Mr and Mrs Robert Gilly v Directeur des services fiscaux du Bas-Rhin.
Date: 1998-05-12
15 As the Court has already held in Case 137/84 Mutsch [1985] ECR 2681, at paragraph 11, Article 220 is not intended to lay down a legal rule directly applicable as such, but merely defines a number of matters on which the Member States are to enter into negotiations with each other `so far as is necessary'.  Its second indent merely indicates the abolition of double taxation within the Community as an objective of any such negotiations.
21 It need merely be pointed out here that Mrs Gilly has acquired French nationality by her marriage and works in Germany whilst residing in France.  She must therefore be considered in France as a worker exercising her right to freedom of movement, as guaranteed by the Treaty, in order to work in a Member State other than that in which she resides.  The circumstance that she has retained the nationality of the State in which she is employed in no way affects the fact that, for the French authorities, she is a French national working in another Member State (see, to the same effect, Case 292/86 Gullung v Conseils de l'Ordre des Avocats du Barreau de Colmar et de Saverne [1988] ECR 111, paragraph 12).
23 Whilst abolition of double taxation within the Community is, as stated in paragraph 16 above, one of the objectives of the Treaty, it must none the less be noted that, apart from the Convention of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (OJ 1990 L 225, p. 10), no unifying or harmonising measure for the elimination of double taxation has yet been adopted at Community level, nor have the Member States yet concluded any multilateral convention to that effect under Article 220 of the Treaty.
24 The Member States are competent to determine the criteria for taxation on income and wealth with a view to eliminating double taxation - by means, inter alia, of international agreements - and have concluded many bilateral conventions based, in particular, on the model conventions on income and wealth tax drawn up by the Organisation for Economic Cooperation and Development (`OECD').
30 Although the criterion of nationality appears as such in the second sentence of Article 14(1) for the purpose of allocation of fiscal jurisdiction, such differentiation cannot be regarded as constituting discrimination prohibited under Article 48 of the Treaty.  It flows, in the absence of any unifying or harmonising measures adopted in the Community context under, in particular, the second indent of Article 220 of the Treaty, from the contracting parties' competence to define the criteria for allocating their powers of taxation as between themselves, with a view to eliminating double taxation.
31 Nor, in the allocation of fiscal jurisdiction, is it unreasonable for the Member States to base their agreements on international practice and the model convention drawn up by the OECD, Article 19(1)(a) of the 1994 version of which in particular provides for recourse to the paying State principle.  According to the commentary on that article, that principle is justified by `the rules of international courtesy and mutual respect between sovereign States' and `is contained in so many of the existing conventions between OECD member countries that it can be said to be already internationally accepted'.
37 It is settled case-law that Article 6 of the Treaty, which lays down the general principle of the prohibition of discrimination on grounds of nationality, applies independently only to situations governed by Community law in respect of which the Treaty lays down no specific prohibition of discrimination (see in particular Case C-131/96 Mora Romero v Landesversicherungsanstalt Rheinprovinz [1997] ECR I-3659, paragraph 10).
38 In the field of freedom of movement for workers, the prohibition of discrimination has been specifically implemented and embodied in Article 48 of the Treaty and by acts of secondary legislation including, in particular, Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475).
46 Here, it must be stressed, as has been done by the Advocate General at point 66 of his Opinion, that the object of a convention such as that in issue is simply to prevent the same income from being taxed in each of the two States.  It is not to ensure that the tax to which the taxpayer is subject in one State is no higher than that to which he or she would be subject in the other.
47 However, it is common ground that any unfavourable consequences entailed in the present case by the tax credit mechanism set up by the bilateral convention, as implemented in the context of the tax system of the State of residence, are the result in the first place of the differences between the tax scales of the Member States concerned, and, in the absence of any Community legislation in the field, the determination of those scales is a matter for the Member States.
49 As regards the effect on the amount of the tax credit of the fact that the taxpayer's personal and family circumstances are taken into account in the State of residence but not in the State of employment, it must be pointed out that the disparity derives from the fact that, in relation to direct taxes, the situations of residents and of non-residents are not, as a rule, comparable, since income received in the territory of a State by a non-resident is in most cases only a part of his total income, which is concentrated at his place of residence (Case C-279/93 Finanzamt Köln-Altstadt v Schumacker [1995] ECR I-225, paragraphs 31 and 32).
53 As is clear from the answer to the first, second and fourth questions, the fact that in allocating powers of taxation between them the contracting parties have chosen various connecting factors, in particular nationality with regard to public-service remuneration received in the State other than the State of residence, cannot in itself constitute discrimination prohibited by Community law.