Opinion of the Advocate General — ECLI:EU:C:1997:423
Date: 1997-09-23
Language of the case: Swedish
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Anti-discrimination;Non-discrimination on grounds of nationality
Procedure: Reference for a preliminary ruling
Origin: Sweden

summary of the relevant provisions of the 
Swedish legislation on the taxation of savings 
in the form of life assurance, as described by 
the national court in its order for reference. 
Taxation of companies established in Sweden 
3. Both insurance companies and policy­
holders are subject to taxation in respect of 
life assurance policies taken out with com­
panies which are 'Swedish or established in 
Sweden'. ' For tax purposes, a distinction is 
drawn between two categories of life assur­
ance: pension insurance (P-assurance) and 
capital insurance (K-assurance). Only life 
assurance policies which meet special condi­
tions for pension savings instruments are 
classified in the P-assurance group, one of 
* Original language: Italian. 
1 — The referring court uses, sometimes indiscriminately, the 
terms 'Swedish company' and 'company established in Swe­
den' on the one hand, and the terms 'foreign company' and 
'company not established in Sweden', on the other. How­
ever, considering the characteristics and the rationale behind 
the Law at issue, the grounds put forward by the Swedish 
Government in justification thereof, as well as certain state­
ments made in the order for reference, it is my view that the 
decisive criterion for application of the Premium Tax Law 
— in lieu of the normal tax arrangement — is that of the 
place of establishment of the insurance company (outside 
Sweden) rather than its nationality. This assumption will 
therefore be adopted throughout this Opinion and the terms 
'domestic companies' and 'foreign companies', occasionally 
used by the referring court and quoted in inverted commas 
in the text, are to be taken to refer to established and non-
established companies respectively. 
I -1899 
OPINION OF MR TESAURO — CASE C-118/96 
those conditions being that the relevant 
policy must be contracted with an insurance 
company established in Sweden. 
Life assurance companies established in Swe­
den must pay yield tax under Law (1990: 
661) on Yield Tax on Pension Funds. Yield 
tax is calculated according to a standard 
method where the basis of assessment is the 
life assurance company's assets at the end of 
the year preceding the tax year. More pre­
cisely, the basis of assessment is determined 
by multiplying the insurance company's 
total assets, after deduction of financial 
liabilities, by the average interest rate on 
Government bonds over the year preceding 
the tax year in question. The applicable tax 
rates are 15% for P-assurance and 27% for 
K-assurance. 
The tax charge on policyholders varies 
depending on whether the insurance taken 
out falls into the P category or the K cat­
egory. In the case of P-assurance, premiums 
are tax-deductible in the year in which they 
are paid whereas insurance proceeds falling 
due are subject to payment of income tax. In 
the case of K-assurance, premium payments 
are not tax-deductible but insurance pro­
ceeds falling due are not subject to tax. 
Taxation of companies not established in 
Sweden 
4. Savings policies taken out with companies 
established outside Sweden are taxed under 
the Premium Tax Law, which came into 
force on 1 January 1991. Article 1 of this 
Law provides that natural or legal persons 
domiciled in Sweden or residing there per­
manently who take out life assurance policies 
with companies not established in Sweden 
are to be liable to premium tax. Pursuant to 
Article 3 of the Law, the tax rate is equiva­
lent to 15% of the premium payment. 2 
Article 5 of the Premium Tax Law further 
provides that the competent tax authorities 
may, on the policyholder's application, either 
grant full exemption or reduce the premium 
tax by one-half if the insurance company 
with whom the policy was contracted is 
liable, in the State in which it is established, 
to revenue tax which is comparable to the 
taxation borne by domestic insurance com­
panies in Sweden. 
5. From the description given of the relevant 
provisions of national law, it appears that 
savings policies issued by insurance compa­
nies established in Sweden are taxed (in part) 
2 — Premiums are not tax-deductible in the year in which they 
are paid, but insurance proceeds falling due are not subject to 
further tax. 
I -1900 
SAFIR v SKATTEMYNDIGHETEN I DALARNAS LÄN 
on the basis of the assets of the issuing insur­
ance company and (in part) by way of a 
yield tax on the return to policyholders; sav­
ings policies issued by insurance companies 
established abroad and consequently not 
liable to tax in Sweden are, however, taxed 
on the premiums paid by the policyholders. 
In other words, as the referring court points 
out, 'the tax on savings policies issued by 
Swedish life assurance companies applies to 
the yield on individual life assurance policies 
whilst the tax on equivalent policies issued 
by foreign life assurance companies applies 
to the premiums.' 
The purpose of this differentiated arrange­
ment, whereby policyholders resident in 
Sweden who contract insurance policies with 
companies established in Sweden are subject 
to different tax treatment than those who 
contract insurance policies with companies 
not established in Sweden, is, again accord­
ing to the order for reference, to 'maintain 
competitive neutrality between Swedish sav­
ings policies and foreign savings policies'. 
The intent of the Swedish legislature is dem­
onstrated by the fact that the Premium Tax 
Law introduces the possibility of a tax 
exemption (or reduction) for savings policies 
issued by assurance companies which are not 
established in Sweden but which are subject 
to taxation comparable to that borne by 
domestic insurers. 
The facts 
6. The facts in the main proceedings are 
straightforward and date back to early 1995 
when Jessica Safir (hereinafter the 'appli­
cant'), having taken out a life assurance 
policy with Skandia Life Assurance Com­
pany Ltd, an English insurance company 
which also operates on the Swedish market, 3 
applied to the tax authorities for an exemp­
tion from premium tax under Paragraph 5 of 
the Premium Tax Law. 
The tax authorities reduced the taxation by 
half so that the applicant, having declared a 
premium payment of SKR 1 000, paid pre­
mium tax amounting to SKR 75. Subse­
quently, however, following the negative 
outcome of two reviews of the tax reduction 
decision undertaken by the same tax authori­
ties, the applicant challenged that decision 
before the competent County Administrative 
Court, requesting that it be set aside. 
The question referred by the national court 
7. In doubt as to the compatibility with 
Community law of the different tax treat­
ment accorded under the Premium Tax Law 
to policyholders insured with companies not 
established in Sweden, the national court 
decided to stay the proceedings and to refer 
3 — And, paradoxically, wholly owned by the Swedish company 
Skandia. 
I -1901 
OPINION OF MR TESAURO — CASE C-118/96 
the following question to the Court for a 
preliminary ruling: 
'Where in a Member State, the taxation of 
savings policies issued by domestic life assur­
ance companies and foreign life assurance 
companies conducting insurance business in 
the Member State through an establishment 
takes the form of a tax on yield from insur­
ance capital calculated in a standard way and 
levied on the insurer, is it contrary to 
Articles 6, 59, 60, or 73b and 73d of the 
Treaty of Rome for tax to be charged — with 
the aim of maintaining competitive neutrality 
between domestic and foreign savings poli­
cies — on insurance premiums paid by poli­
cyholders resident in the Member State 
under life assurance policies contracted with 
insurers which are established in another 
Member State and which are operating in the 
first-mentioned Member State in accordance 
with the rules on cross-border insurance 
activities, if the tax on the aforementioned 
insurance premiums can, upon application to 
the tax administration, be reduced entirely or 
by 50% in the event that the insurance com­
pany established abroad is subject to revenue 
tax in the State in which it is domiciled that 
is comparable to the tax charged on domestic 
savings policies in the other Member State?' 
The relevant provisions of Community law 
8. The national court is therefore asking the 
Court whether the Premium Tax Law is 
compatible with the provisions of the EC 
Treaty on the freedom to provide services 
and free movement of capital as well as with 
Article 6 thereof, which lays down in general 
terms the prohibition of discrimination on 
grounds of nationality. At first view, the Law 
at issue formally distinguishes, for tax pur­
poses, between holders of insurance policies 
issued by foreign (non-established) insurers 
and holders of policies issued by domestic 
insurers; this built-in discrimination being 
likely to restrict both the provision of cross-
border services and the corresponding move­
ment of capital. 
I would immediately exclude application of 
Article 6. It is settled case-law that this 
article applies independently only to situ­
ations governed by Community law in regard 
to which the Treaty lays down no specific 
prohibition of discrimination. 4 It is there­
fore under Articles 59 and 73b of the Treaty, 
which give effect to the principle of non­
discrimination in the specific areas of free 
provision of services and free movement of 
capital, that the legality of the legislation at 
issue should be examined. 
4 — See, inter alia, Case 305/87 Commission v Greece [1989] 
ECR 1461, at paragraph 13, and Case C-379/92 Peralta 
[1994] ECR I-3453, at paragraph 18. 
I - 1902 
SAFIR v SKATTEMYNDIGHETEN I DALARNAS LÄN 
9. In this connection, I consider that a fur­
ther clarification is necessary. It is clear from 
an examination of the rules governing the 
freedom to provide services and the free 
movement of capital, their place in the 
Treaty and a careful reading of all the rel­
evant case-law that the provisions of Article 
59 et seq., on the one hand, and of Article 
73b et seq., on the other, are not intended to 
apply cumulatively and still less indiscrimi­
nately, but that they govern, at least in prin­
ciple, different cases: the first require aboli­
tion of all restrictions on the free provision 
of services — including financial services — 
within the Community whereas the second 
prohibit all restrictions on the free move­
ment of capital and payments between Mem­
ber States and between Member States and 
third countries. 
As a result, the compatibility with Commu­
nity law of the national legislation at issue 
should — unless it simultaneously hinders 
both the free provision of services and the 
free movement of capital — be examined 
under either Article 59 et seq. or under 
Article 73b et seq. I might add that com­
bined application of these articles, without 
distinguishing whether the case involves 
freedom to provide services or free move­
ment of capital, would not, to say the least, 
be a very rigorous approach. 
10. The approach I propose is supported 
both by the wording of the aforesaid provi­
sions and by their place in the Treaty, which 
devotes to them two specific chapters (the 
third and fourth respectively) under Title III . 
The deliberate distinction drawn by the 
authors of the Treaty between the sphere of 
application of the rules governing services 
and that of the rules governing capital is con­
firmed by Article 60, which identifies the 
notion of services with services normally 
provided for remuneration, 'in so far as they 
are not governed by the provisions relating 
to freedom of movement of goods, capital 
and persons'. The wording of Article 61(2), 
pursuant to which 'the liberalisation of 
banking and insurance services connected 
with movements of capital shall be effected 
in step with the progressive liberalisation of 
movement of capital', 5 is also significant in 
this respect. 
11. The Court's case-law also tends gener­
ally in the same direction. Already in Société 
Générale Alsacienne de Banque, the Court, 
sharing the Advocate General's detailed rea­
soning on this point, stressed that it was first 
necessary to establish if the transactions at 
issue in those proceedings (execution of 
stock exchange orders and other current 
5 — This provision may be considered to be of little practical 
consequence today, following the near-total liberalisation of 
capital movements implemented with the coming into force 
of Council Directive 88/361/EEC of 24 June 1988 (OJ 1988 
L 178, p. 5) and of the Treaty of Maastricht. It can, however, 
still effectively govern events which occurred prior to this 
liberalisation (for a recent example, sec Case C-222/95 
Société Civile Immobilière Parodi v Banque H. Albert de 
Bary [1997] ECR I-3899). 
I - 1903 
OPINION OF MR TESAURO — CASE C-118/96 
account transactions) were to be treated as 
services or as movements of capital before 
ascertaining the compatibility with Commu­
nity law of the restrictions placed on such 
transactions by the provisions of national 
law in question. 6 
In its judgment in Casati, rendered shortly 
thereafter, the Court then specified the dif­
ference in scope, in terms of application in 
time and detailed rules for application, 
between the provisions relating to capital 
movements and those relating to the other 
freedoms guaranteed by the Treaty. In par­
ticular, the Court underscored the fact that 
free movement of capital, unlike other free­
doms, could not be considered to be auto­
matically achieved at the end of the transi­
tional period; and that Article 67, still in 
force at the time, 7 imposed the obligation to 
liberalise movements of capital only 'to the 
extent necessary to ensure the proper func­
tioning of the common market'. 8 
12. The position adopted by the Court in 
the Bachmann case is clearer still. Asked to 
rule on the compatibility with Community 
law of a provision of Belgian law which sub­
jected the deductibility of health, pension 
and life insurance contributions for tax pur­
poses to the condition that such contribu­
tions had to be paid in the State itself, the 
Court examined the case only in relation to 
Articles 48 and 59 of the Treaty. Moreover, 
in precluding application of the rules relating 
to capital movements, despite these having 
been expressly invoked, the Court stated that 
'Article 67 does not prohibit restrictions 
which do not relate to the movement of 
capital but which result indirectly from 
restrictions on other fundamental free­
doms'. 9 
13. Subsequent case-law follows the same 
logic. In Bordessa, for example, the Court 
expressly excluded application of Article 59 
(and Article 30) to measures subjecting the 
exportation of coins, banknotes and bearer 
cheques to the requirement of preliminary 
authorisation and examined those measures 
under Article 67 alone (and the directive 
implementing that provision). 10 In that case, 
the movement of capital was not connected 
to trade in services (or goods). Moreover, the 
Court stated in this connection that, even if 
the transaction at issue in the main proceed­
ings had been shown to constitute a payment 
6 — Case 15/78 Société Générale Alsacienne de Banque v Kotstier 
[1978] ECR 1971, at paragraph 3; sec especially the Opinion 
of Advocate General Reischl, paragraphs I-1 and I-2 of 
which are entirely devoted to the importance of distinguish­
ing between the scope of application of the provisions gov­
erning services and that of the provisions relative to capital, 
in particular in borderline cases (such as that then before the 
Court) involving services provided by credit institutions. 
7 — It is hardly necessary to point out that Articles 67 to 73 of 
the EEC Treaty were replaced by Articles 73b to 73g of the 
EC Treaty. 
8 — Case 203/80 Casati [1981] ECR 2595, at paragraph 10. 
9 — Case C-204/90 Bachmann v Belgium [1992] ECR I-249, at 
paragraph 34. See also the Opinion, in the same case, of 
Advocate General Mischo who, in proposing to the Court 
the conclusion which it adopted on this issue, observed that 
the transfer of capital necessary to pay contributions abroad 
was not subject to any difficulty and that consequendy the 
causal nexus between the provision at issue and the free 
('completely free') movement of capital was too tenuous 
and indirect. 
10 — Joined Cases C-358/93 and C-416/93 Criminal proceedings 
against Bordessa, Melado and Barbero Maestre [1995] ECR 
I-361, at paragraphs 13 and 14. 
I - 1904 
SAFIR v SKATTEMYNDIGHETEN I DALARNAS LÄN 
for goods or services, it would in any case be 
governed not by Articles 30 and 59, but by 
Article 106 of the Treaty. 11 
Although it reached the opposite result, the 
Court reasoned in the same way when ruling 
that the compatibility with Community law 
of United Kingdom legislation prohibiting 
the advertisement and sale of foreign lottery 
tickets as well as the conduct of such lotter­
ies on British territory was to be examined 
under Article 59 of the Treaty and expressly, 
although incidentally, excluded application 
of the rules relating to capital (and those 
relating to goods and persons). 12 
14. In Svensson and Gustavsson, 13 the 
Court departed from this — on the whole 
rather consistent — regulatory and case-law 
framework. In that case, the national court 
asked the Court to rule on the compatibility 
with Articles 67 and 71 of the Treaty of a 
provision of Luxembourg law which 
restricted entitlement to interest rate subsi­
dies for the construction, acquisition or 
improvement of housing to persons having 
taken out a loan from a credit institution 
approved (and therefore established) in 
Luxembourg. 
Going against the Opinion of the Advocate 
General who, in line with the Bachmann 
judgment, had proposed that the case be 
dealt with only in relation to Article 59 et 
seq. of the Treaty, 14 the Court chose instead 
to apply, in combination, the rules governing 
services and those governing capital move­
ments and concluded that the national legis­
lation was contrary to both. More precisely, 
the Court first declared that the legislation at 
issue, because it was 'liable to dissuade those 
concerned from approaching banks estab­
lished in another Member State', constituted 
an obstacle to movements of capital in the 
form of bank loans. Secondly, the Court 
stated that the legislation was contrary to 
Article 59 — thereby recognising the trans­
action at issue to be a service in the sense of 
that provision — because it entailed dis­
crimination against credit institutions estab­
lished in other Member States. 
11 — Bordessa (cited in the preceding footnote), at paragraph 14. 
Reasoning in these terms, the Court in substance elaborated 
on the distinction already outlined in Luisi and Carboni 
(Joined Cases 286/82 and 26/83 [1984] ECR 377, at para­
graphs 21 and 22) between payments and capital move­
ments: 'current payments are transfers of foreign exchange 
which constitute the consideration within the context of an 
underlying transaction, whilst movements of capital are 
financial operations essentially concerned with the invest­
ment of the funds in question rather than remuneration for 
a service'. Moreover, stressing the proper relevance of the 
payments category as against the capital category and 
expressly linking only the first — and not the second — to 
the trade in goods or services underlying the transfer, the 
Court concluded by distinguishing, in this judgment, 
between the movement of capital category and the services 
(and goods) category. 
12 — Case C-275/92 Her Majesty's Customs and Excise v Schindler 
and Schindler [1994] ECR I-1039, at paragraph 30. 
13 — Case C-484/93 Svensson and Gustavsson v Ministre du 
Logement et de l'Urbanisme [1995] ECR I-3955. 
14 — Opinion of Advocate General Elmer delivered on 17 May 
1995 (ECR I-3957, at paragraphs 8 to 11). 
I - 1905 
O P I N I O N O F MR TESAURO — CASE C-118/96 
15. Without going into the merits of the 
classification attributed to the transaction at 
issue (movement of capital and/or provision 
of services), it may be questioned why the 
Court, having established that the provision 
in dispute was contrary to Article 67 of the 
Treaty, thought it necessary to examine it 
under Article 59 as well. 15 
In my view, this approach is consistent with 
neither the letter nor the spirit of the rel­
evant Community provisions, considering in 
particular the residual value that the Treaty 
specifically and indisputably places on the 
rules governing the freedom of services. 
Moreover, without providing proper reason­
ing it goes against earlier case-law, outlined 
above, in the matter. 16 
16. Furthermore, indiscriminate application 
of the provisions of the Treaty governing ser­
vices and capital might be further precluded 
by the fact that the scope of the prohibition 
laid down in Article 59, on the one hand, 
and that laid down in Article 73 b of the 
Treaty, on the other, is different. While free­
dom to provide services is, of course, subject 
only to the exceptional restrictions permitted 
or envisaged by Article 56 (and, on the con­
ditions reviewed below, to restrictions justi­
fied by overriding requirements), free move­
ment of capital, on the other hand, is subject 
to the broader restriction laid down in 
Article 73d(a), which expressly permits the 
enactment of fiscal provisions which distin­
guish between taxpayers on grounds of resi­
dence (even though, under the 'classic' for­
mula, they must not constitute a means of 
arbitrary discrimination or a disguised 
restriction). This is a subtle difference in the 
ambit of the two provisions which makes it 
even more important for their respective 
scopes of application to be determined accu­
rately. 
17. The foregoing observations lead me to 
the conclusion that it is always necessary to 
establish precisely whether a provision of 
national law at issue, especially when related 
to the banking or insurance sectors, is to be 
defined as a (potential) restriction on free­
dom to provide services or as a (potential) 
restriction on free movement of capital, 
depending on the nature and type of restric­
tion which such a provision is likely to 
entail. In my view, this is absolutely neces­
sary in order to identify the proper basis for 
determining the provision's legality. 
This should be done on the basis of the cri­
teria laid down in the case-law existing prior 
to Svensson: if the measure at issue directly 
restricts the transfer of capital, rendering it 
impossible or more difficult, for example by 
15 — The judgment has been universally criticised in legal litera­
ture precisely because of this 'double' assessment. See, inter 
alia, P. Bentley, Tax obstacles to the free movement of capi­
tals, in The EC Tax Journal, 1996-1997, p. 49; and W. 
Devroe and J. Wouters, Liberté d'établissement et libre 
prestation de services, in Journal des tribunaux, droit 
européen, 1996, p. 49. 
16 — Case C-148/91 Verenigung Veronica Omroep Organisatie v 
Commissariaat voor de Media [1993] ECR I-487 was 
clearly quite different. There the Court ruled that the 
national provisions at issue (the Dutch Mediawet on radio 
and television broadcasting) were compatible with Commu­
nity law given that they restricted neither the freedom to 
provide services nor the free movement of capital. 
I - 1906 
SAFIR v SKATTEMYNDIGHETEN I DALARNAS LÄN 
subjecting it to mandatory authorisation or 
in any event by imposing currency restric­
tions, Article 73b et seq. of the Treaty will 
apply; 17 if, conversely, it only indirectly 
restricts movement of capital and primarily 
constitutes a non-monetary restriction on 
the freedom to provide services, then Article 
59 et seq. of the Treaty will apply. 18 It 
would still be possible for both sets of provi­
sions to apply together, but only in relation 
to the provisions restricting simultaneously, 
although from different angles, both provi­
sion of services and movement of capital. 19 
18. On application of those criteria to the 
present case, it is clear that the contested 
national legislation could well constitute an 
obstacle for insurance companies which 
intend to conduct their business in Sweden 
without having a fixed place of business 
there. Savings policies taken out with the lat­
ter are by law subject to different tax treat­
ment than those issued by insurers estab­
lished in Sweden. It need only be noted here 
that the premium tax to which policyholders 
are subject could well deter persons from 
taking out policies with companies that are 
not established in Sweden, particularly if 
domestic insurers offer comparable insurance 
products with tax-exempt premiums. 
As regards movements of capital (and pay­
ments), the national legislation does not 
appear to prevent these nor to make them 
more difficult, unless simply as a conse­
quence of being an obstacle to the freedom 
to provide services, which is both obvious 
and irrelevant. The legislation at issue does 
not provide for any special formalities 
(approvals or declarations), nor does it 
impose currency restrictions on the transfer 
of premium payments on policies contracted 
with companies not established in Sweden; 
on the contrary, the transfer of such funds 
abroad appears to be totally unrestricted. 
19. In my view, those aspects are sufficient 
to preclude application of Article 73b and at 
the same time to bring the case within the 
purview which Article 59 of the Treaty has if 
no other provisions apply. Consequendy, it 
is in relation to that article that the compat­
ibility with Community law of the national 
legislation at issue should be examined. 
17 — To be precise. Article 73b(1) in the case of movements of 
capital not connected to a trade in goods or services; or 
Article 730(2), which applies to payments, where the capital 
in question represents consideration for trade in goods or 
services. 
18 — On this point, in addition to the cases cited in footnotes 11 
to 13 above, see the recent judgment in Parodi (cited in 
footnote 5), in which the Court — after having ruled out 
that a provision of French law subjecting the grant of mort­
gage loans by foreign credit institutions to authorisation 
could be justified, under Article 61(2) of the Treaty, by (at 
the time) non-liberalised restrictions on movement of capi­
tal — then examined the case solely under Article 59, 
expressly classifying the transaction in question (mortgage 
loan from a credit institution) as a service. 
19 — For example, a provision like the one at issue in Svensson 
but which would also prohibit loans in foreign currency 
from credit institutions established abroad. 
I - 1907 
OPINION OF MR TESAURO — CASE C-118/96 
The restrictive effects of the measure at issue 
20. I now come to the question referred for 
a preliminary ruling. The Governments 
which have intervened in the proceedings 
share the view that the Swedish legislation is 
compatible with Community law, on the 
ground that, because it is not discriminatory, 
it does not contravene Article 59. They point 
out that the Court's recent case-law recog­
nises the principle of fiscal territoriality and 
that the legislation at issue implements that 
principle. As regards direct taxation, which 
falls within the competence of Member 
States, this principle permits differences in 
the tax treatment of residents and non­
residents. Here they cite in particular the 
judgment in Schumacher. 20 
According to those same Governments, even 
if the legislation at issue were established to 
be discriminatory, it would in any case be 
justified by virtue of its aims. It is designed 
to maintain effective fiscal supervision while 
ensuring fiscal cohesion of the national tax 
system: these are general interests which 
have been expressly recognised in case-law as 
worthy of protection (see Futura and Bach­
mann respectively). The legislation at issue 
is, they say, also necessary and proportionate 
because its objectives could not be effectively 
attained by less restrictive measures. 21 
21. I would again point out that the legisla­
tion at issue subjects premiums paid by 
policyholders on life assurance policies 
contracted with insurers not established in 
Sweden to premium tax: premiums paid on 
policies issued by domestic companies, or 
companies established in Sweden, are, how­
ever, free of such tax since these savings poli­
cies are taxed under different arrangements. 
Furthermore, policyholders insured with 
insurance companies that are not established 
in Sweden are entitled, subject to application, 
either to an exemption or to a reduction of 
premium tax, as the case may be, provided it 
is established that the insurer is subject, in its 
home State, to revenue tax which is compa­
rable with the taxation borne by insurance 
companies established in Sweden. 
22. In other words, the Premium Tax Law 
provides for differentiated tax treatment of 
20 — Case C-279/93 Finanzamt Köln-Altstadt v Schumacker 
[1995] ECR I-225: but see also Case C-80/94 Wielockx v 
Inspecteur der Directe Belastingen [1995] ECR I-2493 and 
Case C-107/94 Asscher v Staatssecretaris van Financien 
[1996] ECR I-3089; and, finally, Case C-250/95 Futura Par­
ticipations and Singer v Administration des Contributions 
[1997] ECR I-2471. 
21 — Actually, the United Kingdom Government proposes to 
leave this assessment to the national court in view of the 
particular circumstances of the case. 
I - 1 9 0 8 
SAFIR y SKATTEMYNDIGHETEN I DALARNAS LÄN 
different groups of legal persons. Firstly, it is 
self-evident that policyholders (recipients of 
services) are treated differently depending on 
whether their policies have been taken out 
with insurers not established in Sweden, in 
which case they are liable to premium tax, or 
with insurers established in Sweden, in 
which case they are not liable to premium 
tax. Secondly, those same policyholders who 
have taken out life assurance with companies 
not established in Sweden may be subject to 
different tax treatment in so far as they may 
or may not obtain an exemption from pre­
mium tax or, as the case may be, a reduction 
thereof, depending on the outcome of the 
review by the Swedish tax authorities of the 
taxation arrangements to which those insur­
ers are subject in their home States. 
While it is true, moreover, that such different 
tax treatment affects all policyholders domi­
ciled or resident in an individual Member 
State and that consequently, under the rules 
of Community law on freedom of services, 
this treatment is not relevant as such, it none 
the less has repercussions on the providers of 
the services concerned, depending on 
whether or not they have a permanent estab­
lishment in Sweden. In other words, insur­
ance companies without an establishment in 
Sweden — since only the premiums paid by 
their policyholders are liable to tax — are at 
a clear disadvantage in relation to insurance 
companies established in Sweden, which 
entails, or in any case could entail, a not 
inconsiderable restriction on the pursuit of 
their business in the State concerned. 
23. These restrictions are clearly, albeit indi­
rectly, based upon the place of establishment 
of the provider of services 22 and are conse­
quently liable to restrict its cross-border 
activities: they are therefore in patent conflict 
with Article 59 of the Treaty. 23 
That article prohibits 'restrictions on free­
dom to provide services within the Commu­
nity ... in respect of nationals of Member 
States who are established in a State of the 
Community other than that of the person 
for whom the services are intended'. As the 
Court has itself stated on several occasions, 
Articles 59 and 60 'require the removal not 
only of all discrimination against a provider 
of a service on the grounds of his nationality 
but also all restrictions on his freedom to 
provide services imposed by reason of the 
fact that he is established in a Member State 
other than that in which the service is to be 
22 — It need hardly be pointed out that the discrimination would 
be even more obvious if the Premium Tax Law regime was 
applied not on the basis of establishment of the insurer but 
on the basis of the insurer's nationality. On this point, see 
footnote 1 above. 
23 — It may be recalled moreover that already the General pro­
gramme for the abolition of restrictions on freedom to pro­
vide services (adopted on 18 December 1961, OJ 15 January 
1962, p. 32) included among the restrictions to be abolished 
also those which indirectly affect providers of services, for 
example through the recipients thereof. 
I - 1909 
OPINION OF MR TESAURO — CASE C-118/96 
provided'. 24 The legislation at issue is cer­
tainly a good illustration of the second cat­
egory of restriction mentioned in the passage 
quoted. 
24. In these circumstances, the view that, 
under the principle of fiscal territoriality, the 
legislation at issue falls outside the scope of 
Article 59 appears to be entirely groundless. 
The following brief observations are in my 
view sufficient in this respect: 
First, the Schumacker case-law is itself based 
on the explicit proposition that 'although as 
Community law stands at present, direct 
taxation does not as such fall within the pur­
view of the Community, the powers retained 
by the Member States must nevertheless be 
exercised consistently with Community 
law', 25 and Member States shall 'therefore 
avoid any overt or covert discrimination on 
grounds of nationality'. 26 Second, while it is 
true, as the Court has made clear, that differ­
ences in the tax treatment of residents and 
non-residents do not as such constitute dis­
crimination prohibited under the Treaty, it is 
also true that the objective difference 
between two categories of taxpayers must be 
taken into account, in particular 'from the 
point of view of the source of the income 
and the possibility of taking account of their 
ability to pay tax or their personal and fam­
ily circumstances'. 27 
25. At first view, there is a significant differ­
ence with the present case, given that the dis­
criminatory treatment under the Premium 
Tax Law concerns taxpayers resident in the 
same Member State and affects them dis­
tinctly according to the company (established 
or not established) with whom they have 
elected to take out an insurance policy. 
Furthermore, the principle of fiscal territori­
ality, which the Court has recognised in 
respect of the rules on free movement of per­
sons and freedom of establishment, cannot 
be transposed sic et simpliciter to freedom of 
services. The very provisions of the Treaty 
which enshrine that freedom require that a 
provider of services conducting his business 
in a Member State other than that in which 
he is established at the very least be given 
equivalent treatment with a provider estab­
lished in that same State. It follows that 
acceptance of a principle which allowed dif­
ferent tax treatment of recipients of services 
according to the place of establishment of 
the provider of the services would not only 
be contrary to the very concept of freedom 
24 — Case 205/84 Commission v Germany [1986] ECR 3755, 'the 
Insurance case', i t paragraph 25; Case C-180/89 Commis­
sion v Italy [1991] ECR I-709, at paragraph 15. 
25 — See the judgments in Schumacker, Wielockx and Asscher 
(cited in footnote 20), at paragraphs 21, 16 and 36 respec­
tively. 
26 — Futura (cited in footnote 20), at paragraph 19. 
27 — Wielockx (cited in footnote 20), at paragraph 18; in the same 
sense, see the judgments in Schumacker and Asscher (cited 
in footnote 20), at paragraph 31 et seq. and paragraph 41 
respectively. In those judgments, the Court did not consider 
the cases of different treatment submitted to it to be objec­
tively justified. 
I - 1 9 1 0 
SAFIR t SKATTEMYNDIGHETEN I DALARNAS LÄN 
to provide services but would, all things con­
sidered, totally undermine it. 28 
Lastly, I would recall that in Bachmann, 
where the facts were in many ways simlar to 
the present case, the Court stated that 'provi­
sions requiring an insurer to be established 
in a Member State as a condition of the eli­
gibility of insured persons to benefit from 
certain tax deductions in that State operate to 
deter those seeking insurance from 
approaching insurers established in another 
Member State, and thus constitute a restric­
tion of the latter's freedom to provide ser­
vices'. 29 
26. All things considered, the legislation at 
issue is certainly capable of restricting the 
freedom to provide services and, conse­
quently, is in principle contrary to Article 59 
of the Treaty. It need hardly be stressed that 
this conclusion cannot be challenged on the 
grounds that the same legislation makes it 
possible for policyholders insured with non-
established companies to obtain an exemp­
tion from, or reduction of, premium tax. 
This possibility is only contingent and in any 
case requires not only the policyholder to 
take the initiative but also a review to be car­
ried out by the competent national tax auth­
ority of the taxation arrangements applicable 
in the State of establishment of the insurer. 
The grounds relied on to justify the measure 
at issue 
27. At this juncture, it remains only to 
examine whether, in view of its characteris­
tics and rationale, the legislation is none the 
less capable of being justified. Both the 
Swedish and United Kingdom Governments 
submit that there is here a general interest, 
specifically the need to ensure national fiscal 
cohesion and effective fiscal supervision. 
28. I would point out first of all that, 
according to the Court's case-law, a national 
provision which is discriminatory can be jus­
tified, and therefore be declared compatible 
with Community law, only if it is covered by 
one of the derogations expressly laid down 
in the Treaty. In Bond van Adverteerders, 
subsequently confirmed in other cases, the 
Court made clear that 'national rules which 
are not applicable to services without dis­
tinction as regards their origin and which are 
therefore discriminatory are compatible with 
28 — In this regard, I would recall this well-known statement of 
the Court: 'If the requirement of an authorisation consti­
tutes a restriction on the freedom to provide services, the 
requirement of a permanent establishment is the very nega­
tion of that freedom' (the 'Insurance' case, cited in footnote 
24, at paragraph 52; the italics are mine). Although the leg­
islation at issue does not formally subject services provided 
by foreign insurers to the requirement of establishment, it 
does, however, as we have seen, entail similar effects in so 
far as it subjects to this requirement the grant of significant 
tax advantages to policyholders. 
29 — Bachmann (cited in footnote 9 ) at paragraph 31. 
I -1911 
OPINION OF MR TESAURO — CASE C-118/96 
Community law only if they can be brought 
within the scope of an express derogation'. 30 
In this connection, it is appropriate to men­
tion the derogation provided for by Article 
56 of the Treaty, to which Article 66 refers, 
pursuant to which Member States may apply 
special tax rules to foreign nationals pro­
vided that these are justified in the interest of 
public policy, public security or public 
health. I might add that this provision, pre­
cisely because it is a derogation, must be 
interpreted strictly, so that it certainly does 
not cover the economic objectives of a 
restrictive measure. 31 
29. I would also point out that national pro­
visions restricting freedom to provide ser­
vices may also be justified where they safe­
guard needs of public interest, provided, 
however, that certain well-defined conditions 
are met. It is settled case-law that freedom to 
provide services, one of the fundamental 
freedoms enshrined in the Treaty, may only 
be restricted by provisions which comply 
cumulatively with certain specific conditions: 
they must be justified by the general interest 
and apply (without distinction) to all persons 
or undertakings operating within the ter­
ritory of the State in which the service is 
provided; they must be objectively necessary 
to achieve the aims pursued and be propor­
tionate thereto; and, finally, the protected 
interest must not be safeguarded by provi­
sions to which the provider of services is 
subject in his State of establishment. 32 
In recognising that national provisions which 
apply without distinction are incompatible 
with Community law when they are restric­
tive and not justified by public interest, the 
Court was in substance following, in the 
matter of freedom to provide services, the 
same approach as that which it used in rela­
tion to goods from the time of the well-
known 'Cassis de Dijon' judgment. 33 
30. Given the foregoing, it must now be 
established, in order to decide which justifi­
cations are admissible, whether the measure 
at issue is to be treated as formally discrimi­
natory or, on the contrary, as applicable 
30 — Case 352/85 Bond van Adverteerders and Others v Nether­
lands State [1988] ECR 2085, at paragraph 32; also Case 
C-288/89 Stichting Colletieve Antennevoorziening Gouda 
and Others v Commissariaat voor de Media [1991] ECR 
I-4007, at paragraph 11, and Case C-353/89 Commission v 
Netherlands [1991] ECR I-4069, at paragraph 15; Case 
C-17/92 Federación de Distribuidores Cinematograficos 
('Federine') v Estado Español et Unión de Productores de 
Cine y Televisión [1993] ECR I-2239, at paragraph 16; and, 
finally, Svensson (cited in footnote 13), at paragraph 15. 
31 — See, for example, Bond van Adverteerders, at paragraph 34, 
and Federine, at paragraphs 16 and 21. 
32 — See the 'Insurance' case (cited in footnote 24) at paragraph 
27, and also, lastly, Parodi (cited in footnote 5) at paragraph 
21. 
33 — This approach was explicitly recognised in particular in 
Gouda and in Commission v Netherlands (cited in footnote 
30), as well as in Case C-76/90 Säger v Dennemeyer & Co. 
[1991] ECR I-4221, in which the Court, adopting for free­
dom of services the same terminology as applied to free 
movement of goods, defined as 'imperative reasons relating 
to the public interest' those which it had until then classi­
fied as reasons of general interest and reiterated the needs 
worthy of protection. Considering, however, that right 
from its first judgments in the matter (see, for example, the 
judgment in Case 33/74 Van Binshergen v Bestuur van de 
Bedrijfsvereniging voor de Metaalnijverheid [1974] ECR 
1299) the Court had considered measures restricting the 
freedom to provide services as being justified by the general 
interest, it is quite clear that the judgments in Gouda, Säger 
and Commission v Netherlands, far from innovating, merely 
make explicit the approach adopted and provide a fuller 
systematic and theoretical reconstruction of it. 
I - 1912 
SAFIR v SKATTEMYNDIGHETEN I DALARNAS LÄN 
without distinction. I might add that this 
question is not as banal as it may seem, given 
that such a classification is not always easy 
to make in relation to freedom to provide 
services, or rather, that it is difficult to arrive 
at a clear and unequivocal definition of dis­
criminatory measures from the relevant case-
law. 
It is unquestionable that a national provision 
which provides for different treatment on the 
basis of nationality is formally discrimina­
tory. 34 However, the classification of the 
same measure is less evident where the dif­
ference in treatment is based on the residence 
or on the establishment of the provider of a 
service. While it is true that the Court has 
effectively found national provisions apply­
ing different tax treatment according to place 
of establishment to be discriminatory and 
consequently justifiable only under the dero­
gation provided for by Article 56, 35 the 
Court has also found national provisions 
subjecting the exercise of activities to the 
requirement of residence 36 or of establish­
ment, 37 to be justified in the general interest, 
or has at least examined such provisions in 
the light of the objectives pursued. This not­
withstanding the fact that this requirement, 
as the Court has pointed out on several occa­
sions, makes it absolutely impossible to exer­
cise the activity in question on an (only) 
occasional basis and therefore has the effect 
of denying providers established in other 
Member States of the benefit of Community 
rules on freedom to provide services. 38 
31. All things considered, however, the case-
law just cited has its own logic in that it clas­
sifies as applicable without distinction (also) 
those national measures which, while sub­
jecting the exercise of a given activity to the 
requirement of residence or establishment, 
none the less apply to all persons intending 
to exercise that activity on the territory of 
that Member State. In other words, the 
Court considers as formally discriminatory 
only those national provisions which lay 
down a different regime for foreign nationals 
and/or providers of services Originating' in 
another Member State. However, where the 
legislation in question is intended to apply to 
34 — See, to this effect, in this sense Case C-20/92 Hubbard (Tes-
tamentvollstrecker) v Hamburger [1993] ECR I-3777, at 
paragraphs 14 and 15; and Case C-45/93 Commission v 
Spain [1994] ECR I-911, at paragraphs 9 and 10. 
35 — See, inter alia, Bond van Adverteerders (cited in footnote 
30), at paragraphs 26 and 29; Case C-211/91 Commission v 
Belgium [1992] ECR I-6757, at paragraphs 9, 10 and 11; 
and Fedecine (cited in footnote 30), at paragraph 14. 
36 — See, for example, Van Binsbergen (cited in footnote 33) at 
paragraph 14; and Case 39/75 Coenen and Others v Sociaal-
Economische Raad [1975] ECR 1547, at paragraphs 7 and 8 
and at paragraphs 9 and 10. 
37 — See, in particular, the 'Insurance' case (cited in footnote 24), 
at paragraphs 52 to 57, as well as Case C-101/94 Commis­
sion v Italy [1996] ECR I-2691, at paragraph 31. I would 
add that in both cases the Court reached the conclusion 
that the requirement of establishment was not indispensable 
for attaining the objective pursued. 
38 — In this sense, see, inter alia, Parodi (cited in footnote 5), in 
which the Court again underscored that the requirement of 
establishment 'has the result of depriving Article 59 of the 
Treaty of all effectiveness, a provision whose very purpose 
is to abolish restrictions on the freedom to provide services 
of persons who are not established in the State in which the 
service is to be provided'. The Court none the less added 
that 'If such a requirement is to be accepted, it must be 
shown that it constitutes a condition which is indispensable 
for attaining the objective pursued' (paragraph 31). 
I -1913 
OPINION OF MR TESAURO — CASE C-118/96 
all persons exercising the activity concerned 
on the territory of a given Member State, 
even where it expressly lays down a resi­
dence or establishment condition (thereby 
making it impossible for providers estab­
lished in another Member State to exercise 
the activity), it is classified as applicable 
without distinction. 
The obvious consequence is that legislation 
which treats providers established in another 
Member State differently than those estab­
lished domestically can only be justified 
under the derogations provided for by the 
Treaty, whereas legislation directly denying 
providers established in another Member 
State access to a given activity, precisely 
because it requires them to be resident or 
established in the State in which the service 
is to be provided, may be justified by 
imperative reasons relating to the public 
interest. This result is, I admit, unsatisfac­
tory, just as its underlying reasoning may be 
considered perverse; the fact remains, how­
ever, that a measure requiring establishment 
in the matter of services is, formally of 
course, applicable without distinction. 
32. N o w let us look at the measure at issue 
here. Clearly, it does not, at least not directly, 
apply a different system for insurance com­
panies which are not established in Sweden. 
The difference in treatment applies in fact, at 
least formally, to the policyholders who are 
all resident in Sweden. However, considering 
that the difference in tax treatment depends 
on the choice of insurer (established or not), 
it is only too clear that this measure entails a 
disparity of treatment based on the place of 
establishment of the provider. 
In the circumstances, how one determines 
whether it falls into the 'formally discrimina­
tory' category or into the 'applicable without 
distinction' category depends on where one 
puts the emphasis: on the fact that it is not 
directly discriminatory on grounds of estab­
lishment or on the fact that, all things con­
sidered, it is a measure laying down a differ­
ent regime depending on whether or not 
insurance companies are established in Swe­
den. I would add that the most relevant case-
law, that involving similarly structured pro­
visions, is of no help here, on the contrary. 
33. This is firstly true of the judgment in 
Bachmann, a case which involved national 
rules making the deductibility of certain 
insurance contributions conditional on their 
being paid in the same State. The Court in 
fact considered that the rules be justified by 
the need to ensure national fiscal cohesion, 
thereby recognising it to be by nature appli­
cable without distinction. It is worth stress­
ing that, to this end, the Court simply 
recalled that 'the requirement of an establish­
ment is compatible with Article 59 of the 
Treaty where it constitutes a condition which 
is indispensable to the achievement of the 
I - 1914 
SAFIR v SKATTEMYNDIGHETEN I DALARNAS LÄN 
public-interest objective pursued'. 39 In view 
of that finding it could be concluded that, if 
public interest can justify even the prohibi­
tion — imposed by an establishment require­
ment — on the exercise of certain activities 
in the territory of a given State, then provi­
sions entailing certain disadvantages or not 
allowing certain advantages to persons 
choosing to deal with providers not estab­
lished in the State concerned should a for­
tiori be capable of justification. 
Although the Court would appear to have 
duly distanced itself from the Bachmann rul­
ing in its subsequent judgment in the Svens­
son case, which involved similar provisions, 
the latter judgment created a number of 
uncertainties precisely on the point at issue 
here. In fact, in response to the contention of 
the Luxembourg Government that the provi­
sion of national law concerned was necessary 
to ensure fiscal cohesion, the Court pointed 
out that 'the rule in question entails discrimi­
nation based on the place of establishment' 
and consequently 'can only be justified on 
the general interest grounds referred to in 
Article 56(1) of the Treaty, to which Article 
66 refers, and which do not include econ­
omic aims'. 40 However, the Court, not with­
out evident contradiction, none the less went 
on to address the merits of the Luxembourg 
Government's arguments and concluded 
that, conversely to its finding in Bachmann, 
the legislation at issue could not be consid­
ered necessary for safeguarding fiscal co­
hesion. 41 
34. It seems to me that a particular piece of 
legislation can be capable of justification 
either under the derogations expressly pro­
vided for in the Treaty or on grounds relat­
ing to the public interest, 42 depending on 
whether it is discriminatory or applicable 
without distinction. After all, even granted 
that it is not always easy to classify a given 
rule of national law — either because its dis­
criminatory effects (in fact) are all too clear 
or because the specific nature of a given ser­
vice demands greater caution — it stands to 
reason that there cannot and should not be a 
third category of measure (applicable with­
out distinction and formally discriminatory 
or applicable with distinction but not dis­
criminatory). This case gives the Court an 
opportunity to clarify the issue by expressly 
declaring whether the national legislation at 
issue is to be held to be discriminatory — 
and thus capable of justification only on the 
basis of the derogations laid down in the 
Treaty itself — or whether, being applicable 
without distinction, it is capable of justifica­
tion also on grounds of overriding reasons 
relating to the public interest. 
39 — Bachmann (cited in footnote 9), at paragraph 32. 
40 — Svensson (cited in footnote 13), at paragraph 15. 
41 — As above, at paragraphs 16 to 18. 
42 — It should, however, be noted here that it is not the first time 
that the Court has taken into consideration, with the aim of 
assessing the compatibility with Community law of a 
national provision restricting freedom to provide services, 
both the requirements specified in Article 56 and overriding 
reasons relating to the public interest (see, to this effect, 
paragraphs 31 and 32 of the judgment in Commission v 
Italy, cited in footnote 37). 
I - 1915 
OPINION OF MR TESAURO — CASE C-118/96 
More precisely, I consider that the Court 
should, in the present case, either find that 
provisions which indirectly introduce differ­
ences in treatment between providers of ser­
vices according to whether or not they are 
established in the Member State concerned 
are to be classified as formally discrimina­
tory, as Svensson would appear to suggest, or 
it should affirm that provisions which do not 
formally apply different rules to established 
and non-established providers remain mea­
sures that are applicable without distinction, 
as Bachmann would appear to suggest. 
35. Applying the first approach to the 
present case, it is sufficient to note here that 
the national legislation at issue does not fall 
within any of the derogations provided for 
in Article 56 of the Treaty, to which Article 
66 refers. Moreover, it cannot be disputed 
that fiscal cohesion and effective fiscal super­
vision, the grounds invoked by the Swedish 
Government, pursue an objective that is 
essentially economic, so that the measure in 
question can in no case be justified, and can­
not therefore be declared compatible with 
Community law, on those grounds. 
36. I do not believe that the conclusion 
would be any different if the Court were to 
decide, adopting the second approach, to 
classify the measure at issue as applicable 
without distinction. While it is not contested 
that the grounds submitted in justification 
are recognised by the relevant case-law 43 as 
warranting protection, the fact remains that 
the provision at issue is far from being neces­
sary in order to attain the objectives pursued 
and does not withstand the test of propor­
tionality. 
Firstly, the purported need to ensure effec­
tive fiscal supervision obviously does not 
apply in this instance. Considering the char­
acteristics and the rationale of the legislation 
at issue, as these were explained by the 
Swedish Government itself, it must be recog­
nised that the legislation bears no significant 
causal nexus to the objective pursued. 
37. Nor do I believe that the national legisla­
tion at issue can be justified by the need to 
ensure national fiscal cohesion: reference to 
the Bachmann case is certainly not sufficient 
for this purpose. It is quite true in fact that 
43 — It should be noted that the Court recognised both effective 
fiscal supervision, in particular in Futura (cited in footnote 
20) and the safeguarding of fiscal cohesion, in particular in 
Bachmann (cited in footnote 9), as being needs in the public 
interest. In this respect, see also my observations in the 
Opinion delivered on 16 September 1997 in Cases C-120/95 
(Decker) and C-158/96 (Kohll), in particular under para­
graph 53. 
I -1916 
SAFIR y SKATTEMYNDIGHETEN I DALARNAS LÄN 
in that case the Court considered that fiscal 
cohesion would have been seriously jeopar­
dised if the Belgian State had been obliged to 
grant the same tax advantages to policyhold­
ers insured with companies established 
abroad, given the difficulty of taxing income 
paid from outside the country. It is also true, 
however, that the Court reached this conclu­
sion only after having pointed out that the 
objective of the national rules concerned was 
to create a mechanism of direct compensa­
tion between the deductibility of the contri­
butions in question and the tax charge 
imposed on the yield subsequently received 
by the beneficiary. 
Without going into the substance of this 
analysis, it is sufficient to note that the cir­
cumstances of the present case are quite dif­
ferent. Here in fact the discriminatory treat­
ment lies in the modes of taxation, in that 
policyholders insured with companies estab­
lished abroad are taxed on their premium 
payments, whereas policies issued by com­
panies established in Sweden are taxed partly 
on the savings capital with the insurer and 
partly on the yield paid to policyholders. 
This is done with the express aim, as the 
referring court explains, 'of maintaining 
competitive neutrality between domestic and 
foreign savings policies'. However, the pro­
ceeds of the premium tax do not appear to 
be applied in a manner which is relevant in 
the sense of the Bachmann ruling; nor do 
they seem to be used to offset advantages 
otherwise obtained. Consequently, it would, 
to say the least, be inappropriate to apply 
that precedent to the present case. 
38. In any case, the Swedish provision cer­
tainly does not seem to be proportionate to 
the aim it expressly seeks to attain. Competi­
tive neutrality between established and non-
established companies could surely be main­
tained by means less restrictive of the 
freedom to provide services while still 
respecting the principle of fiscal territoriality. 
One possibility, for example, could be to 
extend the premium tax regime to policy­
holders contracting with insurance com­
panies established in Sweden; it would also 
be conceivable for the yield which policyhold­
ers receive to be taxed as domestically-
earned income, without making any distinc­
tion between policyholders. 
Lastly, it is worth emphasising that, subse­
quently to the facts under examination, the 
law in dispute was substantially amended. 
According to the applicant, this amendment 
has introduced an undifferentiated system 
for the taxation of insurance policy yields 
received by policyholders; it thus applies 
irrespective of the place of establishment of 
the insurance company. This fact, which can 
be interpreted in only one way, is significant 
to say the least. 
I - 1917 
OPINION OF MR TESAURO — CASE C-118/96 
Conclusion 
39. In the light of the foregoing, I propose that the Court answer the question 
referred to it by the Länsrätt i Kopparbergs Län as follows: 
Article 59 of the Treaty is to be interpreted as precluding legislation of a Member 
State which taxes premiums paid by resident policyholders under life assurance 
policies contracted with an insurer established in another Member State, even where 
that tax can be reduced to zero or by half if the insurance company established 
abroad is subject, in its home State, to revenue tax which is comparable to that 
charged on savings policies issued by domestic insurance companies. 
I - 1 9 1 8