C-224/02

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OPINION OF MR JACOBS — CASE C-224/02

National provisions 5. In addition, where the debtor's ability to pay is substantially reduced because of illness, unemployment or other special reason, the part excluded from attachment is to be redetermined, until further notice or for a specified period, at a higher level than would otherwise have been applicable; the attachment may also be suspended for a period in similar circumstances, once it has been in effect for a year.

3. Under the Ulosottolaki (Law on enforce- ment), a debtor's income may be attached following a court decision imposing an obligation to pay. The law endeavours however to guarantee a minimum subsis- tence level. The relevant provisions are to be found essentially in Paragraphs 6, 6a, 6b and 7 of Part 4 of the Ulosottolaki. 6. Under the 1967 Convention between Finland and Spain for preventing double taxation, Finnish pensions of the kind in issue in the present case are taxable only in the Contracting State in which the recipient lives.

4. Where wage or pension income paid in Finland is attached for debt, there is a 'protected part', which is a fixed amount defined from time to time by decree as sufficient for subsistence, 2 and a 'part excluded from attachment', a varying The proceedings amount calculated proportionally in rela- tion to both the total income and the protected part but always greater than the latter. As its name suggests, the part excluded from attachment remains at the debtor's disposal. It is calculated after compulsory deduction of tax at source. 7. Heikki Antero Pusa is a Finnish national. In 1998 he moved from Finland to Spain, where he still lives. He receives a 2 — At the material time in the present case, the amount of that protected part was FIM 97 (about EUR 16.25) per day for a Finnish invalidity pension, paid into his single person. account in Finland. He is also in debt in

'Does Article 18 EC or any other rule of Community law preclude national legisla- tion under which, in an attachment carried 9. In proceedings against the creditor, a out for the purpose of enforcing a judgment banking organisation, Mr Pusa submits concerning a money debt, that part of the inter alia that the attachment infringes his pension payable at regular intervals to the rights under the Ulosottolaki. Because he debtor which the attachment may concern lives in Spain, he is not liable to tax in is determined by deducting from the pen- Finland on his pension income. The pension sion the income tax prepayment levied in institution therefore does not deduct tax at the Member State in question, whereas the source. The amount which it must withhold income tax which a debtor resident in each month for the purposes of the attach- another Member State is obliged to pay in ment is thus calculated on the basis of his his State of residence is not taken into gross — not net — pension, no account account as a deduction, so that the attach- being taken of the fact that he pays 19% able part is greater in the latter case in being tax in Spain. Consequently, Mr Pusa determined on the basis of the gross and not argues, he is left each month with less the net amount of the pension?'

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OPINION OF MR JACOBS — CASE C-224/02

11. The Finnish Government and the 14. Mr Pusa is a Finnish national residing Commission have both presented written in Spain. He is a citizen of the European observations and oral argument; the Italian Union who has exercised his right to move Government has submitted written obser- and reside within the territory of the vations. Member States. The treatment of which he complains is inseparable from the fact that he has lived and worked, and receives a pension, in one Member State but now lives and is taxed in another.

recurrent theme in the Court's case-law as a secures freedom of movement for workers form of indirect discrimination on grounds through 'the abolition of any discrimination of nationality. based on nationality', has been interpreted as precluding also certain non-discrimina- tory measures. 5And the wording of Article 18 EC, for its part, is clearly not limited to a prohibition of discrimination; paragraph 1 simply sets out the right of a citizen of the Union to move and reside freely within the territory of the Member States, subject only 18. But discrimination on grounds of to any limitations or conditions laid down nationality, whether direct or indirect, is in the Treaty or implementing measures. not necessary in order for Article 18 to apply. In particular, it is not necessary to establish that, for example, a measure adversely affects nationals of other Member States more than those of the Member State imposing the measure.

25. As the Commission has pointed out, there is nothing in the order for reference to suggest any justification for the treatment in issue. The Finnish Government however puts forward a number of considerations, based on its explanation of how the national rules operate in a case such as 23. The questions to be addressed are thus Mr Pusa's, arguing essentially that if any whether the Finnish legislation in issue does difference of treatment exists — and that on in fact impose a burden on those exercising one view there is none — it is objectively the right to freedom of movement and justified. residence and whether, if so, it may none the less be justified on the ground that it is

6 — The right in Article 18(1) could not be fully effective if a citizen could be deterred from exercising it by the prospect of obstacles raised on his return (D'Hoop, cited in note 4, paragraphs 30 and 31 of the judgment; Case C-224/01 Köbler, judgment of 30 September 2003, paragraph 74). In the context of Article 39 EC, provisions which deter a 26. It explains, first, that tax paid abroad national from leaving his Member State to exercise his right to freedom of movement constitute an obstacle to that may be taken into account, upon proof of freedom (Case C-385/00 De Groot [2002] ECR I-11819, paragraph 77 et seq. and the case-law cited there; Case C-232/01 Van Lent, judgment of 2 October 2003, at paragraph 16). 7 — Cited in note 4. 8 — See, for example, D'Hoop, at paragraph 36 of the judgment.

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PUSA

29. It also stated that the official body which administers attachments has to deal with a vast number of cases each year — 2.7 million in 2002 — a task which requires simplicity of operation and reliability of information. The information to which that 27. Thus, essentially, the system allows body has automatic access is however income tax to be taken into account in all limited. It includes any income tax deducted cases — automatically wherever possible at source, which appears on the document or, when that is impossible, in a way which showing the amount of wages or pension does not impose any greater adverse effect paid, but not other taxes. The amount of on the debtor than is inevitable, given that such other taxes can only be taken into impossibility. account on the production of proof that they have been paid; such proof must be provided by the debtor who may, however, produce it at any time in order to seek a recalculation of the part of his income which is excluded from attachment.

28. At the hearing, the Finnish Govern- ment stressed the overall aim of ensuring that debts are paid as promptly as possible without placing the debtor in an intolerable 30. Of those considerations, it seems to me that the most important is that all tax may 9 — The Finnish Government also asserts that the unfavourable be taken into account upon proof of its treatment of which Mr Pusa complains is due at least in part to the fact that, instead of providing proof of his payment of payment. A requirement that the debtor tax in Spain, he has merely submitted a declaration to that effect. must provide such proof where it is not 10 — Apparently 1973. automatically available seems justified,

33. Moreover, the national court, in its question, specifically asks about a situation in which 'that part of the pension ... which 31. In that regard, I am not persuaded by the attachment may concern is determined the Commission's contention that the Fin- by deducting from the pension the income nish authorities could and should them- tax prepayment levied in the Member State selves obtain any relevant information from in question, whereas the income tax which their counterparts in the other Member a debtor resident in another Member State State. Whilst such cooperation is no doubt is obliged to pay in his State of residence is conceivable and would certainly be com- not taken into account as a deduction, so mendable, the quickest and most effective that the attachable part is greater in the channel of communication, in the debtor's latter case ...'. own interest, is the debtor himself, who can reasonably be required to provide proof of payment.

34. Clearly the way in which Finnish law operates is a matter for the national court. 32. However, such a justification can be If the description given in its question is accepted only if debtors residing in another correct, subject merely to a discretion on Member State who have submitted the the part of the national authorities to take necessary proof are in all cases ensured account of income tax proved to have been treatment equivalent to that of debtors paid in another Member State, then the residing in Finland. An entitlement to Finnish legislation goes beyond what is equivalent treatment must be clear from required to advance the aim propounded by the legislation. A mere discretion on the the Finnish Government and is therefore not objectively justified.

However, a rule that any income tax not deducted at source in the first Member State will be taken into account on production of proof of payment by the debtor is objectively justified, provided that it does not operate in such a way as to make it impossible in practice, or excessively difficult, for debtors resident in another Member State to obtain adjustment of the attachable portion on that basis, to the same extent as if the tax had been deducted at source.

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