The right to live and work anywhere in the EU is one of the cornerstones of the EU’s internal market. Worker mobility has been identified as one of the key potentials for increasing growth and employment in Europe. According to Eurostat, the Statistical Office of the EU, 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.

However, there are still many hurdles for those wanting to work in another EU Member State. One of these is unfair tax regimes that vary from one State to another. These complicated tax regimes between Member States mean that they are a deterrent to mobility in the EU. Tax obstacles may arise either in the State of origin or in the new State of residence.

The EU wants to make sure that those Europeans living and working in another Member State are not facing double taxation or be excluded from tax benefits enjoyed by domestic residents.

For this reason, the European Commission has decided to examine the tax codes of all 28 EU Member States in order to stamp out tax discrimination against foreign nationals from other EU countries. For the next 12 months the EU will be assessing whether national tax regimes are creating disadvantages for mobile EU citizens.

If it is found that there is discrimination or breaches of the EU's fundamental freedoms, the Commission will take note of them and insist with the national authorities so that the necessary amendments are made. Should the problems persist, the Commission may initiate infringement procedures against the Member States in question.

The Commission’s 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 in line with EU law or face infringement proceedings.

The Commission's initiative will also scrutinise and assess whether EU citizens residing in a Member State other than their own are penalised and taxed more heavily as a result of their mobility. This could either be in the Member State of origin, or where they have chosen to move to. Citizens may suffer tax disadvantages:

·            because of the location of their investments or assets, the location of the taxpayer himself or due to the mere change of the taxpayer's residence;

·            in respect of their contributions to pensions schemes, receipt of pensions or transfers of pension and life insurance capital;

·            in respect of their self-employed activities carried-out in another State or due to the mere relocation of such activities;

·            because of the refusal of certain tax deductions or tax benefits;

·            in respect of their accumulated wealth.

European Commissioner for Taxation, Customs, Anti-fraud and Audit, Algirdas Semeta, has stated that EU rules are very clear: EU citizens should be treated equally within the Single Market and no discrimination should take place. It is the duty of EU citizens to make sure that these practices are reflected in the tax rules of all Member States.

The Commission has also come up with a legislative proposal to tackle double taxation to better the rights of workers to free movement and to increase protection for those workers who are posted in other Member States.

Simone Aquilina is Executive, EU Policy & Legislation, MEUSAC