“Cross-border work and the free movement of labor are a vital aspect of European cooperation and integration,” noted Karl-Heinz Lambertz (Belgium, SOC), rapporteur, during the 37th session of the Congress on October 29, 2019, in Strasbourg, France. “To prevent this from creating situations of tax inequality between regions on both sides of the border and undermining territorial cohesion, it is essential that the allocation of tax revenue between workers’ places of employment and residence be equitable,” he emphasized.
The report titled “Fair Tax Distribution in Cross-Border Areas – Potential Conflicts and Opportunities for Compromise” notes that, in the absence of a common policy among Council of Europe member states, cross-border workers pay their taxes in the country where they work, rather than in the country where they reside. “This creates a win-lose situation in which local and regional authorities on one side of the border benefit from this exchange at the expense of their counterparts on the other side of the border,” explained the rapporteur. These problems are particularly evident in certain border regions where funding for public services is completely insufficient due to taxation exclusively in the country of employment.
In the adopted report, the Congress calls on local and regional authorities in the places where cross-border workers are employed to distribute tax revenues fairly, to ensure that they lead to an improvement in the quality of life at the local level, and to contribute to the financing of local public services used by these workers in their places of residence. At the national level, a better-coordinated multilateral dialogue must be established to harmonize taxation and burden-sharing criteria in cross-border areas.
“In the case of Luxembourg, where there isn’t enough housing to accommodate all the cross-border workers, more than 200,000 people cross the border every day, with all the environmental consequences one can imagine. “Soon the number of cross-border workers will be double the country’s population, which is not a sustainable trend,” explained Dominique Gros, mayor of Metz, during his speech.
“The various stakeholders in Europe’s cross-border regions must work together as partners to achieve shared goals,” said Claude Haegi, former president of the Congress and president of the Foundation for the Economy and Sustainable Development of Europe’s Regions (FEDRE), citing the example of the influx of French cross-border workers into the city of Geneva in Switzerland. “The tax equity proposed by this report is a prerequisite for moving forward with inspiring joint projects that meet the expectations of the people, ” he concluded.