Spain

The European Commission has formally requested Spain to change its tax provisions according to which non-residents are taxed on the gross amount of their income, whereas residents are only taxed on their net income.

The Commission considers that these rules are incompatible with the EC Treaty, which guarantees the free movement of persons and workers, the freedom to provide services and the free movement of capital. The request takes the form of a reasoned opinion (second step of the infringement procedure provided for in Article 226 of the EC Treaty). If there is no satisfactory reaction to the reasoned opinion within two months, the Commission may decide to refer the matter to the European Court of Justice.

The EU Commission has also initiated second step infringement procedures against Spain in respect of its tax provisions which impose an exit tax on individuals who cease to be tax resident in Spain.

Estonia

The European Commission has formally requested Estonia to amend its discriminatory taxation of pensions paid to non-residents. In Estonia, rules provide for higher taxation of pensions paid to non-residents in comparison to pensions paid to resident taxpayers.