Case X v. Staatssecretaris van Financiën: Fractional Allocation of Personal and Family Tax Benefits for EU Resident Individuals with Multi-State Income

Abstract

According to the well-established principles of the Schumacker-doctrine, a source state does not have to grant personal and family tax benefits, applicable for its own residents, unless (1) the non-resident earns ‘all or almost all’ his family income in the working state, and (2) the income in the residence state is insufficient to take into account the personal and family circumstances. This article critically analyses the judgment of the Court of Justice in the X-case, where the Court had to decide about the last so-called ‘income requirement’ of the Schumacker-doctrine in a multi-state situation. As the residence state could not take into account the personal and family situation, the Court insisted that the personal and family tax benefits should be allocated on a pro rata basis.