The Court of Justice for the European Union (CJEU) today issued a judgment finding that pensioners in the private and public sectors may be subject to different national tax regimes, and that the Italian tax treatment stemming from the Italy-Portugal income tax treaty does not infringe the principles of freedom of movement and non-discrimination.
The cases are: HB v. Istituto Nazionale della Previdenza Sociale (C-168-19) and IC v. Istituto Nazionale della Previdenza Sociale (C-169/19) (30 April 2020)
As explained by a release [PDF 152 KB] from the CJEU, individuals HB and IC (both of Italian nationality) are former Italian public sector employees receiving a retirement pension from the INPS (Italy’s social security system).
After transferring their residence to Portugal, they requested from the INPS, in 2015, that they receive, pursuant to the Italy-Portugal income tax treaty, the gross amount of their pension without deduction (withholding) of tax at source by Italy, so as to be able to benefit from the tax advantages offered by Portugal. The INPS rejected those requests, taking the view that those rules apply only to Italian private-sector pensioners who have transferred their residence to Portugal and to Italian public-sector pensioners who, in addition to having transferred their residence to Portugal, have acquired Portuguese nationality (a condition which HB and IC did not meet).
HB and IC then brought actions before an Italian regional court that, in turn, asked the CJEU whether the Italian tax system (flowing from the treaty provisions) constitutes an obstacle to the freedom of movement of Italian public sector pensioners and discrimination on grounds of nationality.
By today’s judgment, the CJEU answers both questions in the negative.
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