Case C‑632/13

Skatteverket

v

Hilkka Hirvonen

(Request for a preliminary ruling from the Högsta förvaltningsdomstolen)

‛Reference for a preliminary ruling — Freedom of movement for persons — Equal treatment — Income tax — Revenue of non-resident taxpayers subject to taxation at source — Exclusion of any tax deduction related to the taxpayer’s personal circumstances — Justification — Possibility for non-resident taxpayers to opt for the regime applicable to resident taxpayers and to benefit from the relevant tax deductions’

Summary — Judgment of the Court (Sixth Chamber), 19 November 2015

Citizenship of the Union — Right to move and reside freely in the territory of the Member States — Tax legislation or Fiscal legislation — Income tax — Refusal to grant non-resident taxpayers, who obtain the majority of their revenue from the source State and who have opted for the taxation at source regime, the same personal deductions as those granted to resident taxpayers — Lawfulness — Condition — Tax burden on non-resident taxpayers not greater overall than that on resident taxpayers

(Art. 21 TFEU)

In matters of taxation of income, the refusal to grant non-resident taxpayers, who obtain the majority of their income from the source State and who have opted for the taxation at source regime, the same personal deductions as those granted to resident taxpayers under the ordinary taxation regime does not constitute discrimination contrary to Article 21 TFEU where the non-resident taxpayers are not subject to an overall tax burden greater than that placed on resident taxpayers and on persons in a similar situation whose circumstances are comparable to those of non-resident taxpayers.

A difference in treatment between non-resident and resident taxpayers, consisting in the fact that it subjects the gross income of non-residents to a definitive tax at a single rate, deducted at source, whilst the net income of residents is taxed according to a progressive table including a tax-free allowance, is compatible with EU law provided that the single rate is not higher than that which would actually be applied to the person concerned, in accordance with the progressive table, in respect of net income increased by an amount corresponding to the tax-free allowance.

The refusal to grant the personal deduction must be accepted as an element inherent to the taxation at source regime, since it seeks both to simplify the task of the administration and ease the burden on the non-resident taxpayer. Thus, when a non-resident taxpayer opts for that regime, the administration no longer has to collect the tax from that taxpayer, so that it is not necessary for it to have a precise overview of the personal or family circumstances of that person. At the same time, that taxpayer is no longer required to cooperate, in that he is not required to submit a tax return for the income which he obtains in the source State and, in consequence, is not required to make himself familiar with the tax system of a Member State other than his Member State of residence.

Accordingly, it complies with the essence of the taxation at source regime that all the expenses actually incurred by a taxable person cannot be taken into consideration under that type of taxation, given that the tax is taken from the authority paying national benefits in the source State. As a general rule, that authority is not required to take account of certain expenses and taking account of all expenses would run counter to the simplification sought by that regime.

(see paras 44, 46, 47, 49, operative part)