Case C-400/02

Gerard Merida

v

Bundesrepublik Deutschland

(Reference for a preliminary ruling from the Bundesarbeitsgericht)

(Article 39 EC – Collective agreement – Supplementary temporary allowance in favour of former civilian employees of the allied forces in Germany – Frontier workers – Determination of the basis of calculation of that allowance – Notional taking into account of German tax on wages)

Summary of the Judgment

Freedom of movement for persons – Workers – Equal treatment – Social advantages – Interim assistance granted to workers in the event of dismissal – Notional deduction, for workers resident and chargeable to tax in another Member State, of income tax theoretically due in the Member State of employment – Not permissible – Justification – None

(Art. 39 EC; Council Regulation No 1612/68, Art. 7(4))

Articles 39 EC and 7(4) of Regulation No 1612/68 on freedom of movement for workers within the Community preclude national legislation provided for in a collective agreement under which the amount of a social benefit such as a interim assistance by way of unemployment benefit granted to workers in the event of dismissal, which is paid by the Member State of employment to a worker who resides and chargeable to tax in another Member State, is calculated in such a way that the tax on wages payable in the Member State of employment is notionally deducted on determination of the basis of assessment of that benefit, even though, under a double taxation agreement, salaries, wages and analogous emoluments paid to workers not residing in that State are chargeable to tax only in the Member State in which such workers are resident.

The administrative difficulties for the Member State of employment which would stem from the application of different methods of assessment of that assistance depending on the place of residence of the person concerned and the budgetary consequences of the failure to take into account of national wage tax cannot justify that Member State’s failure to comply with its obligations under the Treaty.

(see paras 29-30, 37, operative part)

JUDGMENT OF THE COURT (Second Chamber) 16 September 2004 (1)

(Article 39 EC – Collective agreement – Supplementary temporary allowance in favour of former civilian employees of the allied forces in Germany – Frontier workers – Determination of the basis of calculation of that allowance – Notional taking into account of German tax on wages)

In Case C-400/02,

REFERENCE for a preliminary ruling under Article 234 EC,

by the Bundesarbeitsgericht (Germany), made by decision of 27 June 2002, received at the Court on 12 November 2002, in the proceedings

v

THE COURT (Second Chamber),,

composed of: C.W.A. Timmermans, President of the Chamber, J.-P. Puissochet, J.N. Cunha Rodrigues (Rapporteur), R. Schintgen and N. Colneric, Judges,

Advocate General: C. Stix-Hackl,

having regard to the written procedure and further to the hearing on 15 January 2004,after considering the observations submitted on behalf of:

after hearing the Opinion of the Advocate General at the sitting on 5 February 2004,

gives the following

‘1. A worker who is a national of a Member State may not, in the territory of another Member State, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal, and should he become unemployed, reinstatement or re-employment;

…

4.‘1. Interim assistance shall be paid:

...

...

3(a)(1) The basis of assessment of interim assistance payable in addition to remuneration for other employment (subparagraph 1a) shall be the collectively agreed basic remuneration under Paragraph 16(1)(a) of the Tarifvertrag für die Arbeitnehmer bei den Stationierungsstreitkräften im Gebiet der Bundesrepublik Deutschland (collective agreement for employees employed with forces stationed in the Federal Republic of Germany) of 16 December 1966 (hereinafter ‘the TV AL II’) to which the employee was entitled for a full calendar month on the basis of his contractually agreed normal working time at the time of cessation of employment ...

…

If interim assistance is paid in addition to benefits from the Bundesanstalt für Arbeit or sickness or accident assurance, the requisite amount must be added to it in order to cover wage tax.

…’

‘On Paragraph 4(1)

...

2.6.5 Unemployment benefit which, owing to his place of residence, a frontier worker from an EU Member State can receive only in his country of residence is in principle equivalent to benefit payable by the Bundesanstalt für Arbeit where the frontier worker was able to pursue employment on the German employment market from his place of residence at that time.

...

On Paragraph 4(3)

...

2.8.5 Where the employee at the time of cessation of employment was exempt under a double taxation agreement from tax on emoluments, in determining the basis of assessment under point 3(b), account is to be taken of the tax deductible in the case of an otherwise comparable German employee resident in Germany.

...

On Paragraph 4(4)

…

2.9.4 Where an employee is in receipt of interim assistance under point 2.6.5 in addition to the benefit paid by a foreign social security institution, the amount of interim assistance shall be determined by reference to the benefit payable by the Bundesanstalt für Arbeit to which the person concerned would be entitled if he were resident in Germany. If the benefit in fact received is higher the difference is to be offset under Paragraph 5.’

‘Salaries, wages and analogous remuneration, as well as retirement pensions, paid by one of the Contracting States … to resident natural persons of the other State in consideration of current or previous military or administrative services shall be chargeable to tax only in the first State. None the less, that provision shall not apply where remuneration is paid to persons possessing the nationality of the other Member State without at the same time being nationals of the first State; in that case, the remuneration is chargeable to tax only in the State of which those persons are resident.’

‘Is Article 39 EC infringed by the fact that for the purposes of calculating the basis of assessment of interim assistance in a case arising under Paragraph 4(1)(b) of the TV SozSich account must be taken of the notional German tax on emoluments (second sentence of Paragraph 4(3)(b) of that collective agreement) if the former employee lives and is subject to tax abroad?’

On those grounds, the Court (Second Chamber) rules as follows:

Signatures.