Brussels, 16 October 2008
Direct taxes: The European Commission requests Spain to end discriminatory taxation of non-resident taxpayers
The European Commission has formally requested that Spain change its tax provisions according to which non-residents are taxed on the gross amount of their income, whereas residents are only taxed on their net income. The Commission considers that these rules are incompatible with the EC Treaty, which guarantees the free movement of persons and workers, the freedom to provide of services and the free movement of capital. The request takes the form of a reasoned opinion (second step of the infringement procedure provided for in Article 226 of the EC Treaty). If there is no satisfactory reaction to the reasoned opinion within two months, the Commission may decide to refer the matter to the Court of Justice of the European Communities.
According to Spanish rules, non-residents operating in Spain without a permanent establishment are taxed on a gross basis, i.e. without deduction of costs, whereas residents are taxed on their net income.
Moreover, concerning capital gains, the Spanish rules in general provide that the regime applicable to residents will also be applicable to non-residents. However, in certain cases non-residents operating in Spain without a permanent establishment are taxed on their capital gains while residents are not.
The Commission is of the opinion that these rules restrict the free movement of persons and workers, the freedom to provide services and the free movement of capital, and that Spain thus fails to fulfil its obligations under Article 39, 49 and 56 of the EC Treaty and the corresponding Articles of the EEA Agreement. The Commission based its reasoning, in particular, on the judgment of the European Court of Justice in the Asscher case.
The Commission's case reference number is 2007/4129.
For the latest general information on infringement measures against Member States see:
 2 C-107/94 P.H. Asscher v. Staatssecretaris van Financien  ECR I-3089