WRITTEN QUESTION E-2607/01

by Ilda Figueiredo (GUE/NGL) to the Commission

(26 September 2001)

Subject: Double taxation of labour

Several dozen Portuguese workers were taken on in August 1990 at the airport in Portugal by Cogefar-Impresit (an Italian company with offices in Portugal) to work in Brussels on a secondment basis in the building industry. As this situation was not legal, they signed a contract with CDK (company based in Belgium) in November 1991.

Until June 1991 these workers were paid in Portugal by cheque.

In 1990 and 1991, Cogefar declared the workers in Portugal and CDK did so in Belgium, but in an irregular manner. For example, one worker's wages were declared in Portugal for the period from August to December 1990 as amounting to ESC 270 000 and in Belgium for the same period as amounting to BFR 700 000, without contributions for family benefits despite the fact that he was married and had two children.

As regards income tax for 1990 and 1991 (claimed by Belgium), the Belgian tax authorities maintain that this tax is payable to the Belgian tax department, on the grounds that, under the terms of the bilateral agreement (Article 15), the wages have not been assessed for tax purposes by an entity established outside Belgium as they were paid by CDK, to which Cogefar belongs. The Portuguese workers have challenged this interpretation on the basis on the grounds that, during the period in question, they were actually employed by Cogefar, which had installations in Portugal, that they were paid in Portugal, and that they paid tax there. The statements submitted by CDK are therefore untrue and falsified.

At present some fifty Portuguese, whose work situation in Brussels has been regularised, are in this situation and are faced with heavy tax debts, as a result of clearly established acts of falsification committed by a company in the European Union in 1990 and 1991.

Will the Commission state whether measures can be taken to remedy this situation?

Answer given by Mr Bolkestein on behalf of the Commission

(23 November 2001)

The question raised by the Honourable Member specifically concerns the situation of a number of Portuguese employees of a firm based in Portugal who were seconded to Belgium in 1990 and 1991 to work in the building industry. According to the details provided by the Honourable Member, during the period in question, the employees continued to receive their salary in Portugal and pay their taxes there. As a result of declarations made by the Belgian firm for which they were working, the workers concerned were also subject to taxation in Belgium as the Belgian authorities believed that their wages had not been assessed for tax purposes by an entity established outside Belgium.

As the employees in question have therefore been taxed twice, the Honourable Member asks whether measures can be taken to remedy the situation.

Firstly, the Commission would remind the Honourable Member that Community law, and in particular Article 49 of the EC Treaty, forbids Member States to obstruct the freedom to provide services across frontiers by means of double taxation.

In this respect, the Commission notes that the Convention of 16 July 1960 between Portugal and Belgium sets out the applicable tax rules for the avoidance of double taxation. On the question of taxation of the remuneration of employees, Articles 15 and 23 lay down the rules for deciding in which country salaries should be taxed.

Regarding the case in hand, since it is not in a position to assess the factual circumstances, it is not for the Commission to comment on the remedies which national law offers to taxpayers in the event of double taxation of their income, contrary to the rules laid down by the Convention.