back to updates & publications

[PERSONAL INCOME TAX] ECJ Decision: État belge (Case C-35/19)

On 24 October 2019, the Court of Justice of the European Union (ECJ) delivered the judgement between BU and État belge concerning the disability allowance, free movement of workers and freedom to provide services.

Summary of the facts

The applicant, a Belgium national, has suffered an accident in Belgium on her way to work in Limburg (the Netherlands), which led to incapacity for work followed by the dismissal from her employment. The applicant has received an allowance under the Law on insurance against incapacity for work (‘the WAO allowance’) and an allowance of the Pension fund for civil servants including old-age, survivors’ and invalidity pensions (‘the ABP allowance’) covered by Netherlands social security.

The Belgian tax authorities sent the applicant a revised assessment of her personal income tax return stating that those allowances are received as pensions and are taxable in Belgium as such. The applicant lodged a complaint against that decision claiming that those allowances are exempt from taxation in Belgium since the WAO allowance is not a pension but a disability allowance, just as the ABP allowance is a pension linked to disability. The complaint was rejected on the ground that those allowances are classified as ‘allowances for incapacity to work’, which is included among the pensions that are taxable in Belgium. The applicant challenged the decision of the Belgian tax authorities before the Court of First Instance (Tribunal de première instance de Liège, Belgium).

Questions referred to the ECJ

Does Article 38[(1)(4) of the Income Tax Code 1992, in the version applicable to the facts in the main proceedings] infringe Article 45 TFEU et seq. (principle of free movement of workers) and Article 56 TFEU et seq. (principle of freedom to provide services) […] in so far as it exempts disability allowances from tax only if those allowances are paid by the State Treasury, that is to say, by the Belgian State, in accordance with Belgian legislation, thereby giving rise to discrimination between taxpayers resident in Belgium who receive disability allowances paid by the Belgian State, which are exempt from tax, and taxpayers resident in Belgium who receive allowances intended to compensate for a disability paid by another Member State of the European Union, which are not exempt from tax?

Conclusion by the ECJ

The Court upheld that the Article 45 TFEU must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which, without providing justification in that regard, a matter which is however for the referring court to verify, provides that the tax exemption applicable to disability allowances is subject to the condition that those allowances are paid by a body of the Member State concerned and, therefore, excludes from that exemption allowances of the same nature paid by another Member State, even where the recipient of those allowances is a resident of the Member State concerned.

For more information please contact:

Franco Falzon C.P.A. LL.M
(Managing Partner)

E: franco@ffinternational.com.mt

T: +356 2010 7771 (office)

M: +356 9989 5679 (mobile)

Profile: Franco Falzon


While FF International Limited (hereinafter referred to as “FFI”) endeavours to ensure that any information published in articles / publications / memos / updates (including any information published on our website) is accurate as at the time of publication, FFI nor any of their respective directors, partners, officers, employees, or agents make any representation or warranty (express or implied) or accept or will accept any responsibility or liability in relation to the accuracy or completeness of the information contained published in our articles / publications / memos / updates (including any information published on our website) or any other written or oral information made available or published on our articles / publications / memos and updates. Any responsibility or liability in respect of any such information or any inaccuracy or omission arising from any article / publication / memo is expressly disclaimed. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the achievement or reasonableness of any future projections, estimates, prospects or returns published on our articles / publications / memos / updates (including any information published on our website) . The content of the above article / publication / memo / update and any information published on our website is intended to serve solely as general information only and its purpose is not to provide any specific professional advice whether of a financial, legal, tax or other nature. Since it is recommended that business decisions be based only on qualified professional advice, neither FFI nor any related company belonging to FFI nor any of the respective directors, partners, officers, employees, or agents of FFI will be held liable for any damages which might result as a consequence of relying on the information contained within. FFI including any directors, partners, officers, employees, or agents of FFI and / or any entity related to FFI accept no liability whatsoever for the content of this article / publication / memo / update for the consequences of any actions taken on the basis of the information provided. If you have any questions relating to the accuracy and correctness of the above article / publication / memo / updates or any information published on our website you are kindly requested inform us by sending us an email on info@ffinternational.com.mt