JHA | Radgen v Finanzamt Ettlingen C-478/15

Radgen v Finanzamt Ettlingen C-478/15

October 2, 2016

EU law principles are not limited to the EU/EEA

On 21 September 2016, the Court of Justice of the European Union (CJEU) found that the Agreement between the EU and Switzerland on the free movement of persons precludes legislation that denies a tax exemption for German teachers working in Switzerland.

One of the many agreements signed between Switzerland and the EU provides for free movement of persons on the basis of the rules applying in the European Community. Under German law, income from part-time activities as a lecturer carried out for a public establishment established in an EU/EEA Member State is exempt from tax up to a certain amount. Mr Radgen, a German national and resident, taught on a part-time basis at an establishment governed by public law in Switzerland. The activity was carried out under an employment contract between him and that establishment. The German tax authorities refused to apply the exemption on the ground that it did not apply in the Swiss context, as Switzerland is outside the EU and EEA. The CJEU, however, found that the difference in treatment was liable to deter resident German taxpayers from exercising their right to free movement by taking up employment in Switzerland and that German teachers in Switzerland were in a comparable situation to German teachers in Germany.

This case shows that EU law principles (in addition to the free movement of capital) are not constrained solely to the EU/EEA.

This article appears in the JHA October 2016 Tax Newsletter, which also features:

  1. Judgment in Six Continents v HMRC [2016] EWHC 2426 (Ch) by Christopher Kientzler
  2. Etablissements Fr. Colruyt Case C- 221/15

You can download the complete newsletter as a PDF here: October 2016 – Tax Newsletter.