In a ruling handed down on Thursday 16 January (case C-277/23), the Court of Justice of the EU ruled against the Croatian government and its tax legislation, which had increased the tax liability of a mother whose child had received a mobility grant under the Erasmus+ programme.
“The amount paid to a student should not be taken into account in calculating the income tax of the parent on whom that student is dependent”, thus ruled the Court in this dispute concerning the 2014-2015 academic year of this Croatian student (who had received €1,840).
“A Croatian student received aid for learning mobility under the Erasmus+ programme for a period of study at a university in Finland”, the Court points out in a press release. The Croatian tax authorities then informed the mother that the increase in the basic personal deduction for a dependent child, which she had always received, had been withdrawn for the corresponding year, as the thresholds had been exceeded.
The Court emphasised that, if a Member State participates in the Erasmus+ programme, it must ensure that the arrangements for the allocation and taxation of grants intended to support the mobility of beneficiaries of that programme do not create an unjustified restriction on the right to freedom of movement and residence within the territory of the Member States.
It considers that the taking into account of mobility assistance received by a dependent child for the purposes of determining the amount of the basic deduction to which a taxpayer parent is entitled in respect of that child constitutes such a restriction, which has directly disadvantaged the parent and the student.
Financial support under the Erasmus+ programme is intended to help cover the additional costs that would not be incurred without this mobility. In the case under consideration, the tax treatment of this financial support is even likely to lead to a heavier tax burden for these taxpayer parents, without the resources available to them having been increased in order to meet that burden, which may produce “opposite effects”.
Link to the judgment: https://aeur.eu/f/f2j (Original version in French by Solenn Paulic)