European Union - Compatibility with fundamental freedoms of a municipal surcharge distinguishing between residents and non-Residents for the purposes of the applicable rate: Opinion statement ECJ-TF 4/2023 on the decision of the EFTA court of 4 July 2023 in RS (Case E-11/22)

This is an Opinion Statement prepared by the CFE ECJ Task Force on the RS case, in which the EFTA Court delivered its decision on 4 July 2023. At issue in the RS case was the question whether and to what extent municipal surcharges are compatible with the fundamental freedoms. In Liechtenstein, workers were subject to an income tax at national level. In addition, the income of resident workers was also taxable at the level of the municipality in the form of a municipal surcharge. The tax rates for the municipal surcharge varied from municipality to municipality. Non-resident workers were not subject to the municipal surcharge but to a surcharge which was a supplementary national tax. The tax rate for the supplementary national tax was higher than the highest municipal tax rate. The EFTA Court ruled that non-resident workers may not be subjected to a higher rate of taxation than the lowest municipal tax rate.