Commission to examine tax measures for cross-border workers
Brussels, 02 April 2012 - Member States' tax provisions are to be scrutinised to ensure that they do not discriminate against cross-border workers, in a targeted initiative launched by the Commission. It is estimated that more than 1.2 million people work cross-border in the EU. Gross wages paid to cross-border and seasonal workers in 2010 amounted to €46.9 billion. Worker mobility has been identified as one of the key potentials for increasing growth and employment in Europe. However, tax obstacles remain one of the key deterrents to citizens looking for work in another Member State.
Algirdas Šemeta, Commissioner for Taxation, Customs, Anti-Fraud and Audit, said: "EU rules are clear: all EU citizens must be treated equally within the Single Market. There cannot be discrimination, and workers' right to free movement must not be impaired. Most Member States respect these core principles but I am ready to take any measure necessary to ensure that they are reflected in all Member States' tax rules."
This is why, throughout 2012, the Commission will carry out a thorough assessment of national direct taxes to determine whether they create unfair disadvantages for workers that live in one Member State and work in another. Where discrimination or breaches of the EU's fundamental freedoms are found, the Commission will flag them to the national authorities and insist that the necessary amendments are made. Should the problems persist, the Commission will take infringement procedures against the Member States in question.
As tax obstacles remain one of the key deterrents to cross border mobility, the Commission is working on many fronts to tear down barriers for EU workers, for example, in its proposal to tackle double taxation (IP/11/1337) or to boost protection for posted workers (IP/12/267).
In this latest initiative, the Commission is scrutinizing:
- whether citizens who earn most of their income in another Member State are taxed more heavily than the citizens of that same Member State. In this context, the Commission checks that all the personal and family deductions available to residents are in practice also available to these non-residents.
- whether Member States differentiate between their own citizens and citizens from other Member States who occasionally work in their territory, particularly as regards the right to deduct expenses and the application of different tax rates.
The Commission will not only look at the situation for employed and dependent workers but also self-employed individuals and pensioners.
The main principles to be applied to the taxation of cross border workers were established in some landmark judgments of the EU's Court of Justice, such as Schumacker (C-279/93), Wielockx (C-80/94), Turpeinen (C-520/04) and Gerritse (C-234/01).
The right to live and work anywhere in the EU is both a fundamental right for European citizens and a key instrument for developing a Europe-wide job market. The Commission supports Member States in designing policies to address legal and administrative obstacles to working mobility (e.g. Youth on the move - IP/10/1124) but also ensure that cross-border workers are not treated differently from national workers and they shall enjoy the same social and tax advantages as national workers (more info).
Two services that help European citizens and businesses understand and defend their rights in the EU are Your Europe Advice and SOLVIT. Your Europe Advice answers questions from citizens asking about their rights, for example their health insurance or unemployment benefit entitlements when going to live and work abroad. SOLVIT provides practical and timely solutions to citizens and businesses who encounter administrative obstacles, such as getting professional qualifications recognised in another Member State so they could work there. Both of these services have enabled thousands of European citizens and businesses to benefit from the opportunities afforded by the Single Market.