Skatteverket v Hilkka Hirvonen.
Date: 2015-11-19
12. Since 2005, following the judgment in Wallentin (C‑169/03, EU:C:2004:403), non-resident taxable persons may opt to have their taxable income taxed under the ordinary taxation regime instead of under the taxation at source regime. When they opt for the first of those regimes, those persons are granted allowances for the costs of obtaining and retention of the revenue. If they have obtained all or nearly all their income in Sweden, they also have the right to certain other tax incentives, such as the possibility of deducting, on certain conditions, the interest costs on loans which cannot be deducted in the State of residence.
The main proceedings and the question referred for a preliminary ruling
18. Before that court, the Skatteverket argues that the deduction of the interest paid on a housing loan is possible only under the ordinary taxation regime, for which non-resident taxpayers may opt. The Court of Justice has confirmed the lawfulness of such a right to choose in its judgment in Gerritse (C‑234/01, EU:C:2003:340). In addition, the situation in the main proceedings is not, in the view of the Skatteverket, comparable to that which gave rise to the judgment in Gielen (C‑440/08, EU:C:2010:148). The purpose and objective of taxation at source, which is recognised as a fundamental principle of international tax law, namely to ease the burden on the taxpayer and to simplify the task of the administration, instituted by the special income tax law, precludes the possibility of deducting expenses and costs incurred.
19. The referring court does, however, see certain points of convergence between the main proceedings and the case which gave rise to the judgment in Gielen (C‑440/08, EU:C:2010:148) since, in the latter case, the Court held that the fact that a non-resident taxpayer was able to opt for the taxation regime of resident taxpayers rather than being subject to that applicable to non-resident taxpayers cannot remove the discriminatory nature of a specific tax advantage. None the less, that court notes that, unlike the facts of the case which gave rise to the judgment in Gielen (C‑440/08, EU:C:2010:148), the main proceedings concern a tax advantage which is not specific and that, in Sweden, a non-resident taxpayer may choose between ‘two entirely different regimes’ for the taxation of his income.
21. As a preliminary point, it must be borne in mind that, in accordance with the case-law of the Court, retired persons such as Ms Hirvonen, who leave the Member State in which they have spent all their working life to reside in another Member State may benefit, where their situation is not covered by the freedom of movement guaranteed by Article 45 TFEU, from the right to freedom of movement as a citizen of the European Union under Article 21 TFEU (see, to that effect, judgment in Turpeinen , C‑520/04, EU:C:2006:703, paragraphs 16 to 23).
28. In that regard, it should be noted that, although direct taxation falls within their competence, the Member States must none the less exercise that competence consistently with EU law (see, inter alia, judgment in Gielen , C‑440/08, EU:C:2010:148, paragraph 36 and the case-law cited).
29. 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, judgment in Gielen , C‑440/08, EU:C:2010:148, paragraph 37 and the case-law cited).
30. In accordance with the settled case-law of the Court, discrimination can arise only through the application of different rules to comparable situations or the application of the same rule to different situations (see, in particular, judgments in Schumacker , C‑279/93, EU:C:1995:31, paragraph 30, and Gschwind , C‑391/97, EU:C:1999:409, paragraph 21).
31. In that regard, it is also clear from the case-law of the Court that, in relation to direct taxes, the situations of residents and of non-residents in a State are generally not comparable, because the 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, and because 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 (judgment in Wallentin , C‑169/03, EU:C:2004:403, paragraph 15 and the case-law cited).
32. Thus, 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, having regard to the objective differences between the situations of residents and of 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 (judgment in Wallentin , C‑169/03, EU:C:2004:403, paragraph 16 and the case-law cited).
33. The Court has held, however, that the position is different in a case in which the non-resident receives no significant income in his State of residence and obtains the major part of his taxable income from an activity pursued in another State, with the result that the 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 (judgment in Wallentin , C‑169/03, EU:C:2004:403, paragraph 17 and the case-law cited).
34. In the case of a non-resident who receives the major part of his 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 irrespective of the different rates applicable under laws such as those at issue in the main proceedings, namely the special income tax law and the inkomstskattelagen (judgment in Wallentin , C‑169/03, EU:C:2004:403, paragraph 17).
35. In accordance with the case-law of the Court, that applies 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 of employment (see, to that effect, judgment in Lakebrink and Peters-Lakebrink , C‑182/06, EU:C:2007:452, paragraph 34) and also, mutatis mutandis , in a situation where a retirement pension constitutes the taxable income (judgment in Turpeinen , C‑520/04, EU:C:2006:703, point 29).
39. It is exactly that factor which distinguishes the facts of the main proceedings from the specific facts of the case which gave rise to the judgment in Gielen (C‑440/08, EU:C:2010:148).
41. Answering that question in the negative, the Court explained that the option to choose between a discriminatory tax regime and one which is ostensibly not discriminatory is not capable of remedying the discriminatory effects of the first of those two tax regimes. A finding to the contrary would have the consequence of validating a tax regime which, in itself, remains contrary to Article 49 TFEU by reason of its discriminatory nature. The Court has previously stated that the fact that a national scheme which restricts the freedom of establishment is optional does not mean that it is not incompatible with EU law (judgment in Gielen , C‑440/08, EU:C:2010:148, paragraphs 50 to 53).
42. The Court thus concluded that the choice offered to non-resident taxpayers by means of the option to be treated as resident taxpayers does not serve to neutralise the discrimination within the meaning of Article 49 TFEU (judgment in Gielen , C‑440/08, EU:C:2010:148, paragraph 54).
44. A difference in treatment between non-resident and resident taxpayers, consisting in the fact that it subjects the income of non-residents to a definitive tax at the single rate of 25%, deducted at source, whilst the income of residents is taxed according to a progressive table including a tax-free allowance, is compatible with EU law provided that the single rate is not higher than that which would actually be applied to the person concerned, in accordance with the progressive table, in respect of net income increased by an amount corresponding to the tax-free allowance (see, to that effect, judgment in Gerritse , C‑234/01, EU:C:2003:340, paragraph 53 et seq.).