Keywords

Summary



Keywords

1. Freedom to provide services – Services – Definition

(Art. 50 EC)

2. Freedom to provide services – Restrictions – Tax legislation

(Art. 49 EC)

3. Citizens of the European Union – Right of free movement and residence in the territory of the Member States – Tax legislation

(Art. 18 EC)

Summary

1. Courses offered by certain establishments forming part of a system of public education and financed, entirely or mainly, by public funds are excluded from the definition of services within the meaning of Article 50 EC. By establishing and maintaining such a system of public education, financed as a general rule by the public budget and not by pupils or their parents, the State did not intend to involve itself in remunerated activities, but was carrying out its task in the social, cultural and educational fields towards its population.

However, courses given by educational establishments essentially financed by private funds, notably by students and their parents, constitute services within the meaning of Article 50 EC, since the aim of those establishments is to offer a service for remuneration. It is not necessary, in that respect, for that private financing to be provided principally by the pupils or their parents. Article 50 of the Treaty does not require that the service be paid for by those for whom it is performed.

(see paras 39-41)

2. Where taxpayers of a Member State send their children to a school situated in another Member State the financing of which is essentially from private funds, Article 49 EC must be interpreted as precluding legislation of a Member State which allows taxpayers to claim as special expenses conferring a right to a reduction in income tax the payment of school fees to certain private schools established in national territory, but generally excludes that possibility in relation to school fees paid to a private school established in another Member State.

Such legislation constitutes an obstacle to the freedom to provide services guaranteed by Article 49 EC, in that it has the effect of deterring taxpayers resident in the Member State concerned from sending their children to schools established in another Member State. Furthermore, it also hinders the offering of education by private educational establishments established in other Member States, to the children of taxpayers resident in the first Member State.

Refusal to grant the tax advantage in question for school fees paid to schools established in another Member State cannot be justified by the objective of ensuring that the operating costs of private schools are covered without causing an unreasonable burden on the State, since that objective could be achieved by less stringent methods. In order to avoid an excessive burden it is legitimate for a Member State to limit the amount deductible in respect of school fees to a given level, corresponding to the tax relief granted by that State, taking account of certain values of its own, for the attendance of schools situated in its territory, which would constitute a less stringent method than refusing to grant the tax relief in question. It appears in any event disproportionate totally to exclude from that tax relief school fees paid to schools established in another Member State whether or not those schools fulfil objective criteria determined on the basis of principles individual to each Member State and allowing it to be determined what types of school fees confer a right to that tax relief

(see paras 66-67, 79-82, operative part 1)

3. Where taxpayers of a Member State send their children to a school established in another Member State, the services of which are not covered by Article 49 EC, Article 18 EC precludes legislation which allows taxpayers to claim as special expenses conferring a right to a reduction in income tax the payment of school fees to certain private schools established in national territory, but generally excludes that possibility in relation to school fees paid to a private school established in another Member State.

Such legislation places those children at an unjustifiable disadvantage by comparison with those who have not availed themselves of their freedom of movement by going to school in another Member State, and infringes the rights that are conferred upon them by Article 18(1) EC.

(see paras 98-99, operative part 2)