Case C‑296/12

European Commission

v

Kingdom of Belgium

‛Failure of a Member State to fulfil obligations — Freedom to provide services — Free movement of capital — Income tax — Contributions paid to a savings pension — Tax reduction solely in respect of payments to institutions or funds established in that Member State — Coherence of the tax system — Efficacy of fiscal supervision’

Summary — Judgment of the Court (Tenth Chamber), 23 January 2014

Freedom to provide services — Restrictions — Tax legislation — Income tax — National legislation reserving a tax reduction in respect of contributions paid to a savings pension solely to payments to institutions or funds established in that Member State — Not permissible — Justification — None

(Art. 56 TFEU)

A Member State fails to fulfil its obligations under Article 56 TFEU where it adopts and maintains a tax reduction in respect of contributions paid to a savings pension in so far as that reduction is applicable only in respect of payments to institutions and funds established in that Member State.

Such national legislation is liable to dissuade both the citizens of that Member State who are liable to tax from subscribing to an individual or collective savings account or taking out savings insurance with financial institutions established in another Member State and those institutions from offering their services on the market of the former Member State. Such national legislation therefore constitutes a restriction on the freedom to provide services.

However such legislation, capable of hindering the exercise of the freedom to provide services or of making it less attractive, may none the less be allowed if it pursues an objective in the public interest, is appropriate to ensuring the attainment of that objective, and does not go beyond what is necessary to attain the objective pursued.

The restriction on the freedom to provide services entailed by that legislation cannot be justified by the objective of guaranteeing the effectiveness of fiscal supervision. Further, the fact that a savings pension is acquired from a financial institution established in another Member State is not liable, as such, adversely to affect the coherence of the rules of the Member State concerned. There is nothing to prevent the latter Member State from exercising its power of taxation over the income derived from the savings pension paid by a financial institution established in another Member State to a person liable to tax who is still resident in that Member State when that income is paid, as a counterbalance to the payments of contributions in respect of which a tax reduction was granted.

(see paras 30-32, 39, 50, 52, operative part)

Case C‑296/12

European Commission

v

Kingdom of Belgium

‛Failure of a Member State to fulfil obligations — Freedom to provide services — Free movement of capital — Income tax — Contributions paid to a savings pension — Tax reduction solely in respect of payments to institutions or funds established in that Member State — Coherence of the tax system — Efficacy of fiscal supervision’

Summary — Judgment of the Court (Tenth Chamber), 23 January 2014

Freedom to provide services — Restrictions — Tax legislation — Income tax — National legislation reserving a tax reduction in respect of contributions paid to a savings pension solely to payments to institutions or funds established in that Member State — Not permissible — Justification — None

(Art. 56 TFEU)

A Member State fails to fulfil its obligations under Article 56 TFEU where it adopts and maintains a tax reduction in respect of contributions paid to a savings pension in so far as that reduction is applicable only in respect of payments to institutions and funds established in that Member State.

Such national legislation is liable to dissuade both the citizens of that Member State who are liable to tax from subscribing to an individual or collective savings account or taking out savings insurance with financial institutions established in another Member State and those institutions from offering their services on the market of the former Member State. Such national legislation therefore constitutes a restriction on the freedom to provide services.

However such legislation, capable of hindering the exercise of the freedom to provide services or of making it less attractive, may none the less be allowed if it pursues an objective in the public interest, is appropriate to ensuring the attainment of that objective, and does not go beyond what is necessary to attain the objective pursued.

The restriction on the freedom to provide services entailed by that legislation cannot be justified by the objective of guaranteeing the effectiveness of fiscal supervision. Further, the fact that a savings pension is acquired from a financial institution established in another Member State is not liable, as such, adversely to affect the coherence of the rules of the Member State concerned. There is nothing to prevent the latter Member State from exercising its power of taxation over the income derived from the savings pension paid by a financial institution established in another Member State to a person liable to tax who is still resident in that Member State when that income is paid, as a counterbalance to the payments of contributions in respect of which a tax reduction was granted.

(see paras 30-32, 39, 50, 52, operative part)