F. Gielen v Staatssecretaris van Financiën.
Date: 2010-03-18
36. It should be noted that, although direct taxation falls within their competence, the Member States must none the less exercise that competence consistently with European Union law (see, inter alia, Case C‑319/02 Manninen  [2004] ECR I‑7477, paragraph 19 and the case‑law cited).
37. It must also be noted that the rules regarding equal treatment forbid not only overt discrimination by reason of nationality but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result (see, inter alia, Case C‑279/93 Schumacker  [1995] ECR I‑225, paragraph 26 and the case‑law cited).
43. More specifically, 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 (see, inter alia, Case C‑383/05 Talotta  [2007] ECR I‑2555, paragraph 19 and the case-law cited, and Case C‑527/06 Renneberg  [2008] ECR I‑7735, paragraph 59).
48. In those circumstances, it must be concluded that national legislation which, for the purposes of a tax advantage, such as the self‑employed person’s deduction at issue in the main proceedings, uses an ‘hours test’ in such a way as to prevent non‑resident taxable persons from including hours worked in another Member State risks operating primarily to the detriment of those taxable persons. Consequently, such legislation constitutes indirect discrimination on grounds of nationality for the purposes of Article 49 TFEU.
The option to be treated as a resident taxable person
50. It should be noted, at the outset, that the option to be treated as a resident taxable person provides non‑resident taxable persons, such as Mr Gielen, with a choice between a discriminatory tax regime and one which is ostensibly not discriminatory.
51. It has, however, to be pointed out in that regard that such a choice is not, in the present case, capable of remedying the discriminatory effects of the first of those two tax regimes.
52. As the Advocate General stated, in essence, in point 52 of his Opinion, if such a choice were to be recognised as having the effect described, the consequence would be to validate a tax regime which, in itself, remains contrary to Article 49 TFEU by reason of its discriminatory nature.
53. In addition, as the Court has already had the opportunity to clarify, the fact that a national scheme which restricts the freedom of establishment is optional does not mean that it is not incompatible with European Union law (see, to that effect, Case C‑446/04 Test Claimants in the FII Group Litigation  [2006] ECR I‑11753, paragraph 162).
54. Consequently, the choice offered, in the dispute in the main proceedings, to non‑resident taxable persons by means of the option to be treated as resident taxable persons does not serve to neutralise the discrimination established in paragraph 48 above.