ECJ: Belgian communal tax for non-residents is discriminatory

Belgium’s fixed 7% communal tax on Belgian source income for non-resident taxpayers has been found by the European Court of Justice to violate Article 45 TFEU on the free movement of workers (ECJ - CHEFQUET C 119/24, 12 March 2026). The Court held that non-residents can potentially face a higher tax burden than Belgian residents living in municipalities with low or zero percent communal tax rates, resulting in indirect discrimination based on residence. 

• Belgian tax non-residents (French tax residents) earning income taxable in Belgium are subject to communal taxes at a fixed rate (currently 7%) on the Belgian income.
• The taxpayers claimed that the application of these communal taxes is discriminatory in view of the Freedom of movement for workers. In some cases, applying the fixed rate of (currently) 7 % leads to a higher tax burden for non-residents compared to residents, when comparing with municipalities with low or 0 % communal tax rates.
• The Liège Court of Appeal had requested the European Court of Justice to issue a preliminary ruling (prejudiciële vraag / renvoi préjudiciel). 

• The Court found that the Belgian communal tax regime for tax non-residents violates Article 45 TFEU (freedom of movement for workers), as it results in indirect discrimination based on tax residence.
• According to the ECJ, non-residents and residents are in a comparable situation regarding taxation on Belgian income when it comes to applying communal taxes to the taxable income. As the current application can lead to non-residents being taxed at a higher rate than residents, at least in certain cases, the Belgian rules are deemed to be discriminatory towards non-residents in similar situations. 

• The ECJ has issued this position in a Reference for a preliminary ruling. Consequently, the Liège Court of Appeal will now have to rule on the case based on this position. It remains up to the Liège Court of Appeal to definitively confirm that the Belgian tax residents living in municipalities with lower communal tax rates enjoy more favourable tax treatment, although based on the facts at hand that seems rather straightforward.
• Regardless of the outcome of the specific case, the ECJ-interpretation is binding erga omnes. As a result, all Belgian non-resident taxpayers can theoretically use this position to appeal application of the Belgian communal taxes at (currently) 7 % on their taxable income in Belgium. Taxpayers could use any of the available procedures depending on the relevant deadlines, be it via tax claim or request for ex officio tax relief, or through court proceedings. It will be up to the Belgian authorities to amend the national legislation to remediate the established discrimination. Most likely, Belgium will hold off on taking any action until they see how the Liège Court of Appeal rules on the case, but the potential budgetary ramifications at play for Belgium are enormous.