OS ECJ-TF 4/2017 on the Decision of the Court of Justice of the European Union of 9 February 2017 in X (Case C-283/15) ('Pro-Rata Personal Deductions'), Concerning Personal and Family Tax Benefits in Multi-State Situations

Abstract

This article deals with the decision taken by the Court of Justice of the European Union in X (Case C-283/15), on 9 February 2017. In general terms, the Court followed the Opinion of Advocate General Wathelet of 7 September 2016. The case concerned tax legislation permitting the deduction of negative relating to a dwelling. The issue was whether the fundamental freedoms must be interpreted as precluding a State from refusing the benefit of that deduction in respect of a self-employed non-resident in circumstances in which that person receives 60% of his total income within that State, and 40% within a non-Member State. Therefore, he does not receive income that enables him to qualify for an equivalent right to deduct within the State where his dwelling is located. Having recognized that the freedom of establishment applies to the case, the First Chamber confirmed the right of that person to a deduction of negative relating to his dwelling. Subsequently, it held that a self-employed person can claim an equivalent right of deduction in any State of within which that person receives income, in proportion to the share of that income received within each State of activity. A Member State of activity is any State that has the power to tax such income from the activities of a non-resident as is received within its territory, irrespective of where the activities are actually performed. Finally, the Court stated that the fact that the non-resident taxpayer concerned receives part of his taxable income within a third country rather than a State is not relevant.