Crisis of the resident individual income tax (IRPF) optional regime for residents in other Member States of the European Union. Jurisprudential reservations about its capacity to rectify discrimination (Gielen judgment)

Abstract

The European Court of Justice’s case-law questions the validity of the optional regime for taxpayers that reside in another Member State of the European Union. It points that its existence is not enough to consider that discrimination against non-residents are repaired. We must take into consideration that option for the resident individual income tax can cause unfavorable consequences (progressive tax rates can be detrimental). Nonresidents, then, would bear a right to have these differences of treatment corrected while kept in the scope of the non-residents individual income tax (therefore maintaining the proportional tax rate).