European Commission v Republic of Estonia.
Date: 2012-05-10
24. On this point, it must be recalled that it follows from Article 38(1)(c) of the Rules of Procedure and the related case‑law of the Court that an application must state clearly and precisely the subject-matter of the proceedings and a summary of the pleas in law on which the application is based, so as to enable the defendant to prepare a defence and the Court to rule on the application. It follows that the essential points of law and of fact on which an action is based must be indicated coherently and intelligibly in the application itself and that the heads of claim must be set out unambiguously so that the Court does not rule ultra petita  or indeed fail to rule on a complaint (see, inter alia, judgment of 12 February 2009 in Case C‑475/07 Commission  v Poland , paragraph 43, and judgment of 24 March 2011 in Case C‑375/10 Commission  v Spain , paragraph 10).
25. Those requirements may be examined by the Court of its own motion (see, inter alia, Case C‑195/04 Commission  v Finland  [2007] ECR I‑3351, paragraphs 21 and 22).
26. The Court has also held that, where an action is brought under Article 258 TFEU, the application must set out the complaints coherently and precisely, so that the Member State and the Court can know exactly the full extent of the alleged infringement of European Union law, a condition which must be satisfied if the Member State is to be able to present an effective defence and the Court to determine whether there has been a breach of obligations, as alleged (see, inter alia, Commission  v Poland , paragraph 44, and Commission  v Spain , paragraph 11).
47. It must be noted, as a preliminary point, that it is settled case‑law that, while direct taxation falls within the competence of the Member States, they must none the less exercise that competence consistently with European Union law (see, inter alia, Schumacker , paragraph 21; Case C‑446/03 Marks & Spencer  [2005] ECR I‑10837, paragraph 29; and Case C‑540/07 Commission  v Italy  [2009] ECR I‑10983, paragraph 28). Tax rules of national law must therefore be adopted consistently with the freedoms guaranteed by the Treaties, in particular the freedom of movement for workers as conferred by Article 45 TFEU.
48. It is incompatible in principle with the rules on freedom of movement for a worker who has made use of that right to be the subject of less favourable treatment in the Member State of which he is a national than he would receive if he had not made use of the opportunities offered by those rules. However, it must be remembered that discrimination can arise only through the application of different rules to comparable situations or the application of the same rule to different situations (see, inter alia, Schumacker , paragraph 30; Gschwind , paragraph 21; and Case C‑383/05 Talotta  [2007] ECR I‑2555, paragraph 18).
49. As far as direct taxes are concerned, residents and non-residents are generally not in comparable situations, since 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, and 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 is generally the place of his usual residence (see, inter alia, Schumacker , paragraphs 31 and 32, and Gschwind , paragraph 22).
50. The Court held in Schumacker , paragraph 34, that the fact that a Member State does not grant to a non-resident certain tax advantages which it grants to a resident is not, as a rule, discriminatory, having regard to the objective differences between the situations of residents and non-residents from the point of view both of the source of their income and of their personal ability to pay tax or their personal and family circumstances (see Gschwind , paragraph 23).
51. There could be discrimination within the meaning of the Treaty between residents and non-residents only if, notwithstanding their residence in different Member States, it were established that, having regard to the purpose and content of the national provisions in question, the two categories of taxpayers are in a comparable situation (see Gschwind , paragraph 26).
52. That is the case where a non-resident who has no significant income in his Member State of residence and gains the main part of his taxable income from an activity carried on in the Member State of employment is in a comparable situation to that of residents of the latter State because the Member 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. Consequently, as regards his tax treatment, he must be treated as resident in the Member State of employment, and that State must grant him the tax advantages it allows to residents (see, inter alia, Schumacker , paragraphs 36 and 37, and Gschwind , paragraph 27).
53. The Court has also held that, in a situation in which there is no taxable income in the Member State of residence under the tax legislation of that State (see, to that effect, Wallentin , paragraph 18), discrimination could arise if the personal and family circumstances of a person such as the complainant were taken into account neither in the Member State of residence nor in the Member State of employment (see, to that effect, Wallentin , paragraph 17).
54. Thus, where nearly 50% of the total income of the person concerned is received in his Member State of residence, that State should in principle be able to take into account his ability to pay tax and his personal and family circumstances in accordance with the rules laid down by that State’s legislation (see Gschwind , paragraph 29).
57. The difference of treatment resulting from such legislation could be justified only if it were based on objective considerations proportionate to the legitimate aim of the national provisions (Case C‑520/04 Turpeinen  [2006] ECR I‑10685, paragraph 32). In this respect, although the Republic of Estonia has argued that the condition in question is intended to avoid non-resident taxpayers accumulating allowances in both the Member States concerned, it must be stated that, in a case such as that of the complainant, there cannot be any unjustified accumulation of advantages.
63. It should be recalled, however, that in accordance with the last subparagraph of Article 288 TFEU recommendations are among the acts of the European Union institutions that have no binding force. Furthermore, as the Advocate General observes in point 60 of his Opinion, the procedure for a declaration of failure to fulfil obligations is based on the objective finding that a Member State has failed to fulfil its obligations under European Union law, so that the principle of the protection of legitimate expectations cannot be relied on by the Republic of Estonia in the present case in order to preclude an objective finding of a failure on its part to fulfil its obligations under the Treaty (see, to that effect, Case C‑562/07 Commission  v Spain  [2009] ECR I‑9553, paragraph 18).
67. It must be pointed out that the Estonian legislation does not provide for any possibility of granting the tax advantage at issue to persons drawing a pension in Estonia who reside in one of the non-member countries that are members of the EEA Agreement. In so far as the requirements of Article 28 of the EEA Agreement have the same legal effect as the substantially identical provisions of Article 45 TFEU, the considerations set out above may be applied mutatis mutandis  to Article 28 (see, to that effect, Case C‑104/06 Commission  v Sweden  [2007] ECR I‑671, paragraph 32).