CJEU rules that communal taxes for nonresidents are discriminatory

On 12 March 2026, the Court of Justice of the European Union (CJEU) took an important position in case C‑119/24 (Chefquet) finding that Belgium’s communal tax surcharge on nonresidents violates the principle of freedom of movement for workers provided in article 45 of the Treaty on the Functioning of the European Union (TFEU).

Background

In Belgium, municipal tax rates vary between 0% and 9% depending on the municipality. Residents pay these local surcharges, while nonresidents are subject to a fixed 7% federal surcharge on their Belgian-source income.

Question referred to the CJEU

The Court of Appeal of Liège referred the case to the CJEU for a preliminary ruling on whether the 7% federal surcharge on nonresidents violates article 45 of the TFEU, resulting in indirect discrimination based on tax residency.

Judgment of the CJEU

The CJEU ruled that the fixed 7% surcharge violates article 45 of the TFEU because it can impose a heavier tax burden on nonresidents than on residents living in municipalities with municipal tax rates below 7%.

The CJEU found that nonresidents and residents in comparable situations should not face different tax burdens. Although ensuring nonresidents contribute to public services is a legitimate aim, the fixed surcharge is disproportionate and exceeds what is necessary to achieve this objective. Therefore, the Belgian legislation is indirectly discriminatory and restricts the free movement of workers.

Implications of the judgment

The CJEU’s ruling is a preliminary ruling and the Liège Court of Appeal must now apply this position to the case at hand. As a result of the direct effect of EU law, having been established that Belgian law violates EU law, the existing domestic rules are set aside with immediate effect by both the national courts and, in principle, the Belgian administrative authorities (including the tax administration).

Nonresident taxpayers can theoretically challenge the historical application of the 7% communal tax by filing a claim within one year from the date of issuance of the relevant tax assessment notice. Since the CJEU’s decision constitutes a new fact, a request for ex officio tax relief may also be made to claim a refund of the 7% communal tax for up to five years retroactively.