# C_2007199EN.01000401.xml

| 25.8.2007 | EN | Official Journal of the European Union | C 199/4 |
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Judgment of the Court (Second Chamber) of 5 July 2007 — Commission of the European Communities v Kingdom of Belgium

(Case C-522/04)( 1 )

(Failure of a Member State to fulfil obligations - Freedom of movement for persons - Freedom of movement for workers - Freedom to provide services - Freedom of establishment - Free movement of capital - Articles 28, 31, 36 and 40 of the Agreement on the European Economic Area - Directive 2002/83/EC - Tax legislation providing for less favourable treatment of contributions to occupational pension schemes paid to insurance undertakings established abroad - Taxation in Belgium of capital and surrender values paid to beneficiaries who have transferred their residence abroad - Tax convention preventing double taxation - Representative responsible)

(2007/C 199/06)

Language of the case: French

Parties

Applicant: Commission of the European Communities (represented by: R. Lyal and D. Triantafyllou, acting as Agents)

Defendant: Kingdom of Belgium (represented by: E. Dominkovits and M. Wimmer, acting as Agents)

Re:

Failure of a Member State to fulfil its obligations — Breach of Articles 18, 39, 43, 49 and 56 of the EC Treaty, of Articles 28, 31, 36 and 40 of the EEA Agreement, and of Articles 5(1) and 53(2) of Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance (OJ 2002 L 345, p. 1) — Tax legislation providing for less favourable treatment of the contributions to occupational retirement schemes paid to insurance undertakings established abroad, taxation in Belgium of the capital and surrender values paid to recipients who have transferred their residence abroad and the obligation for those undertakings to have a representative residing in Belgium in order to guarantee payment of the annual tax on insurance contracts

Operative part of the judgment

The Court:

| 1. | —
By making the deductibility of employers' insurance contributions supplementary pension and life assurance subject to the condition, laid down in Article 59 of the Income Tax Code 1992 consolidated by the Royal Decree of 10 April 1992, as amended by the Law of 28 April 2003 on supplementary pensions and the tax regime applying thereto and to certain additional social security advantages, that those contributions be paid to an insurance undertaking or welfare fund established in Belgium; —
by making the tax reduction for long-term savings, granted by virtue of Articles 145/1 and 145/3 of the Income Tax Code 1992, as amended by the Law of 28 April 2003, for personal supplementary pension and life assurance contributions and premiums paid in the form of deductions made by the employer from the employee's remuneration, or in the form of deductions made by the undertaking from the remuneration of a director who is not under a contract of employment, subject to the condition that those contributions and premiums be paid to an insurance undertaking or welfare fund established in Belgium; —
by providing, in Article 364a of the Income Tax Code 1992, as amended by the Law of 28 April 2003, that, when capital, surrender values and savings referred to in Article 34 of the Income Tax Code 1992 are paid or allocated to a taxpayer who has previously transferred his residence or the primary location of his assets abroad, the payment or allocation is deemed to have taken place on the day preceding that transfer, and by treating, pursuant to the second paragraph of Article 364a, in the same way as an allocation any transfer referred to in Article 34(2)(3), so that every insurer is under an obligation to withhold amounts in respect of income tax, in accordance with Article 270 of the Code, from capital and surrender values paid to a non-resident who has been, at one time or another, resident for tax purposes in Belgium, in so far as those sums have been built up, entirely, or partially, during the period in which the person concerned was a Belgian resident for tax purposes, even though bilateral tax agreements concluded by the Kingdom of Belgium grant the right to tax such income to another Contracting State; —
by levying tax, pursuant to Article 364b of the Income Tax Code 1992, as amended by the Law of 28 April 2003, on transfers of capital or surrender values built up by means of employers' contributions or personal contributions for supplementary retirement benefits, where the transfer is made by the pension fund or insurance institution with which the capital or surrender values have been built up in favour of the beneficiary or persons entitled through him, to another pension fund or insurance institution established outside Belgium, while such a transfer does not constitute a taxable transaction if the capital or surrender values are transferred to another pension fund or insurance institution established in Belgium; —
by requiring, on the basis of Article 224/2a of the General Regulation on taxes assimilated to stamp duty resulting from the Royal Decree of 3 March 1927, as amended by the Royal Decree of 30 July 1994, foreign insurers who have no place of business in Belgium to obtain authorisation, before providing their services in Belgium, for a representative residing in Belgium, who must personally assume, in writing, responsibility towards the State for paying the annual tax on insurance contracts, interest and fines which may be due in respect of contracts relating to risks situated in Belgium, the Kingdom of Belgium has failed to fulfil its obligations under Articles 18 EC, 39 EC, 43 EC and 49 EC, Articles 28, 31 and 36 of the Agreement establishing the European Economic Area of 2 May 1992 and Article 4 of Council Directive 92/96/EEC of 10 November 1992 on the coordination of laws, regulations and administrative provisions relating to direct life assurance and amending Directives 79/267/EEC and 90/619/EEC (third life assurance Directive), following revision, Article 5(1) of Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance. | — | By making the deductibility of employers' insurance contributions supplementary pension and life assurance subject to the condition, laid down in Article 59 of the Income Tax Code 1992 consolidated by the Royal Decree of 10 April 1992, as amended by the Law of 28 April 2003 on supplementary pensions and the tax regime applying thereto and to certain additional social security advantages, that those contributions be paid to an insurance undertaking or welfare fund established in Belgium; | — | by making the tax reduction for long-term savings, granted by virtue of Articles 145/1 and 145/3 of the Income Tax Code 1992, as amended by the Law of 28 April 2003, for personal supplementary pension and life assurance contributions and premiums paid in the form of deductions made by the employer from the employee's remuneration, or in the form of deductions made by the undertaking from the remuneration of a director who is not under a contract of employment, subject to the condition that those contributions and premiums be paid to an insurance undertaking or welfare fund established in Belgium; | — | by providing, in Article 364a of the Income Tax Code 1992, as amended by the Law of 28 April 2003, that, when capital, surrender values and savings referred to in Article 34 of the Income Tax Code 1992 are paid or allocated to a taxpayer who has previously transferred his residence or the primary location of his assets abroad, the payment or allocation is deemed to have taken place on the day preceding that transfer, and by treating, pursuant to the second paragraph of Article 364a, in the same way as an allocation any transfer referred to in Article 34(2)(3), so that every insurer is under an obligation to withhold amounts in respect of income tax, in accordance with Article 270 of the Code, from capital and surrender values paid to a non-resident who has been, at one time or another, resident for tax purposes in Belgium, in so far as those sums have been built up, entirely, or partially, during the period in which the person concerned was a Belgian resident for tax purposes, even though bilateral tax agreements concluded by the Kingdom of Belgium grant the right to tax such income to another Contracting State; | — | by levying tax, pursuant to Article 364b of the Income Tax Code 1992, as amended by the Law of 28 April 2003, on transfers of capital or surrender values built up by means of employers' contributions or personal contributions for supplementary retirement benefits, where the transfer is made by the pension fund or insurance institution with which the capital or surrender values have been built up in favour of the beneficiary or persons entitled through him, to another pension fund or insurance institution established outside Belgium, while such a transfer does not constitute a taxable transaction if the capital or surrender values are transferred to another pension fund or insurance institution established in Belgium; | — | by requiring, on the basis of Article 224/2a of the General Regulation on taxes assimilated to stamp duty resulting from the Royal Decree of 3 March 1927, as amended by the Royal Decree of 30 July 1994, foreign insurers who have no place of business in Belgium to obtain authorisation, before providing their services in Belgium, for a representative residing in Belgium, who must personally assume, in writing, responsibility towards the State for paying the annual tax on insurance contracts, interest and fines which may be due in respect of contracts relating to risks situated in Belgium, |
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| — | By making the deductibility of employers' insurance contributions supplementary pension and life assurance subject to the condition, laid down in Article 59 of the Income Tax Code 1992 consolidated by the Royal Decree of 10 April 1992, as amended by the Law of 28 April 2003 on supplementary pensions and the tax regime applying thereto and to certain additional social security advantages, that those contributions be paid to an insurance undertaking or welfare fund established in Belgium; | | | | | | | | | | |
| — | by making the tax reduction for long-term savings, granted by virtue of Articles 145/1 and 145/3 of the Income Tax Code 1992, as amended by the Law of 28 April 2003, for personal supplementary pension and life assurance contributions and premiums paid in the form of deductions made by the employer from the employee's remuneration, or in the form of deductions made by the undertaking from the remuneration of a director who is not under a contract of employment, subject to the condition that those contributions and premiums be paid to an insurance undertaking or welfare fund established in Belgium; | | | | | | | | | | |
| — | by providing, in Article 364a of the Income Tax Code 1992, as amended by the Law of 28 April 2003, that, when capital, surrender values and savings referred to in Article 34 of the Income Tax Code 1992 are paid or allocated to a taxpayer who has previously transferred his residence or the primary location of his assets abroad, the payment or allocation is deemed to have taken place on the day preceding that transfer, and by treating, pursuant to the second paragraph of Article 364a, in the same way as an allocation any transfer referred to in Article 34(2)(3), so that every insurer is under an obligation to withhold amounts in respect of income tax, in accordance with Article 270 of the Code, from capital and surrender values paid to a non-resident who has been, at one time or another, resident for tax purposes in Belgium, in so far as those sums have been built up, entirely, or partially, during the period in which the person concerned was a Belgian resident for tax purposes, even though bilateral tax agreements concluded by the Kingdom of Belgium grant the right to tax such income to another Contracting State; | | | | | | | | | | |
| — | by levying tax, pursuant to Article 364b of the Income Tax Code 1992, as amended by the Law of 28 April 2003, on transfers of capital or surrender values built up by means of employers' contributions or personal contributions for supplementary retirement benefits, where the transfer is made by the pension fund or insurance institution with which the capital or surrender values have been built up in favour of the beneficiary or persons entitled through him, to another pension fund or insurance institution established outside Belgium, while such a transfer does not constitute a taxable transaction if the capital or surrender values are transferred to another pension fund or insurance institution established in Belgium; | | | | | | | | | | |
| — | by requiring, on the basis of Article 224/2a of the General Regulation on taxes assimilated to stamp duty resulting from the Royal Decree of 3 March 1927, as amended by the Royal Decree of 30 July 1994, foreign insurers who have no place of business in Belgium to obtain authorisation, before providing their services in Belgium, for a representative residing in Belgium, who must personally assume, in writing, responsibility towards the State for paying the annual tax on insurance contracts, interest and fines which may be due in respect of contracts relating to risks situated in Belgium, | | | | | | | | | | |

| 2. | The remainder of the action is dismissed. |
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| 3. | The Kingdom of Belgium is ordered to pay the costs. |
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( 1 )  OJ C 249, 14.10.2006.

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