R. H. H. Renneberg v Staatssecretaris van Financiën.
Date: 2008-10-16
36. In that regard, it should also be noted that any Community national who, irrespective of his place of residence and his nationality, works in a Member State other than that of his residence falls within the scope of Article 39 EC (see to that effect, inter alia, Case C‑152/03 Ritter-Coulais   [2006] ECR I-1711, paragraph 31; Case C‑212/05 Hartmann  [2007] ECR I‑6303, paragraph 17; Case C‑182/06 Lakebrink and Peters-Lakebrink  [2007] ECR I‑6705, paragraph 15; Case C‑287/05 Hendrix  [2007] ECR I‑6909, paragraph 46; and Case C‑152/05 Commission  v Germany  [2008] ECR I‑0000, paragraph 20).
43. It is established case-law that the provisions of the Treaty on freedom of movement for persons are intended to facilitate the pursuit by Community nationals of occupational activities of all kinds throughout the European Community, and preclude measures which might place them at a disadvantage when they wish to pursue an economic activity in the territory of another Member State (see, inter alia, Case C‑209/01 Schilling and Fleck-Schilling  [2003] ECR I‑13389, paragraph 24; Ritter-Coulais , paragraph 33; Lakebrink and Peters-Lakebrink , paragraph 17; and Commission  v Germany , paragraph 21).
48. Pursuant to the case-law of the Court, in the absence of unifying or harmonising measures at Community level, the Member States retain competence for determining the criteria for taxation on income and capital with a view to eliminating double taxation by means, inter alia, of international agreements. In that context, the Member States are free to determine the connecting factors for the allocation of fiscal jurisdiction in bilateral agreements for the avoidance of double taxation (see, inter alia, Case C‑307/97 Saint-Gobain ZN  [1999] ECR I‑6161, paragraph 57; Case C‑385/00 de Groot  [2002] ECR I‑11819, paragraph 93; Case C‑265/04 Bouanich  [2006] ECR I‑923, paragraph 49).
49. In the circumstances of this case, in adopting Articles 6 and 19(1) of the Bilateral Tax Convention, the Kingdom of the Netherlands and the Kingdom of Belgium availed themselves of the freedom to determine the connecting factors of their choice for the purpose of determining their respective fiscal jurisdictions.  Thus, under Article 6 of that Convention, it is for the Kingdom of Belgium to tax income derived from immovable property within its territory, while, under Article 19(1) of the Convention, the pay of a Netherlands civil servant such as Mr Renneberg is taxable in the Netherlands.
50. Nevertheless, that allocation of the power of taxation does not mean that the Member States are entitled to impose measures that contravene the freedoms of movement guaranteed by the Treaty (see, so that effect, Bouanich , paragraph 50; Case C-374/04 Test Claimants in Class IV of the ACT Group Litigation  [2006] ECR I-11673, paragraph 54; and Case C-379/05 Amurta  [2007] ECR I‑9569, paragraph 24).
51. As far as concerns the exercise of the power of taxation so allocated by bilateral conventions to prevent double taxation, the Member States must comply with Community rules (see, to that effect, Saint-Gobain ZN , paragraph 58, and Bouanich , paragraph 50) and, more particularly, respect the principle of national treatment of nationals of other Member States and of their own nationals who exercise the freedoms guaranteed by the Treaty (see de Groot , paragraph 94).
59. In relation to direct taxation, the Court has indeed accepted, in cases relating to taxation of the income of natural persons, that the situation of residents and the situation of non-residents in a given Member State are not generally comparable, since there are objective differences between them, both from the point of view of the source of the income and from the point of view of their ability to pay tax or the possibility of taking account of their personal and family circumstances (Case C‑383/05 Talotta  [2007] ECR I‑2555, paragraph 19 and the case-law cited).
60. The Court has made it clear, however, that, in the case of a tax advantage which is not available to a non-resident, a difference in treatment as between the two categories of taxpayer may constitute discrimination within the meaning of the Treaty where there is no objective difference between the situations of the two which would justify different treatment in that regard ( Talotta , paragraph 19, and the case-law cited).
61. Such is the case particularly where a non-resident taxpayer receives no significant income in his Member State of residence and derives the major part of his taxable income from an activity pursued in the Member State of employment, so that the Member State of residence is not in a position to grant him the advantages which follow from the taking into account of his personal and family circumstances (see, inter alia, Schumacker , paragraph 36, and Lakebrink and Peters-Lakebrink , paragraph 30).
62. In such a situation, discrimination arises from the fact that the personal and family circumstances 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 are taken into account neither in the State of residence nor in the State of employment ( Schumacker , paragraph 38, and Lakebrink and Peters-Lakebrink , paragraph 31).
63. In paragraph 34 of Lakebrink and Peters-Lakebrink , the Court stated that the scope of the case-law arising from Schumacker  extends to all the tax advantages connected with the non-resident’s ability to pay tax which are granted neither in the State of residence nor in the State of employment.
65. A taxpayer such as Mr Renneberg cannot, for the purposes of determining the basis of assessment of the tax on his work-related income received in the Netherlands, request that rental losses relating to immovable property which he owns in Belgium be taken into account, unlike a taxpayer who resides and works in the Netherlands and who, suffering rental losses relating either to immovable property in the Netherlands which he occupies himself or to immovable property in Belgium which he does not himself occupy on a permanent basis, may set off those losses for the purposes of determining the basis of assessment of income tax in the Netherlands.
66. To the extent that, although residing in one Member State, a person such as Mr Renneberg derives most of his taxable income from salaried employment in another Member State and has no significant income in his Member State of residence, he is, for the purposes of taking into account his ability to pay tax, in a situation objectively comparable, with regard to his Member State of employment, to that of a resident of that Member State who is also in salaried employment there.
67. It is apparent that such a person, not being liable in his Member State of residence to pay tax applicable to natural persons in respect of income from immovable property other than the property tax paid in advance, is not able to have the negative income relating to his immovable property in that Member State taken into account and, moreover, is deprived of any possibility of setting off that negative income in the determination of the basis of taxation of his taxable income in his Member State of employment.
70. Furthermore, it should be noted that, in paragraph 101 of the judgment in de Groot , the Court held that the mechanisms used to eliminate double taxation or the national tax systems which have the effect of eliminating or alleviating double taxation must, however, permit the taxpayers in the Member States concerned to be certain that, ultimately, 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.  Having regard to the guidance given in Lakebrink and Peters-Lakebrink , referred to in paragraph 63 of this judgment, those considerations also apply with regard to the taking into account of workers’ overall ability to pay tax.
78. Secondly, 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 (OJ 1977 L 336, p. 15) may, 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 carries out his employed activity, be relied upon by a Member State in order to obtain from the competent authorities of the other Member State all the information enabling it to establish income taxes correctly, or all the information it considers necessary to ascertain the correct amount of the income tax payable by a taxpayer under the legislation which it applies (see, to that effect, Case C‑422/01 Skandia and Ramstedt  [2003] ECR I‑6817, paragraph 42).
81. It is, however, necessary to examine whether that obstacle can be accepted.  According to the Court’s case-law, a measure restricting one of the fundamental freedoms guaranteed by the Treaty may be accepted only if it pursues a legitimate objective which is compatible with the Treaty and is justified by overriding reasons in the public interest.  But even if that were so, application of that measure would still have to be such as to ensure achievement of the aim pursued and not go beyond what is necessary for that purpose (see, to that effect, Case C‑109/04 Kranemann  [2005] ECR I‑2421, paragraph 33, and Case C‑40/05 Lyyski  [2007] ECR I‑99, paragraph 38).