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Published online by Cambridge University Press: 17 January 2008
The Court has continued with its expansive interpretation of the Citizenship provisions in Article 18 EC which it had previously acknowledged as being a fundamental right granted to all EU citizens by the Treaty.1 The case-law of the Court has, in particular, stressed the relationship between the free movement rights under Article 18 EC and preventing discrimination against EU nationals on grounds of nationality and without which the Citizenship provisions would lack force. Two recent judgments of Bidar2 and Ioannidis3 demonstrate the extent to which the Court will prevent covert discrimination on grounds of nationality. In a third judgment, that of Schempp,4 the Court, seemingly sensitive to criticism of interfering in domestic tax policy, adopts a more measured interpretation of discrimination when considering whether the rights granted under Article 18 EC are interfered with.
5 Council Directive 90/364/EEC of 28 June 1990 on the right of residence. This Directive will be replaced by Directive 2004/38/EC on the right of citizens of the Union to move and reside freely within the territory of the Member States, ‘the Citizenship Directive.’
9 Particularly noteworthy is the statement in para 39 that non-taxability is different from an actual non-taxation, even if the practical result is the same. Since the ECJ did not give an answer to the question if a deduction must be allowed in case of actual non-taxation in a Member State that normally taxes maintenance payments, the outcome might be different if the recipient of the payments is resident in, or a national of, another Member State other than Austria.
10 Advocate General Geelhoed recognizes that taxation of maintenance payments may trigger Art 56 EC (para 18). In contrast the Court does not refer to this issue.
11 While in the present state of Community law direct taxation falls within the competence of the Member States, the latter must none the less exercise that competence in accordance with Community law, in particular the provisions of the Treaty concerning the right of every citizen of the Union to move and reside freely within the territory of the Member States, and therefore avoid any overt or covert discrimination on the basis of nationality. See, eg, Case C279/93 Schumacker  ECR I225Google Scholar, paras 21 and 26, and Case C385/00 De Groot  ECR I11819, para 75.Google Scholar
12 The situation of a national of a Member State who, like Mr Schempp, has not made use of the right to freedom of movement cannot, for that reason alone, be assimilated to a purely internal situation, see, to that effect, Case C200/02 Zhu and Chen  ECR 1–9925, para 19.Google Scholar
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