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6th Jun 2020

Commission to launch EU tax discrimination probe

  • Governments that have discriminatory systems will be told to bring tax codes into line with EU law or face fines (Photo: alancleaver)

The European Commission will examine the tax codes of all 28 EU countries in a bid to stamp out tax discrimination against foreign nationals from other EU countries.

In a statement released on Monday (20 January), the EU executive said that it would spend the next 12 months assessing whether national tax regimes were creating disadvantages for mobile EU citizens.

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  • The Commission wants to make sure that tax regimes offer equal treatment for foreign EU workers

The EU executive is anxious that Europeans living and working in another member state should not face double taxation or be excluded from tax perks enjoyed by domestic residents.

The commission investigations will focus on tax rules on income, as well as levies on capital gains and other investments, and pension provisions. Governments found to have discriminatory tax systems will be told to bring their tax codes into line with EU law or face infringement proceedings.

Speaking with journalists on Monday (20 January), commission spokeswoman Emer Traynor said that complicated tax regimes were "one of the key deterrents to mobility in the EU" for citizens wanting to work in other countries.

EU law requires equal tax treatment for citizens within the single market.

However, the investigations come as a number of EU countries are putting pressure on the commission to make it harder for foreign workers to claim domestic welfare benefits.

According to the EU's statistical agency Eurostat, 13.6 million EU citizens lived in a country that was not their state of origin in 2012.

Of this, an estimated 6.5 million people work in a different EU country to the one whose citizenship they hold.

The EU executive estimates that having free movement for the 12 EU countries to join the bloc between 2004 and 2009 was worth an extra 1 percent of GDP - equivalent to around €50 billion - for the other EU-15.

Its estimates do not include Croatia, which joined last year.

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