TAXATION: FOUR COUNTRIES RAPPED FOR PENSION FUND DISCRIMINATION.
The Commission says that the discrimination which exists in several Member States restricts the right of workers to freedom of movement. It also prevents pension funds from exercising their right to the free provision of services. In addition, it prohibits companies with establishments in different Member States from centralising their occupational pension arrangements into one single scheme for all their employees throughout the European Union. Previous rulings by the European Court of Justice indicate that the scope for Member States to apply different rules to foreign pensions funds is in any case very narrow (cases of Wielockx (C-80/94), Jessica Safir (C-196/98), Danner (C-136/00) and Skandia (C-422/01)).
In its reply to the letter of formal notice, the Spanish Government has admitted that the current Spanish provisions are not compatible with EU law. Spain has announced that it intends to make the necessary amendments of its legislation before 23 September 2005, which is the deadline for the implementation of the pension funds Directive. The Commission, however, estimates that this timetable is not sufficient.
The French Government has also admitted that its tax rules are not compatible with European legislation and has announced that it will change its laws. However, it has not provided full details or a timetable.
The Belgian Government has not yet provided any definitive reply as to its intentions with regard to the points raised by the Commission. The Commission finds it unacceptable that, in addition to the discrimination detailed above, Belgium taxes the transfer of capital towards foreign pension funds. In addition, Belgium continues to tax pension payments made to persons who have moved to other Member States.
The Portuguese Government has argued that its tax legislation is coherent in that there is a link between tax deductibility of contributions and taxation of pensions in case of Portuguese pension funds and between the non-tax deductibility of contributions and the non-taxation of pensions in case of foreign pension funds (similar to the coherence accepted by the Court in the Bachmann judgement (C-204/90). The Commission, however, is of the opinion that such cohesion does not exist in the Portuguese legislation.
|Printer friendly Cite/link Email Feedback|
|Date:||Dec 20, 2003|
|Previous Article:||FINANCIAL SERVICES: GREECE AND FINLAND FACE COURT ACTION OVER SECURITIES DIRECTIVE.|
|Next Article:||FRANCE INFRINGES VAT RULES FOR SECOND-HAND VEHICLES.|