EU law update: Ruling on financial aid for students
EC proposes extending tax information exchange
The European Court of Justice has issued a judgment in regard to financial aid for higher-level education which is of particular significance for migrant workers.
Legislation in Luxembourg provides for aid to be granted to students holding either Luxembourg nationality or the nationality of another EU member state, and who are resident in Luxembourg when they are about to embark on higher-education studies. Thus, the children of workers employed in Luxembourg but resident in another member state were denied financial aid.
In a judgment on June 20th, the court held that the condition of residence required by Luxembourg legislation amounts to indirect discrimination on grounds of nationality in so far as it is liable to operate mainly to the detriment of nationals of other member states, as nonresidents are in the majority of cases foreign nationals.
While the court held that the objective of increasing the proportion of Luxembourg residents who hold a higher-education degree was valid, the condition of residence was too restrictive. The court found that other factors could be taken into account in assessing a student’s level of attachment to Luxembourg and conditions could be adapted to address the special situation of the children of crossborder workers.
In finding that the Luxembourg legislation was contrary to the principle of freedom of movement of workers, the court highlights the importance of member states acting proportionately and also that citizens should be aware of their rights under EU law.
On June 12th, the European Commission proposed extending the automatic exchange of information between EU tax administrations as part of an intensified fight against tax evasion. If these measures are passed, it will lead to the most comprehensive system for the automatic exchange of tax information anywhere in the world.
Currently, the EU directive on savings tax ensures member states collect data on the savings of nonresident individuals and automatically provide this data to the tax authorities of the member states where those individuals reside. The directive on administrative cooperation envisages the automatic exchange of information on other forms of income from January 1st, 2015, namely employment, directors’ fees, life insurance, pensions and property.
The commission’s latest proposal seeks to revise the directive administrative cooperation so that dividends, capital gains, all other forms of financial income and account balances would be subject to automatic information exchange within the EU. If implemented, member states will share as much information among themselves as they have committed to share with the US under the Foreign Account Tax Compliance Act.
Aileen Murtagh is a member of the Irish Society for European Law