Case C-169/03

Florian W. Wallentin

v

Riksskatteverket

(Reference for a preliminary ruling from the Regeringsrätten (Sweden))

(Freedom of movement for persons – Workers – Income tax – Restricted liability of a taxpayer receiving a small part of his income in one Member State and residing in another Member State)

Summary of the Judgment

Freedom of movement for persons – Workers – Equal treatment – Remuneration – Income tax – Income of non-residents who do not receive income taxable in the Member State of residence subject to deduction at source excluding any tax allowance linked to the personal circumstances of the taxpayer – Not permissible

(Art. 39 EC)

Article 39 EC precludes a Member State’s legislation from providing that

– natural persons who are not regarded as being resident for tax purposes in that Member State, but who receive income there from employment, are subject to taxation levied at source such that the basic allowance or any other allowance or deduction linked to the taxpayer’s personal circumstances is not granted,

– whereas taxpayers resident in that State are entitled to such allowances or deductions at the time of ordinary assessment to tax on their income received in that State and abroad,

– when the persons not resident in the State of taxation have had, in their own State of residence, only income which, by its nature, is not subject to income tax.

(see para. 24, operative part)

JUDGMENT OF THE COURT (First Chamber) 1 July 2004 (1)

(Free movement of persons – Workers – Income tax – Restricted liability of a taxpayer receiving a small part of his income in one Member State and residing in another Member State)

In Case C-169/03,

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

and

on the interpretation of Article 39 EC,

THE COURT (First Chamber),,

composed of: P. Jann (Rapporteur), President of the Chamber, A. La Pergola, S. von Bahr, R. Silva de Lapuerta and K. Lenaerts, Judges,

Advocate General: P. Léger,

after considering the written observations submitted:

after hearing the Opinion of the Advocate General at the sitting on 11 March 2004,

gives the following

‘Is Article 39 of the EC Treaty to be interpreted as precluding a Member State’s legislation which provides that natural persons who are not regarded as resident in the country for tax purposes but who receive income from employment in the country (restricted tax liability) are subject to a tax at source of such a nature that a basic allowance or other allowance or deduction for personal circumstances is not granted, whereas persons resident in the country are entitled to such an allowance or deduction at the time of ordinary assessment to income tax in respect of all income which they receive in the Member State and abroad (full tax liability), but where the first mentioned person’s lack of right to a basic allowance is taken into account, inter alia, by means of a tax rate which is lower than the rate applicable for taxable persons resident in the country?’

On those grounds,

THE COURT (First Chamber),

in answer to the question referred to it by the Regeringsrätten by order of 10 April 2003, hereby rules:

Jann

La Pergola

von Bahr

Silva de Lapuerta

Lenaerts

Delivered in open court in Luxembourg on 1 July 2004.

Registrar

President of the First Chamber

R. Grass

P. Jann