The European Commission is tracking down tax obstacles that deter European citizens from looking for a job in another member state. On 2 April, it announced that it would assess national direct taxes throughout 2012 to determine whether they may unfairly penalise workers who reside in one member state and work in another. «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,» commented the Commissioner for Taxation, Customs, Anti-Fraud and Audit, Algirdas Semeta. There are an estimated 1.2 million cross-border workers in the EU. Gross salaries paid to these workers and to seasonal workers amounted to €46.9 billion in 2010.

INFRINGEMENT PROCEEDINGS IF NEED BE

The Commission will start by checking whether citizens who earn most of their income in another member state are taxed in the same way as other citizens of the same state and whether all personal and family deductions available to residents are in practice also available to these non-residents. It will also make sure that member states make no distinction between their own citizens and those of other member states who work occasionally on their territory, especially as regards the right to deduct expenses and the application of different tax rates. «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,» added the commissioner. He does not rule out the use of infringement proceedings. The Commission’s review will include the situation for employees, the self-employed and pensioners. If it should detect cases of discrimination or infringement of fundamental freedoms, it will report the failings to national authorities and insist that the necessary changes be made. If the problems continue, the Commission will initiate infringement proceedings against the member states in question.

This initiative, which supplements recent proposals to combat double taxation and enhance the protection of posted workers, fits into the framework of a general drive to strengthen the internal market. Workers’ mobility has been identified as a key factor to stimulate growth and employment in Europe and the Commission is committed to remove obstacles to cross-border mobility.

Workers’ mobility has been identified as a key factor to stimulate growth and employment in Europe