, if such a measure 
does not directly affect the student, but his or her parent, who is obliged to support 
the student and to bear the cost of his or her studies in another Member State, that 
parent would not be able to rely on the direct effect of the said provisions, as the 
rights and freedoms guaranteed by these articles do not apply to him or her 
personally (he or she has not personally exercised them nor have they been 
personally granted to him or her by EU law). 
42 As the student is not a party to the tax proceedings in the present case (the 
obligation to pay tax is not his), he does not have the legal standing to bring an 
action before the administrative court, which could then, using the mechanism 
established by Article 267 TFEU, request the Court of Justice to give him a useful 
answer to the question of whether the tax provision at issue constitutes an obstacle 
to the right to freedom of movement contrary to Articles 20 and 21 TFEU. 
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43 The tax treatment of the appellant is inseparably linked with the tax treatment of 
her dependent child with regard to student mobility under the Erasmus+ 
programme. Article 10(20) ZDP/04 states that non-refundable grants from EU 
programmes to promote mobility are non-taxable student income, and payment of 
such grants does not impose a tax obligation on the student in question. However, 
as these non-taxable receipts are not covered by an explicit statutory exemption 
under Article 36(5) ZPD/04, they are, by virtue of Article 36(1) and (4) ZPD/04, 
taken into account when determining the parent’s right to an increased basic 
allowance for a dependent student and lead to the loss of this right if they exceed a 
certain fixed limit (in this case, HRK 11 000.00). 
44 The right to financial support for student mobility under the Erasmus+ programme 
does not stand alone in relation to the student’s right to mobility and the exercise 
of the fundamental right to freedom of movement of persons for the purpose of 
education, as Articles 3.11 and 9 of the Erasmus+ agreement and the attached 
university documents provide for an obligation to repay that support if the student 
no longer exercises that mobility (see, similarly, Opinion of 26 January 2016, 
Commission v Netherlands, C-233/14, EU:C:2016:50, point 14). 
45 Consequently, the national provision on which the tax measure at issue is based 
already establishes a direct link with the origin of the non-repayable funds from 
EU programmes and the objectives of the FEU Treaty, such as student mobility 
(Article 165(2), second indent), and the purpose of the payment of student 
mobility support under the Erasmus+ programme was to create a cross-border 
situation allowing a student to go and study in another Member State of the 
European Union. This support is therefore, de facto and de jure, inseparable from 
the right of EU citizens to move freely for the purposes of their education and 
therefore should not be subject to restrictions on fundamental freedoms (Opinion 
of 27 January 2005, Schempp, C-403/03, EU:C:2005:62, points 18 and 20). 
46 The conclusion that the appellant can rely on Articles 20 and 21 TFEU is also 
supported by the objection raised by the appellant on the basis of Article 18 
TFEU. As the Court has already granted students the right to invoke 
discrimination under Article 18 TFEU when exercising the rights guaranteed by 
Articles 20 and 21 TFEU and Directive 2004/38 (judgment of 4 October 2012, 
Commission v Austria, C-75/11, EU:C:2012:605), and guided by the concept of 
discrimination by association adopted in the Court’s case-law (Opinion of 
12 March 2015; Judgment of the Court (Grand Chamber) of 16 July 2015, CHEZ 
Razpredelenie Bulgaria, C-83/14, EU:C:2015:480), it seems that the appellant 
could directly invoke Article 18 TFEU, which applies whenever the case falls 
within the substantive scope of the FEU Treaty, in claiming that the tax measure 
placed her in a less favourable position because of her child’s special status under 
EU law, that is, because she enjoys rights directly granted to her child by national 
acts implementing Regulation No 1288/2013 and by Articles 20(2)(a) and 21(1) 
TFEU and Article 7(1)(c) of Directive 2004/38. 
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47 Since Case C-75/11, however, the Court has slightly changed this approach. In its 
judgment of 2 June 2016, Commission v Netherlands (C-233/14, EU:C:2016:396, 
paragraphs 88 to 94), which dealt with a similar issue of the right of ‘mobile’ 
students to have their transport costs covered, the Court held that these costs are 
‘scholarships’ in the broader sense of the word, from which application of the 
principle of equal treatment is excluded by virtue of Article 24(2) of Directive 
2004/38. 
48 However, given that the purpose of Article 24(2) of Directive 2004/38 was to 
exempt Member States from the obligation to grant foreign students the same 
entitlement to social assistance or grants as to their nationals, which is additional 
to the condition set out in Article 7(1)(c) of that Directive requiring that the 
student have sufficient resources not to become a burden on the social security 
system of the host Member State during their stay, it would appear that 
Article 24(2) of the Directive is applicable to Erasmus+ student mobility support 
paid from the EU budget, whose very purpose was to eliminate the restrictions on 
student mobility referred to in the Directive by paying Erasmus+ students a 
certain amount of money before the start of their stay in another Member State, 
thereby indirectly relieving the burden on the social security system of that 
Member State. 
49 Accordingly, Regulation No 1288/2013 does not even apply the concept of 
‘scholarship’. Article 27(12) mentions EU funds for ‘grant support’. Member 
States have very narrow powers over Erasmus+ support, as it is paid from funds 
transferred by the Commission to be managed by the National Agency, which, in 
doing so, is bound by the Commission’s existing rules on the amount of monthly 
support or the obligation to reimburse it. The latter issue is therefore not governed 
by national law, but directly by a Commission regulation and rules which are 
binding on the national agency. 
50 Accordingly, it would appear that Articles 20 and 21 TFEU could apply in the 
appellant’s case, either alone or in conjunction with Article 18 TFEU. 
2. Is there an obstacle to the right to freedom of movement (student mobility) 
within the meaning of Articles 20 and 21 TFEU? 
51 The Court argues that although direct taxation falls within the competence of 
Member States, they must exercise that competence consistently with EU law. 
Such competence does not allow them to apply measures that conflict with the 
freedoms of movement guaranteed under the TFEU, including tax measures which 
would discourage individuals from exercising their fundamental rights guaranteed 
under the FEU Treaty (judgments of 24 October 2019, Belgian State, C-35/19, 
EU:C:2019:894, paragraphs 31 and 34, and of 1 December 2011, Commission v 
Hungary, C-253/09, EU:C:2011:795, paragraph 42). These measures may 
constitute an obstacle to the right to free movement even if they are formulated in 
an apparently neutral way, independent of the nationality of the person concerned 
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(judgment of 9 November 2006, Turpeinen, C-520/04, EU:C:2006:703, 
paragraph 15). 
52 The Court has already ruled that national tax legislation which denies an EU 
citizen the right to deduct tax on the ground that he or she has exercised his or her 
right to freedom of movement constitutes a measure restricting the right to 
freedom of movement under Article 21 TFEU (judgment of 26 May 2016, Kohll 
and Kohll-Schlesser, C-300/15, EU:C:2016:361, paragraph 44). 
53 In the context of student mobility, it has been established that if a Member State 
regulates its system for assisting education in such a way that students studying in 
a different Member State become entitled to that assistance, it is obliged to ensure 
that the system for awarding such assistance does not constitute an unreasonable 
restriction on the right of movement and of establishment in the territory of a 
Member State enshrined in Article 21 TFEU (judgments of 18 July 2013, Prinz 
and Seeberger, C-523/11 and C-585/11, EU:C:2013:524, paragraph 30, and of 
24 October 2013, Elrick, C-275/12, EU:C:2013:684, paragraph 25) and may not, 
by virtue of provisions creating additional obstacles or costs associated with 
leaving countries of origin, discourage people from leaving their country of origin 
to pursue studies in another Member State (judgment of 23 October 2007, Morgan 
and Bucher, C-11/06 and C-12/06, EU:C:2007:626, paragraph 30). This finding is 
based on the fact that mobility in education and training is an integral part of 
freedom of movement of persons and one of the main objectives of the European 
Union’s action based on the second indent of Article 165(2) TFEU (judgment of 
14 June 2012, Commission v Netherlands, C-542/09, EU:C:2012:346, 
paragraph 71). 
54 In this case, the appellant’s child was evidently not dissuaded from benefiting 
from the Erasmus+ student mobility resources and the rights laid down in 
Articles 20 and 21 TFEU, as the disputed tax treatment could be foreseen neither 
by the appellant, who was supporting him in accordance with Article 64 of the 
Constitution and Article 290(1) of the Obiteljski zakon (Family law), nor by the 
student himself before he went to Finland to study. 
55 However, it would appear that, according to the Court’s case-law, that 
circumstance could nevertheless be irrelevant to determining whether or not an 
obstacle exists to the right of free movement and residence in another Member 
State under Articles 20 and 21. Indeed, the Court stated in its judgment of 
26 February 2015, Martens (C-359/13, EU:C:2015:118, paragraphs 26, 32), that 
‘it is, in that regard, irrelevant that considerable time has elapsed since the 
appellant […] exercised her free movement rights’. In this case, too, time had 
elapsed since the right to freedom of movement had been exercised and the 
obstacle to that right had been imposed by the mere fact of exercising it. 
3. Is there unequal (less favourable) treatment in comparable situations – 
possible ways of applying the principle of equality (prohibition of discrimination) 
in the present case? 
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16  
56 As to the premiss that exercising the rights guaranteed by Articles 20 and 21 
TFEU has placed the taxpayer in a less favourable situation, there are difficulties 
in finding a comparable group (benchmark) against which to compare the 
appellant’s situation. 
57 The appellant first argues that she was discriminated against in relation to ‘other 
employed persons’ and then that she was discriminated against in relation to 
taxpayers in Croatia whose dependent children studied under the Erasmus+ 
programme in the group 3 countries with lower average costs of living, as defined 
by the Commission, as in that case she would not have lost the right to the 
disputed allowance on the ground that the advance student mobility payment 
would not have exceeded the limit laid down in Article 36(1) and (4) ZPD/04. 
58 This implies that Member States would, through such tax legislation, promote 
student mobility only to countries participating in the Erasmus+ programme 
where the average cost of living is lower, that is to say, where the tax treatment 
(total cost of going to study) would be more favourable. In the case of students 
whose educational costs are being paid by parents who are supporting them, such 
a tax provision might restrict not only the right of students to leave their country 
of residence for educational purposes, but also the mobility of students within the 
EU to certain Member States. This may run counter to the recommended 
neutrality of Erasmus+ measures in relation to the different education systems in 
the Member States referred to in Article 18(7) of Regulation No 1288/2013. 
59 However, it would not appear that the appellant’s situation is comparable to that 
of income taxpayers in Croatia whose children have studied in Erasmus+ 
countries with lower average costs of living, at least not in the way formulated in 
the complaint. 
60 Indeed, if we accepted the argument that, for the purposes of assessing a breach of 
the principle of non-discrimination, the appellant would have to be compared with 
tax residents whose children studied in Erasmus+ countries with a lower average 
cost of living, we would be overlooking an essential element of the appellant’s 
allegedly less favourable treatment, namely the fact that her child studied in 
Finland, where the cost of living is higher than in Croatia, where the appellant 
earns an income to support her child. Moreover, the claim of exclusion from the 
limit laid down in Article 36(1) and (4) ZPD/04 would not be correct if the 
ancillary circumstances of the case were even slightly different (for example, if 
the advance payment and the remainder of that support had been paid in a single 
tax year, even if in instalments). Therefore, such a point of reference would only 
relate to ancillary aspects of the case that are unrelated to the substance of the 
allegations raised, and would not involve objective, easily identifiable elements 
(ECtHR Advisory Opinion, §§ 68-69; Opinion of 26 January 2016, Commission v 
Netherlands, C-233/14, EU:C:2016:50, point 105). 
61 Next, we have to accept the conclusion of the courts that the appellant cannot be 
compared to the parent of a child receiving social assistance within the meaning of 
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Article 36(5) ZPD/04, which does not cause that taxpayer to lose the right to an 
increased basic allowance for a dependent child. Social assistance is, in the 
context of national law, paid to persons from vulnerable groups, for example on 
the basis of their financial situation or disability. Mobility support from the 
Erasmus+ programme, from which the appellant’s child benefited, is available to 
all students, regardless of their financial situation or that of their parents. 
62 Furthermore, it is a fact that where the payment of any of the non-taxable benefits 
set out in Article 10 ZPD/04 exceeds the limit set out in Article 36(1) and (4) 
ZPD/04, the right to increase the basic allowance for the dependent family 
member is lost. This could indicate that there is in fact no unequal treatment in 
comparable situations on the basis of rights under EU law, since the fiscal 
treatment of Erasmus+ student mobility support in this sense is the same as for the 
income of any other dependent family member. 
63 However, there is an element of doubt here because, as the appellant points out, 
none of the non-taxable receipts referred to in Article 10 ZPD/04 has the specific 
purpose of encouraging student mobility within the EU, which is one of the main 
objectives of the EU’s action under the second indent of Article 165(2) TFEU, nor 
do they constitute a measure implementing Regulation No 1288/2013, the primary 
objective of which is to create a cross-border situation and enable the free 
movement of people for educational purposes in accordance with Articles 20(2)(a) 
and 21(1) TFEU and Article 7(1)(c) of Directive 2004/38. 
64 For this reason, national grants or other forms of funding for students and pupils, 
which are awarded irrespective of where the student will study and for various 
purposes, as well as other non-repayable (or repayable) funds granted from the EU 
budget that are disbursed in the Member State of the final beneficiary and are not 
aimed at exercising the fundamental right of free movement of EU citizens 
guaranteed by the TFEU are different from Erasmus+ student mobility support. 
65 It therefore appears that the appellant is not in a situation comparable to any 
income tax payer in Croatia, but is actually in a different situation from all others. 
66 It appears that, in this case, the test of discrimination is not whether the appellant’s 
right to be treated in the same way as other persons in a comparable situation has 
been infringed, but whether the requirement that the State treats persons whose 
situation is substantially different in a different way has been infringed. 
67 In other words, the fundamental question which the test of discrimination should 
answer in this case is whether the tax provision, by virtue of the specific status of 
the appellant’s dependent children conferred by EU law, should treat the appellant 
differently from income tax payers in Croatia whose dependent children have not 
benefited from the right of students to mobility within the EU. 
68 In order to assess whether the appellant was placed in a less favourable situation 
in relation to the indicated comparable group, it is necessary to address her 
allegations concerning the direction of mobility from Croatia to Finland, which 
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the Commission classified as a group 1 Erasmus+ country, with a higher average 
cost of living. According to the Commission’s Erasmus+ programme guidelines of 
2014, 2015 and 2017, Croatia was classified in the group of participating countries 
with an average cost of living at the time of the mobility in Finland of the 
appellant’s child. It was only in 2017 that the European Commission classified 
Croatia as a participating country with a lower average cost of living. 
69 And while it might appear that the appellant is alleging less favourable treatment 
on the basis of a de facto difference, the Constitutional Court notes that this ‘de 
facto difference’ is codified as a legal norm in Article 18(7) of Regulation 
No 1288/2013. In implementing this provision, on the basis of Article 36(3) of the 
Regulation, the Commission has drawn up a formula to calculate the monthly 
mobility support for students depending on the average cost of living and the 
direction of mobility between countries classified in each of the three groups. The 
ranges introduced for these groups, on the basis of which the amount of support 
for the appellant’s child was determined, in comparison with the ranges which the 
Commission established for socially disadvantaged groups, clearly do not reflect 
the real costs of student mobility. 
70 Therefore, it should perhaps be assumed that parents of dependent students 
benefiting from mobility and moving from a Member State with lower or middle 
average living costs to one with higher average living costs, as in the appellant’s 
case, are at a particular disadvantage in terms of their child’s living costs not only 
in comparison with parents whose children did not benefit from Erasmus+ funding 
and remained to study at home, thereby avoiding mobility costs, but also in 
comparison with parents whose dependent children benefited from Erasmus+ 
funding within the same group of countries, defined for the purposes of the 
programme, with a comparable cost of living, and especially in comparison with 
those parents whose children benefited from mobility by going from a country 
with a higher or average cost of living to a country with a lower average cost of 
living. 
71 For the above reasons, the seemingly neutral provisions of Article 36(1) and (4) 
ZPD/04 appear to place the appellant in a less favourable position compared to 
taxpayers in Croatia whose dependent children have received other non-taxable 
income, as referred to in Article 10 ZPD/04, in excess of the limit laid down in 
Article 36(1) and (4) ZPD/04, and have not benefited from Erasmus+ student 
mobility measures in Member States with a higher average cost of living, as 
determined by the Commission in accordance with Article 18(7) of Regulation 
No 1288/2013. 
4. Can the placing of the appellant in a less favourable position be justified by 
a particular reasonable objective? 
72 Decisions by public authorities obliging the payment of tax constitute measures to 
control the use of property with the legitimate aim of ensuring the payment of 
taxes (Article 51(1) of the Constitution, Article 1(2) of Protocol No 1 to the 
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ECHR), and Member States have broad discretion as to the means they choose to 
achieve this objective. 
73 The tax decision at issue does not implement a social policy measure that benefits 
the appellant, but deprives her of the right to the allowance set out in Article 36(2) 
ZPD/04, guaranteed to all child-supporting taxpayers, which reflects the 
constitutional principle of equality and fairness of the tax system and has the 
legitimate aim of correcting the social and material inequalities in average income 
and expenditure between taxpayers who have dependent children and those who 
do not (judgment of 14 June 2012, Commission v Netherlands, C-542/09, 
EU:C:2012:346, paragraph 57). 
74 Therefore, the Constitutional Court must admit that the provisions of Article 36(1) 
and (4) ZPD/04 have a generally legitimate purpose in that the legislature, in 
accordance with the principle of sound management of limited public resources, 
does not grant the right to increase the basic allowance for a dependent child to 
taxpayers whose dependent children receive a certain amount of income in the tax 
year, which, in the legislature’s view, results in the child being able to contribute 
to his or her maintenance from his or her own income and reduce his or her 
parents’ expenses, unlike taxpayers whose children receive little or no income and 
who are therefore supported solely by their parents’ income. 
5. Was the tax measure at issue necessary to achieve that legitimate aim and is 
it justified (proportionate) from the point of view of EU law? 
75 National legislation which restricts the right to freedom of movement for the 
purpose of education laid down in Article 21 TFEU, by making it more difficult to 
achieve the objective of promoting student mobility referred to in the second 
indent of Article 165(2) TFEU, or which ‘penalises’ an EU citizen for exercising 
that right can only be justified if it is based on objective considerations of public 
interest unrelated to the nationality of the persons concerned and if it is 
proportionate in relation to the legitimate aim pursued by that legislation, and 
must therefore be suitable for attaining the legitimate aim pursued and not go 
beyond what is necessary to achieve that aim. 
76 With regard to the national legislation governing tax allowances in the country of 
tax residence, the principle has been adopted that it is incumbent on the Member 
State of residence, as the centre of a taxpayer’s personal and property interests, to 
grant tax benefits, exemptions or allowances related to the taxpayer’s personal or 
family situation, as that State is in the best position to assess the taxpayer’s ability 
to pay tax, taking into account all of his or her income and his or her personal and 
family situation. Irrespective of this, however, tax provisions that constitute a 
restriction of the right to free movement can only be justified under the same 
conditions of proportionality already indicated above (judgment of 15 July 2021, 
Belgian State (Loss of tax advantages in Member State of residence), C-241/20, 
EU:C:2021:605, paragraphs 25 to 27 and 33). 
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77 It has already been held that Article 36(1) and (4) ZPD/04 constituted an obstacle 
to the use of mobility measures under the Erasmus+ programme, that is to say, to 
leaving the Member State of residence to go and study in another Member State, 
and for that reason alone deprived the appellant of her tax allowance for a 
dependent student and made her liable to pay tax, irrespective of the fact that the 
student had taken up residence for the purposes of education in a Member State 
which, on the basis of Article 18(7) of Regulation No 1288/2013, was classified as 
a participating country with a higher average cost of living. It follows that those 
provisions are not tax-neutral with regard to a dependent student’s right to decide 
to leave his or her country of residence to study in another Member State or with 
regard to the free choice of the country of residence (host country) for the purpose 
of study, in view of the direction of mobility of students within the European 
Union between the different groups of countries participating in the Erasmus+ 
programme, as determined by the Commission. Therefore, the first condition – the 
absence of less favourable treatment on the basis of nationality – does not appear 
to have been met (judgment of 23 October 2007, Morgan and Bucher, C-11/06 
and C-12/06, EU:C:2007:626, paragraphs 38 and 41). 
78 The application of Article 36(1) and (4) ZPD/04 is appropriate to achieving the 
legitimate aim indicated above, but the question is whether it is necessary to 
achieve that aim in this particular case. 
79 Article 36(1) and (4) ZPD/04 sets a limit that the non-taxable receipts must not 
exceed if a parent is not to lose their allowance for a dependent child, without 
allowing verification of his or her personal and family situation. Furthermore, it 
excludes the possibility of setting that limit in accordance with the appellant’s 
recognised entitlement to the higher basic allowance referred to in Article 54 
ZPD/04, which applies to residents of group II-assisted areas of Croatia. It is thus 
based on a fixed criterion that does not make an allowance for differences 
between different categories of taxpayer, which is contrary to the legitimate 
purpose of Article 36(2) ZPD/04, whereby entitlement to the allowance for a 
dependent child is granted in order to correct social and financial inequality 
among taxpayers. 
80 The fixed limit in Article 36(1) and (4) ZPD/04 also makes it impossible to take 
into account the direction of mobility of a dependent student, that is, the fact that 
the appellant’s child benefited from a mobility measure in an Erasmus+ 
participating country with a higher average cost of living than Croatia, where she 
normally resides and studies. 
81 Notwithstanding the fact that the Erasmus+ student mobility support, determined 
in accordance with the rules of the Erasmus+ programme, cannot cover the actual 
costs of a Croatian student’s study trip to Finland, taxpayers in Croatia whose 
children have chosen to benefit from a mobility measure in a country with a 
higher average cost of living lose the right to their allowance for a dependent child 
in spite of the fact that they clearly have to incur higher expenses for the child’s 
MINISTARSTVO FINANCIJA 
 
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upkeep than if the child had stayed in Croatia to study. This may indicate that the 
tax burden imposed is disproportionate. 
82 There is therefore doubt as to whether the tax measure at issue is necessary to 
achieve the legitimate purpose pursued by national law of not granting the 
allowance in question to parents of dependent children who have earned their own 
non-taxable income, where that income has reduced the parents’ expenses 
(relieved their obligations) in relation to the child’s maintenance. 
83 Juxtaposing the importance of that legitimate objective and the objective of 
promoting student mobility referred to in the second indent of Article 165(2) 
TFEU, it should be noted that, despite the specific qualification of support for 
student mobility from the Erasmus+ programme in Article 10(20) ZPD/04, which 
refers to the legitimate purpose of mobility for the purpose of education under the 
second indent of Article 165(2) TFEU, Article 36(1) and (4) ZPD/04 does not 
allow that support to be treated differently from any other receipts with regard to 
allowances for a dependent student. 
84 Also from the point of view of the second indent of Article 165(2) TFEU, it seems 
questionable whether the tax measure at issue would have been necessary if the 
tax authorities, before denying the right to an allowance for a dependent student 
benefiting from a mobility measure under the Erasmus+ programme in a country 
with a higher average cost of living, had withheld advance income tax as in 
previous tax years, assuming that the appellant enjoyed the right to increase her 
basic allowance for her child as if he had studied in Croatia, where the costs of 
study and the average cost of living are lower than in Finland. 
85 The appellant’s arguments regarding the disproportionate nature of the tax 
measure at issue appear to be supported by the decisions of the Vlada 
(Government) and the Hrvatski sabor (Croatian Parliament) to exclude student 
mobility support under the Erasmus+ programme in ZPD/16 from the income 
limit for a dependent child. The Government justified this on the grounds of 
obstacles to mobility, which disproportionately affected students from vulnerable 
groups, and of achieving the objective of making better use of mobility 
programmes for education in the European Union. 
86 However, what is at issue in the appellant’s case is the fact, correctly argued by 
the courts, that the courts were unable apply the ZPD/16 retroactively to her 
obligation to pay income tax and the local income tax supplement for 2014. 
87 Although the Constitutional Court has in certain specific cases interpreted the 
case-law as meaning that courts can and should apply a new law retroactively if 
the infringement of constitutional rights and freedoms can be remedied by the 
application of a law more favourable to the appellant, the present case is not 
similar to those cases. 
88 Indeed, an obligation to apply a new provision retroactively would jeopardise the 
fundamental principles of the national tax system which are undoubtedly also 
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22  
inherent in the tax systems of other Member States, namely that the tax rules in 
force when the tax-relevant circumstances arose are to be applied in order to 
determine the tax liability and that the tax liability is determined and the tax due is 
calculated for tax periods representing one calendar year. 
89 Given that the appellant’s rights guaranteed by Article 48(1) of the Constitution 
and Article 1 of Protocol No 1 to the ECHR cannot be protected by retroactive 
application of a tax provision, such a result, given that all of the allegations 
concerning the disproportionate nature of the tax measure at issue are in any event 
based on the interpretation, intention and objectives of EU law, could only be 
achieved by a preliminary ruling of the Court, on the basis of which the national 
court would be obliged to disapply the provisions of Article 36(1) and (4) ZPD/04, 
on which the tax measure at issue is based. 
90 For the above reasons, the Constitutional Court is asking the first question referred 
for a preliminary ruling – to which the Court of Justice can provide a useful 
answer – on the substance of the appellant’s allegations of violations of 
Articles 14 and 48(1) of the Constitution in connection with the application of EU 
law. 
B) DISPUTED ISSUES CONCERNING THE POSSIBLE APPLICATION OF 
REGULATION NO 883/2004 
91 Since the appellant is challenging the loss of the tax allowance for a dependent 
child who was resident in another Member State, her case in principle falls within 
the substantive scope of Regulation No 883/2004. 
92 The judgment of 16 June 2022, Commission v Austria (Indexation of family 
benefits) (C-328/20, EU:C:2022:468), however, concerned tax benefits for 
dependent children of migrant workers employed in Austria whose children reside 
in other Member States. In the present case, the situation is reversed, as the 
dependent child exercised the right to move and reside freely in another Member 
State, while the appellant has not made use of her right of free movement under 
Article 21 or 45 TFEU. 
93 Furthermore, it appears that in the judgment of 13 October 2022, Finanzamt 
Österreich (Recovery of family benefits) (C-199/21, EU:C:2022:789, 
paragraphs 33 to 38), which concerned tax credits for a child who had studied in 
another Member State, the Court took the view that, for the purposes of applying 
Article 67 of Regulation No 883/2004, whether the individual who invokes its 
application has previously exercised his or her right to free movement is not 
decisive: the decisive factor is that the right to a family benefit, if not previously 
exercised, may be granted in accordance with the legislation of the Member State 
which is responsible for paying it. In the present case, the appellant did exercise 
that right in previous tax periods and it can still be granted for the 2014 tax year if 
EU law requires that Article 36(1) and (4) ZPD/04 be waived. 
MINISTARSTVO FINANCIJA 
 
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94 However, it would also appear that exercise of the right to a family benefit 
referred to in the judgment in the previous paragraph of the present request 
depends on whether the person who invokes the application of Regulation 
No 883/2004 receives a pension from the two competent Member States. In the 
present case – which deals with the payment of student mobility support under the 
Erasmus+ programme – even though that support is disbursed in the Member 
State of study, in accordance with the Commission’s criteria it is paid only in the 
dependent student’s country of origin, where his or her parent also resides. 
Similarly, the appellant derives her own taxable receipts exclusively in Croatia. 
95 It should also be noted that Article 2 of Regulation No 883/2004, which regulates 
‘persons covered’ by the Regulation, does not contain the condition of residence 
in a Member State different from the country of origin or prior exercise of the 
right of free movement. It only states that it applies ‘to nationals of a Member 
State […] who are or have been subject to the legislation of one or more Member 
States, as well as to the members of their families […]’. The definition of ‘activity 
as an employed person’ in Article 1(a) of Regulation No 883/2004 does not place 
conditions on the place of activity as an employed person either, merely stating 
that ‘activity as an employed person’ means ‘any activity or equivalent situation 
treated as such for the purposes of the social security legislation of the Member 
State in which such activity or equivalent situation exists’. 
96 The appellant is therefore a person who is active as an employed person within the 
meaning of Article 1(a) of Regulation No 883/2004, who has exercised the right to 
a tax allowance for a dependent child, which is a family benefit within the 
meaning of Article 1(z) of that regulation, who is subject to the legislation of at 
least one Member State within the meaning of Article 2 of that regulation, and 
who is claiming her right to a tax allowance for a dependent family member which 
was denied to her because of the payment of support for residing in another 
Member State within the meaning of Article 67 of that Regulation. 
97 Those provisions may therefore be sufficiently open-ended for the appellant’s case 
to fall within the scope of Regulation No 883/2004 and Article 67 of the 
regulation may be interpreted as meaning that the appellant should also be granted 
a tax allowance for a child who has benefited from Erasmus+ programme mobility 
measures and has taken up residence in another Member State for educational 
purposes as if she had not benefited from those measures. 
98 If such an interpretation were accepted, it would neutralise the whole test of 
proportionality (and discriminatory result) of an obstacle to the right to free 
movement of Erasmus+ students under Articles 18, 20 and 21 TFEU, as 
previously argued, as it would ensure that nobody is penalised with regard to the 
granting of family benefits merely because he or she or a family member has 
exercised the right to move freely guaranteed by the FEU Treaty. This would 
bring the scope of Regulation No 883/2004 in line with the scope and objectives 
of the FEU Treaty. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-277/23 
 
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99 It should also be noted that the regulations on the coordination of social security 
systems also apply to students as persons insured in at least one Member State. If 
it were to be held that Article 2 of Regulation No 883/2004 applies only to 
persons who have previously exercised some freedom of movement guaranteed by 
the FEU Treaty, then the appellant’s child is a person covered by the regulation 
within the meaning of that article, and the appellant could be covered by the 
regulation as a family member of a person who has exercised that right. 
100 In this regard, it may be noted that as early as the judgment of 16 July 1992, 
Hughes v Chief Adjudication Officer (C-78/91, EU:C:1992:331, paragraphs 25 to 
28), it was held that the family member of a person who has exercised his or her 
right of free movement may invoke the protection of family benefits in his or her 
country of residence in accordance with Council Regulation (EEC) No 1408/71 of 
14 June 1971 on the application of social security systems to paid workers and 
their families moving within the Community (OJ 1971 L 149, p. 1), the 
predecessor of Regulation No 883/2004, even though the family member had not 
personally exercised his or her right of free movement and was habitually resident 
in the Member State of his or her nationality. 
101 However, the issue in the present case is whether the appellant, as such a family 
member, is not entitled, as indicated in the aforementioned Hughes judgment, to a 
‘derived right’ to family benefits based on the right to a family benefit of a 
dependent student as a person who has exercised the right of free movement. The 
only way to establish such a ‘derived right’ is to take into account that, according 
to Article 10(20) ZPD/04, mobility support from the Erasmus+ programme is not 
taxable in the case of a dependent student who has exercised the right to free 
movement, and should therefore remain tax-neutral for the parent of the dependent 
student as well, and that therefore the applicability of Article 36(1) and (4) 
ZPD/04 should be waived in respect of the appellant, with regard to the dependent 
student’s allowance. 
102 At the same time, it also appears that the meaning of the provision of Article 67 of 
Regulation No 883/2004 does not require that certain rights to family benefits be 
granted to an individual as rights ‘derived’ from some other rights granted to him 
or her or to a family member while he or she is exercising some freedom of 
movement, but that the provision in fact contains a ‘negative’ right to respect his 
or her acquired rights, as if neither he or she nor a family member had exercised 
the right to free movement guaranteed by the FEU Treaty. 
103 Accordingly, in the event that the Court concludes that Regulation 883/2004 is 
applicable in the present case, even though the Constitutional Court has doubts in 
this regard, a second question has been referred for a preliminary ruling. 
104 For the purpose of ruling on the request for a preliminary ruling, copies of the files 
of the Osijek Administrative Court and the Constitutional Court were submitted in 
the annex to the request.