«(Income tax – Non-residents – Article 59 of the EC Treaty (now, after amendment, Article 49 EC) and Article 60 of the EC Treaty (now Article 50 EC) – Non-taxable threshold amount – Deduction of business expenses)»

1.. Freedom to provide services – Restrictions – Tax legislation – Income taxes – Exclusion of non-residents from the right to deduct business expenses – Not permissible (EC Treaty, Art. 59 (now, after amendment, Art. 49 EC) and Art. 60 (now Art. 50 EC))

2.. Freedom to provide services – Restrictions – Tax legislation – Income taxes – Rate of taxation fixed in relation to the income of non-residents and progressive in relation to the income of residents – Whether permissible – Conditions (EC Treaty, Art. 59 (now, after amendment, Art. 49 EC) and Art. 60 (now Art. 50 EC))

JUDGMENT OF THE COURT (Fifth Chamber) 12 June 2003 (1)

((Income tax – Non-residents – Article 59 of the EC Treaty (now, after amendment, Article 49 EC) and Article 60 of the EC Treaty (now Article 50 EC) – Non-taxable threshold amount – Deduction of business expenses)

In Case C-234/01,

REFERENCE to the Court under Article 234 EC by the Finanzgericht Berlin (Germany) for a preliminary ruling in the proceedings pending before that court between

and

on the interpretation of Article 52 of the EC Treaty (now, after amendment, Article 43 EC),

THE COURT (Fifth Chamber),,

composed of: M. Wathelet (Rapporteur), President of the Chamber, C.W.A. Timmermans, D.A.O. Edward, P. Jann and A. Rosas, Judges,

Advocate General: P. Léger,

after considering the written observations submitted on behalf of:

having regard to the Report for the Hearing,

after hearing the oral observations of Mr Gerritse and the Commission at the hearing on 9 January 2003,

after hearing the Opinion of the Advocate General at the sitting on 13 March 2003,

gives the following

The deduction at source shall be 25% of the income received ...

The deductibility of business expenses

The deduction at source of 25%

Observations submitted to the Court

The answer of the Court

On those grounds,

THE COURT (Fifth Chamber),

in answer to the question referred to it by the Finanzgericht Berlin by order of 28 May 2001, hereby rules:

Wathelet

Timmermans

Edward

Jann

Rosas

Delivered in open court in Luxembourg on 12 June 2003.

R. Grass

M. Wathelet

Registrar

President of the Fifth Chamber