CFE Opinion Statement on withholding taxes on active income within the EU

Within barely a year, the ECJ has had the opportunity to confirm through three judgments the principles it laid down some years before in the Gerritse case. The judgments were those handed down in Conijn, Scorpio and Centro Equestre da Leziria Grande cases. With some differences, all cases related to the German legislation on withholding taxes on payments made to non-residents and, although establishing the same paramount rule, each of them went a bit further than the previous one into the different issues raised by the system of withholding tax which is common to all EU countries.

Against this background, the CFE Opinion Statement refers to the following questions:
- An overall approach or per-country approach?
- An open question. Are withholdings on active income still justified within the EU?

The main conclusion is that in order to be fully compatible with the Treaty, in the case of a non-resident who receives active income from another EU country and who is subject to tax in the source Member State, this non-resident taxpayer should be able to choose between submitting a tax return directly to the source country (from his own country), and applying all the deductions he is entitled to.