European Court Rules Against Sweden In Tax Case

by Ulrika Lomas, Tax-News.com, Brussels

05 July 2004

The European Court of Justice ruled last week that EU citizens working temporarily in another member state should be entitled to the same tax benefits as nationals.

By doing so, the ECJ ruled against the tax authorities of Sweden who had argued that a German student employed on a temporary basis by the Church of Sweden was not entitled to exemption from Swedish income tax as he was not an official resident of the country.

Due to his status as a student and his partial financing by his parents, the German student was not legally obliged to pay income taxes in his home state of Germany.

In reaching their decision, the justices cited Article 39 of the European Treaty which prohibits “discrimination based on nationality between workers of the member states."

The ruling was welcomed by the European Commission which argued the case against the Swedish authorities. A spokesman told the EU Observer that the decision “removes an obstacle to free movement [between EU countries] of workers."

The decision will disappoint the authorities in France and Finland however, who had sent legal represenatives to argue in favour of the Swedish governemnt's actions.

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