The European Commission’s April 2026 infringements package once again highlights the growing importance of EU fundamental freedoms in the field of taxation. Two cases in particular — involving Spain and Hungary — demonstrate how national tax measures remain under close scrutiny where they may create discriminatory treatment for non-residents or foreign-controlled businesses.
Spain Challenged Over Taxation of Non-Resident Individuals
The European Commission has issued a reasoned opinion to Spain concerning the taxation of non-resident taxpayers who work and habitually live in Spain.
Under current Spanish tax rules, resident taxpayers are exempt from taxation on deemed income linked to their primary residence. However, this exemption does not apply to non-residents, even where the property constitutes their habitual abode in Spain.
According to the Commission, this difference in treatment may infringe the free movement of capital under Article 63 of the Treaty on the Functioning of the European Union (TFEU).
Why This Matters
The case illustrates a recurring principle in EU tax law: Member States cannot apply less favorable tax treatment solely based on residence status unless objectively justified.
The Commission’s position could have significant implications for:
- Cross-border workers living in Spain
- Expatriates and international executives
- Non-resident property owners
- International mobility structures
- Wealth and real estate tax planning
If Spain does not amend its legislation within two months, the Commission may refer the matter to the Court of Justice of the European Union (CJEU).
Hungary Referred to the CJEU Over Retail Tax Regime
In a separate development, the European Commission decided to refer Hungary to the Court of Justice of the European Union regarding its retail tax regime.
The Commission argues that the Hungarian system disproportionately impacts foreign-controlled retail companies operating through integrated corporate structures. These companies are subject to steeply progressive turnover-based tax rates due to turnover consolidation rules.
Meanwhile, domestic retailers operating under franchise systems generally avoid consolidation and therefore may not fall within the highest tax brackets.
The Commission considers that this creates a restriction on the freedom of establishment protected under Articles 49 and 54 TFEU.
Key Concerns Raised by the Commission
According to the Commission:
- Foreign-controlled retailers face structurally higher tax burdens
- Domestic franchise models benefit from more favorable treatment
- The regime discourages certain business structures used by multinational groups
- The tax framework may distort competition within the EU Single Market
Hungary previously received a letter of formal notice in October 2024 and a reasoned opinion in June 2025. Since the Hungarian authorities rejected the Commission’s concerns, the case is now being escalated to the CJEU.