Opinion Statement ECJ-TF 4/2017 on the Decision of the Court of Justice of the European Union of 9 February 2017 in X (Case C-283/15 “Pro-Rata Personal Deductions”), Concerning Personal and Family Tax Benefits in Multi-State Situations

The CFE welcomes the pro-rata approach to personal and family deductions developed in the X decision. In doing so, the Court contributes to the establishment of the internal market. Indeed, the pro-rata approach supports an open market economy with free competition, an efficient allocation of production factors, tax neutrality, a level playing field, international tax neutrality, the ability-to-pay principle, the direct benefit principle and origin-based taxation.
The CFE, however, also notes that implementation of the principles established by X will pose a number of technical and policy issues for domestic legislators that have not yet been addressed by the Court. These include the calculation of the relevant proportions of income and possible mechanisms to avoid “cherry picking” by non-residents.