The Contents of Highlights & Insights on European Taxation, Issue 6, 2026

Please find below a selection of articles published this month (June 2026) in Highlights & Insights on European Taxation, plus one freely accessible article.

Highlights & Insights on European Taxation (H&I) is a publication by Wolters Kluwer Nederland BV.

The journal offers extensive information on all recent developments in European Taxation in the area of direct taxation and state aid, VAT, customs and excises, and environmental taxes.

To subscribe to the Journal’s page, please click HERE

Year 2026, no. 6 

TABLE OF CONTENTS 

DIRECT TAXATION, CASE LAW

– Chefquet (C-119/24). Flat-rate tax surcharge on non-residents constitutes a restriction on free movement for workers. Court of Justice

(comments by Edoardo Traversa & Vicky Sheikh) (H&I 2026/169)

INDIRECT TAXATION, CASE LAW

– Česká síť (C-796/23). National VAT liability rules for partnerships deemed incompatible with VAT Directive. Court of Justice

(comments by Giorgio Beretta) (H&I 2026/183)

– Dyrektor Krajowej Informacji Skarbowej (T-689/24). VAT deduction cannot be deferred for lack of invoice during the tax period if received before return submission. General Court

(comments by Marie Lamensch) (H&I 2026/168)

– Harry and Associés (C-527/24). Loss of VAT refund rights due to system error breaches neutrality and proportionality. Court of Justice

(comments by Andrea Purpura) (H&I 2026/164)

– Mokoryte (T-233/25), Private-law agreements cannot transfer the right to adjust the taxable amount to a third party other than the taxable person. General Court

(comments by José Manuel Macarro Osuna) (H&I 2026/150)

– Aptiv Services Hungary (C-521/24). VAT deduction cannot be refused solely because invoices arrive after the tax period of acquisition. Court of Justice

(comments by Tamás Fehér) (H&I 2026/149)

CUSTOMS AND EXCISE

– Jelgratz and Buchgint (T-685/24 and T-686/24). ‘Own use’ excludes gratuitous transfer of excise goods to others. General Court

(comments by Giorgio Emanuele Degani) (H&I2026/167)

ECHR

– Petrignani and Others v. Italy (26187/14). Confiscation of tax crime proceeds from cooffenders is limited by legality and proportionality. European Court of Human Rights

(comments by Edwin Thomas) (H&I 2026/166)

FREE ARTICLE

– Chefquet (C-119/24). Flat-rate tax surcharge on non-residents constitutes a restriction on free movement for workers. Court of Justice

(comments by Edoardo Traversa & Vicky Sheikh) (H&I 2026/169)

On 12 March 2026, the Court of Justice of the European Union (hereafter: the ‘CJ’) delivered its judgment in Chefquet (C‑119/24), holding that a Belgian tax surcharge imposed on non-resident taxpayers is incompatible with the free movement of workers under Article 45 TFEU.

Under Belgian tax law, resident taxpayers are subject not only to federal personal income tax but also to a communal surcharge determined on their commune of residence under Articles 465–468 of the Belgian Income Tax Code (hereafter: the ‘ITC’). Each commune sets its own rate annually, typically ranging from 0% to 9%, with an average of around 7%. The proceeds are allocated to the commune concerned.

Non-resident taxpayers fall outside this system because they have no commune of residence in Belgium. Instead, they are subject to a fixed-rate national surcharge of 7% under Article 245 ITC, the proceeds of which accrue to the federal State. This regime reflects a deliberate legislative choice: allocating non-residents to specific communes would be technically complex, particularly for employment income. The legislature therefore adopted a uniform rate intended to approximate the average communal surcharge. Yet this approximation is imperfect. In communes with low or zero rates, non-residents may bear a heavier tax burden than residents.

That is precisely what occurred in Chefquet. The case concerned a French-resident couple. The husband worked part-time as a professor at several Belgian universities, and both spouses owned real estate in Belgium. Between 1992 and 2009, they were subject to Belgian non-resident income tax, increased by the surcharge for non-residents under Article 245 ITC.

The couple challenged the assessments through administrative and then judicial proceedings. The Namur Court of First Instance dismissed most of their claims and referred a question to the Belgian Constitutional Court. In its judgment of 6 June 2019 (Case No. 92/2019), the Constitutional Court held that the surcharge did not constitute unjustified discrimination under the Belgian Constitution. It relied on the legislature’s intent of ensuring comparable treatment between residents and non-residents, and on the premise that non-residents benefit, at least generally, from Belgian public services.

Following that ruling, the Namur Court of First Instance dismissed the remaining claims. On appeal, the Liège Court of Appeal stayed the proceedings and referred questions to the CJ, giving rise to the Chefquet judgment. The core question referred to the CJ was whether such a fixed-rate surcharge, by potentially imposing a heavier burden on non-residents than on residents in comparable communes, constitutes a restriction on the free movement of workers incompatible with Article 45 TFEU.

Advocate General Emiliou’s Opinion of 4 September 2025

In his Opinion of 4 September 2025, Advocate General Emiliou proposed a more nuanced outcome than the Court would ultimately adopt (see below), broadly aligning himself with the Belgian Government’s position.

Comparability: residents and non-residents are in a comparable situation

The Advocate General began from the settled principle in Schumacker (CJ, 14 February 1995, C‑279/93 Finanzamt Köln-Altstadt v. Schumacker, ECLI:EU:C:1995:31) that residents and non-residents are not, as a rule, in a comparable situation for direct tax purposes, since non-residents generally earn most of their income in their State of residence, which is best placed to assess their overall ability to pay.

He nonetheless concluded that, in the present case, the two categories are comparable: the disputed surcharge is unrelated to the taxpayer’s personal or family circumstances and merely operates as a proportional increase in the tax levied on Belgian-source income. In economic terms, it affects the effective rate of taxation. Relying on settled case law, the Advocate General reasoned that residents and non-residents must be treated as comparable where the issue concerns the applicable rate of taxation in the source State.

He further rejected the argument that the different allocation of the tax revenue (communal for residents, federal for non-residents) creates a relevant distinction.

That difference concerns only the internal distribution of tax revenue between levels of government and does not alter the nature of the levy. Nor could the unequal use of communal services justify different treatment: taxes are contributions to the general financing of public expenditure, not consideration for specific services rendered.

Discrimination: the disputed surcharge gives rise to indirect discrimination

The Advocate General distinguished between the existence of the surcharge and its rate. In his view, the mere fact that non-residents are subject to a specific surcharge is not, in itself, discriminatory. The communal surcharge applicable to residents and the federal surcharge applicable to non-residents are functionally equivalent mechanisms.

The problem lies in the method of calculation. Whereas the surcharge borne by residents varies according to the commune of residence, the non-resident surcharge is fixed uniformly at 7%. Consequently, in communes where the communal surcharge is lower than 7% – or zero – non-residents bear a heavier tax burden than objectively comparable residents.

The Advocate General acknowledged that the 7% rate broadly reflected the national average and was, in most situations, equivalent or even slightly more favourable than the surcharge applicable to residents. That circumstance was nonetheless insufficient to exclude discrimination. According to settled case law, a measure remains incompatible with EU law where it disadvantages certain taxpayers, even if it is favourable in the majority of cases.

He therefore concluded that Article 245 ITC gives rise to indirect discrimination liable to affect predominantly nationals of other Member States, since non-residents are generally non-nationals.

Justification: the Advocate General takes a pragmatic approach

On justification, the Advocate General adopted a more pragmatic approach than the Court would later follow.

First, he accepted that preventing reverse discrimination – namely ensuring that residents are not treated less favourably than non-residents – may constitute a legitimate objective.

Second, he considered that the Belgian system could satisfy the proportionality requirement. He emphasised the practical difficulties inherent in allocating non-residents to one of Belgium’s many communes, each applying different surcharge rates, and accepted that the use of a national average rate may represent a reasonable and administratively workable approximation.

In his view, such a mechanism could be justified provided that the additional burden imposed on non-residents remained limited and no less restrictive alternative could reasonably be implemented. Subject to that factual assessment by the national court, he concluded that Article 245 ITC could be compatible with Article 45 TFEU.

The Court’s judgment of 12 March 2026

The Sixth Chamber of the CJ adopted a stricter approach than the Advocate General. While it agreed on comparability and the existence of a restriction, it rejected any possible justification.

The Court confirms comparability and indirect discrimination

The Court agreed that resident and non-resident taxpayers are in a comparable situation for the purposes of the surcharge. The very objective of Article 245 ITC – namely subjecting non-residents to a contribution equivalent to that borne by residents – presupposes such comparability.

Both the communal surcharge and the non-resident surcharge are calculated on the same tax base and operate as an increase in effective income tax liability.

The Court also dismissed the relevance of the different destination of the revenue: whether the proceeds accrue to a commune or to the federal State does not alter the nature of the tax.

The Court further confirmed the existence of indirect discrimination. Because the fixed-rate surcharge applicable to non-residents exceeds the communal surcharge applicable in certain communes, non-residents may, in some situations, bear a heavier tax burden than objectively comparable residents.

Since non-residents are predominantly nationals of other Member States, the measure constitutes an indirect restriction on the free movement of workers within the meaning of Article 45(2) TFEU.

Crucially, the Court clarified that a measure may constitute indirect discrimination even where it is, on average, neutral or favourable to non-residents. It is sufficient that the measure places non-residents at a disadvantage in certain specific situations. In that respect, the Court relied on its settled case law, including Pensioenfonds Metaal en Techniek (CJ, 2 June 2016, C‑252/14 Pensioenfonds Metaal en Techniek v. Skatteverket, ECLI:EU:C:2016:402).

The Court rejects any possible justification

The Court examined and rejected two possible justifications.

First, it accepted that ensuring that non-residents contribute to the financing of public services may constitute a legitimate objective in principle. The Belgian system nonetheless failed the proportionality test because the fixed 7% rate could, in certain situations, exceed the surcharge borne by comparable residents.

Second, the Court firmly rejected the prevention of reverse discrimination as a justification. A Member State cannot restrict the free movement of workers in order to ensure that its own residents are not treated less favourably than non-residents. Accepting such an argument would undermine the very substance of Article 45 TFEU. Any reverse discrimination results solely from national law and cannot justify a restriction on a fundamental freedom.

The Court therefore held that Article 45(2) TFEU precludes national legislation under which non-resident taxpayers are subject to a fixed-rate surcharge modelled on the communal surcharge applicable to residents where that mechanism results, even if only in certain cases, in a heavier tax burden for non-residents than for objectively comparable residents.

A foreseeable outcome?

In our view, the outcome in Chefquet was not particularly surprising. Even before the CJ delivered its judgment on 12 March 2026, a closely related issue had already been examined by the EFTA Court in RS (4 July 2023, E‑11/22, RS v. Steuerverwaltung des Fürstentums Liechtenstein).

That case concerned a Liechtenstein regime comparable to the Belgian surcharge applicable to non-residents. The system nonetheless differed in one important respect: the surcharge imposed on non-residents systematically exceeded the burden borne by residents, including those residing in communes applying the highest rates. The discriminatory nature of the measure, therefore, was obvious.

The Belgian regime was more nuanced. The fixed 7% rate applicable to non-residents did not systematically place them at a disadvantage and could, in certain communes, even prove lower than the surcharge borne by residents. This was precisely the core of the Belgian Government’s argument – and, to some extent, that of Advocate General Emiliou: a national average rate constituted a reasonable, broadly balanced, and administratively workable approximation.

The Court nonetheless rejected that logic. Whereas the EFTA Court had condemned a systematic disadvantage, the CJ went further by holding that a merely situational disadvantage is sufficient. It is irrelevant that the difference in treatment affects only certain non-residents or remains limited in scope: it suffices that a non-resident may, in an identifiable situation, be taxed more heavily than an objectively comparable resident.

The structural problem created by zero-rate communes

The judgment reveals a structural weakness in the Belgian system. As long as even a single Belgian commune applies a zero surcharge rate, any positive uniform surcharge imposed on non-residents will necessarily result, in certain situations, in a heavier burden than that borne by some residents. Under the Court’s reasoning, the mere existence of such a concrete disadvantage is sufficient to establish a restriction contrary to Article 45 TFEU.

Belgium, therefore, is confronted with several imperfect alternatives. Abolishing the surcharge altogether would restore equal treatment but would simultaneously result in the systematic under-taxation of non-residents compared with most residents – in other words, the very reverse discrimination that Article 245 ITC was intended to prevent. Aligning the surcharge with the lowest communal rate would, in practice, lead to the same outcome as long as at least one commune maintains a zero rate. Both solutions would also entail a significant budgetary cost, given that the disputed surcharge reportedly generated annual revenue of approximately EUR 75 to 80 million between 2021 and 2024.

A third possibility would be to individualise the surcharge applicable to non-residents by linking it to the commune with which the income has the closest economic connection: the location of the immovable property for real estate income, or the place of work or employer’s establishment for employment income. Such an approach would restore genuine equality of treatment between residents and non-residents and would align more closely with the logic underlying the Court’s judgment.

That solution would, however, entail significant administrative difficulties, already highlighted by the Advocate General. With more than 580 Belgian communes each applying different surcharge rates, the tax authorities would need to determine, for each non-resident and each category of income, the relevant communal rate – potentially where income is connected to several communes simultaneously. Chefquet does not resolve that practical difficulty. It does, however, establish a clear limit: the current system now appears difficult to reconcile with EU law.

Broader and practical implications of Chefquet

The judgment has implications extending beyond the Belgian regime itself. More fundamentally, it illustrates the tension between subnational fiscal autonomy and the requirements of EU free movement law. When a Member State replaces locally variable taxation with a uniform national proxy for non-residents, it risks creating disparities incompatible with the fundamental freedoms. The Court’s message is clear: approximation alone is insufficient where the system may produce a heavier burden for non-residents, even in isolated situations.

Turning to practical remedies, non-resident taxpayers subject to the Belgian surcharge may seek reimbursement through two procedural avenues. First, they may lodge an administrative complaint pursuant to Article 371 ITC, to be filed within one year from the third working day following dispatch of the assessment notice. Second, they may request ex officio relief under Article 376 ITC: the CJ’s judgment qualifies as a ‘new fact’ within the meaning of that provision, opening a five-year period – running from 1 January of the year of assessment. This avenue is unavailable where the assessment has already been the subject of a prior objection resulting in a final decision on the merits.

The judgment may also extend beyond the free movement of workers. The Court itself noted that, with respect to the immovable property income at issue, the case could also fall within the scope of the freedom of establishment or the free movement of capital. The latter freedom is particularly significant because it also protects third-country nationals. Non-EU taxpayers owning immovable property in Belgium may therefore rely on the Court’s reasoning to challenge the surcharge under Article 63 TFEU.

Conclusion

Chefquet is an important judgment in the field of free movement and direct taxation. By condemning the uniform surcharge applicable to non-residents, the Court reaffirmed that a tax mechanism cannot be justified by statistical coherence or administrative convenience where it results, even occasionally, in less favourable treatment for non-residents than for objectively comparable residents.

The judgment forms part of a broader evolution in the Court’s case law towards a more concrete assessment of indirect tax discrimination. The Court no longer evaluates the system primarily at a macro level or by reference to its average effects but rather, from the perspective of the taxpayer concerned. This also explains the Court’s rejection of reverse discrimination as a justification: imbalances resulting from the internal structure of a national tax system cannot be remedied through restrictions on the fundamental freedoms guaranteed by EU law.

The practical implications for Belgium are structural. As long as any commune applies a zero-surcharge rate, the current fixed-rate mechanism cannot be reconciled with Article 45 TFEU. This leaves Belgium with limited options: abolish the surcharge, align it with the lowest communal rate, or fundamentally redesign the system. A coherent solution would be to align the surcharge with the commune to which the income is economically connected – a more complex but EU-law-compliant alternative that would also restore genuine comparability between residents and non-residents.

More fundamentally, Chefquet illustrates the broader tension that the internal market creates for decentralised tax systems. The more such systems rely on territorial differentiation, the more they expose themselves to an exacting EU-law review requiring concrete equality of treatment between mobile and non-mobile taxpayers.

Prof. Edoardo Traversa & Vicky Sheikh