Case C-150/04: Action brought on 23 March 2004 by the Commission of the European Communities against the Kingdom of Denmark
Date: 2004-07-24
Institutions: Court of Justice
Subjects: Denmark, EU law - national law, action for failure to fulfil an obligation, life assurance, pension scheme, tax convention, tax law, tax relief, tax system

24.7.2004

EN

Official Journal of the European Union

C 190/3

ruling in the proceedings pending before that court between
Österreichischer Gewerkschaftsbund, Gewerkschaft der Priva-
tangestellten and Wirtschaftskammer Österreich - on the inter-
pretation of Article 141 EC and Article 1 of Council Directive
75/117/EEC of 10 February 1975 on the approximation of the
laws of the Member States relating to the application of the
principle of equal pay for men and women (OJ 1975 L 45,
p. 19) - the Court, composed of: V. Skouris, President, P. Jann,
C.W.A. Timmermans, A. Rosas, J.-P. Puissochet (Rapporteur)
and J.N. Cunha Rodrigues, Presidents of Chambers, R.
Schintgen, F. Macken, N. Colneric, S. von Bahr and R. Silva de
Lapuerta, Judges; J. Kokott, Advocate General; H. von Holstein,
Deputy Registrar, for the Registrar, has given a judgment on 8
June 2004, in which it has ruled:

S. Schreiner) - application for a declaration that, by failing to
adopt the laws, regulations and administrative provisions neces-
sary to comply with Council Directive 98/50/EC of 29 June
1998 amending Directive 77/187/EEC on the approximation of
the laws of the Member States relating to the safeguarding of
employees' rights in the event of transfers of undertakings,
businesses or parts of businesses (OJ 1998 L 201, p. 88) or, in
any event, by failing to inform the Commission thereof, the
Grand Duchy of Luxembourg has failed to fulfil its obligations
under that directive - the Court (Third Chamber), composed of:
A. Rosas, acting for the President of
the Third Chamber,
R. Schintgen and N. Colneric (Rapporteur), Judges; L.A. Geel-
hoed, Advocate General; R. Grass, Registrar, has given a judg-
ment on 10 June 2004, in which it:

1. The benefit, for persons performing military service or, as an alter-
native, compulsory civilian service which may be extended volunta-
rily, consisting in the taking into account, for calculation of a
termination payment they might subsequently be entitled to claim,
of the duration of that service is to be regarded as part of their
pay within the meaning of Article 141 EC.

2. Article 141 EC and Council Directive 75/117/EEC of 10
February 1975 on the approximation of the laws of the Member
States relating to the application of the principle of equal pay for
men and women do not preclude the calculation of a termination
payment from taking into account, as length of service, the dura-
tion of periods of military service or
the civilian equivalent
performed mainly by men but not of parental leave taken most
often by women.

(1) OJ C 202 of 24.8.2002.

the laws,

1. Declares that, by failing to adopt

regulations and
administrative provisions necessary to comply with Council Direc-
tive 98/50/EC of 29 June 1998 amending Directive
77/187/EEC on the approximation of the laws of the Member
States relating to the safeguarding of employees' rights in the event
of transfers of undertakings, businesses or parts of businesses, the
Grand Duchy of Luxembourg has failed to fulfil its obligations
under that directive;

2. Orders the Grand Duchy of Luxembourg to pay the costs.

(1) OJ C 213 of 6.9.2003.

JUDGMENT OF THE COURT

(Third Chamber)

of 10 June 2004

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

Denmark

(Case C-150/04)

(2004/C 190/06)

in Case C-333/03: Commission of the European Commu-
nities v Grand Duchy of Luxembourg (1)

(Failure of a Member State to fulfil obligations — Failure to
transpose Directive 98/50/EC — Transfer of undertakings —
Safeguarding of employees' rights)

An action against
the Kingdom of Denmark was brought
before the Court of Justice of the European Communities on
23 March 2004 by the Commission of the European Commu-
nities, represented by R. Lyal and S. Tams, acting as Agents,
with an address for service in Luxembourg.

(2004/C 190/05)

The applicant claims that the Court should:

(Language of the case: French)

(Provisional translation; the definitive translation will be published in
the European Court Reports)

In Case C-333/03: Commission of the European Communities
(Agent: M.-J. Jonczy ) v Grand Duchy of Luxembourg (Agent:

1) Declare that, by introducing and maintaining a system for
life insurance and pensions under which tax deductions and
tax exemptions for payments (sections 18 and 19 of the law
on pension tax) are granted only for payments under
contracts entered into with pension institutions established
in Denmark, whereas no such tax relief
is granted for
payments pursuant to contracts entered into with pension
institutions established in other Member States (sections
53A and 53B), the Kingdom of Denmark has failed to fulfil
its obligations under Articles 39, 43, 49 and 56 EC.

C 190/4

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Official Journal of the European Union

24.7.2004

2) Order the Kingdom of Denmark to pay the costs.

Facts and pleas in law:

The Danish legislation concerning inter alia deductions for
payments into life insurance and pension insurance schemes is
contrary to the provisions of the EC Treaty governing the
freedom to provide services, the free movement of workers,
freedom of establishment and the free movement of capital and
cannot be justified on ground of overriding public interest, as
established in the Court's case-law.

The need to ensure effective fiscal supervision, as relied on by
the Danish Government, cannot justify the Danish deduction
provisions, which place a restriction on the abovementioned
freedoms. The provisions are contrary to the principle of
proportionality, since effective fiscal supervision and prevention
of tax evasion can be ensured through measures which are less
restrictive than the Danish rules, such as a requirement that
taxpayers provide the necessary information as a precondition
for obtaining the tax deduction or a requirement of coopera-
tion with the tax authorities in other Member States in accord-
ance with Council Directive 77/799/EEC of 19 December 1977
concerning mutual assistance by the competent authorities of
the Member States in the field of direct taxation. (1)

F r e e do m t o p r ov i de se r v i c e s (A r ti c le 49 E C)

— Coherence of the tax system

The failure to allow deductions and exemptions for payments
to foreign pension insurance schemes leads to a situation
where policy-holders residing in Denmark are precluded from
setting up pension insurance schemes with pension institutions
established in Member States other than Denmark. Foreign
pension institutions are de facto precluded from offering their
services on the Danish market. The requirement of being estab-
lished in Denmark therefore constitutes a restriction on the
freedom to provide services from Member States other than
Denmark.

F r e e mov e me n t of w o r ke r s a n d fr e e do m of e st a bli sh -
me nt (A r ti c le s 39 a nd 43 E C)

and self-employed persons

The Danish rules which do not allow deductions for payments
into foreign pension insurance schemes affect principally
migrant workers
from other
Member States. Workers and self-employed persons who move
to Denmark and who have already set up pension insurance
schemes in other Member States have to join new pension
insurance schemes with pension institutions established in
Denmark in order to obtain the same tax advantages as
workers who have set up pension insurance schemes in
Denmark.

Fr e e move me nt of capi tal (A r t i cle 56 EC)

The requirement that the pension institution must be estab-
lished in Denmark in order for the insured to obtain the tax
relief precludes policy-holders from setting up pension insur-
ance schemes with pension institutions established in other
Member States. The Danish provisions thus lead to a situation
where restrictions are placed on the free movement of capital
in the form of payments into and out of pension insurance
schemes.

O v e r r i di ng p u bli c - i nte r e st g r ou nds

— Effective fiscal supervision

The Court's case-law recognises that coherence of
the tax
system requires that the Member State, in so far as it allows for
deductions for payments into pension insurance schemes made
in another Member State, must be able to tax the amounts paid
out from the pension insurance schemes.

There is to be coherence, however, in relation to the individual
taxpayer and a close connection between deductions
for
payments into the scheme and the taxation of payments out of
the scheme.

In the Commission's view, the symmetry in the tax treatment
of payments in and payments out for domestic and foreign
schemes is insufficient where in domestic schemes payments in
give rise to a tax deduction or exemption and payments out
are taxed, whereas for foreign schemes payments in do not
give rise to a deduction but neither are payments out taxed.

the tax owing on an amount equal

The tax advantage granted for pension insurance schemes set
up with domestic pension institutions consists primarily of a
deferment of
to the
payments made into the scheme. The tax deferment makes
domestic pension insurance schemes particularly attractive,
even though the payments out are taxed at a later time. The
presence of taxation ‘symmetry’ for foreign pension insurance
schemes does not compensate for that lost tax advantage.

Denmark must recognise that pension insurance schemes set
up in pension institutions established in other Member States
must be covered by the same tax advantages as domestic
pension insurance schemes. It is only in cases where Denmark
is not entitled to tax payments out from the pension insurance
scheme that it can be relevant to consider the aspect of coher-
ence of the tax system. Denmark can tax all payments out from
schemes to policy-holders residing in Denmark, regardless of
whether the scheme has been set up in Denmark or elsewhere.
Denmark only loses that right if the policy-holder moves his or
her place of residence to another country.

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Official Journal of the European Union

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The Commission also finds that the necessary coherence of the
Danish tax system has not been established, in that Denmark
has entered into double-taxation conventions with a number of
countries, which means that the coherence of the tax system is
not attained for individual taxpayers in terms of a close connec-
tion between deductions for payments in and taxation of
payments out of the scheme.

Double-taxation conventions which follow the OECD model
ensure that payments out of pension insurance schemes are not
taxed either in the country where the insured resides or in the
country where the pension institution is established. It follows
from those conventions that payments out of pension insur-
ance schemes can be taxed only in the country where the
pension beneficiary resides. Those agreements
imply that
Denmark has waived the right to tax payments from pension
institutions established in Denmark. This is true regardless of
whether or not
the payments into the pension insurance
scheme have given rise to tax deductions in Denmark. On the
other hand, Denmark may tax all pension payments to policy-
holders resident in Denmark, even though the payments into
the scheme were made in one of the countries which is party
to the convention.

Other double-taxation conventions contain provisions which
allow policy-holders to deduct payments into foreign pension
insurance schemes. People who move to Denmark from one of
those countries can thus maintain their pension insurance
schemes in their home country and deduct the payments into
the schemes from their taxable income in Denmark. The deduc-
tion provisions in those conventions show that the Danish
rules not allowing for tax deductions for payments into foreign
pension schemes are not consistent.

(1) OJ 1977 L 336, p. 15.

Reference for a preliminary ruling by the Bundesfinanzhof
(Germany) by order of that court of 18 March 2004 in the
case of Finanzamt Heidelberg (Heidelberg Tax Office)
against iSt Internationale Sprach- und Studententreisen
GmbH.

(Case C-200/04)

(2004/C 190/07)

Finance Court) of 18 March 2004, received at
the Court
Registry on 5 May 2004, for a preliminary ruling in the case of
Finanzamt Heidelberg (Heidelberg Tax Office) against iSt Inter-
nationale Sprach- und Studententreisen GmbH, on the
following question:

Does the special scheme for travel agents set out in Article 26
of Directive 77/388/EEC (1) also apply to transactions entered
‘High School
into by an undertaking which organises
Programmes’ and ‘College Programmes’
involving periods of
three to ten months spent in a foreign country, which are
offered to participants by the undertaking in its own name and
which are provided using services performed by other taxable
persons?

(1) OJ L 145, p. 1.

Reference for a preliminary ruling by the Landgericht
Frankfurt am Main by order of that court of 28 April 2004
in the case Gebrüder Stolle GmbH & Co. KG against
Heidegold Geflügelspezialitäten GmbH

(Case C-203/04)

(2004/C 190/08)

Reference has been made to the Court of Justice of the Euro-
pean Communities by order of the Landgericht Frankfurt am
Main (Frankfurt am Main Regional Court, Germany), of 28
April 2004, which was received at the Court Registry on 7
May 2004, for a preliminary ruling in the case of Gebrüder
Stolle GmbH & Co. KG against Heidegold Geflügelspezialitäten
GmbH.

The Landgericht Frankfurt am Main asks the Court of Justice to
give a preliminary ruling on the following question:

Is Article 10(1) of Regulation (EEC) No 1538/91 of 5 June
1991 (marketing standards for poultry) (1) to be interpreted as
meaning that on labelling within the meaning of Article 1(3)(a)
of Directive 79/112/EEC the legend ‘reared under controlled
conditions’ indicates a type of farming within the meaning of
Article 10(1) of Regulation (EEC) No 1538/91?

Reference has been made to the Court of Justice of the Euro-
pean Communities by order of the (Bundesfinanzhof (Federal

(1) OJ L 143, 7.6.1991, p. 11.