EU reviews cross-border tax fairness

3 Apr 12
European Union member states are to have their tax rules examined to ensure they don’t discriminate against cross-border workers.

By Vivienne Russell | 3 April 2012

European Union member states are to have their tax rules examined to ensure they don’t discriminate against cross-border workers.

The European Commission announced yesterday that it would carry out a ‘thorough assessment’ of nations’ direct taxation arrangements to ensure that people who live in one member state but work in another are not taxed more heavily than citizens of the same member state. The review will also check whether member states apply different tax rules to their own citizens and those resident in another state.

It will encompass tax arrangements not just for employed workers, but also for the self-employed and pensioners.

If any discriminatory rules are detected, these will be flagged up with national authorities, which will be required to make changes. The commission warned that should problems persist it would take infringement procedures against them.

Algirdas Semeta, EU commissioner for taxation, customs, anti-fraud and audit, said: ‘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.

‘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.’

An estimated 1.2 million people work cross-border in the EU and worker mobility has been identified as a major driver of growth and employment in Europe. The commission says: ‘Tax obstacles remain one of the key deterrents to citizens looking for work in another member state.’

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