CELEX: 62006CC0527
Language: en
Date: 2008-06-25 00:00:00
Title: Opinion of Mr Advocate General Mengozzi delivered on 25 June 2008. # R. H. H. Renneberg v Staatssecretaris van Financiën. # Reference for a preliminary ruling: Hoge Raad der Nederlanden - Netherlands. # Freedom of movement for workers - Article 39 EC - Tax legislation - Income tax - Determination of the basis of assessment - National of a Member State receiving all or almost all of his income in that State - Residence in a different Member State. # Case C-527/06.

OPINION OF ADVOCATE GENERAL
      MENGOZZI
      delivered on 9 July 2008 1(1)
      
      Case C‑527/06
      R.H.H. Renneberg
      v
      Staatssecretaris van Financiën
      (Reference for a preliminary ruling from the Hoge Raad der Nederlanden (Netherlands))
      (Tax law – Article 39 EC – Income tax payable by non-residents – Calculation of the basis of assessment – Immovable property located in the territory of another Member State – Negative income not taken into account – Allocation of fiscal jurisdiction)I –  Introduction
      1.        In the present reference for a preliminary ruling the Court of Justice is asked in essence whether Article 39 EC and/or Article
         56 EC preclude a situation in which a Member State does not permit a non-resident taxpayer receiving all (or almost all) of
         his work-related income taxable in that Member State to deduct from the tax on such rental income losses in respect of a property
         located in the Member State in which the taxpayer resides, even though the first Member State (the Member State of employment)
         allows resident taxpayers working in its territory to make such a deduction. 
      
      2.        As I shall demonstrate in this Opinion, it is necessary to assess whether the implications from the judgment in Schumacker, (2) as recently clarified by the judgments in Lakebrink and Peters-Lakebrink, (3) and Ritter-Coulais (4) are fully applicable in a case such as that in the main proceedings, in which the principal issue is the application of the
         provisions of a convention for the prevention of double taxation between the two Member States concerned.
      
      II –  Legal background
      A –    Treaty law
      3.        Article 4(1) of the Convention between the Kingdom of Belgium and the Kingdom of the Netherlands for the avoidance of double
         taxation of income and capital and for the regulation of certain other taxation matters, signed on 19 October 1970, (‘the
         Bilateral Tax Convention’) (5) provides: 
      
      ‘For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that
         State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar
         nature; …’
      
      4.        Article 6(1) of the Bilateral Tax Convention provides:
      
      ‘Income derived from immovable property may be taxed in the State in which that property is located.’
      5.        Article 19(1) of the Bilateral Tax Convention, relating to the taxation of the salaries of officials, reads:
      
      ‘Remuneration, including pensions, paid by a Contracting State or a political subdivision thereof, either directly or from
         funds established by them, to a natural person in respect of services which that person has performed for that State or political
         subdivision are taxable in that State. …’ 
      
      6.        Under Article 24(1)(1) of the Bilateral Tax Convention, in order to avoid double taxation of residents of the Netherlands,
         the Kingdom the Netherlands may, when taxing its own residents, include in the basis of assessment the items of income or
         capital which, in accordance with the provisions of the Bilateral Tax Convention, are taxable in Belgium. 
      
      7.        Article 24(1)(2) of that convention provides that, subject to the application of the provisions relating to compensation for
         losses laid down in the domestic rules for the avoidance of double taxation, the Kingdom of the Netherlands will make a reduction
         in the amount of tax calculated in accordance with Article 24(1)(1). The reduction is to be equal to the amount of tax corresponding
         to the ratio between the amount of income or capital included in the basis of assessment referred to in Article 24(1)(1) and
         taxable in Belgium under Article 6 of the Bilateral Tax Convention, in particular, and the total amount of income or total
         capital constituting the basis of assessment referred to in Article 24(1)(1).
      
      8.        Article 25(3) of the Bilateral Tax Convention, headed ‘Non-discrimination’, provides that ‘non-resident natural persons of
         one of the States are entitled in the other State to the personal allowances, concessions and reductions which are granted
         by the latter to its own residents by reason of their circumstances or dependents.’ 
      
      B –    National law
      9.        Article 1 of the Netherlands Law on Income Tax (Nederlandse wet op de Inkomstenbelasting) of 16 December 1964 (‘the WIB’) (6) defines ‘national’ taxpayers (‘resident taxpayers’) as natural persons resident in the Netherlands, as opposed to ‘foreign’
         taxpayers (‘non-resident taxpayers’), namely natural persons who are not resident in that Member State but do receive income
         there. 
      
      10.      Taxpayers resident in the Netherlands are subject to tax on their entire income derived in the Netherlands and non-resident
         taxpayers are subject to tax only on some of their income from the Netherlands. 
      
      11.      In the case of resident taxpayers, the basis of assessment is made up of gross worldwide income, less deductible losses. Gross
         income includes, in particular, net income from work and from assets, including the advantage which the taxpayer derives from
         occupying his own dwelling. 
      
      12.      Pursuant to Article 42a(1) of the WIB, that advantage is fixed as a flat-rate amount, and other advantages and costs, charges
         and depreciations – other than interest on debts, the costs of loans, and periodic payments for rights in respect of a long
         lease or building lease – are not taken into account.
      
      13.      Pursuant to Article 4(2) of the WIB, if the calculation of net income results in a negative amount, that negative amount is
         deducted from taxable gross income.
      
      14.      It is settled that the result of applying all the various provisions referred to above is that the full amount of the interest
         on a debt taken on to finance a personal dwelling is deducted from gross income and, consequently, from the taxable income
         of a resident taxpayer, even if the interest exceeds the advantage the taxpayer derives from living in his own dwelling. 
      
      15.      As the national court notes, if a resident of the Netherlands has a negative income from immovable property located in Belgium,
         that negative income component may be deducted from the remaining (Netherlands) income. However, in a subsequent year in which
         a positive income is derived from that immovable property, the deduction to avoid double taxation will be calculated by deducting
         that loss from that positive income (Article 24(1)(2) of the Bilateral Tax Convention, in conjunction with Article 3(4) of
         the Decree on the avoidance of Double Taxation 1989).
      
      C –    The tax position of a taxpayer resident in Belgium who obtains work-related income in the Netherlands 
      16.      Although in principle, pursuant to Article 2(2) of the WIB, Netherlands nationals who are not resident in the Netherlands
         but are employed by a Netherlands legal person governed by public law are deemed to be resident in the Netherlands, the national
         court points out that the Hoge Raad der Nederlanden has ruled none the less that, in respect of income which the Bilateral
         Tax Convention allocates to the Kingdom of Belgium, determination of residence under Article 2(2) of the WIB must be disregarded
         in favour of the provisions of that convention. 
      
      17.      It therefore follows from the findings of the national court that the appellant in the main proceedings, Mr Renneberg, is,
         under Article 4 of the Bilateral Tax Convention, to be regarded as a person residing in Belgium. 
      
      18.      In the Netherlands, therefore, Mr Renneberg is not regarded as having unlimited liability to tax and is treated there, as
         regards the income which the Bilateral Tax Convention allocates to Belgium, in accordance with the regime which applies to
         non-resident taxpayers. This means that income, whether negative or positive, which pursuant to the Bilateral Tax Convention
         has been allocated to the Kingdom of Belgium for taxation does not influence the tax on income, positive or negative, which
         pursuant to that same convention has been allocated to the Kingdom of the Netherlands. 
      
      III –  The dispute in the main proceedings and the question referred for a preliminary ruling
      19.      Mr Renneberg, who has Netherlands nationality, moved from the Netherlands to Belgium in December 1993. In 1996 and 1997 he
         lived in a dwelling of his own which he had acquired in 1993 and which had been financed with a mortgage loan from a Netherlands
         bank.
      
      20.      During those two years Mr Renneberg was employed in the public service by the Netherlands municipality of Maastricht and obtained
         his entire work-related income in the Netherlands.
      
      21.      In Belgium, Mr Renneberg was liable to a tax on his own dwelling, namely a property tax (‘précompte immobilier’).
      
      22.      In the Netherlands, when calculating the assessments for 1996 and 1997 in respect of taxable income of HFL 75 265 and HFL 78
         600, respectively, the Tax Inspectorate did not accept as a deductible item from the other (Netherlands) income the negative
         return on his Belgian dwelling, that is to say, the balance resulting from the difference between the interest paid on the
         mortgage and the rentable value of the dwelling. According to Mr Renneberg’s tax return, those (negative) amounts were HFL 8 165 in
         1996 and HFL 8 195 in 1997.
      
      23.      The Tax Inspectorate upheld the tax assessments against which Mr Renneberg had appealed. 
      
      24.      After the Gerechtshof te ’s-Hertogenbosch (the ’s-Hertogenbosch Regional Court) dismissed the appeals he had lodged against
         those decisions, Mr Renneberg lodged an appeal in cassation against those decisions before the Hoge Raad der Nederlanden (Supreme
         Court of the Netherlands). 
      
      25.      The Hoge Raad der Nederlanden notes, first, that Mr Renneberg relies on the judgment in Schumacker and, secondly, that the tax advantage at issue in the main proceedings is not based on the taxpayer’s personal and family
         circumstances. 
      
      26.      It holds that, unlike the consideration – based on the progressivity principle – of personal and family circumstances where
         direct taxes are levied, the possibility of setting off – within a single tax jurisdiction – negative income from one particular
         source of income against positive income from another source of income is not such a universal characteristic of direct taxation
         that taxpayers who, taking advantage of a right to freedom of movement guaranteed by the EC Treaty, are liable to tax in different
         Member States should benefit from that possibility in one of those Member States.
      
      27.      It is in those circumstances that, having stayed proceedings pending judgment by the Court of Justice in Ritter-Coulais, the Hoge Raad der Nederlanden decided to refer the following question to the Court for a preliminary ruling:
      
      ‘Must Articles 39 EC and 56 EC be interpreted as precluding, either individually or jointly, a situation in which a taxpayer
         who, in his country of residence, has negative income from a dwelling owned and occupied by him, and obtains all of his positive
         income, specifically work-related income, in a Member State other than that in which he resides, is not permitted by that
         other Member State (the State of employment) to deduct the negative income from his taxable work-related income, even though
         the State of employment does allow its own residents to make such a deduction?’
      
      IV –  Procedure before the Court of Justice
      28.      Mr Renneberg, the Netherlands and Swedish Governments and the Commission of the European Communities have submitted written
         observations. The Netherlands Government and the Commission also presented oral argument at the hearing on 22 May 2008, at
         which the other interested parties were not represented.
      
      V –  Analysis
      A –    Applicability of the freedoms of movement
      29.      In their written observations the Netherlands Government and the Commission submit as their main contention that neither Article 39
         EC nor Article 56 EC is applicable in a situation such as that at issue in the main proceedings. With regard to the free movement
         of workers, they maintain, by reference to Werner (7) and Turpeinen, (8) that a national of one Member State may not claim such freedom where he has consistently worked in his home State and has
         transferred only his residence to another Member State. As regards Article 56 EC, relying on van Hilten-van der Heijden, (9) they contend that the mere transfer of residence from one Member State to another does not involve a capital movement. The
         Commission proposes none the less that the situation which gave rise to the main proceedings should be considered with regard
         to Article 18 EC, a proposal which it made again at the hearing.
      
      30.      For my part, I am not unswayed by the arguments relating to Article 56 EC, although I cannot subscribe to the restrictive
         interpretation of Article 39 EC put forward by the Netherlands Government and the Commission.
      
      31.      In that regard, that interpretation appears incorrectly to confuse the situation of a national of a Member State who is in
         paid employment in that State and who is attempting to exercise his right of freedom of movement as a worker in that Member
         State at the time of the initial transfer of his residence to another Member State for personal reasons with that of a national who, whilst retaining his paid employment
         in his Member State of origin, wishes to exercise his right of freedom of movement as a worker in the latter after transferring his residence to another Member State for personal reasons, a situation which requires him to travel daily between those two States as a frontier worker.
      
      32.      This second case is precisely that of Mr Renneberg. He is seeking to rely on application of the Treaty provisions on the free
         movement of workers as against the alleged obstacles raised by the tax regime in the Kingdom of the Netherlands, his State
         of employment, with regard to the taxation of income he received in that Member State after the transfer of his residence to Belgium for personal reasons. Such a situation does indeed fall within the scope of Article 39 EC.
         
      
      33.      The Court reached the same conclusion in its recent judgments in Hartmann and Hendrix. (10) In the first of those judgments, having noted that the situation which gave rise to the main proceedings was that of a person
         who, since the transfer of his residence, had resided in a Member State other than the one in which he was working, the Court
         held that the fact that Mr Hartmann settled in Austria for reasons not connected with his employment did not justify refusing
         him the status of migrant worker which he had acquired as from the time when, following the transfer of his residence to Austria,
         he made full use of his right to freedom of movement for workers by going to Germany to carry on an occupation there. (11) Similarly, in Hendrix, the Court held that the fact that Mr Hendrix, who was of Netherlands nationality, had maintained paid employment in his
         State of origin after transferring his residence to Belgium gave him the status of a migrant worker and brought him, throughout
         the period following the transfer of his residence, within the scope of the provisions of Community law relating to freedom
         of movement for workers. (12)
      
      34.      The Court did not therefore accept the arguments put forward by the Netherlands authorities and the United Kingdom Government
         in their observations in Hendrix that, in essence, the reasoning employed by the Court on the subject of freedom of establishment in Werner should also be applied in the context of Article 39 EC. (13) For the reasons set out above I am of the view that a similar approach should be taken with regard to the observations of
         the Netherlands Government and the Commission concerning the inapplicability of Article 39 EC in the present case. The judgment
         in Turpeinen, cited by the Commission in order to justify considering the case in the main proceedings in the light of Article 18 EC,
         does not alter that view. In that judgment the Court rejected the applicability of Article 39 EC in favour of Article 18 EC,
         on the ground that Ms Turpeinen, who was of Finnish nationality, had exercised the right to reside in another Member State
         only after her retirement and thus without any intention of working in paid employment in that State (14) (nor, a fortiori, in her State of origin from which she was receiving her retirement pension). That situation is therefore
         very different from the one currently being considered by the Court.
      
      35.      In my view, there is therefore nothing to preclude the situation in the dispute in the main proceedings being assessed in
         the light of Article 39 EC. (15)
      
      36.      In those circumstances, priority should be given to interpreting Article 39 EC, since consideration of the applicability of
         Article 56 EC will be appropriate only if the tax legislation at issue in the main proceedings is compatible with Article
         39 EC, which, as will be demonstrated below, does not seem to me to be the case.
      
      B –    The existence of indirect discrimination prohibited by Article 39 EC
      37.      As I explained in my introductory comments, the issue the Court is required to resolve here amounts, in my view, to deciding
         whether the judgment in Schumacker, as subsequently clarified by the judgments in Lakebrink and Peters-Lakebrink, and the ruling in Ritter-Coulais may be validly applied to a situation such as that in the main proceedings.
      
      38.      In setting out the principle of freedom of movement for workers, Article 39 EC prohibits all discrimination on grounds of
         nationality between workers of the Member States. (16) That prohibition thus covers not only overt discrimination on grounds of nationality but also discrimination which, by the
         application of other criteria of differentiation, leads in fact to the same result. (17)
      
      39.      In the present case, the Netherlands tax regime applies irrespective of the nationality of the taxpayer concerned. However,
         as is clear from the order for reference, that regime affords taxpayers who live and work in the Netherlands the right to
         have rental income losses relating to a property located in another Member State taken into account in the assessment of the
         tax on their work-related income received in the Netherlands, but excludes non-resident taxpayers working in the Netherlands
         who suffer similar losses.
      
      40.      Although the Court has ruled that tax benefits granted only to residents of a Member State may constitute indirect discrimination
         on grounds of nationality, the situations of residents and non-residents must also be comparable. (18)
      
      41.      In principle, the income received in the territory of a Member State by a non-resident is in most cases only a part of his
         total income, which is concentrated at his place of residence. In addition, international tax law and Community law accept
         that a non-resident’s personal ability to pay tax, determined by reference to his aggregate income and his personal and family
         circumstances, is easier to assess at the place where his personal and financial interests are centred, which in general is
         the place where he has his usual abode. (19) Consequently, the fact that a Member State does not grant to a non-resident certain tax benefits which it grants to a resident
         is not, as a rule, discriminatory since those two categories of taxpayer are not in a comparable situation. (20)
      
      42.      However, in well-established case law, initiated by the judgment in Schumacker, the Court has held that the position is different where the non-resident receives no significant income in his State of
         residence and obtains the major part of his taxable income from an activity performed in the State of employment, with the
         result that his State of residence is not in a position to grant him the advantages resulting from the taking into account
         of his personal and family circumstances. (21) In the case of a non-resident who receives the major part of his income and almost all his family income in a Member State
         other than that of his residence, discrimination arises from the fact that the personal and family circumstances of that non-resident
         are taken into account neither in the State of residence nor in the State of employment. (22) 
      
      43.      The judgment in Ritter-Coulais, on the one hand, and the judgment in Lakebrink and Peters-Lakebrink, on the other hand, constituted a development in case-law following the Schumacker judgment as regards the obligations incumbent on the Member State of employment of non-residents who receive all or almost
         all of their taxable work-related income in that State. 
      
      44.      In Ritter-Coulais, the Court was asked whether the freedoms of movement laid down in the Treaty required that natural persons in receipt of
         income from paid employment in one Member State (Germany) and assessable to tax on their total income there were entitled
         to request that account be taken, for the purposes of determining the rate of tax applicable to that income and in the absence
         of positive revenue, of rental income losses relating to their own use of a private dwelling located in another Member State
         (France), in the same way as taxpayers in Germany.
      
      45.      It should be pointed out that the Court did not answer the first question referred by the national court concerning taking
         into account rental income losses for the purposes of determining the basis of assessment, due to the hypothetical nature of that question as regards resolving the dispute in the case before the national court. (23) That question is again raised directly in the present case, in a context which, however, as I will explain below, differs
         in several respects from that in Ritter-Coulais. 
      
      46.      As regards its answer to the second question concerning calculation of the rate of tax on work-related income of non-residents
         in the Member State of employment, the Court held that Article 48 of the Treaty precluded that Member State treating differently
         rental income losses relating to properties located outside German territory, whose owners are more often non-residents, such
         as Mr and Mrs Ritter-Coulais, and those relating to properties located in Germany, by making the taking into account of the
         former income losses, for the purposes of determining the rate of taxation, subject exclusively to the existence of positive
         rental income. (24)
      
      47.      It is interesting to observe that, although the situation that gave rise to the dispute between Mr and Mrs Ritter-Coulais
         and the German tax authorities concerned workers who lived in one Member State but received all or almost all of their taxable
         work-related income in another Member State, the judgment in Ritter-Coulais makes no reference to the Schumacker judgment, contrary to the reasoning followed by Advocate General in his Opinion, which was essentially based on the implications
         that were to be drawn from that judgment. (25)
      
      48.      That undoubtedly deliberate omission might be due to the fact that the tax benefits at issue in that case did not correspond
         to those relating to the taking into account of the personal and family circumstances of the non-resident taxpayers concerned,
         within the meaning of the judgment in Schumacker, but, more generally, to consideration by the Member State of employment of their ability to pay tax, including therefore
         their total income. (26) It may therefore have seemed to the Court inappropriate to link the situation in Ritter-Coulais to the line of cases initiated by Schumacker. 
      
      49.      A further explanation for the omission of any reference to the ruling in Schumacker in the judgment in Ritter-Coulais may also lie in the fact that the German legislation at issue in that case did not introduce directly a difference in treatment between residents and non-residents, but excluded taking into consideration, for the purposes of
         determining the rate of taxation of taxpayers’ incomes, negative rental income derived from properties located in France in the absence of positive income. That fact led the Court to state that, in so far as non-residents were more likely to own and personally occupy properties
         outside Germany, the treatment of non-resident workers under the German legislation was less favourable than that afforded
         to workers who resided in Germany in their own homes. (27)
      
      50.      The Court appears, however, to have gone a step further in Lakebrink and Peters-Lakebrink, in a situation similar to that which gave rise to Ritter-Coulais, by extending the ruling in Schumacker, in so far as it related to the obligations incumbent on the Member State of employment of non-residents receiving all or
         almost all of their income in that State, to cover the situation of Mr and Mrs Lakebrink.
      
      51.      Mr and Mrs Lakebrink were working in Luxembourg but living in Germany and, under Luxembourg law, unlike persons working and
         living in Luxembourg, they were not entitled to have the negative rental income from their properties in Germany (which they
         did not occupy) taken into consideration for the purpose of determining the tax rate applicable to their Luxembourg income,
         which constituted the major part of their taxable income.
      
      52.      On the basis of the ruling in Schumacker, the Court held, first, that there was discrimination within the meaning of that ruling against non-resident workers, such
         as Mr and Mrs Lakebrink, who receive no income in their State of residence and obtain all their family income from an activity
         performed in the State of employment. (28) Secondly, in paragraph 34 of the judgment, the Court explained the ground on which that finding of discrimination in Schumacker is based, stating that it relates to all the tax advantages connected with the non-resident’s ability to pay tax which are not taken into account either in the
            State of residence or in the State ofemployment, and in adopting the reasoning which I had set out in point 36 of my Opinion in that case and in referring to the analysis
         given by Advocate General Léger in points 97 and 99 of his Opinion in Ritter-Coulais. (29) The Court added, in the same paragraph of the judgment, that such ability to pay tax may indeed be regarded as forming part
         of the personal circumstances of the non-resident within the meaning of the judgment in Schumacker. It therefore concluded that the refusal by the tax authorities of a Member State (in that case the Grand-Duchy of Luxembourg)
         to take into consideration negative rental income relating to a taxpayer’s properties abroad constituted discrimination prohibited
         by Article 39 EC. (30)
      
      53.      In Lakebrink and Peters-Lakebrink, the Court therefore appears to require the Member State of employment of non-resident taxpayers who obtain the major part
         of their work-related income in that Member State to take into account, for the purposes of determining the rate of tax applicable
         to that income, the ability to pay of those taxpayers – including, therefore, the rental income losses suffered by them relating
         to a property located in their Member State of residence – provided such ability to pay is not taken into account in the latter
         Member State.
      
      54.      The statement made in paragraph 34 in fine of Lakebrink and Peters-Lakebrink, that the ability to pay tax may indeed be regarded as forming part of the personal circumstances of the non-resident within the meaning of the judgment in Schumacker, seems to me to be by way of an obiter dictum. That comment also seems to me to be somewhat risky for two principal reasons.
         
      
      55.      First, it seems to treat the non-resident’s ability to pay tax as being the same as his personal circumstances although, according
         to the ruling in Schumacker, the ability to pay tax is determined only in part by taking into account the taxpayer’s personal circumstances. 
      
      56.      Secondly, as a corollary, whilst taking into account information concerning the personal and family circumstances of a taxpayer
         necessarily leads to reducing the income tax he must pay, taking into account the taxpayer’s ability to pay tax, including
         therefore his aggregate income, is likely to lead to an increase in the tax due. Such might be the case, for example, in a
         situation where the Member State of employment of non-resident taxpayers receiving the major part of their work-related income
         there requires those taxpayers, in the same way as resident taxpayers, to include all positive income from a foreign source
         for the purposes of determining the basis of assessment and/or rate of tax whilst enabling them to include in it also, where
         appropriate, all their negative income from a similar source. In a hypothesis in which such a non-resident taxpayer receives
         only positive income from a foreign source, the fact that his Member State of employment takes his ability to pay tax into
         account will not in the end reduce the income tax he must pay, in the same way as if an identical rule were applied in respect
         of a resident taxpayer.
      
      57.      Therefore, although I support the finding in Lakebrink and Peters-Lakebrink that, since the situations of a resident and a non-resident are objectively comparable from the point of view of their Member
         State of employment, a non-resident taxpayer’s ability to pay must be taken into consideration by that Member State in the
         same way as that of a resident taxpayer, I have reservations about the fact that in that judgment such ability to pay is regarded
         as part of the personal circumstances of the taxpayer, within the meaning of the judgment in Schumacker, without further clarification.
      
      58.      That said, irrespective of the issue of their link with the judgment in Schumacker, the Court’s findings in Ritter-Coulais and Lakebrink and Peters-Lakebrink lead, in my view, to similar results. Those judgments thus require that the Member State of employment should allow non-residents
         receiving all or almost all of their income in that Member State to request that their negative rental income relating to
         a property located in the Member State of residence – whether they occupy it themselves (in the case of Mr and Mrs Ritter-Coulais)
         or not (as in the case of Mr and Mrs Lakebrink) and in so far as similar tax benefits cannot be afforded by the latter State
         – be taken into account for the purposes of determining the tax rate applicable to that income. (31)
      
      59.      The fact that, unlike the German legislation at issue in Ritter-Coulais, the Luxembourg legislation did not require rental income losses or profits relating to properties located abroad owned by
         non-residents working in Luxembourg to be taken into account for the purposes of determining the tax rate applicable did not
         constitute a factor precluding a finding that such legislation was incompatible with Article 39 EC, in the absence of formal
         pleading by the governments submitting observations in Lakebrink and Peters-Lakebrink of any justification for the difference in treatment demonstrated by the Court, such as the need to safeguard the coherence
         of their own tax systems. (32) In that regard, the classification of the national measure at issue in Lakebrink and Peters-Lakebrink as constituting indirect discrimination on grounds of nationality, unlike the classification in Ritter-Coulais as a measure placing Community nationals at a disadvantage, seems to stem from the fact that the Luxembourg legislation,
         unlike the German legislation at issue in Ritter-Coulais, established a difference in treatment based directly on whether or not a place of residence existed in Luxembourg.
      
      60.      It should also be noted that the refusals which the taxpayers in Ritter-Coulais and Lakebrink and Peters-Lakebrink received resulted solely from application of the national tax laws concerned and did not originate from the provisions of
         the bilateral tax conventions between the Federal Republic of Germany and the French Republic on the one hand or Luxembourg
         and the Federal Republic of Germany on the other hand. (33)
      
      61.      The case presently before the Court is similar in several respects to the two cases considered above. It concerns the situation
         of a non-resident who, whilst exercising his right of freedom of movement as a worker, wishes to obtain from the Member State
         in which he receives the major part of his taxable work-related income, and like residents of that Member State, to have negative
         rental income relating to a property which he occupies in his Member State of residence taken into account. Apart from the
         fact that Mr Renneberg occupies his own property located in Belgium, this case seems more similar to Lakebrink and Peters-Lakebrink because, like the Luxembourg legislation at issue in the latter case, the refusal of the Kingdom of the Netherlands, as a
         taxpayer’s Member State of employment, to take into account for tax purposes the losses in rental income suffered by that
         person, relating to a property located in his Member State of residence, is based directly on the fact that the taxpayer concerned has no place of residence in the Netherlands, as will be expanded upon below. 
      
      62.      The present case, however, is different from both Ritter-Coulais and from Lakebrink and Peters-Lakebrink in two important aspects that are closely linked. 
      
      63.      On one hand, unlike those two cases, the refusal Mr Renneberg received from the Netherlands tax authorities appears not to
         stem exclusively from Netherlands domestic legislation but from the provisions of the Bilateral Tax Convention, and more particularly
         from the way in which that convention allocated jurisdiction between the Kingdom of Belgium and the Kingdom of the Netherlands.
         
      
      64.      On the other hand, Mr Renneberg is asking that rental income losses relating to his property located in Belgium should be
         taken into account for the purposes of determining the basis of assessment of the income tax he pays in the Netherlands and
         not, as was the case in Ritter-Coulais and Lakebrink and Peters-Lakebrink, for the purposes of calculating the rate of such tax paid in the Member State of employment.
      
      65.      The first of those two aspects leads the Netherlands and Swedish Governments to consider that there is an objective difference
         between the situation of a taxpayer who is a non-resident in the Netherlands, like Mr Renneberg, and that of a taxpayer who
         resides in the Netherlands, so even the possibility of indirect discrimination prohibited under Article 39 EC is excluded.
      
      66.      In that regard, as the Netherlands and Swedish Governments accept, moreover, there is no doubt in my mind that there is a
         difference of treatment between the situation of a taxpayer such as Mr Renneberg and that of a taxpayer who is a resident, who is in paid employment
         in the Netherlands and who receives negative rental income from a property located in Belgium. As was confirmed by the Netherlands
         Government in response to the Court’s written questions and at the hearing, a taxpayer such as Mr Renneberg cannot include
         in the calculation of the tax on work-related income which he pays in the Netherlands rental income losses relating to a property
         located in Belgium, unlike a taxpayer who lives and works in the Netherlands and who, suffering rental income losses relating
         either to a property located in the Netherlands which he occupies himself or to a property located in Belgium which he does
         not permanently occupy himself, could claim those losses against income tax paid in the Netherlands.
      
      67.      The Netherlands and Swedish Governments contend, however, that such a difference in tax treatment, because it stems from the allocation of fiscal jurisdiction provided for in the Bilateral Tax Convention between the Kingdom of the Netherlands and the Kingdom of Belgium, relates to
         situations that are not objectively comparable, so that any discrimination is to be excluded. 
      
      68.      However, the Commission considers, in essence that, from the point of view of the Member State of employment, the situations
         of a resident and of a non-resident who receive all or almost all of their income in that State are comparable. In its view
         that measure introduces a difference in treatment between those two categories of taxpayer solely on the ground of their place
         of residence.
      
      69.      As the two previous points demonstrate, the theoretical debate – although not devoid of practical consequences – underlying
         the observations of the intervening governments and the Commission, relates above all to whether it is sufficient, for the
         purposes of examining the objective comparability of the situations, that the rules at the origin of the difference in treatment
         at issue should be taken into account or whether only a factual similarity should be taken into account for those purposes
         (namely, the comparison of a resident and a non-resident receiving the major part or all of their taxable income in the Member
         State of employment).
      
      70.      The Commission’s position appears to me to correspond more closely to the logic evolved in the case-law of the Court. Since
         discrimination can arise only through the application of different rules to comparable situations, (34) it seems inappropriate to say the least, for the purposes of examining the objective comparability of situations, to take as the assessment criterion the national and/or treaty rules at the origin of the difference in treatment,
         where the Court is in fact being called upon to determine whether those rules are discriminatory. In other words, I find it
         difficult to understand how it is possible to accept the circular argument, which is however put forward by the intervening
         governments, that situations are not objectively comparable because a Member State treats them differently.
      
      71.      At the same time, it is clear from Schumacker and Lakebrink and Peters-Lakebrink that the Court regards the situation of a resident as being the same as that of a non-resident where the latter receives
         no significant income in his State of residence and derives the major part of his taxable income from an activity pursued
         in the Member State of employment for the purposes of the latter Member State taking into account that taxpayer’s ability
         to pay, without considering at that stage of the reasoning the origin of that difference in treatment.
      
      72.      That, in my view, should also be the approach in the present case and appears, moreover, to be the one on which the national
         court is basing its view.
      
      73.      Since, as can be seen from the order for reference, it is settled that Mr Renneberg, residing in Belgium, derives all his
         taxable income from paid employment in the Netherlands and obtains no significant income in his Member State of residence,
         he is in a situation that is objectively comparable, in respect of his Member State of employment, to that of a Netherlands
         resident also in paid employment in that Member State, for the purposes of taking into account his ability to pay tax. (35)
      
      74.      That approach does not appear to me to affect the freedom of the contracting parties to the bilateral tax convention to determine
         the connecting factors for the allocation of fiscal jurisdiction, in the way in which that freedom is interpreted by the case-law
         of the Court. (36)
      
      75.      In that regard, it should be pointed out that the Netherlands Government’s refusal to allow rental income losses suffered
         by Mr Renneberg in Belgium to be taken into account is based on the fact that under Article 6 of the bilateral tax convention
         it falls exclusively to the Kingdom of Belgium to tax income from a property located in the territory of that Member State,
         although, under Article 19(1) of that convention, Mr Renneberg’s salary is taxed in the Kingdom of the Netherlands.
      
      76.      I readily accept that in adopting Articles 6 and 19(1) of the bilateral tax convention the contracting parties availed themselves
         of the freedom to determine the connecting factors of their choice for the allocation of their respective fiscal jurisdictions. (37)
      
      77.      However, I do not think that this is a decisive factor in the dispute in the main proceedings.
      
      78.      If the Court were to consider that the taking into account of the ability of a non-resident such as Mr Renneberg to pay tax
         should be regarded as the same as the taking into account of his personal circumstances, as was stated in paragraph 34 in fine of Lakebrink and Peters-Lakebrink, it should be pointed out that under Article 25(3) of the bilateral tax convention the Kingdom of the Netherlands is required
         to grant non-resident taxpayers the personal allowances, concessions and reductions which it grants to its own residents by
         reason of their (personal) situation or dependents. To my mind, and as the Netherlands Government accepted at the hearing,
         such a provision, which concerns the non-discriminatory treatment of residents of the other contracting party, cannot be linked
         to the allocation of fiscal jurisdiction between those contracting parties, even though it is an integral part of the structure
         of the Bilateral Tax Convention. (38) Hence, the fact that the Bilateral Tax Convention does not extend compliance with the principle of non-discrimination to
         the situation of a non-resident taxpayer, such as that of Mr Renneberg, who undoubtedly falls within the personal scope of
         application of that convention, does not per se preclude compliance with that principle as stemming from Community law. 
      
      79.      In case, for the purpose of resolving the issue in the present case, the Court does not wish to continue to regard the ability
         to pay tax and the personal circumstances of a non-resident taxpayer as being the same, as it did in Lakebrink and Peters-Lakebrink, I consider that it should none the less arrive at the same result as that stated in the preceding point, in the light in
         particular of its case-law whereby respect for the rights stemming from application of the freedoms of movement provided for
         under Community law cannot be subject to the contents of a bilateral tax convention. (39)
      
      80.      In that regard, it should be pointed out that in the present case use by the contracting parties of their freedom to determine
         the connecting factors for the allocation of fiscal jurisdiction does not mean that the Kingdom of the Netherlands is automatically
         deprived of all jurisdiction to take into account rental income losses relating to a property located in Belgium when determining
         the rate of tax applicable to the income of a non-resident taxpayer who receives the major part or all of his taxable income
         in the Netherlands. 
      
      81.      It notes that, in the case of Netherlands residents, the mere fact that they receive income, whether positive or negative,
         from a property located in Belgium, in respect of which that State exercises its fiscal jurisdiction, does not preclude the
         Kingdom of the Netherlands, under Article 24(1)(1) of the Bilateral Tax Convention, including such property-rental income
         in the taxable basis of tax on work-related income to be paid by taxpayers residing in the Netherlands, in order to avoid double taxation. That
         fact, noted by the national court, was moreover confirmed by the Netherlands Government in its answers to the written questions
         raised by the Court. More particularly, that government stated that rental income losses incurred in respect of the property
         located in Belgium are taken into account in determining taxable income and, under Netherlands legislation, are carried over
         into the following financial years if there is a positive net foreign income. As for positive property-rental income included
         in the basis on which tax is to be paid in the Netherlands, the latter grants a reduction equivalent to the amount of tax,
         under detailed rules laid down in Article 24(1)(2) of the Bilateral Tax Convention, with the aim of avoiding double taxation.
      
      82.      In those circumstances, it does not seem to me to be correct to state, as the Netherlands Government attempts to do, that
         the refusal Mr Renneberg received from the Netherlands tax authorities originates in the choice by the contracting parties
         to allocate the powers to tax property-rental income of taxpayers falling within the scope of application of the Bilateral
         Tax Convention to the State in whose territory the property is located. On the contrary, that refusal depends in fact on whether
         or not those taxpayers have a residence in the Netherlands.
      
      83.      Although a resident and a non-resident are not as a general rule in objectively comparable situations, as I stated above and
         as the Commission contends, that is not so as regards the situation of a non-resident taxpayer who receives all or almost
         all of his taxable work-related income in the Member State of employment as compared with that of a taxpayer who lives and
         is in similar paid employment in that Member State.
      
      84.      The fact that that difference in treatment results from the Bilateral Tax Convention’s failure to take into account the special
         situation of non-resident taxpayers who receive all or almost all their income in the Member State of employment does not
         appear per se to preclude application of the rights stemming from freedom of movement for workers, to the extent that, as noted above,
         respect for those rights cannot of itself be subject to the content of such a convention. (40) In short, extension by the Kingdom of the Netherlands of the treatment reserved for resident taxpayers to cover the situation
         of a non-resident taxpayer like Mr Renneberg in no way affects the Kingdom of Belgium’s rights under the Bilateral Tax Convention
         and does not impose on it any new obligation. (41)
      
      85.      Moreover, nor does the fact that the refusal given to Mr Renneberg by the Netherlands Tax Authorities concerns the determination
         of the basis for assessing the tax to be paid in the Netherlands seem to me to be decisive since, as I noted with regard to
         the situation of Netherlands residents, under Article 24(1) of the Bilateral Tax Convention, the taking into account of rental
         income losses relating to a property located in Belgium owned by a Netherlands resident for the purposes of determining the
         basis for assessing income tax paid in the Netherlands does not deprive the Kingdom of Belgium of its power to tax the income
         relating to such property. 
      
      86.      I do not understand why taking into account for the same purposes similar losses suffered by a taxpayer who is not resident
         in the Netherlands but who receives all or almost all of his taxable income in that Member State would lead to a different
         conclusion.
      
      87.      Still in this connection, it is also important to note that in referring to points 97 to 99 of Advocate General Léger’s Opinion
         in Ritter-Coulais, which concern the taking into account by the Member State of employment of rental income losses suffered by Mr and Mrs Ritter-Coulais
         for the purposes of determining taxable income and the rate of tax, paragraph 34 of Lakebrink and Peters-Lakebrink, which is moreover worded in general terms, appears to exclude the distinction suggested by the Netherlands Government in
         the present case between taking into account the rental income losses of a non-resident in a situation comparable to that
         of Mr Renneberg for the purposes of determining the basis of assessment, on the one hand, and of determining the rate of income
         tax to be paid in that Member State, on the other hand.
      
      88.      Furthermore, in Deutsche Shell – which I shall revert to in greater detail below – I note that the Court objected to a Member State excluding currency losses
         borne by a permanent establishment located in another Member State from the basis of assessment of the principal establishment located in the first Member State, which by their nature could never be suffered by the permanent
         establishment despite the existence of a double taxation convention allocating fiscal jurisdiction between the contracting
         parties with regard to the taxation of income attributable to permanent establishments. (42)
      
      89.      I would add that the difference in treatment at issue in the present case, contrary to what is stated by the Netherlands and
         Swedish Governments, does not come merely from the existence of discrepancies between the different national tax laws. Even
         if the Kingdom of Belgium were to allow the losses at issue in the dispute in the main proceedings to be taken into account
         for the purposes of determining the basis for assessing the income tax of its residents, a taxpayer in Mr Renneberg’s situation,
         who receives all or almost all of his income in the Netherlands, would in any case be unlikely to derive any benefit from
         such an advantage. That possibility would moreover appear to be excluded in Belgium if one is to believe the observations
         made by the Netherlands Government in that regard. Moreover, since it does not appear from the order for reference – and besides
         it is hardly likely – that the Kingdom of Belgium allows its resident taxpayers to carry over rental income losses suffered
         in one or more tax years into subsequent years in which there is positive rental income, the potential existence of such a
         possibility does not appear decisive in the case-law of the Court, which normally limits its reasoning to the tax years at
         issue in the cases before it during which the losses were incurred. (43)
      
      90.       In any event, the argument put forward succinctly by the Netherlands Government at the hearing in that context, concerning
         in essence the likelihood of taking into account twice losses incurred on the property located in Belgium does not convince
         me. First, because the occurrence of such a likelihood is already avoided under Article 24 of the Bilateral Tax Convention
         in respect of situations comparable to that of Mr Renneberg. Secondly, because in cases where the operations of a taxpayer
         are carried out in part in the territory of a Member State other than that in which he is in paid employment a Member State
         may rely on Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of
         the Member States in the field of direct taxation (44) in order to obtain from the competent authorities of another Member State all the information enabling it to establish the
         income taxes correctly, or all the information it considers necessary to ascertain the correct amount of income tax payable
         by a taxpayer under the legislation which it applies. (45)
      
      91.      Lastly, I consider that in the present case the difference in treatment based on residence is discriminatory because, although
         the rental income losses relating to a property located in Belgium are always taken into account in determining the basis
         for assessment of the work-related income of Netherlands resident taxpayers working in the Netherlands, they are never taken
         into account in the situation of a non-resident taxpayer deriving all or almost all of his taxable income from paid employment
         in that Member State. 
      
      92.      Such difference in treatment is, in principle, contrary to Article 39 EC, unless it is appropriate to ensuring the attainment
         of an objective in the public interest compatible with the Treaty and does not go beyond what is necessary to attain that
         objective. (46)
      
      93.      In that connection, it should be pointed out that neither the national court nor the intervening governments mention, let
         alone rely on, any ground justifying the indirect discrimination noted above, which should lead the Court to exclude consideration
         of it in the present case.
      
      94.      I am aware that the approach suggested above, based on respect for Community law, ultimately consists in requiring Member
         States which are contracting parties to a bilateral tax convention to take into account the special situation of certain taxpayers
         who fall within the personal scope of that convention, so as to avoid what one might call a ‘fiscal no man’s land’, whatever
         form of bilateral allocation of fiscal jurisdiction those States may have agreed upon.
      
      95.      In other words, Member States which are parties to a bilateral tax convention should, according to that approach, be under
         a genuine obligation to prevent a situation in which aspects of the ability to pay tax of a taxpayer of one of those Member
         States, like that at issue in the dispute in the main proceedings, are not taken into account by either of those States.
      
      96.      That finalist approach is not entirely new. One finds a similar line of reasoning inter alia in de Groot and Deutsche Shell.
      
      97.      In the first of those cases the Court stated, in paragraph 101 of the judgment, that ‘the mechanisms used to eliminate double taxation or the national tax systems which have the effect of eliminating or alleviating double taxation must permit the taxpayers in the States concerned to be certain that, as the end result, all their personal and family circumstances will be duly taken into account, irrespective of how those Member States have
            allocated that obligation amongst themselves, in order not to give rise to inequality of treatment which is incompatible with
            the Treaty provisions on the freedom of movement for workers and in no way results from the disparities between the national
            tax laws’. (47)
      
      98.      Applying that finding in the case at issue, the Court held, in paragraph 102 of the judgment, that ‘Netherlands law and the
         conventions concluded with Germany, France and the United Kingdom do not ensure that result. The State of residence is partially
         released from its obligation to take into account the taxpayers’ personal and family circumstances without the States of employment
         undertaking to bear the tax consequences of taking such circumstances into account or having them imposed on them by virtue
         of the conventions for the avoidance of double taxation concluded with the State of residence. The situation is different
         only as regards the Convention with Germany, in the sole case that 90% of the income is received in the State of employment,
         which is not the case in the main proceedings’. 
      
      99.      It should of course be pointed out that the above assessment was made by the Court in a context in which a Member State was
         exercising its power of taxation arising from the earlier allocation of fiscal jurisdiction.
      
      100. In de Groot it was common ground that, under the bilateral allocation of fiscal jurisdiction between the Kingdom of the Netherlands,
         Mr de Groot’s Member State of residence and the Member States in which he had been in paid employment during the same tax
         year, it was for the Kingdom of the Netherlands to take into account the taxpayer’s personal and family circumstances. In
         the dispute between Mr de Groot and the Netherlands tax authorities, the Kingdom of the Netherlands refused however to exercise
         in full the fiscal jurisdiction which stemmed from the bilateral conventions with the Member States of employment by failing to grant
         Mr de Groot the full amount of the tax deductions to which he would have been entitled, because he was making maintenance
         payments in the Netherlands, if he had been in paid employment solely in that Member State. As stated in paragraphs 93 and
         94 in particular of the judgment in de Groot, the case referred to the Court was one in which the issue was the (incomplete) exercise of the taxation power of a Member State, which has to be done in accordance with Community law, and more particularly
         with Article 39 EC.
      
      101. I wonder none the less whether that fact excludes extension to the present case of the considerations set out in paragraph
         101 of de Groot.
      
      102. In the present case, as I observed above, Article 24(1) of the Bilateral Tax Convention confers on the Kingdom of the Netherlands
         jurisdiction to take into consideration rental income losses relating to a property located in Belgium sustained by Netherlands
         residents when determining the basis for assessing the tax to be paid by them in the Netherlands, although the jurisdiction
         of the Kingdom of Belgium to tax income relating to such property is not affected. Since the jurisdiction of the Kingdom of
         the Netherlands to include rental income losses in respect of a property located in Belgium for the purposes of determining
         the taxable basis of work-related income taxed in the Netherlands exists on the basis of the Bilateral Tax Convention, the
         refusal received by Mr Renneberg can, in my view, be regarded as refusal to apply in full such pre-established jurisdiction
         in the case of a taxpayer covered by the convention who is in an objectively comparable situation to that of Netherlands residents
         who benefit from application of the provisions of Article 24(1) of the Bilateral Tax Convention.
      
      103. The extension of such treatment in favour of a non-resident taxpayer receiving all or almost all his taxable income in the
         Netherlands, the Member State of employment, does not therefore affect the allocation of fiscal jurisdiction between the contracting
         parties to the Bilateral Tax Convention. (48)
      
      104. Since, under the Bilateral Tax Convention, the Kingdom of the Netherlands must take into account rental income losses relating
         to a property located in Belgium for the purposes of determining the basis for assessing tax paid in the Netherlands, it must
         also take into account those same losses for the same purposes in the case of non-residents receiving all or almost all of
         their taxable income in the Netherlands and not deriving any significant income from their Member State of residence, otherwise
         the situation of those taxpayers will not be taken into account in either of the Member States concerned. (49)
      
      105. It seems to me that the Member States’ obligation as to the result to be achieved with regard to the particular situations
         of certain taxpayers falling within the scope of the Bilateral Tax Convention also arises from Deutsche Shell.
      
      106. In that case, a reference had been made to the Court for a preliminary ruling concerning the tax treatment by the German authorities
         of the monetary depreciation (from Italian lire into German marks) of start-up capital granted by Deutsche Shell, a company
         whose registered office was in Germany, to one of its permanent establishments located in Italy, upon repatriation of that
         capital following transfer of the permanent establishment. (50) Primarily, the national court was asking in essence whether freedom of establishment and the free movement of capital precluded
         the Federal Republic of Germany excluding from the basis of assessment for German tax a currency loss suffered by Deutsche
         Shell upon repatriation of start-up capital because of the exemption granted under the tax convention between it and the Italian
         Republic, even though that currency loss could not form part of the permanent establishment’s profits to be assessed for purposes
         of taxation in Italy and thus could not be taken into account either in Germany or in Italy.
      
      107. As is clear from the order for reference and the Opinion of Advocate General Sharpston, (51) the national court concluded that the tax authority had interpreted the double taxation convention between the Federal Republic
         of Germany and the Italian Republic correctly, so there was no scope for the contested exchange rate loss to be taken into
         account in Germany because, under that convention, the income of the permanent establishment was to be taxed in Italy and
         the exchange rate loss related to the activity of that establishment in Italy.
      
      108. Under the convention, the exchange rate loss could therefore be taken into account for tax purposes only in Italy. However,
         although the Italian Republic had taxed the profits of the permanent establishment generated by its transfer, the depreciation
         of the value of the start-up capital that had been granted to it was not taken into account as the basis of assessment was
         established in Italian lire.
      
      109. Having found that, the exchange rate loss being a real financial loss affecting the company established in Germany, the tax
         system at issue constituted an obstacle to the freedom of establishment of the company established in Germany, (52) the Court rejected in particular the argument put forward by the German Government that by that convention the Federal Republic
         of Germany and the Italian Government had allocated their fiscal jurisdiction in such a way as to exempt permanent establishments
         situated on the territory of the other Contracting State from income tax, which excluded the currency loss concerned from
         being taken into account by the company’s Member State of residence.
      
      110. In that context, the Court did acknowledge that the competence of Member States to determine the criteria for taxation of
         income and wealth also means that a Member State cannot be required to take into account, for the purposes of applying its
         tax law, the negative results of a permanent establishment situated in another Member State which belongs to a company with
         a registered office in the first State solely because those negative results are not capable of being taken into account for tax purposes in the Member State where the
         permanent establishment is situated. (53) The Court held that ‘[f]reedom of establishment cannot be understood as meaning that a Member State is required to draw up
         its tax rules on the basis of those in another Member State in order to ensure, in all circumstances, taxation which removes
         any disparities arising from national tax rules, given that the decisions made by a company as to the establishment of commercial
         structures abroad may be to the company’s advantage or not, according to circumstances’. (54)
      
      111. The Court does not, however, follow that line of reasoning in the case at issue on the ground that ‘the tax disadvantage concerned
         relates to a specific operational factor which is capable of being taken into consideration only by the German tax authorities. Although it is true that any Member State which has concluded a double taxation convention must implement it by applying its own tax law and thereby
            calculate the income attributable to a permanent establishment, it is unacceptable for a Member State to exclude from the basis of assessment of the principal establishment [Deutsche Shell] currency losses which, by their nature, can never be suffered by the permanent establishment.’ (55)
      
      112. Since the currency exchange loss suffered by Deutsche Shell was caused solely by the monetary depreciation between the time
         the start-up capital was allocated and the time it was repatriated to Germany upon conversion of its value in Italian lire
         into German marks, the loss was generated solely on German territory and could not, by its very nature, be taken into account
         by the Italian tax authorities, as the Court found.
      
      113. Ultimately, in Deutsche Shell, the Court therefore appears to require the company’s Member State of residence to exercise its fiscal jurisdiction in respect
         of a cross-border transaction on the ground that that Member State is in fact the only one that can take into account the
         exchange rate loss at issue in order to ensure compliance with Community law, irrespective of the interpretation given by
         the referring court of the provisions of the double taxation convention with regard to the allocation of fiscal jurisdiction.
         
      
      114. It is undeniable that the situation in Deutsche Shell is different from that in the present case. However, to my mind it is the approach taken by the Court which is most important,
         namely that of ensuring that, however fiscal jurisdiction is allocated, the particular situation of a taxpayer falling within
         the scope of a double taxation convention should be taken into account in one of the Member States parties to that convention.
      
      115. If one were thus to extend the logic underlying the judgments in de Groot and Deutsche Shell to the situation of a taxpayer such as Mr Renneberg, who receives all or almost all of his taxable income in the Netherlands,
         it would in my view mean that the latter must, over and above the provisions of the Bilateral Tax Convention, take into account,
         for the contested tax years, rental income losses suffered by that taxpayer relating to his property in Belgium, the Member
         State in which he cannot enjoy a comparable advantage as he has no taxable income there.
      
      116. In the light of all these considerations, and without the need to give a view on the interpretation of Article 56 EC, I consider
         that Article 39 EC must be interpreted as meaning that it precludes a Member State refusing, in the case of a non-resident
         taxpayer who receives all or almost all of his taxable income from an occupation in that Member State, to take into account,
         for the purposes of determining the basis of assessment of the income tax that must be paid in that Member State, rental income
         losses relating to a property located in the taxpayer’s Member State of residence but in which he does not receive any income,
         when the first Member State (the Member State of employment) grants that advantage to its own residents who are in a comparable
         situation.
      
      VI –  Conclusion
      117. Having regard to all of the foregoing considerations, I suggest that the Court should rule as follows on the reference for
         a preliminary ruling from the Hoge Raad der Nederlanden:
      
      Article 39 EC must be interpreted as meaning that it precludes a Member State refusing, in the case of a non-resident taxpayer
         who receives all or almost all of his taxable income from an occupation in that Member State, to take into account, for the
         purposes of determining the basis of assessment of the income tax that must be paid in that Member State, rental income losses
         relating to a property located in the taxpayer’s Member State of residence but in which he does not receive any income, when
         the first Member State (the Member State of employment) grants that advantage to its own residents who are in a comparable
         situation.
      
      1 –	Original language: French.
      
      2 –	Case C‑279/93 [1995] ECR I‑225.
      
      3 –	Case C‑182/06 [2007] ECR I‑6705.
      
      4 –	Case C‑152/03 [2006] ECR I‑1711.
      
      5 –	Trb. 1970, 192 and Moniteur Belge, 25 September 1971.
      
      6 –	Staatsblad 1964, No 519.
      
      7 –	Case C‑112/91 [1993] ECR I‑429, paragraphs 16 and 17.
      
      8 –	Case C‑520/04 [2006] ECR I‑10685, paragraph 16.
      
      9 –	Case C‑513/03 [2006] ECR I‑1957, paragraph 49. 
      
      10 –	Case C‑212/05 [2007] ECR I‑6303 and Case C‑287/05 [2007] ECR I‑6909, respectively. In the relevant paragraphs, the judgments
         in those cases refer to paragraph 31 of the judgment in Ritter-Coulais, in which the Court held that ‘any Community national who, irrespective of his place of residence and his nationality, has
         exercised the right to freedom of movement for workers and who has been employed in a Member State other than that of residence
         falls within the scope of Article 48 of the EC Treaty (now, after amendment, Article 39 EC)’. See also Lakebrink and Peters-Lakebrink, paragraph 15).
      
      11 –	Hartmann, paragraph 18.
      
      12 –	Hendrix, paragraph 46.
      
      13 –	Hendrix, paragraphs 42 and 44.
      
      14 –	Turpeinen, paragraph 16.
      
      15 –	I would add, although it is clear, that the clause excluding the provisions on the free movement of workers from applying
         to employment in the public service, contained in Article 39(4) EC, cannot be relied upon against Mr Renneberg because he
         is of Netherlands nationality and had already begun working for the municipality before exercising the right of freedom of
         movement for workers.
      
      16 –	See, in particular, Case C‑419/92 Scholz [1994] ECR I‑505, paragraph 7.
      
      17 –	See, in particular, Case 152/73 Sotgiu [1974] ECR 153, paragraph 11; Schumacker, paragraph 26, and Case C-80/94 Wielockx [1995] ECR I‑2493, paragraph 16.
      
      18 –	See, in particular, Schumacker, paragraphs 29 and 31, Wielockx, paragraphs 17 to 19, and Lakebrink and Peters-Lakebrink (paragraphs 27 to 29). 
      
      19 –	See, to that effect, Schumacker, paragraph 32; Case C‑391/97 Gschwind [1999] ECR I‑5451, paragraph 22; Case C‑87/99 Zurstrassen [2000] ECR I‑3337, paragraph 21; Case C‑385/00 de Groot [2002] ECR I‑11819, paragraph 90; Case C‑234/01 Gerritse [2003] ECR I‑5933, paragraph 43; Case C‑169/03 Wallentin [2004] ECR I‑6443, paragraph 15, and Case C‑329/05 Meindl [2007] ECR I‑1107, paragraph 23.
      
      20 –	See, in particular, Schumacker, paragraph 34; Gschwind, paragraph 23, and Case C‑346/04 Conijn [2006] ECR I‑6137, paragraph 16)
      
      21 –	See Schumacker, paragraph 36; Gschwind, paragraph 27; de Groot, paragraph 89; Wallentin, paragraph 17, and Lakebrink and Peters-Lakebrink, paragraph 30.
      
      22 –	See Schumacker, paragraph 38; Wielockx, paragraphs 21 and 22; Wallentin, paragraph 17, and Lakebrink and Peters-Lakebrink, paragraph 31.
      
      23 –	Ritter-Coulais, paragraphs 11 to 17.
      
      24 –	Ritter-Coulais, paragraphs 34 to 38.
      
      25 –	Opinion in Ritter-Coulais, paragraphs 84 to 102.
      
      26 –	See, to that effect, Opinion of Advocate General Léger, paragraphs 98 to 102.
      
      27 –	See paragraphs 36 and 37 of Ritter-Coulais.
      
      28 –	Paragraph 33 of Lakebrink and Peters-Lakebrink.
      
      29 –	Ibid., paragraph 34.
      
      30 –	Ibid., paragraph 35.
      
      31 –	Which is in principle the case where those taxpayers receive no work-related income in their Member State of residence.
      
      32 –	For information, in my Opinion in that case I had none the less examined, as a subsidiary point, the observations in which
         the Luxembourg Government was, it seemed to me, basically trying to demonstrate that legislation at issue sought to safeguard
         the coherence of its tax system (see points 44 to 52 of the Opinion).
      
      33 –	See to that effect Ritter-Coulais, paragraph 7, and Lakebrink and Peters-Lakebrink, paragraphs 6 to 8, and my Opinion in the latter case, point 39.
      
      34 –	Or the application of the same rule to different situations (see in particular Schumacker, paragraph 30, and Lakebrink and Peters-Lakebrink, paragraph 27).
      
      35 –	See also, to that effect, Opinion of Advocate General Léger in Ritter-Coulais (points 98 and 99). 
      
      36 –	See Gilly, paragraphs 24 to 30; Case C‑307/97 Saint-Gobain ZN [1999] ECR I‑6161, paragraph 57; de Groot, paragraph 93; Case C-265/04 Bouanich [2006] ECR I–923, paragraph 49; Case C‑513/03 van Hilten-van der Heijden [2006] ECR I‑1957, paragraph 47; Test Claimants in Class IV of the ACT Group Litigation [2006] ECR I-11673, paragraph 52, and Case C‑170/05 Denkavit Internationaal and Denkavit France [2006] I‑11949, paragraph 43.
      
      37 –	That allocation is moreover based on international practice, in particular on the Model Tax Convention on Income and on
         Capital drawn up by the Organisation for Economic Cooperation and Development (OECD), a model which the Court has regularly
         stated it was not unreasonable for the Member States to base their agreements on: see, in particular, Gilly, paragraph 31, and van Hilten-van der Heijden, paragraph 48.
      
      38 –	In a context in which the issue was whether a German national residing in Germany was entitled to rely on the provisions
         of the bilateral tax convention the Court, rightly in my view, held that the non-discrimination rule laid down in Article
         25(3) of that convention cannot be regarded as relating to the allocation of fiscal jurisdiction between those two Member
         States [see Case C‑376/03 D [2003] ECR I‑5821, paragraphs 60 to 62]. 
      
      39 –	See, to that effect, Case 270/83 Commission v France [1986] ECR 273, paragraph 26, and Denkavit Internationaal and Denkavit France, paragraph 53. 
      
      40 –	See case-law cited in footnote 39 above. It will be noted also that, even in cases in which the Court accepts that it is
         the choice of a connecting factor for the purposes of allocating bilateral fiscal jurisdiction that is at issue, it none the
         less checks whether that choice, which is not in itself discriminatory, may be ‘to the disadvantage of the taxpayers concerned’
         [see Gilly, paragraph 34].
      
      41 –	See, for similar reasoning, Saint-Gobain ZN, paragraph 60.
      
      42 –	Case C‑293/06 [2008] ECR I‑00000, paragraph 44.
      
      43 –	See in particular Lakebrink and Peters-Lakebrink, paragraph 22, and Deutsche Shell, paragraphs 40 and 50.
      
      44 –	OJ 1977 L 336, p. 15.
      
      45 –	See, to that effect, Case C‑383/05 Talotta [2007] ECR I‑2555, paragraph 29, and case-law cited therein. 
      
      46 –	See in particular to that effect, Case C‑250/95 Futura Participations and Singer [1997] ECR I‑2471, paragraph 26; Case C‑9/02 De Lasteyrie du Saillant [2004] ECR I–2409, paragraph 49; Case C-470/04 N [2006] ECR I‑7409, paragraph 40, and Case C‑104/06 Commission v Sweden [2007] ECR I‑671, paragraph 25.
      
      47 –	Emphasis added.
      
      48 –	In order to dispel any doubt, it is not a matter of granting such an extension to any non-resident taxpayer falling within
         the scope of that convention, nor a fortiori of granting it to natural persons who are nationals of a Member State which is not a party to the Bilateral Tax Convention;
         the Court refused such an extension in D, paragraphs 54 to 60.
      
      49 –	It should be noted that the method by which this aspect of the ability to pay of a non-resident taxpayer who receives all
         or almost all of his taxable income in the State of employment is to be taken into account should be governed by national
         law, in compliance with Community law: see, to that effect, de Groot, paragraphs 114 and 115, and my Opinion in Lakebrink and Peters-Lakebrink, point 41.
      
      50 –	Naturally, the tax year and the monetary depreciation in that case preceded the entry into force of the Euro.
      
      51 –	See in particular Opinion delivered on 8 November 2007 in Deutsche Shell, point 12.
      
      52 –	Paragraphs 27, 29 to 32 of the judgment. As opposed, it would seem, to mere virtual accounting losses.
      
      53 –	Paragraph 42 (emphasis added).
      
      54 –	Paragraph 43. The Court refers, by analogy, to Case C‑403/03 Schempp [2005] I‑6421, paragraph 45, in which the Court held that ‘the Treaty offers no guarantee to a citizen of the Union that
         transferring his activities to a Member State other than that in which he previously resided will be neutral as regards taxation.
         Given the disparities in the tax legislation of the Member States, such a transfer may be to the citizen’s advantage in terms
         of indirect taxation or not, according to circumstances’.
      
      55 –	Paragraph 44 (emphasis added).