Brussels, 20/07/2006 (Agence Europe) - The Commission has sent Belgium a formal request to amend the legislation according to which Belgian residents with both Belgian and foreign income are discriminated by not benefiting from a full deduction of personal and family allowances. The Commission considers that this limited deduction of personal allowances is contrary to the EC Treaty. The European Court of Justice (ECJ) has already ruled on this issue in a case concerning the Netherlands (Case C-385/00 "De Groot"). The request is in the form of a “reasoned opinion” under Article 226 of the EC Treaty. If Belgium does not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the European Court which has “ruled very clearly on how the exemption with progression method should be applied" said EU Taxation and Customs Commissioner László Kovács. When a double tax convention is applicable, Belgium exempts foreign source income of Belgian residents from tax, but nevertheless takes such foreign source income into account for the purposes of determining the rate of tax applicable to the taxpayers' Belgian source income (exemption with progression method). This leads to a limited deduction of the personal and family allowances.