WRITTEN QUESTION E-2997/03 by Bill Newton Dunn (ELDR) to the Commission. Double taxation in Finland and UK.
Date: 2003-10-14
Institutions: European Parliament, Provisional data
Subjects: Finland, United Kingdom, double taxation, local tax, pension scheme, tax convention

8.4.2004

EN

Official Journal of the European Union

C 88 E/445

Apart from the relevant Czechoslovak primary legal texts, European and international law, the main
1.
sources used were the relevant rulings by Czech courts, in particular the Constitutional Court and the
Supreme Court, as well as various other information papers submitted by Czech officials. All these sources
have been listed in annexes 1 to 3 of the document of 14 October 2002 referred to above. In addition, the
Commission consulted a variety of legal opinions, of its own Legal Service as well as from independent
experts.

The main considerations are set out

2.
in the above-mentioned document of 14 October 2002.
Essentially, the question to be answered in the document was whether the decrees posed an obstacle to the
Czech Republic’s accession to the Union in the light of the ‘acquis communautaire’. The conclusion of the
Commission’s investigation is that this is not the case.

3. and 4.
The Commission took note of various legal positions from all sides of the argument. Among
the legal opinions available, conclusions and recommendations regarding the decrees vary considerably.
While the Commission, in determining its own assessment, carefully took into account positions that are
critical of the decrees, it considered it equally essential to conduct a thorough fact-finding investigation
based on the actual legal situation and practice in the Czech Republic.

(2004/C 88 E/0453)

WRITTEN QUESTION E-2997/03

by Bill Newton Dunn (ELDR) to the Commission

(14 October 2003)

Subject: Double taxation in Finland and UK

I have two constituents who are Finnish born, who are now living in the UK. The husband’s pension
comes from Finland. But the Helsinki Tax Office is deducting 17 % ‘council tax’ from the pension before it
is paid to him. The deduction is, apparently, to pay for the Helsinki fire service, street lighting, libraries,
subsidised evening classes, etcetera.

As my constituents now live in the UK and are not able to use any of these services in Helsinki, is it
correct that the 17 % deduction can be made from his pension?

Answer given by Mr Bolkestein on behalf of the Commission

(12 November 2003)

In general, Member States are free to decide on the distribution of taxing rights between themselves. As the
Court of Justice stated in Gilly (Case C-336/96, paragraph 24) the Member States are competent to
determine the criteria for taxation on income with a view to eliminating double taxation by means of
bilateral tax treaties.

The application of the bilateral tax treaty between Finland and the United Kingdom is in principle a matter
for the Member States concerned. That tax treaty gives Finland the exclusive right to tax pensions paid
from Finland under the Finnish social security legislation. It also gives Finland the exclusive right to tax
pensions paid by the Finnish State for services rendered to Finland, if the pension is paid to Finnish
nationals. The tax treaty expressly covers the Finnish ‘communal’ tax. Private pensions paid from Finland
to the United Kingdom are exclusively taxable in the United Kingdom. Therefore, the correctness of the
application of the tax treaty depends on the character of the pension of the Honourable Member’s
constituent.