# C_2005057EN.01001702.xml

| 5.3.2005 | EN | Official Journal of the European Union | C 57/17 |
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5.3.2005

EN

Official Journal of the European Union

C 57/17

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Action brought on 23 December 2004 by the Commission of the European Communities against the Kingdom of Belgium

(Case C-522/04)

(2005/C 57/33)

Language of the case: English

An action was brought before the Court of Justice of the European Communities on 23 December 2004 against the Kingdom of Belgium by the Commission of the European Communities, represented by Richard Lyal and Dimitris Triantafyllou, acting as Agents, with an address for service in Luxembourg.

The Commission of the European Communities claims that the Court of Justice should declare that:

| — | by making the deductibility of employers' contributions for supplementary old age and premature death insurance subject to the condition, laid down in Article 59 of the CIR'92 (Income Tax Code), that the contributions must be paid to an insurance undertaking or welfare fund established in Belgium; |
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by making the deductibility of employers' contributions for supplementary old age and premature death insurance subject to the condition, laid down in Article 59 of the CIR'92 (Income Tax Code), that the contributions must be paid to an insurance undertaking or welfare fund established in Belgium;

| — | by making the reduction of tax for long-term savings, granted by virtue of Articles 145/1 and 145/3 of the CIR'92 for personal contributions for supplementary old age and premature death insurance in the form of deductions made by the employer from the employee's remuneration, subject to the condition that the contributions must be paid to an insurance undertaking or welfare fund established in Belgium; |
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by making the reduction of tax for long-term savings, granted by virtue of Articles 145/1 and 145/3 of the CIR'92 for personal contributions for supplementary old age and premature death insurance in the form of deductions made by the employer from the employee's remuneration, subject to the condition that the contributions must be paid to an insurance undertaking or welfare fund established in Belgium;

| — | by providing in Article 364 bis of the CIR'92 that, where capital, surrender values and savings referred to in Article 34 if the CIR'92 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, under paragraph 2 of the same article, assimilating to an allocation all transfers 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 CIR'92, from capital and redemption values paid to a non-resident who has been, at one time or another, a resident for tax purposes in Belgium, provided that those sums have, totally or partially, been constituted during the period in which the person concerned was a Belgian resident for tax purposes, even though bilateral tax agreements concluded by Belgium grant the right to tax such income to another Contracting State; |
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by providing in Article 364 bis of the CIR'92 that, where capital, surrender values and savings referred to in Article 34 if the CIR'92 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, under paragraph 2 of the same article, assimilating to an allocation all transfers 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 CIR'92, from capital and redemption values paid to a non-resident who has been, at one time or another, a resident for tax purposes in Belgium, provided that those sums have, totally or partially, been constituted during the period in which the person concerned was a Belgian resident for tax purposes, even though bilateral tax agreements concluded by Belgium grant the right to tax such income to another Contracting State;

| — | by levying tax, under Article 364 ter of the CIR'92, on transfers of capital or redemption values constituted by means of employers' contributions or personal contributions for supplementary retirement benefits, effected by the pension fund or insurance institution with which they have been established, for the benefit of the beneficiary or persons claiming through him, to another pension fund or insurance institution established outside Belgium, whereas such a transfer does not constitute a taxable transaction if the capital or redemption values are transferred to another pension fund or insurance institution established in Belgium; and |
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by levying tax, under Article 364 ter of the CIR'92, on transfers of capital or redemption values constituted by means of employers' contributions or personal contributions for supplementary retirement benefits, effected by the pension fund or insurance institution with which they have been established, for the benefit of the beneficiary or persons claiming through him, to another pension fund or insurance institution established outside Belgium, whereas such a transfer does not constitute a taxable transaction if the capital or redemption values are transferred to another pension fund or insurance institution established in Belgium; and

| — | by, on the basis of Article 224/2 bis of the Règlement général sur les taxes assimilées au timbre (General Regulation on taxes assimilated to stamp duty), requiring foreign insurers who have no operational headquarters in Belgium to obtain approval, before providing their services in Belgium, of 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, on the basis of Article 224/2 bis of the Règlement général sur les taxes assimilées au timbre (General Regulation on taxes assimilated to stamp duty), requiring foreign insurers who have no operational headquarters in Belgium to obtain approval, before providing their services in Belgium, of 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, 39, 43, 49 and 56 of the EC Treaty and Articles 28, 31, 36 and 40 of the EEE Agreement, and Articles 4 and 11(2) of Directive 92/96/EEC of 10.11. 1992 (1) – following the recasting of Articles 5(1) and 53(2) of Directive 2002/83/EC of 5. 11. 2002. (2) |
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the Kingdom of Belgium has failed to fulfil its obligations under Articles 18, 39, 43, 49 and 56 of the EC Treaty and Articles 28, 31, 36 and 40 of the EEE Agreement, and Articles 4 and 11(2) of Directive 92/96/EEC of 10.11. 1992 (1) – following the recasting of Articles 5(1) and 53(2) of Directive 2002/83/EC of 5. 11. 2002. (2)

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Pleas in law and main arguments

The Belgian tax rules on occupational retirement schemes contain restrictions on the free movement of services, freedom of movement for workers and freedom of establishment, and free movement of capital.

Freedom to provide services

Tax provisions limiting the deductibility of employers' and personal contributions to occupational retirement schemes to contributions paid to institutions established in Belgium, thereby excluding contributions paid to institutions established outside Belgium, are contrary to the freedom to provide services.

The provision which states that transfers of capital or surrender values created through employers' or personal contributions for supplementary retirement insurance are to be taxable where made to a pension fund or insurance undertaking established abroad likewise constitutes an obstacle to the freedom to provide services for companies established in other Member States.

Finally, the general and absolute obligation imposed on foreign insurance undertakings to appoint a representative residing in Belgium, who must give a personal undertaking to pay the annual tax on insurance contracts, is to be regarded as not being proportional and as undermining the freedom to provide services for companies established in other Member States. Its aim, which is to ensure payment of the tax, could be attained by less stringent means.

The abovementioned national provisions are also contrary to Article 5 of Directive 2002/83/EC, which provides that authorisation obtained in a Member State is valid for the entire Community and enables the undertaking to carry on business there, either by virtue of being established there, or by virtue of the freedom to provide services, and to Article 53(2) of the same directive, which provides that each Member State must authorise insurance undertakings whose headquarters is established in its territory to transfer all or part of their portfolios to a transferee established in the Community.

Freedom of movement for workers and freedom of establishment

The provisions which disallow deduction of employers' contributions or a tax reduction for personal contributions paid to institutions established in other Member States are also contrary to the freedom of movement for employed and self-employed workers which is guaranteed by Articles 39 and 43 EC, in that workers who have engaged in an occupational activity in a Member State and joined an occupational retirement scheme in that State and then go to work in Belgium are unable to benefit from tax advantages for contributions paid in that other State. However, the income deriving from those schemes is taxable in Belgium if the persons concerned are Belgian residents when the income is received.

The free movement of workers and freedom of establishment are also infringed by the provision under which the transfer of capital or surrender values created through employers' or personal contributions to supplementary retirement schemes is taxable when made to a pension fund or insurance institution established abroad. It places at a disadvantage employees and self-employed persons who wish to set up in another Member State and who, at that time, wish to transfer the said capital or surrender values.

Free movement of capital

Finally, the provisions in question also constitute obstacles to the free movement of capital, contrary to Article 56 EC and Article 40 EEE.

Transfers under insurance contracts are to be regarded as capital movements and any limitation on the deductibility of employers' contributions and on tax abatements for personal contributions, whereby only contributions paid to institutions established in Belgium qualify, constitute discriminatory restrictions on the said free movement of capital.

Similarly, the provision which states that the transfer of capital or surrender values created through employers' or personal contributions to supplementary retirement schemes is to be taxable when made to a pension fund or insurance institution established abroad, whereas that is not the case when the transfer is made to an undertaking established in Belgium, is likewise contrary to the free movement of capital.

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(1)  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), OJ L 360 of 9. 12. 1992, p. 1.

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(2)  Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance, OJ L 345 of 19. 12. 2002, p. 1.

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