Opinion of the Advocate General — ECLI:EU:C:2024:265
Date: 2024-03-21
Language of the case: Swedish
Subject matter: Free movement of capital
Procedure: Reference for a preliminary ruling
Origin: Sweden

Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
26 January 2023 
Referring court:  
Högsta förvaltningsdomstolen (Sweden) 
Date of the decision to refer:  
24 January 2023 
Applicants:  
KEVA 
Landskapet Ålands pensionsfond 
Kyrkans Centralfond 
Respondent:  
Skatteverket 
      
Subject of the action in the main proceedings 
Right to refund of Swedish withholding tax levied on the dividends of Swedish 
companies paid to pension institutions established in Finland. 
Subject and legal basis of the reference for a preliminary ruling 
Interpretation of the free movement of capital under Article 63 TFEU and of the 
case-law of the Court of Justice to clarify whether it is compatible with the free 
movement of capital to impose withholding tax on dividends paid to Finnish 
pension institutions. Article 267 TFEU. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING CASE C-39/23 
 
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Questions referred for a preliminary ruling 
Question 1: Does the fact that dividends paid by domestic companies to foreign 
public pension institutions are subject to withholding tax, whereas the 
corresponding dividends are not taxed if they accrue to the own State through its 
general pension funds, constitute such negative differential treatment that it entails 
a restriction of the free movement of capital prohibited, in principle, by Article 63 
TFEU? 
Question 2: If Question 1 is answered in the affirmative, what are the criteria that 
should be taken into account when assessing whether a foreign public pension 
institution is in a situation which is objectively comparable to that of the own 
State and its general pension funds? 
Question 3: Can a possible restriction be regarded as being justified by overriding 
reasons of public interest? 
Provisions of EU law and case-law of the Court of Justice relied on 
Articles 63-66 TFEU 
Judgment in Case C-252/14, Pensioenfonds Metaal en Techniek, EU:C:2016:402, 
paragraphs 44, 47, 48 and 63. 
Relevant provisions of national law 
Kupongskattelagen (Law on withholding tax) (1970:624): Articles 1, 4, 5 and 27  
Inkomstskattelagen (Law on income tax) (1999:1229): Chapter 6, Articles 3, 4, 7 
and 9, first paragraph; Chapter 7, Article 2, first paragraph; Chapter 2, Article 2, 
first paragraph 
Lagen om dubbelbeskattningsavtal mellan de nordiska länderna (Law on the 
double taxation treaty between the Nordic countries) (1996:1512) (‘the Nordic tax 
treaty’: Articles 10(3) and 25) 
Succinct presentation of the facts and procedure in the main proceedings 
1 Occupational pension insurance is on a statutory footing and compulsory in 
Finland. The Finnish occupational pension system is based on the employer 
paying contributions on behalf of the employee to a pension institution. The 
disputes in the main proceedings concern three pension institutions within that 
pension system: KEVA, Landskapet Ålands pensionsfond (the pension fund of the 
region of Åland) and Kyrkans Centralfond (the central fund of the Church), all of 
which manage or have managed funds under the statutory occupational pension 
insurance scheme. 
KEVA AND OTHERS 
 
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2 KEVA is responsible for occupational pensions for employees in the municipal 
sector and also performs certain administrative tasks, including paying out 
pensions and collecting pension contributions. KEVA is a legal person governed 
by public law. 
3 Landskapet Ålands pensionsfond is responsible for occupational pensions for 
employees of the region of Åland, but does not handle payouts. It is not a separate 
legal entity but is part of the region of Åland. The fund’s assets are kept separate 
from the region’s budget. 
4 Kyrkans Centralfond was, until 1 January 2016, a pension institution for 
employees of the Evangelical Lutheran Church in Finland. The fund has also 
managed the Church’s capital for other purposes, such as providing financial 
support to church congregations. The fund is not a separate legal entity but is part 
of the Evangelical Lutheran Church. 
5 As far as taxation is concerned, KEVA is exempt from tax in Finland. Kyrkans 
Centralfond is, in practice, exempt from income tax in Finland. Landskapet 
Ålands Pensionsfond is partially exempt from tax in Finland and is not liable to 
tax on dividends from limited companies. 
6 The main task of the Swedish allmänna pensionsfonderna (general pension funds; 
‘the GP funds’) is to manage capital belonging to the income-based old-age 
pension that is part of the Swedish general old-age pension scheme. This in turn is 
part of the public and compulsory social security system. In their capacity as State 
authorities, the GP funds are part of the State. They are therefore covered by the 
State’s tax exemption. 
7 Between 2003 and 2016, the three Finnish pension institutions received dividends 
from Swedish companies. The dividends were subject to Swedish withholding tax. 
Since the dividends were not taxed in the hands of the pension institutions in 
Finland, the Swedish withholding tax could not be deducted in accordance with 
the Nordic tax treaty. 
8 The pension institutions applied to the Skatteverket (Swedish Tax Agency) for a 
refund of the Swedish withholding tax plus interest. In support of their 
applications, the pension institutions argued that the levying of withholding tax is 
contrary to the free movement of capital under the FEU Treaty because they are 
comparable to the GP funds, which are exempt from income tax. 
9 The Swedish Tax Agency dismissed the applications on the grounds that the 
situation of these pension institutions is not objectively comparable to that of the 
Swedish GP funds. The pension institutions appealed against the decision before 
the Förvaltningsrätten i Falun (Administrative Court, Falun). They then appealed 
that court’s ruling to the Kammarrätten i Sundsvall (Administrative Court of 
Appeal, Sundsvall) and finally the latter court’s judgment to the Högsta 
förvaltningsdomstolen (Supreme Administrative Court). 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING CASE C-39/23 
 
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Main arguments of the parties 
10 The pension institutions argue that the Swedish levying of withholding tax on 
dividends from Sweden to Finnish public law pension institutions is contrary to 
the free movement of capital under Article 63 TFEU. Finnish public law pension 
institutions should be compared with the Swedish GP funds. Since the Finnish 
pension institutions are exempt from Finnish income tax, they cannot deduct the 
Swedish withholding tax in Finland. Finnish public law pension institutions are 
thus placed at a disadvantage compared to the Swedish GP funds, which entails a 
restriction of the free movement of capital under the FEU Treaty. That restriction 
cannot be justified. 
11 The Finnish public pension institutions are of the view that they should be placed 
on an equal footing with the Swedish GP funds. The Swedish and Finnish pension 
systems have the same type of legal constitution and structure, are financed in the 
same way and have the same social function and purpose. Moreover, the 
institutions of the pension systems function in almost exactly the same way. In the 
same way as the Swedish GP funds are part of the Swedish State, Landskapet 
Ålands pensionsfond and Kyrkans Centralfond are part of the region of Åland and 
the Evangelical Lutheran Church, respectively. KEVA has its own legal 
personality, but that does not preclude it from being treated in the same way as the 
GP funds, since comparability must be considered as a whole, that is to say, based 
on the function and purpose of the institutions and the activities they carry out. 
12 The Swedish Tax Agency argues that the Finnish pension institutions and the 
Swedish GP funds are not in objectively comparable situations. The GP funds are 
not independent legal persons, each authority being an emanation of the State as a 
legal person. State authorities are therefore not independent legal entities, but are 
merely part of the legal entity of the State. Even if the Finnish pension institutions 
and the GP funds were to be regarded as carrying on their activities under similar 
conditions in terms of organisation, function and purpose, they cannot be regarded 
as being in objectively comparable situations with regard to the activities of the 
State and the purpose of the State tax exemption. 
13 The rationale for the State’s tax exemption lies in the fact that taxation does not 
bring any funds to the public purse but requires extensive administration. The 
purpose of the tax exemption is thus entirely different from avoiding or alleviating 
economic double taxation. 
Brief summary of the reasons for the reference for a preliminary ruling 
14 The Commission initiated infringement proceedings against Sweden and, in a 
reasoned opinion of 2 December 2021, argued that it is contrary to Article 63 
TFEU that dividends paid to the GP funds are not taxed in Sweden while 
withholding tax is levied on dividends paid to comparable public pension 
institutions established in other Member States. 
KEVA AND OTHERS 
 
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15 The Court of Justice ruled in Case C-252/14 that a difference in treatment of 
dividends paid to resident and non-resident pension funds resulting in the latter 
being taxed more heavily constitutes a restriction of the free movement of capital 
prohibited, in principle, by Article 63 TFEU. In that case, the Court of Justice 
found that the situation of foreign pension funds was not comparable to that of 
national pension funds.  
16 In that instance, however, the subjects concerned were private-law entities, and, 
since the present cases involve public-law entities, the judgment in Case C-252/14 
does not provide any direct guidance. 
17 Nor is there any other Court of Justice ruling that clarifies whether Article 63 
TFEU precludes dividends paid by a national company to a foreign public pension 
institution from being subject to withholding tax when the corresponding 
dividends are not taxed if they accrue to the own State through its general pension 
funds. 
18 The sub-questions that need to be examined are whether the application of the 
Swedish rules implies a negative differential treatment of the foreign pension 
institutions, if in that case those situations are objectively comparable, and, if so, 
whether the difference in treatment is justified by overriding reasons of public 
interest.  
19 There are various ways of looking at these questions, as is evidenced by the 
positions of the parties and by the correspondence between the Commission and 
the Swedish Government. On the question of whether there is negative differential 
treatment, the Swedish Government submits, for example, that the State’s choice 
not to tax itself is simply an instrument for avoiding a circularity of State 
resources for the financing of the Swedish social security system. It does not bring 
any real financial benefit to the State, since the same result could have been 
achieved by another instrument, for example through the allocation of State 
resources. According to the Swedish Government, a different approach would 
mean in practice that any taxation of other Member States could be challenged on 
the ground of the free movement of capital, which, in that government’s view, 
goes far beyond Article 63 TFEU. 
20 The Commission takes the view that, as regards the objective of reducing the need 
to allocate to the State authorities the taxes they would be required to pay if they 
were not exempt, institutions which are regulated in the same way and have the 
same mission in other Member States are in a situation which is objectively 
comparable to that of the AP funds.  
21 On the other hand, it can be argued, as the Swedish Government does, that there is 
no common obligation under EU law for the Member States to contribute to the 
financing of each other’s social security systems. There is no situation in which a 
foreign public pension institution could de facto have the same task as the AP 
funds in the Swedish social security system. Consequently, a foreign public 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING CASE C-39/23 
 
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pension institution can never be in a situation which is objectively comparable to 
that of the Swedish State and its AP funds. 
22 Furthermore, if the Swedish Government’s approach is not accepted, the question 
arises as to what would then be required for the situations to be comparable. The 
Commission points out, in that regard, that public pension institutions from other 
Member States are treated less favourably regardless of their activities and 
objectives or how they are regulated, organised and financed. This can be 
understood as meaning that, in the Commission’s view, it is factors of this kind 
that should be taken into account when assessing whether the situations are 
comparable. The Högsta förvaltningsdomstolen (Supreme Administrative Court) 
seeks guidance as to whether it is those criteria – and/or other criteria – that 
should be decisive in such an assessment. 
23 The question is also whether the comparison should be made with the Swedish 
State as such or only with the AP funds themselves. For example, is it relevant to 
the evaluation in the individual case that the Finnish pension institutions also 
perform certain other tasks than the Swedish AP funds? The AP funds are not in 
charge of collecting pension contributions or paying out pensions, but have the 
sole task of administering funds under the insurance scheme for income-based 
old-age pensions. These other tasks, however, are performed by other authorities 
within the Swedish State, which also benefit from the tax exemption of the latter. 
24 As regards the question of whether a possible difference in treatment is justified 
by overriding reasons of public interest, it should be noted, as the Commission has 
done, that the Court of Justice has consistently rejected the possibility that a loss 
of income or administrative difficulties constitute valid reasons for a restriction on 
the freedom of movement. The Swedish Government, for its part, considers that 
the difference in treatment is justified by the need to safeguard the Swedish social 
policy objective and its financing.