C-391/97

1. This case arises from an application, preliminary ruling under Article 177 of the lodged in Germany by a Netherlands EC Treaty with a view to ascertaining national employed in that State and resid- whether the provisions of Community law ing with his spouse in the Netherlands, to on freedom of movement for workers be given the right to choose the 'splitting' preclude the said right to choose, which method of assessment and tariff for the couples living in Germany have in any case, purpose of liability to income tax of natural from being made subject to a condition, for persons. In this connection the Finanzge- non-resident couples, that the worldwide richt Köln (Finance Court, Cologne), (Ger- income of the couple is taxable as to at least many), has referred a question for a 90% in Germany or otherwise, that the couple's income received abroad and exempt from tax in Germany may not * Original language: Spanish. exceed DEM 24 000 a year.

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5. However, a taxable person who is a national of a Member State of the Eur- opean Union or a State to which the Agreement on the European Economic Area 3 applies and who has permanent residence in one of those States may be treated as taxable on the whole of his 3. Normally income from employment is income and, as such, have the right to subject to a deduction at source by the choose joint assessment and to be placed in person paying the salary. For the purpose of class III for the purpose of the deduction at such deduction, persons subject to tax on source, provided that the following condi- the whole of their income are classified by tions are fulfilled: categories. Unmarried persons form class I. Married persons not separated from their spouses form class III and have a right to choose joint assessment, using the 'split- ting' method and tariff if they both reside in Germany. Taxpayers subject to limited tax are placed in class I irrespective of whether — his or her spouse must have permanent they are married or not. residence or usual abode in another

1 — Case C-279/93 [1995] ECR I-225. 2 — Case C-80/94 [1995] ECR I-2493. 3 — Agreement on the European Economic Area approved by decision of the Council and the Commission of 13 Decem- ber 1993 on the conclusion of the Agreement on the European Economic Area between the European Commu- nities, their Member States and the Republic of Austria, the Republic of Finland, the Republic of Iceland, the Princi- 4. As a result of amendments to the legisla- pality of Liechtenstein, the Kingdom of Norway, the Kingdom of Sweden and the Swiss Confederation tion in 1996 in order to adapt the income (OJ 1994 L 1, p. 1).

— at least 90% of the worldwide income of the couple received in the tax year is taxable in Germany or, otherwise, the income received abroad which is not taxable in Germany does not exceed DEM 24 000 during the same period. Where only one of the spouses receives income or where there is a large difference between the income of the two, this method results in mitigating the progressive increase in tax rates. On the other hand, its advantages are practically neutralised where the income of the two spouses is In this case the spouse is also treated as if more or less the same. the whole of his or her income were taxable by the application of the 'splitting' method and tax scale tariff to determine the amount of tax. This method, which is applied only to married couples, is based on the fiction that each spouse contributed one half of the total taxable income. To determine the tax, the taxable amounts of both spouses are aggregated, the resulting 6. The method was adopted as a result of a total is divided by two, the mathematical 1957 judgment of the Bundesverfassungs- formula laid down by law is applied to one gericht (Federal Constitutional Court) and half and the result is multiplied by two. The is based on a fundamental principle laid total is the amount which the spouses must down in Article 6 of the Grundgesetz (Ger- pay. man Constitution), which places the family under the special protection of the State. This judgment stated that spouses must not, merely by reason of marriage, be liable to a greater tax burden than unmarried persons. As joint assessment means that the income of spouses is aggregated and attri- buted to them jointly and that the spouses The use of this method entails certain tax are treated as one taxpayer, the progressive advantages with regard to the deduction of nature of the tax scale would have the

8. As the provisions enacted in 1996 apply with retrospective effect to assessments still pending and permit non-resident married taxable persons to be treated, on request II. Facts in the main proceedings and in certain circumstances, as taxable on the whole of their income, Mr Gschwind requested the defendant authority to tax his income together with that of his wife in Germany for 1991 and 1992, using the 'splitting' method and tariff. The request was refused and the basic tariff was applied 7. Mr Gschwind, the plaintiff in the main to him on the ground that he did not fulfil proceedings, is a Netherlands national the conditions required by those provisions, living in the Netherlands in a local district namely that at least 90% of the worldwide near the German border with his wife and a income of the couple must be taxable in child born in 1992. In 1991 and 1992, Germany or, otherwise, the couple's aggre- which are the tax years for which he has gate income from foreign sources which is appealed against the income tax assessment exempt from tax in Germany must not issued by the defendant authority, he com- exceed the absolute fixed maximum of muted every working day to the city of DEM 24 000 a year. Aachen. The income from that employ- ment, which was the only income he received individually during the two years in question, was taxed in Germany pur- suant to Article 10(1) of the double taxa-

'Is it contrary to Article 48 of the EC Treaty for Paragraph 1(3), second sentence, IIΙ. The question referred by the national in conjunction with Paragraph la.1.2 of the court Einkommensteuergesetz (German Law on Income Tax) to provide that a Netherlands national deriving taxable income from employment in Germany without having a permanent residence or usual abode there and his spouse, who is not permanently 10. In order to resolve the case, the separated from him and likewise has no national court decided to stay proceedings permanent residence or usual abode in Germany and earns income abroad, are not to be treated as persons subject to 5 — In his appeal the plaintiff states that, had the German unlimited taxation for the purposes of legislature not made the right to choose subject to certain limits in the case of frontier workers, the charge to tax in his applying Paragraph 26(1), first sentence, case would have been as follows (subject to any error on my of the Einkommensteuergesetz (joint assess­ part, the average rate for 1992, applying the progression saving rule and the 'splitting' method, should be 23.9632% ment) on the ground that the combined and not 26.9632%): income of the spouses for the calendar year 1991 1992 in question does not fall as to at least 90%, DEM DEM within the Einkommensteuergesetz, or that Gross salary F. Gschwind 82 535 84 047 the income not subject to the Einkommen­ Business expenses -9 001 -9 607 steuergesetz amounts to more than DEM 24 000?' Net income 73 534 74 440 Training and further training expenses -900 -900 Deductible provident expenses -3 510 -3 510 Child relief -4 104 Taxable income 69 124 65 926 Netherlands income exempt in Germany but taken into account for determining the progression saving (PS) 52 426 53 209 IV. The Community legislation Average rate of income tax, with PS and splitting 24.1761% 26.9632% Taxable income F. Gschwind 69 124 65 926 Income tax with PS and the 'splitting' scale of rates 16 711 15 798 Income tax at basic scale of rates 17 723 16 522 11. The national court seeks interpretation Additional tax charge compared of Article 48 of the EC Treaty which, so far with nationals 1 012 724

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The German Government observes that, in the Netherlands, married couples are taxed individually, so that the personal and family circumstances of the plaintiff's wife 15. The Belgian Government considers that are taken into account in accordance with the 'splitting' method is a means of deter- Netherlands law. The plaintiff receives no

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income in the Netherlands and the income taken into account and if two deductions he receives in Germany is not taxable in the instead of one were made from the aggre- Netherlands, pursuant to Article 10 of the gate income, whereas his wife would not be double taxation agreement between Ger- subject to a higher tax rate because her many and the Netherlands. Consequently husband's income would not be added to there is no taxable income in the State of hers in the Netherlands, where she is residence and the income received in Ger- assessed individually. many is not taken into account with that of his wife for the purpose of the progressive saving rule because in the Netherlands there is no provision for the joint assess- ment of couples.

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gressive nature of the tax. The resulting law should take into account the income of total would then be 'split' as if it were the both spouses in order to determine that the joint taxable amount of the spouses, thus maximum taxable income in Germany is giving the average rate of tax, which will be 90% when the income of only one spouse is higher than if the plaintiff's income only taxable there. were 'split', but lower than the rate which would apply to single persons according to the basic tax scale.

VI. Examination of the question The Commission asserts that the refusal to apply the 'splitting' principle with progres- sive tax rates to the plaintiff's income is contrary to Article 48 of the Treaty. The plaintiff is a national of a Member State who has exercised his freedom of move- ment by commuting from the Netherlands to Germany to work there and he should A. Admissibility not be treated less favourably than nation- als in the same situation.

19. The defendant tax authority considers that the question referred to the Court is inadmissible because the national court has With regard to the rate of tax, the Com- not stated its purpose clearly and the mission contends that residents and non- question concerning possible discrimina- residents are in a comparable situation, tion against the plaintiff, who asks to be provided that non-residents do not avoid assessed by a method not envisaged by the progressive tax rates by reason of the fact Law on income tax, even for resident that their tax liability is limited to the taxpayers, is a hypothetical question. income received in the State of employ- ment. The plaintiff is said to meet this requirement because the 'splitting' method applies to him in conjunction with progres- sive tax rates.

B. Substance (a) The limits imposed by Article 48 of the Treaty on the Member States in exercising their taxing powers in relation to direct taxes 20. With its question the Finanzgericht Köln wishes to ascertain whether it is contrary to Article 48 of the Treaty for the German law on income tax, which gives resident married couples the right to choose the 'splitting' method of assessment and 22. In April 1991 the Finanzgericht Köln requested a preliminary ruling from the Court on a number of questions in connec- 6 — See the order of 25 May 1998 in Case C-361/97 Nour tion with proceedings brought by Mr Wer- [1998] ECR I-3101, and the judgments in Case C-291/96 ner, a German national who had lived in Grado and Bashir [1997] ECR 1-5531; Case C-105/94 Celestini [1997] ECR I-2971; Case C-125/94 Aprile [1995] the Netherlands since 1961. He had ECR I-2919, and Case C-83/91 Metlicke [1992] ECR 1-4871. obtained his professional qualifications in 7 — See the Schumacker judgment, cited in footnote 1. It is Germany and worked for 20 years as a undoubtedly one of the Court's judgments which has salaried dentist in a dental surgery in received most attention from commentators. The Court's database already lists more than 60 case notes and articles. Aachen. At the end of 1981 he opened a

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25. In giving judgment in that case, the Court laid down various principles which 23. In its judgment 8 the Court, following will be very useful in resolving the present the Advocate General,9 took the view that case. The Court stated, first, that Article 48 it was unnecessary to reply to the question because it related to a purely internal 10 — In view of subsequent judgments of the Court of Justice, some commentators now regard this judgment as having been superseded. See E. Keeling, 'Some observations on Finanzamt Köln-Altstadt v Roland Schumacker' in The EC 8 — Case C-112/91 Werner [1993] ECR I-429. Tax Journal, vol. I, 1995/96, issue 2, p. 135 et seq., 9 — Opinion of Advocate General Darmon, delivered on particularly pp. 143 and 144, and the judgments cited by 6 October 1992, in the Werner case, cited in footnote 8. the author.

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However, in relation to direct taxes, the situations of residents and of non-residents The distinction between resident and non- are not, as a rule, comparable, so that the resident taxpayers is objective. Residence is fact that a Member State does not grant to the criterion for liability to tax and even a non-resident certain tax benefits which it today it is the criterion on which interna- tional tax law is based, as expressed in the

11 — See the Schumacker judgment, cited in footnote 1, paragraph 24. 13 — Ibid., paragraphs 31, 34 and 35. 12 — Ibid., paragraphs 27 and 28. 14 — Ibid., paragraphs 32 and 33.

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Model Double Taxation Convention of the stances are taken into account neither in Organisation for Economic Cooperation the State of residence nor in the State of and Development (OECD). 15 employment. 17

The Court considered that there is no objective difference between the situations of such a non-resident and a resident engaged in comparable employment such 30. The Court gave a ruling to the same as to justify different treatment as regards effect in the Wielockx judgment a few the taking into account for taxation pur- months later. 19Mr Wielockx was a Belgian poses of the taxpayer's personal and family national residing in Belgium and working circumstances and that, in the case of a non-resident who receives the major part of his income and almost all his family income 17 — See the judgment cited in footnote 1, paragraphs 36 to 38. in a Member State other than that of his Apart from the existence of substantive discrimination between non-resident Community nationals and German residence, 16 discrimination arises from the nationals residing in Germany, the Court found unjustified fact that his personal and family circum- discrimination of a procedural nature in so far as Community nationals who had no permanent residence or usual abode in Germany, but who received income there from employment, were refused the benefit, available to residents, first, of the annual adjustment of deductions at 15 — M. Quaghebeur, 'A bridge over muddied waters. Coher- source in respect of wages tax, which prevented them, for ence in the case law of the Court of Justice of the European reasons of administrative simplification, from claiming Communities relating to discrimination against non-resi- certain items in the assessment of tax, such as occupational dent taxpayers' in The EC Tax Journal, vol. I, 1995/96, expenses, special expenditure or extraordinary costs and, issue 2, p. 109 et seq., p. 133. second, of asking the authorities for an annual calculation of tax. 16 — P. Farmer, 'Article 48 EC and the taxation of frontier workers' in European Law Review, 1995, p. 310 et seq., 18 — Council Directive of 19 December 1977 concerning p. 317. This writer considers that the Court rejected at the mutual assistance by the competent authorities of the hearing by the United Kingdom that only non-residents Member States in the field of direct taxation (OJ 1977 with no income outside the State of employment could be L 336, p. 15). regarded as being in the same position as residents. 19 — Cited in footnote 2.

31. In the Wielockx judgment the Court held that if a non-resident taxpayer is not given the same tax treatment as regards deductions from his taxable income as a (b) The reply to the question from the resident, his personal situation will be national court taken into account neither by the tax authorities of the State where he works — because he is not resident there — nor by the State of residence — because he receives no income there; consequently his

33. As I indicated when describing the 20 — Article 44(1) of the Law of 16 November 1972, which German tax legislation in force, married amended the Nederlandse Wet op de Inkomstenbelasting (Law on income tax of natural persons) of 16 December Community nationals who reside with their 1964, establishes a voluntary pension-reserve tax scheme for self-employed persons, under which such persons may spouse in another Member State and who allocate a proportion of the profits of their business to fulfil the required conditions may now be form a pension reserve with the advantage that the amounts set aside remain in the business. regarded as taxable on the whole of their

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34. The plaintiff in the main proceedings recognises that the new provisions enable non-resident Community nationals who receive taxable income in Germany to be treated fairly and in accordance with 36. Mr Gschwind's argument is that, Community law. However, he observes that although he does not live with his wife in married Community workers not residing Germany, the couple's income is taxable in Germany and not fulfilling the condi- there only as to 58.32% and the income tions prescribed by law for joint assessment from a foreign source represents more than suffer considerable disadvantages by com- double the absolute maximum of parison with resident married taxpayers. DEM 24 000, under Community law he These disadvantages are that it is impossi- should be treated for tax purposes as if he ble to deduct the fixed sum for provident and his wife fulfilled the condition of joint expenses from the taxable amount twice residence in Germany. and, primarily, that such workers are not allowed to choose the 'splitting' method of assessment and tariff. In the plaintiff's opinion, since couples residing in Germany have this right to choose, even if they receive income from foreign sources which is tax-exempt in Germany, non-resident workers in a similar situation should have 37. For the reasons which I shall now give, the same right to choose. I cannot agree with that argument.

38. According to the Court's case-law, the 35. It is apparent from the documents rules regarding equal treatment forbid not b e f o r e t h e C o u r t t h a t in 1 9 9 2 only overt discrimination by reason of

41. To determine whether there is such indirect discrimination by reason of nation- ality, it is necessary to establish whether, as the rule applied to Mr Gschwind differs from that applied to resident taxpayers, he 39. As in the Schumacker case, the provi- and they are in a comparable situation, in sions in question apply irrespective of the which case the reply will be in the affirma- taxpayer's nationality. However, where, in tive, or whether, on the contrary, they are in order to assess the taxpayer's marital a different situation, in which case the reply situation from the tax viewpoint, legisla- will have to be negative. tion makes a distinction on the basis of residence or of the amount of the couple's income from foreign sources and imposes conditions which it is easier for residents than non-residents to fulfil, there will be a risk that nationals of other Member States may be adversely affected to a greater extent because non-residents are more 42. In this connection, particular impor- often non-nationals. Under these circum- tance attaches to the Court's observation stances it is true that provisions of the kind that, in the matter of direct taxes, the described may lead to indirect discrimina- situation of residents is not comparable tion by reason of nationality. with that of non-residents. I think this observation must always be the starting- point where it is necessary to reconcile the principle of equal treatment for workers exercising their freedom of movement with the taxing powers of Member States in the field of direct taxes. In my opinion, when the Court delivered the Schumacker and the Wielockx judgments it did not intend to do away with the generally accepted principle of international tax law, incorporated in 40. However, the Court has also consis- the law of the Member States by means of tently held that discrimination can arise the OECD Model Double Taxation Con- only through the application of different vention, that the overall taxation of tax- rules to comparable situations or the appli- payers, taking account of their personal

The differences, on the other hand, are decisive. In the first place, so far as Mr Schumacker is concerned, his income It remains to consider whether there are constituted almost the entire income of his objective differences between family whereas, in Mr Gschwind's case, his Mr Gschwind's situation as a person liable income is slightly more than half of the to income tax in Germany and that of a family income or, to be precise, 58.38% in resident taxpayer in the same employment. 1991 and 58.32% in 1992. In the second place, neither Mr Schumacker nor his wife had in their State of residence any signifi- cant income which would have permitted their personal and family circumstances to be taken into account whereas, although 45. To establish whether Mr Gschwind is Mr Gschwind had no income in his State of the victim of covert discrimination by residence, his wife received there 41.62% reason of nationality, it is not appropriate of the family income in 1991 and 41.68% to compare him with a taxpayer living in in 1992. Furthermore, Germany amended Germany whose wife lives in another its legislation so as to allow a worker such Member State, because the right to choose as Mr Gschwind the same deductions the 'splitting' method of assessment and relating to his personal and family circum- tariff, which he has requested, is connected stances as those to which a resident is with marriage and is granted uncondition-

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ally only to married persons who are not wife's income had to be taken into account separated and who are both residents. In and if two deductions, instead of one, were my opinion, the comparison should be made on the whole of the income, while his made with a couple living in Germany, wife would not be subject to a higher tax one of whom works in the Netherlands. rate because the income of the two spouses would not be aggregated in the Nether- lands, Mrs Gschwind being taxed on an individual basis.

However, the State of employment allows him all the personal and family deductions

23 — M.A. Caamaño Anido and J.M. Calderón Carrero, 'Prin- As the German Government observes, there cipio de no discriminación por razón de la nacionalidad: Aplicación en el ámbito de la imposición directa (IRPF)' in is no doubt that, as Mr Gschwind receives Jurisprudencia tributaria del Tribunal de Justicia de las the higher income of the couple, overall he Comunidades Europeas (Comentarios y concordancias con la legislación española), 1992-1995, Ed. La Ley-Actuali- would be liable to a lower rate of tax if his dad, Madrid 1997, p. 96 et seq., pp. 104 and 105.

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covert discrimination by reason of nation- setz (Law on cross-border workers) of ality. 24 June 1994 extended the rules laid down for workers living in Germany to all cross- border workers receiving at least 90% of their worldwide income in Germany.

(c) Cases where a non-resident taxpayer receives most of his income and almost all his family income in a Member State

51. The Commission for its part adopted Recommendation 94/79/EC, 26 with the 50. In the Schumacher judgment the Court object, inter alia, of bringing to the notice only examined the situation where the of the Member States the provisions which, taxpayer received most of his own income in the Commission's view, are likely to and almost all his family income in the guarantee that non-residents enjoy the State of employment, and did not consider same tax treatments as residents where the percentage required for that situation to the preponderant part of their income is arise. Paragraph 46 of the judgment cites received in the country of activity. the example of Germany, which already granted frontier workers resident in the Netherlands and working in Germany the tax benefits resulting from the taking into account of their personal and family cir- cumstances, including the 'splitting tariff', since provided that they received at least 90% of their income in Germany those Community nationals were treated in the same way as German nationals under the In the recommendation the Commission Ausführungsgesetz Grenzgänger Nieder- suggests that Member States do not subject lande (German Implementing Law on certain items of income, including income Netherlands frontier workers) of 21 Octo- from dependent personal services, in the ber 1980. 25 Member State of taxation, to any heavier taxation than if the taxpayer, his spouse and his children were resident in that Member State. The Commission recom- mends that this measure be applied subject to the condition that the items of income which are taxable in the Member State in Moreover, before the Schumacker judg- which the natural person is not resident ment was delivered, the Grenzpendlerge-

52. Apart from the detail that the recom- mendation, as such, is not binding on the 54. Although the taxpayer is the individual Member States, it does not consider how and not the couple, it is clear that a method the State which taxes the income of the such as 'splitting' aims to assess the finan- spouse receiving at least 75% of his income cial capacity of both spouses. Therefore, in that State should treat the income of the when it is proposed to grant the right to other non-resident spouse with regard to choose joint assessment without the resi- obtaining the benefit of a method such as dence condition normally required, it seems 'splitting' which permits the couple's to me logical to impose other conditions income to be taxed jointly. 27 instead, namely that most of the couple's income (90% as in Germany or 75% as proposed by the Commission) should be taxable by the State of employment and that, otherwise, the foreign income not taxable in that State, which is taken into account only in order to determine the tariff applying to the taxed income for the purpose of progressive tax rates, should be fixed at a relatively low level. In any case, it 53. Until the Council adopts directives for is clear that Mr Gschwind's income in harmonising the tax legislation applying to Germany did not represent more than 58% direct taxes 28 — which it is unlikely to do of the couple's total income. in the short or medium term 29 — I think the requirement imposed by the Court for the purpose of determining that there is no objective difference in situations which would justify unequal treatment as between a resident and a non-resident, namely that

57. Mr Asscher was a Netherlands national working in the Netherlands and On the other hand, the rules concerning the living in Belgium, where he also worked. In 'splitting' method of assessment and tariff accordance with the convention between which apply to residents are not applied the two countries for the avoidance of where the Community worker's income in double taxation, the income he received in the State of employment, although exceed- the Netherlands was taxed there, while the ing 90% of his personal income, does not remainder of his income was taxed in amount to almost all his family income Belgium. The income received in the Neth- because, in those circumstances, the State erlands was not taxed in Belgium, but was of residence can and must assess the taken into account to determine the rate of taxpayer's situation globally, taking tax there so as to allow for progressive tax account of his family circumstances. rates. After he moved to Belgium, he was subject exclusively to that country's social security legislation and was insured under the compulsory scheme for self-employed persons.

(d) The effect of the Court's judgment in Asscher on this interpretation 30 58. As a result of amendment of the Netherlands legislation in 1989, a system was introduced for the joint collection of income tax and social security contribu- tions on a uniform basis of collection. Under this system, the taxable income is the same as that on which social security 56. The plaintiff in the main proceedings contributions are calculated, so that the and the Commission seek support in that amount exempt from both tax and contri- judgment for their view that Mr Gschwind butions is the same. has suffered discrimination prohibited by Article 48 of the Treaty because the tariff applied to him differs from that applying to a married worker living in Germany, which means that his taxable income is taxed at a

income. For taxpayers living in the Nether- case-law developed in paragraphs 36 to 38 lands or persons treated as such, namely of the Schumacker judgment to the effect those whose worldwide income consisted that if a Member State refuses tax benefits entirely or almost entirely of income tax- linked to the taking into account of perso- able in the Netherlands, the tax rate on the nal and family circumstances to a taxpayer first band was 13% and the rate of who works but does not reside in its contributions to the general national insur- territory, there is discrimination where the ance scheme was 22.1%. The total rate non-resident receives all or almost all of his levied on income in the first tax band for worldwide income in that State since the residents and persons treated as such was income received in the State in which he thus 35.1%. In contrast, for non-resident resides is insufficient to allow his personal taxpayers who received less than 90% of and family circumstances to be taken into their worldwide income in the Netherlands account. and who were not obliged to contribute to the Netherlands national insurance scheme, the tax rate on income in the first band was 25%. This was the rate which applied to Mr Asscher in respect of the income received in the Netherlands. 61. However, I must confess that I find it difficult to see the parallels between Mr Schumacker's situation, which I have already examined, and that of Mr Asscher, who was the director and sole shareholder of a private limited company in the Nether- 59. Of the five questions referred to the lands and who at the same time worked in Court in the Asscher case, the first and the Belgium as a company manager, receiving second have a link with the Gschwind case; income in both States concerning which the in substance, these two questions asked file shows only that the income in the whether Article 52 precluded a Member Netherlands did not constitute 90% of his State from applying a higher rate of income worldwide income. tax to a Community national who pursues an activity as a self-employed person within its territory and at the same time pursues another activity as a self-employed person in another Member State in which he resides than it does to residents pursuing The former claimed that the State of the same activity and whether the answer employment should take account of his to that question is affected by the fact that personal and family circumstances for less than 90% of the taxpayer's worldwide income tax purposes, by granting him the income consists of earnings which may be appropriate deductions and also applying taken into account for income tax purposes the 'splitting' method of assessment and by the State in which he works. tariff, because the State of residence could not grant him any concessions as he received no significant income there. The latter did not receive almost all his income in the Netherlands, and the file does not show what proportion of his total income 60. It is true that in paragraph 43 of the was constituted by the income in the State Asscher judgment the Court repeats the of residence, the fundamental difference in

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VII. Conclusion

65. In the light of the foregoing considerations, I propose that the Court reply as follows to the question referred by the Finanzgericht Köln:

Article 48 of the EC Treaty does not preclude the income tax legislation of the State of employment of a worker living with his spouse in another Member State from making that worker's right to choose the 'splitting' method of assessment and tariff subject to the condition that at least 90% of the couple's income be taxable in its territory or, otherwise, that the couple's income from foreign sources which is not taxable in the first State should not exceed a specified amount, even if the said right is not subject to conditions in the case of married couples living in its territory.

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