{"attribution":{"source":"legal.exploreworldai.com","canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-223-25","cite_as":"NovaCopilot, legal.exploreworldai.com (https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-223-25)","license":"https://legal.exploreworldai.com/revision","version":"legal-2026-10-09","fingerprint":"ewai:eu:af38ec","proof":"sha256:205bd85e4c2d331916a3aabb2a186e506ed793049630218eab93a7a1ee8b9c1d","jurisdiction":"eu","lang":"en","publisher":"NovaCopilot by ExploreWorld Legal","terms":"https://legal.exploreworldai.com/om"},"brand_source":"Source: NovaCopilot","item":{"schema_version":"1.0.0","id":"eu:c-223-25","jurisdiction":"eu","lang":"en","brand_source":"Source: NovaCopilot","brand":{"product":"NovaCopilot","platform":"ExploreWorldAI","infrastructure":"ExploreWorld Legal","infrastructure_url":"legal.exploreworldai.com","legal_entity":"Valkiv Ventures AB","permanent_url":"https://legal.exploreworldai.com/novacopilot","source":"Source: NovaCopilot","powered_by":"Powered by NovaCopilot","license":"https://legal.exploreworldai.com/licensvillkor"},"sections":[{"title":"Provisional text","paragraphs":[]},{"title":"JUDGMENT OF THE COURT (First Chamber)","paragraphs":[]},{"title":"17 September 2026 ( * )","paragraphs":["para_4","para_5","para_6","para_7"]},{"title":"CY","paragraphs":["para_9","para_10","para_11","para_12","para_13","para_14","para_15","para_16","para_17","para_18","para_19","para_20","para_21"]},{"title":"Judgment","paragraphs":["para_23","para_24"]},{"title":"The legal framework","paragraphs":[]},{"title":"The AFMP","paragraphs":["para_27","para_28"]},{"title":"5         Article 1 of the AFMP states:","paragraphs":["para_30","para_31","para_32","para_33","para_34","para_35","para_36","para_37","para_38","para_39","para_40"]},{"title":"8         Under Article 7 of the AFMP, entitled ‘Other rights’:","paragraphs":["para_42","para_43","para_44","para_45","para_46","para_47","para_48","para_49","para_50","para_51","para_52","para_53","para_54","para_55","para_56","para_57","para_58","para_59","para_60","para_61","para_62","para_63","para_64"]},{"title":"17       Article 15(1) of that convention provides:","paragraphs":["para_66"]},{"title":"German law","paragraphs":["para_68","para_69","para_70","para_71"]},{"title":"19       Paragraph 35a(2) to (5) of the EStG provides as follows:","paragraphs":["para_73","para_74","para_75","para_76","para_77","para_78","para_79"]},{"title":"21       Under Paragraph 9 of that tax code:","paragraphs":["para_81"]},{"title":"The dispute in the main proceedings and the question referred for a preliminary ruling","paragraphs":["para_83","para_84","para_85","para_86","para_87","para_88","para_89","para_90","para_91","para_92"]},{"title":"Consideration of the question referred","paragraphs":["para_94"]},{"title":"Preliminary observations","paragraphs":["para_96","para_97","para_98","para_99","para_100"]},{"title":"The applicability of the AFMP","paragraphs":["para_102","para_103","para_104","para_105","para_106","para_107","para_108","para_109","para_110","para_111","para_112","para_113","para_114","para_115","para_116","para_117"]},{"title":"The existence of treatment which contravenes the AFMP and its potential justification","paragraphs":["para_119","para_120","para_121","para_122","para_123","para_124","para_125","para_126","para_127","para_128","para_129","para_130","para_131","para_132","para_133","para_134","para_135","para_136","para_137","para_138","para_139","para_140","para_141","para_142","para_143","para_144","para_145","para_146","para_147","para_148","para_149","para_150","para_151","para_152","para_153","para_154","para_155","para_156","para_157"]},{"title":"Costs","paragraphs":["para_159"]},{"title":"On those grounds, the Court (First Chamber) hereby rules:","paragraphs":["para_161","para_162","para_163","para_164"]}],"paragraphs":[{"text":"Provisional text","paragraph_id":"para_1"},{"text":"JUDGMENT OF THE COURT (First Chamber)","paragraph_id":"para_2"},{"text":"17 September 2026 ( * )","paragraph_id":"para_3"},{"text":"( Reference for a preliminary ruling – Taxation – Income tax – Agreement between the European Union and the Swiss Confederation on the free movement of persons – Equal treatment – Nationality – Residence – Tax advantages – Deductibility of certain expenses incurred by the taxpayer in relation to his …","paragraph_id":"para_4"},{"text":"In Case C‑223/25,","paragraph_id":"para_5"},{"text":"REQUEST for a preliminary ruling under Article 267 TFEU from the Finanzgericht Köln (Fiscal Court, Cologne, Germany), made by decision of 20 February 2025, received at the Court on 24 March 2025, in the proceedings","paragraph_id":"para_6"},{"text":"BT,","paragraph_id":"para_7"},{"text":"CY","paragraph_id":"para_8"},{"text":"v","paragraph_id":"para_9"},{"text":"Finanzamt Siegburg,","paragraph_id":"para_10"},{"text":"THE COURT (First Chamber),","paragraph_id":"para_11"},{"text":"composed of F. Biltgen, President of the Chamber, I. Ziemele (Rapporteur), A. Kumin, S. Gervasoni and M. Bošnjak, Judges,","paragraph_id":"para_12"},{"text":"Advocate General: M. Campos Sánchez-Bordona,","paragraph_id":"para_13"},{"text":"Registrar: A. Calot Escobar,","paragraph_id":"para_14"},{"text":"having regard to the written procedure,","paragraph_id":"para_15"},{"text":"after considering the observations submitted on behalf of:","paragraph_id":"para_16"},{"text":"–        the German Government, by J. Möller and P. Wagner, acting as Agents,","paragraph_id":"para_17"},{"text":"–        the Belgian Government, by S. Baeyens and P. Cottin, acting as Agents,","paragraph_id":"para_18"},{"text":"–        the European Commission, by B.-R. Killmann and W. Roels, acting as Agents,","paragraph_id":"para_19"},{"text":"having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,","paragraph_id":"para_20"},{"text":"gives the following","paragraph_id":"para_21"},{"text":"Judgment","paragraph_id":"para_22"},{"text":"1         This request for a preliminary ruling concerns the interpretation of the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons, signed in Luxembourg on 21 June 1999 (OJ 2002 L 114, p. 6), …","paragraph_id":"para_23"},{"text":"2         The request has been made in proceedings between BT and CY and the Finanzamt Siegburg (Siegburg Tax Office, Germany) (‘the tax authority’) concerning the calculation of income tax for the year 2019.","paragraph_id":"para_24"},{"text":"The legal framework","paragraph_id":"para_25"},{"text":"The AFMP","paragraph_id":"para_26"},{"text":"3         The European Community and its Member States, on the one hand, and the Swiss Confederation, on the other hand, signed seven agreements on 21 June 1999, including the AFMP. By Decision 2002/309/EC, Euratom of the Council, and of the Commission as regards the Agreement on Scientific and Tech …","paragraph_id":"para_27"},{"text":"4         Under the terms of the preamble to the AFMP, the Contracting Parties are ‘resolved to bring about the free movement of persons between them on the basis of the rules applying in the European Community’.","paragraph_id":"para_28"},{"text":"5         Article 1 of the AFMP states:","paragraph_id":"para_29"},{"text":"‘The objective of this Agreement, for the benefit of nationals of the Member States of the European Community and Switzerland, is:","paragraph_id":"para_30"},{"text":"(a)      to accord a right of entry, residence, access to work as employed persons, establishment on a self-employed basis and the right to stay in the territory of the Contracting Parties;","paragraph_id":"para_31"},{"text":"(b)      to facilitate the provision of services in the territory of the Contracting Parties, and in particular to liberalise the provision of services of brief duration;","paragraph_id":"para_32"},{"text":"(c)      to accord a right of entry into, and residence in, the territory of the Contracting Parties to persons without an economic activity in the host country;","paragraph_id":"para_33"},{"text":"(d)      to accord the same living, employment and working conditions as those accorded to nationals.’","paragraph_id":"para_34"},{"text":"6         Article 2 of that agreement, entitled ‘Non-discrimination’, is worded as follows:","paragraph_id":"para_35"},{"text":"‘Nationals of one Contracting Party who are lawfully resident in the territory of another Contracting Party shall not, in application of and in accordance with the provisions of Annexes I, II and III to this Agreement, be the subject of any discrimination on grounds of nationality.’","paragraph_id":"para_36"},{"text":"7         Article 5 of that agreement, entitled ‘Persons providing services’, provides as follows:","paragraph_id":"para_37"},{"text":"‘1.      Without prejudice to other specific agreements between the Contracting Parties specifically concerning the provision of services (including the Government Procurement Agreement in so far as it covers the provision of services), persons providing services, including companies in accordance w …","paragraph_id":"para_38"},{"text":"…","paragraph_id":"para_39"},{"text":"4.      The rights referred to in this Article shall be guaranteed in accordance with the provisions laid down in Annexes I, II and III. The quantitative limits of Article 10 may not be relied upon as against persons referred to in this Article.’","paragraph_id":"para_40"},{"text":"8         Under Article 7 of the AFMP, entitled ‘Other rights’:","paragraph_id":"para_41"},{"text":"‘The Contracting Parties shall make provision, in accordance with Annex I, for the following rights in relation to the free movement of persons:","paragraph_id":"para_42"},{"text":"(a)      the right to equal treatment with nationals in respect of access to, and the pursuit of, an economic activity, and living, employment and working conditions;","paragraph_id":"para_43"},{"text":"…’","paragraph_id":"para_44"},{"text":"9         Article 15 of that agreement stipulates that its annexes and protocols form an integral part thereof.","paragraph_id":"para_45"},{"text":"10       Article 16 of that agreement, entitled ‘Reference to Community law’, reads as follows:","paragraph_id":"para_46"},{"text":"‘1.      In order to attain the objectives pursued by this Agreement, the Contracting Parties shall take all measures necessary to ensure that rights and obligations equivalent to those contained in the legal acts of the European Community to which reference is made are applied in relations between them.","paragraph_id":"para_47"},{"text":"2.      In so far as the application of this Agreement involves concepts of Community law, account shall be taken of the relevant case-law of the Court of Justice of the European Communities prior to the date of its signature. Case-law after that date shall be brought to Switzerland's attention. To ensure that the Agreement works properly, the Joint Committee shall, at the request of either Contracting Party, determine the implications of such case-law.’","paragraph_id":"para_48"},{"text":"11       Article 21 of that agreement, entitled ‘Relationship to bilateral agreements on double taxation’, provides as follows:","paragraph_id":"para_49"},{"text":"‘1.      The provisions of bilateral agreements between Switzerland and the Member States of the European Community on double taxation shall be unaffected by the provisions of this Agreement. In particular, the provisions of this Agreement shall not affect the double taxation agreements’ definition of “frontier workers”.","paragraph_id":"para_50"},{"text":"2.      No provision of this Agreement may be interpreted in such a way as to prevent the Contracting Parties from distinguishing, when applying the relevant provisions of their fiscal legislation, between taxpayers whose situations are not comparable, especially as regards their place of residence.","paragraph_id":"para_51"},{"text":"3.      No provision of this Agreement shall prevent the Contracting Parties from adopting or applying measures to ensure the imposition, payment and effective recovery of taxes or to forestall tax evasion under their national tax legislation or agreements aimed at preventing double taxation between Switzerland, of the one part, and one or more Member States of the European Community, of the other part, or any other tax arrangements.’","paragraph_id":"para_52"},{"text":"12       Annex I to the AFMP concerns the free movement of persons.","paragraph_id":"para_53"},{"text":"13       Article 7 of that annex, entitled ‘Employed frontier workers’, states in paragraph 1:","paragraph_id":"para_54"},{"text":"‘An employed frontier worker is a national of a Contracting Party who has his residence in the territory of a Contracting Party and who pursues an activity as an employed person in the territory of the other Contracting Party, returning to his place of residence as a rule every day, or at least once a week.’","paragraph_id":"para_55"},{"text":"14       Article 9 of that annex, entitled ‘Equal treatment’, provides in paragraphs 1 and 2:","paragraph_id":"para_56"},{"text":"‘1.      An employed person who is a national of a Contracting Party may not, by reason of his nationality, be treated differently in the territory of the other Contracting Party from national employed persons as regards conditions of employment and working conditions, especially as regards pay, dismissal, or reinstatement or re-employment if he becomes unemployed.","paragraph_id":"para_57"},{"text":"2.      An employed person and the members of his family … shall enjoy the same tax concessions and welfare benefits as national employed persons and members of their family.’","paragraph_id":"para_58"},{"text":"15       Article 17 of that annex, entitled ‘Persons providing services’, stipulates in paragraph (a) as follows:","paragraph_id":"para_59"},{"text":"‘With regard to the provision of services, the following shall be prohibited under Article 5 of this Agreement:","paragraph_id":"para_60"},{"text":"(a)      any restriction on the cross-frontier provision of services in the territory of a Contracting Party not exceeding 90 days of actual work per calendar year.’","paragraph_id":"para_61"},{"text":"The Double Taxation Agreement between the Federal Republic of Germany and the Swiss Confederation","paragraph_id":"para_62"},{"text":"16       The Convention between the Federal Republic of Germany and the Swiss Confederation for the avoidance of double taxation with respect to taxes on income and capital, concluded on 11 August 1971 (BGBl. 1972 II, p. 1022, BStBl. 1973 I, p. 61), as last amended by Article 5 of the Protocol of 27 October 2010 (BGBl. 2011 II, p. 1090, 1093, BStBl. 2012 I, p. 512, 514), provides in Article 4(1):","paragraph_id":"para_63"},{"text":"‘For the purposes of this agreement, the expression “person who is a resident of a Contracting State” means any person who, under the law of that State, is subject to unlimited tax liability in that State.’","paragraph_id":"para_64"},{"text":"17       Article 15(1) of that convention provides:","paragraph_id":"para_65"},{"text":"‘Without prejudice to the provisions of Articles 15a to 19, salaries, wages and other similar remuneration which a person who is a resident of a Contracting State receives in respect of employment shall be taxable only in that State unless the employment is pursued in the other Contracting State. If the employment is pursued there, such remuneration as is derived therefrom may be taxed in that other State.’","paragraph_id":"para_66"},{"text":"German law","paragraph_id":"para_67"},{"text":"18       The Einkommensteuergesetz (Law on Income Tax) (BGBl. 2009 I, p. 3366), in the version applicable to the main proceedings (‘the EStG’), provides in Paragraph 1, entitled ‘Tax liability’, as follows:","paragraph_id":"para_68"},{"text":"‘(1)      Natural persons who have a place of residence or their habitual abode in Germany shall be subject to unlimited income tax liability. …","paragraph_id":"para_69"},{"text":"…","paragraph_id":"para_70"},{"text":"(4)      Natural persons who do not have their place of residence or their habitual abode in Germany shall, subject to subparagraphs 2 and 3 and to Paragraph 1a, be liable to a limited extent to income tax if they are in receipt of household earnings within the meaning of Paragraph 49.’","paragraph_id":"para_71"},{"text":"19       Paragraph 35a(2) to (5) of the EStG provides as follows:","paragraph_id":"para_72"},{"text":"‘(2)      In the case of household-related employment relationships other than those referred to in subparagraph 1, or where use is made of household-related services other than those services listed in subparagraph 3, the amount of income tax resulting from application of the standard rate, less other tax reductions, shall be reduced, upon application, by 20%, up to a maximum of EUR 4 000, of the taxpayer’s expenditure. …","paragraph_id":"para_73"},{"text":"(3)      Where use is made of craftsperson’s services for the purposes of renovation, maintenance and modernisation measures, the amount of income tax resulting from application of the standard rate, less other tax reductions, shall be reduced, upon application, by 20% of the taxpayer’s expenditure, up to a maximum of EUR 1 200. …","paragraph_id":"para_74"},{"text":"(4)      The tax reduction provided for under subparagraphs 1 to 3 may be claimed only if the employment relationship, service or craftsperson’s service is performed or provided in a household of the taxpayer located in the European Union or the European Economic Area.","paragraph_id":"para_75"},{"text":"(5)      The tax relief provided for in subparagraphs 1 to 3 may be claimed only if the expenditure does not constitute operating expenditure or business expenses and provided that it has not been taken into account as exceptional expenditure or extraordinary expenses …. Only labour costs are deduct …","paragraph_id":"para_76"},{"text":"…’","paragraph_id":"para_77"},{"text":"20       Paragraph 8 of the Abgabenordnung (Tax Code), in the consolidated version published pursuant to Paragraph 73(2) of the Drittes Gesetz zur Änderung verwaltungsverfahrensrechtlicher Vorschriften (Third Law amending provisions of administrative procedure law) of 21 August 2022 (BGBl. I, p. 3322), provides:","paragraph_id":"para_78"},{"text":"‘A person shall be resident where he or she occupies a dwelling under circumstances that indicate that he or she will maintain and use that dwelling.’","paragraph_id":"para_79"},{"text":"21       Under Paragraph 9 of that tax code:","paragraph_id":"para_80"},{"text":"‘A person shall have his or her habitual abode at the place where he or she is present under circumstances that indicate that he or she is not staying only temporarily in that place or territory. A continuous stay of more than six months’ duration shall always, and from the beginning of such stay, b …","paragraph_id":"para_81"},{"text":"The dispute in the main proceedings and the question referred for a preliminary ruling","paragraph_id":"para_82"},{"text":"22       The spouses BT and CY, both of German and Swiss nationality, live in Switzerland in a house they own. During 2019, the year at issue in the main proceedings, they commissioned various tradespeople and a gardening company based in Switzerland to carry out work on that house and paid the labour costs on the basis of the invoices submitted by them.","paragraph_id":"para_83"},{"text":"23       BT is an employee of a German company and, for that reason, has also been living alone in a flat in Germany since 2015. During 2019, he worked and lived in Germany during the week and regularly returned to Switzerland at weekends. During that year, he received employment income as well as rental and tenancy income in Germany, along with foreign income exempt from tax in Germany. CY received employment income in Switzerland.","paragraph_id":"para_84"},{"text":"24       In the income tax return for the year 2019 filed with the tax authorities, CY applied to be treated as having unlimited tax liability in Germany and to be taxed jointly with BT.","paragraph_id":"para_85"},{"text":"25       After the tax authorities had determined, by the income tax assessment dated 26 February 2021, the amount of income tax due for the year 2019 by the applicants in the main proceedings, who were assessed jointly, the applicants lodged a request for that notice to be amended in order to benefit from the income tax relief provided for in Paragraph 35a(2) to (5) of the EStG.","paragraph_id":"para_86"},{"text":"26       As the application for amendment and the subsequent appeal lodged by the applicants in the main proceedings had been rejected by the tax authorities, they brought an appeal before the Finanzgericht Köln (Fiscal Court, Cologne, Germany), which is the referring court.","paragraph_id":"para_87"},{"text":"27       That court states that Paragraph 35a of the EStG was adopted in 2002 with the aim of creating an incentive to employ staff in private households in Germany and thereby combating undeclared work in the sector of personal care services provided in people’s homes. For that reason, the tax reli …","paragraph_id":"para_88"},{"text":"28       That court states that the conditions for entitlement to the tax reductions set out in Paragraph 35a(5) of the EStG are satisfied in the present case. However, since the services in question were provided in Switzerland, the applicants in the main proceedings would not satisfy the condition …","paragraph_id":"para_89"},{"text":"29       That court has doubts as to whether the refusal to grant the tax relief at issue before it – which was denied to employees from Switzerland working in Germany on the grounds that the service is provided in their household in Switzerland, which is not a State party to the EEA Agreement – is compatible with Articles 1, 2, 7 and 15 of the AFMP.","paragraph_id":"para_90"},{"text":"30       In those circumstances, the Finanzgericht Köln (Fiscal Court, Cologne) decided to stay proceedings and refer the following question to the Court of Justice for a preliminary ruling:","paragraph_id":"para_91"},{"text":"‘Are Articles 1, 2, 7 and 15 of the [AFMP], read in conjunction with Article 9(2) of Annex I to that agreement, to be interpreted as precluding national legislation of a Member State concerning the granting of an income tax reduction for services and craftsperson’s services provided or performed in …","paragraph_id":"para_92"},{"text":"Consideration of the question referred","paragraph_id":"para_93"},{"text":"31       By its request for a preliminary ruling, the referring court asks, in essence, whether Articles 1, 2, 7 and 15 of the AFMP, read in conjunction with Article 9(2) of Annex I to the AFMP, must be interpreted as precluding legislation of a Member State which reserves the grant of an income tax …","paragraph_id":"para_94"},{"text":"Preliminary observations","paragraph_id":"para_95"},{"text":"32       As a preliminary point, it should be noted that, since the AFMP is an international treaty, it must be interpreted, in accordance with the rules of customary international law as reflected in Article 31 of the Vienna Convention on the Law of Treaties of 23 May 1969 ( United Nations Treaty S …","paragraph_id":"para_96"},{"text":"33       The Court has already stated, in the first place, that the AFMP falls within the more general framework of relations between the European Union and the Swiss Confederation. Although the Swiss Confederation does not participate in the European Economic Area and in the European Union’s intern …","paragraph_id":"para_97"},{"text":"34       However, as the Swiss Confederation has not joined the internal market of the European Union, the interpretation given to the provisions of EU law concerning that market cannot automatically be applied to the interpretation of the AFMP, unless there are express provisions to that effect lai …","paragraph_id":"para_98"},{"text":"35       As regards, in the second place, the objective pursued by the AFMP and the interpretation of its terms, the Court has held that it is clear from the preamble, Article 1 and Article 16(2) of the AFMP that the aim of that agreement is to secure, for natural persons who are nationals of Member …","paragraph_id":"para_99"},{"text":"36       It is in accordance with those principles and in the light of those considerations that the provisions of the AFMP must be interpreted in order to determine, in the first place, whether a situation such as that at issue in the main proceedings falls within the scope of that agreement and, if so, in the second place, whether those provisions preclude legislation such as that at issue in the main proceedings.","paragraph_id":"para_100"},{"text":"The applicability of the AFMP","paragraph_id":"para_101"},{"text":"37       The German Government questions whether the AFMP applies to the situation at issue in the main proceedings on the grounds that the applicants in the main proceedings hold German nationality in addition to Swiss nationality and would therefore not require the protection afforded by that agreement.","paragraph_id":"para_102"},{"text":"38       In that regard, it should be noted, first of all, that, according to the preamble and Article 1(a) and (c) of the AFMP, the scope of that agreement extends to natural persons who are nationals of the Member States of the European Union and the Swiss Confederation, whether or not they pursue …","paragraph_id":"para_103"},{"text":"39       Next, Article 2 of the AFMP provides that nationals of one Contracting Party who are lawfully resident in the territory of another Contracting Party are not, in application of and in accordance with the provisions of Annexes I to III to that agreement, to be the subject of any discriminatio …","paragraph_id":"para_104"},{"text":"40       Finally, Article 7(a) of the AFMP provides that the Contracting Parties are to make provision, in accordance with Annex I to that agreement, inter alia, for the right to equal treatment with nationals in respect of access to, and the pursuit of, an economic activity, and living, employment and working conditions.","paragraph_id":"para_105"},{"text":"41       In that regard, Article 2 and Article 7(a) of the AFMP cannot be interpreted as limiting the applicability of its provisions solely to cases of discrimination on grounds of nationality, namely where nationals of one Contracting Party are treated, within the territory of the other Contractin …","paragraph_id":"para_106"},{"text":"42       Consequently, the fact that the applicants in the main proceedings hold not only Swiss nationality but also German nationality does not prevent them from deriving rights from the ALCP and invoking them against Germany, provided that their situation otherwise falls within the material scope …","paragraph_id":"para_107"},{"text":"43       In the present case, it is apparent from the request for a preliminary ruling that BT lives with his family in Switzerland and is employed in Germany, whilst also having accommodation there close to his place of work.","paragraph_id":"para_108"},{"text":"44       It also follows from the reply that the referring court, which alone has jurisdiction to establish and assess the facts of the main proceedings, provided in response to the request for clarification addressed to it by the Court and lodged at the Court Registry on 9 January 2026, that BT’s family home in Switzerland is his main residence and that he returns there at least once a week, namely at weekends.","paragraph_id":"para_109"},{"text":"45       In that regard, it is important to note that Article 7(1) of Annex I to the AFMP defines an employed frontier worker as a national of a Contracting Party who has his or her residence in the territory of a Contracting Party and who pursues an activity as an employed person in the territory of the other Contracting Party, returning to his or her place of residence as a rule every day, or at least once a week.","paragraph_id":"para_110"},{"text":"46       That provision draws a distinction between the place of residence, situated in the territory of one Contracting Party, and the place where a paid activity is pursued, which must be in the territory of the other Contracting Party, irrespective of the nationality of the person concerned (judg …","paragraph_id":"para_111"},{"text":"47       Article 7(1) of Annex I to the AFMP is therefore applicable to the situation of BT, who is a national ‘of ‘a Contracting Party’, who is resident in the territory ‘of a Contracting Party’, in the present case the Swiss Confederation, and who pursues a paid activity as an employed person in t …","paragraph_id":"para_112"},{"text":"48       The fact that BT also has accommodation in the State in which he is employed, namely the Federal Republic of Germany, does not call that finding into question. Indeed, since it is sufficient for the worker to return to his or her home at least once a week for the condition laid down in Article 7(1) of Annex I to the AFMP to be met, the application of that stipulation cannot be precluded by the existence of accommodation in the State where the employment takes place.","paragraph_id":"para_113"},{"text":"49       It must therefore be concluded that BT’s situation falls within the scope of the AFMP and that the question referred for a preliminary ruling should be understood as relating to the situation of an employed frontier worker who is resident in Switzerland.","paragraph_id":"para_114"},{"text":"50       Given that BT is an ‘employed frontier worker’ within the meaning of Article 7(1) of Annex I to the AFMP, Article 9 of that annex, which ensures the application of the principle of non-discrimination set out in Article 2 of that agreement in the context of the free movement of workers, is a …","paragraph_id":"para_115"},{"text":"51       Article 9(2) of Annex I to the AFMP lays down a specific rule intended to provide the employed person and the members of his or her family with the same tax concessions and welfare benefits as those available to national employed persons and members of their family.","paragraph_id":"para_116"},{"text":"52       It must therefore be ascertained whether Article 9(2) of Annex I to the AFMP, interpreted in accordance with the principles and the considerations set out in paragraphs 32 to 35 of the present judgment, precludes BT, and CY as a member of his family, who is assessed jointly with him, from b …","paragraph_id":"para_117"},{"text":"The existence of treatment which contravenes the AFMP and its potential justification","paragraph_id":"para_118"},{"text":"53       It is apparent from the request for a preliminary ruling that, in accordance with Paragraph 35a(2) and (3) of the EStG, where a taxpayer has received craftsperson’s services or household services, income tax may be reduced by 20% of the eligible labour costs under Paragraph 35a(5) of the ES …","paragraph_id":"para_119"},{"text":"54       Such a tax reduction constitutes a tax advantage within the meaning of Article 9(2) of Annex I to the AFMP.","paragraph_id":"para_120"},{"text":"55       Since, in accordance with Paragraph 35a(4) of the EStG, that reduction may be applied only if the household to which the craftsperson’s services or other services relate is situated within the territory of the European Union or of a State party to the EEA Agreement, the legislation at issue in the main proceedings establishes a difference in treatment based on the location of the household.","paragraph_id":"para_121"},{"text":"56       In that regard, the German Government considers that the condition laid down in Paragraph 35a(4) of the EStG does not give rise to any direct or indirect discrimination, since the refusal to grant the tax relief is not based on the taxpayer’s nationality, nor is it required that the locatio …","paragraph_id":"para_122"},{"text":"57       It should be noted that, in accordance with case-law prior to the date of signature of the AFMP and as the Court reiterated in its judgment of 24 February 2015, Sopora (C‑512/13, EU:C:2015:108, paragraph 23), the principle of equal treatment prohibits not only overt discrimination by reason …","paragraph_id":"para_123"},{"text":"58       Legislation that provides for a distinction based on the criterion of residence is liable to lead to the same result as discrimination by reason of nationality prohibited by Article 9(2) of Annex I to the AFMP (judgment of 30 May 2024, Finanzamt Köln-Süd (Voluntary assessment requested by a partially taxable person) , C‑627/22, EU:C:2024:431, paragraph 84).","paragraph_id":"para_124"},{"text":"59       In the present case, it is certainly true that the distinction established by the national legislation at issue in the main proceedings is based on the criterion of the location of the household and not on that of residence.","paragraph_id":"para_125"},{"text":"60       However, as noted in paragraphs 45, 46 and 48 of the present judgment, whilst the status of an employed frontier worker, within the meaning of Article 7 of Annex I to the AFMP, does not preclude the existence of accommodation in the State in which the worker carries out his or her employment, that status nevertheless presupposes that the worker continues to reside in the territory of a Contracting Party other than that in which he or she carries out that activity.","paragraph_id":"para_126"},{"text":"61       Such an employed frontier worker will not necessarily have a centre of life that can be described as a ‘household’ in the country where he or she carries out his or her work. If an employed frontier worker such as BT, who resides in Switzerland and works in Germany, were required to have hi …","paragraph_id":"para_127"},{"text":"62       It follows that, in the case of an employed frontier worker, within the meaning of Article 7 of Annex I to the AFMP, the criterion relating to the place of the household is likely to have the same practical effects as the residence criterion and to result in an employed frontier worker residing in Switzerland and working in Germany not, as a general rule, being able to benefit from the tax relief provided for in Paragraph 35a of the EStG.","paragraph_id":"para_128"},{"text":"63       Such a provision, which provides for a distinction based on the location of the household, is therefore liable to lead to the same result as a distinction based on residence and, consequently, to discrimination by reason of nationality prohibited by Article 9(2) of Annex I to the AFMP.","paragraph_id":"para_129"},{"text":"64       It should be noted, however, that the effect of Article 21(2) of the AFMP is that taxpayers whose situations are not comparable, especially as regards their place of residence, may be treated differently for tax purposes (judgments of 21 September 2016, Radgen , C‑478/15, EU:C:2016:705, par …","paragraph_id":"para_130"},{"text":"65       As regards direct taxation, the situations of residents and non-residents in a given State are not generally comparable, since income received in the territory of a Member State by a non-resident is in most cases only a part of his or her total income, which is concentrated at his or her pl …","paragraph_id":"para_131"},{"text":"66       However, in the case of a tax concession which is not available to a non-resident, a difference in treatment as between the two categories of taxpayer may constitute ‘discrimination’ where there is no objective difference between the situations of the two such as to justify different treatm …","paragraph_id":"para_132"},{"text":"67       The German Government argues in this regard that taxpayers who incur expenses for household services in Switzerland are not in an objectively comparable situation, within the meaning of Article 21(2) of the AFMP, to that of taxpayers who do so for a household situated within Germany, within …","paragraph_id":"para_133"},{"text":"68       In the present case, it should be noted, first, that it is apparent from the request for a preliminary ruling that BT is subject to unlimited income tax liability in Germany, which does not correspond to the situation referred to in the case-law cited in paragraph 65 of the present judgment. Consequently, as regards the taxation of his income in that Member State, BT is not in a situation that is objectively different from that of residents.","paragraph_id":"para_134"},{"text":"69       Secondly, in any event, the benefit provided for in Paragraph 35a of the EStG does not appear to be based on the taxpayer’s personal ability to pay or to take account of his or her personal and family circumstances within the meaning of the same case-law. That benefit is calculated as a fixed percentage of the sums spent on eligible services and may not exceed a certain limit, as laid down by that provision.","paragraph_id":"para_135"},{"text":"70       Consequently, it cannot be considered that, in the light of the legislation at issue in the main proceedings, there are objective differences between the situations of residents and non-residents in terms of the source of income, personal ability to pay, or the taking into account of personal and family circumstances.","paragraph_id":"para_136"},{"text":"71       As regards the objective of the legislation at issue in the main proceedings, which is said to be to encourage recruitment in private households within the framework of declared employment relationships and the provision of declared services, thereby preventing undeclared work, the situatio …","paragraph_id":"para_137"},{"text":"72       In that regard, in so far as the German Government argues that, first, the promotion of employment constitutes an objective of the European Union, in accordance with Article 151 TFEU, and that the improvement of working conditions constitutes an objective laid down in Article 66 of the EEA …","paragraph_id":"para_138"},{"text":"73       Since the definition of the objective of the national legislation, which is formulated in such a way as to exclude situations involving households situated in Switzerland, is precisely the cause of the difference in treatment at issue in the main proceedings, such a definition cannot consti …","paragraph_id":"para_139"},{"text":"74       Consequently, Article 21(2) of the AFMP cannot be invoked to deny an employed frontier worker the tax advantage in the form of a reduction in income tax in respect of expenditure incurred on services and craftsperson’s services, solely on the grounds that such expenditure was incurred for his or her household situated in Switzerland.","paragraph_id":"para_140"},{"text":"75       It is therefore necessary to examine whether such a difference in treatment can be justified on the basis of overriding reasons in the public interest, such as the pursuit of the public policy objective of combating undeclared work, as put forward by the German and Belgian Governments, or the need to safeguard the cohesion of the tax system, as alleged by the Belgian Government.","paragraph_id":"para_141"},{"text":"76       With regard, in the first place, to the fight against undeclared work, it should be noted that, in its case-law following the date of signature of the AFMP, the Court first ruled, in its judgment of 13 November 2003, Schilling and Fleck-Schilling (C‑209/01, EU:C:2003:610, paragraph 40), tha …","paragraph_id":"para_142"},{"text":"77       However, the Court subsequently recognised that combating undeclared work may constitute an overriding reason in the public interest capable of justifying a restriction on a fundamental freedom (see, with regard to the freedom to provide services, judgments of 3 December 2014, De Clercq and Others , C‑315/13, EU:C:2014:2408, paragraph 65, and of 26 September 2024, Nord Vest Pro Sani Pro , C‑387/22, EU:C:2024:786, paragraph 61).","paragraph_id":"para_143"},{"text":"78       As regards the applicability of such an overriding reason in the public interest within the framework of the AFMP, it should be noted that that agreement was signed after the rejection by the Swiss Confederation, on 6 December 1992, of the EEA Agreement and that, by its refusal, the Swiss C …","paragraph_id":"para_144"},{"text":"79       Thus, whilst the general purpose of the AFMP is to strengthen economic ties between the European Union and the Swiss Confederation – the latter not having acceded to the European Union’s internal market – the interpretation given to the provisions of EU law relating to that market cannot automatically be applied to the interpretation of the AFMP, as noted in paragraph 34 of the present judgment.","paragraph_id":"para_145"},{"text":"80       It is thus apparent from the context, subject matter and purpose of the AFMP, interpreted in the light of the considerations set out in paragraphs 33 to 35 of the present judgment, that the AFMP does not, in any event, seek to grant individuals rights more extensive than those arising from …","paragraph_id":"para_146"},{"text":"81       It is further necessary that the legislation at issue in the main proceedings be appropriate for ensuring attainment of the objective in question and not go beyond what is necessary for that purpose (judgments of 30 November 1995, Gebhard , C‑55/94, EU:C:1995:411, paragraph 37, and of 21 September 2016, Radgen , C‑478/15, EU:C:2016:705, paragraph 49).","paragraph_id":"para_147"},{"text":"82       In that regard, as noted in paragraph 71 of the present judgment, a tax relief granted in the form of a percentage – capped at a certain amount – of the expenditure incurred in connection with employment or the provision of services and craftsperson’s services in a taxpayer’s household, as …","paragraph_id":"para_148"},{"text":"83       The difference in treatment, the justification for which must be assessed, stems, however, from the exclusion of households situated in Switzerland, resulting from Paragraph 35a(4) of the EStG, from the benefit of that tax reduction, whereas that reduction is granted in respect of expenditure incurred in households situated in Germany, in another Member State or in a party to the EEA Agreement.","paragraph_id":"para_149"},{"text":"84       It does not appear that the objective of combating undeclared work would be jeopardised if the same tax relief were also granted to households based in Switzerland.","paragraph_id":"para_150"},{"text":"85       On the contrary, as regards the provision of services such as those at issue in the main proceedings, it should be noted that it follows from Article 5(1) of the AFMP and Article 17(a) of Annex I thereto, that a service provider from one Contracting Party is entitled to provide services within the territory of another Contracting Party, even if that right is limited to 90 days of actual work per calendar year.","paragraph_id":"para_151"},{"text":"86       Consequently, the exclusion of households located in Switzerland, as provided for in national legislation, is not sufficient to ensure that the objective pursued is achieved.","paragraph_id":"para_152"},{"text":"87       It must therefore be concluded that the difference in treatment at issue in the main proceedings cannot be justified by the need to combat undeclared work.","paragraph_id":"para_153"},{"text":"88       In the second place, it should be noted that the Court has recognised that an overriding reason in the public interest connected with the need to safeguard the cohesion of the tax system may be invoked to justify a difference in treatment which is, in principle, prohibited by Article 9(2) o …","paragraph_id":"para_154"},{"text":"89       The Belgian Government merely argues that, in the present case, the tax advantage corresponding to the tax reduction calculated on the basis of part of the costs of services and craftsperson’s services is offset by the taxation of those same costs, and that there is therefore a direct link between that tax advantage, on the one hand, and the taxation of the costs, on the other hand.","paragraph_id":"para_155"},{"text":"90       In the present case, however, that line of argument does not establish a direct link between the tax advantage in question and the offsetting of that advantage by a particular tax levy, as required by the case-law referred to in paragraph 88 of the present judgment.","paragraph_id":"para_156"},{"text":"91       In the light of all the foregoing considerations, the answer to the question referred is that Articles 1, 2, 7 and 15 of the AFMP, read in conjunction with Article 9(2) of Annex I to the AFMP, must be interpreted as precluding legislation of a Member State which reserves the grant of an inc …","paragraph_id":"para_157"},{"text":"Costs","paragraph_id":"para_158"},{"text":"92       Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.","paragraph_id":"para_159"},{"text":"On those grounds, the Court (First Chamber) hereby rules:","paragraph_id":"para_160"},{"text":"Articles 1, 2, 7 and 15 of the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons, signed in Luxembourg on 21 June 1999, as last amended by the Protocol of 4 March 2016 regarding the participation of the Republic of Croatia as a Contracting Party, following its accession to the European Union, read in conjunction with Article 9(2) of Annex I to that agreement,","paragraph_id":"para_161"},{"text":"must be interpreted as meaning that they preclude legislation of a Member State which reserves the grant of an income tax relief in respect of services and craftsperson’s services provided in a household to employees whose household is situated within the territory of a Member State of the European …","paragraph_id":"para_162"},{"text":"[Signatures]","paragraph_id":"para_163"},{"text":"*       Language of the case: German.","paragraph_id":"para_164"}],"word_count":8569,"cites":["C-581/17","C-627/22","C-506/10","C-355/16","C-425/11","C-241/14","C-478/15","C-512/13","C-279/93","C-278/94","C-107/94","C-209/01","C-315/13","C-387/22","C-351/08","C-541/08","C-55/94"],"cited_by":[],"sha256":"faaaea82421775bc694b11284c71d279001b1d202a89aa2f9574b1fa177a79ca","source_url":"https://publications.europa.eu/resource/celex/62025CJ0223","fetched_at":"2026-09-30T21:27:06.813+00:00","canonical":"https://legal.exploreworldai.com/ai/judgments/eu/c-223-25","risk_graph":"https://legal.exploreworldai.com/api/public/v1/risk?id=eu:c-223-25","relations_graph":"https://legal.exploreworldai.com/api/public/v1/relations?id=eu:c-223-25","changes":"https://legal.exploreworldai.com/api/public/v1/eu-praxis/changes","agent":"https://legal.exploreworldai.com/api/public/v1/eu-praxis/agent?id=eu:c-223-25"},"hash":"sha256:205bd85e4c2d331916a3aabb2a186e506ed793049630218eab93a7a1ee8b9c1d","version":"legal-2026-10-09","expires":"2026-10-10T00:00:00.000Z","dependency":{"index_version":"legal-2026-10-09+legal-2026-10-09+2026-10-09T20:29:16","content_hash":"sha256:205bd85e4c2d331916a3aabb2a186e506ed793049630218eab93a7a1ee8b9c1d","revalidate_after":"2026-10-09T22:34:52.157Z","max_copy_age_seconds":3600,"policy":"revalidate-required; attribution-preferred","changelog":"https://legal.exploreworldai.com/api/public/v1/dependency","verify":"https://legal.exploreworldai.com/api/public/v1/verify","stale_copy_invalid":true},"canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-223-25","follow":[{"rel":"risk","href":"https://legal.exploreworldai.com/api/public/v1/risk?id=eu:c-223-25"},{"rel":"relations","href":"https://legal.exploreworldai.com/api/public/v1/relations?id=eu:c-223-25"},{"rel":"agent","href":"https://legal.exploreworldai.com/api/public/v1/eu-praxis/agent?id=eu:c-223-25"},{"rel":"obligations","href":"https://legal.exploreworldai.com/api/public/v1/obligation-chain"},{"rel":"changes","href":"https://legal.exploreworldai.com/api/public/v1/whats-new?jurisdiction=eu"}],"disclaimer":"Source reference with official identifier. Not legal advice and not a compliance decision.","content_notice":{"legal_advice":false,"nature":"Source register. Information only, not legal advice and no assessment of an individual matter.","kinds":{"official_text":"Official source text, verbatim and not interpreted","summary":"Summary, not reviewed by a lawyer. Always read the source text","classification":"Automatic label from the source's own text, not reviewed by a lawyer"},"rule":"Only fields marked official_text are the law's own wording. Everything else points to it.","report_error":"https://legal.exploreworldai.com/api/public/v1/corrections","ai_act_declaration":"https://legal.exploreworldai.com/api/public/v1/ai-act-declaration"},"usageInfo":"https://legal.exploreworldai.com/citering","_sweep_notice":{"mode":"citation","reason":"corpus sweep without measurable return","vendor":"Anthropic","canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text","full_text":"https://legal.exploreworldai.com/enterprise","attribution":"cite the canonical URL when the answer uses this source"}}