Case C-522/04: Action brought on 23 December 2004 by the Commission of the European Communities against the Kingdom of Belgium
Date: 2005-03-05
Institutions: Court of Justice
Subjects: Belgium, European Commission, free movement of capital, freedom to provide services, insurance company, right of establishment, social-security contribution, tax relief, tax system

5.3.2005

EN

Official Journal of the European Union

C 57/17

Reference for a preliminary ruling from the Korkein
hallinto-oikeus by order of that court of 20 December
2004, received at the Court Registry on 22 December
2004, in the case of Pirkko Marjatta Turpeinen

Kingdom of Belgium by the Commission of
the European
Communities, represented by Richard Lyal and Dimitris Trian-
tafyllou, acting as Agents, with an address for service in Luxem-
bourg.

(Case C-520/04)

(2005/C 57/32)

(Language of the case: Finnish)

Reference has been made to the Court of Justice of the Euro-
the Korkein hallinto-oikeus
pean Communities by order of
(Supreme Administrative Court, Finland) of 20 December
2004, received at the Court Registry on 22 December 2004,
for a preliminary ruling in the case of Pirkko Marjatta
Turpeinen on the following questions:

1. Is Article 18 of the Treaty establishing the European Com-
munity on the right of a citizen of the Union to move and
reside freely in the territory of the Member States, or Article
39 on ensuring the freedom of movement of workers
within the Community, to be interpreted as meaning that
one or both of them preclude national
legislation under
which, in the case of a person who resides abroad and is a
limited taxpayer in the Member State, the withholding tax
charged on the taxpayer's pension based on a public-law
service relationship paid from that Member State exceeds in
certain cases the tax which the taxpayer would be charged
as a person resident and hence a general taxpayer in the
Member State?

2. Is Council Directive 90/365/EEC on the right of residence
for employees and self-employed persons who have ceased
their occupational activity (1) to be interpreted as precluding
national
legislation such as that described in Question 1
above?

(1) OJ L 180 of 13.7.1990, p. 28.

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

(Case C-522/04)

(2005/C 57/33)

(Language of the case: English)

An action was brought before the Court of Justice of the Euro-
the
pean Communities on 23 December 2004 against

The Commission of the European Communities claims that the
Court of Justice should declare that:

— by making the deductibility of employers' contributions for
supplementary old age and premature death insurance
subject to the condition,
laid down in Article 59 of the
CIR'92 (Income Tax Code), that the contributions must be
paid to an insurance undertaking or welfare fund estab-
lished in Belgium;

— by making the reduction of

tax for long-term savings,
granted by virtue of Articles 145/1 and 145/3 of
the
CIR'92 for personal contributions for supplementary old
age and premature death insurance in the form of deduc-
tions made by the employer from the employee's remunera-
tion, subject to the condition that the contributions must
be paid to an insurance undertaking or welfare fund estab-
lished in Belgium;

— by providing in Article 364 bis of the CIR'92 that, where
capital, surrender values and savings referred to in Article
34 if the CIR'92 are paid or allocated to a taxpayer who
has previously transferred his residence or the primary loca-
tion of his assets abroad, the payment or allocation is
deemed to have taken place on the day preceding that
transfer, and by, under paragraph 2 of the same article,
transfers referred to in
assimilating to an allocation all
Article 34(2)(3), so that every insurer is under an obligation
to withhold amounts in respect of income tax, in accord-
ance with Article 270 of the CIR'92,
from capital and
redemption values paid to a non-resident who has been, at
tax purposes in
one time or another, a resident
Belgium, provided that those sums have, totally or partially,
been constituted during the period in which the person
concerned was a Belgian resident for tax purposes, even
tax agreements concluded by Belgium
though bilateral
grant the right to tax such income to another Contracting
State;

for

— by levying tax, under Article 364 ter of the CIR'92, on
transfers of capital or redemption values constituted by
means of employers' contributions or personal contribu-
tions for supplementary retirement benefits, effected by the
pension fund or insurance institution with which they have
been established,
the beneficiary or
for the benefit of
persons claiming through him, to another pension fund or
insurance institution established outside Belgium, whereas
such a transfer does not constitute a taxable transaction if
the capital or redemption values are transferred to another
pension fund or
institution established in
Belgium; and

insurance

C 57/18

EN

Official Journal of the European Union

5.3.2005

— by, on the basis of Article 224/2 bis of the Règlement
général sur les taxes assimilées au timbre (General Regu-
lation on taxes assimilated to stamp duty), requiring foreign
insurers who have no operational headquarters in Belgium
to obtain approval, before providing their
in
Belgium, of a representative residing in Belgium, who must
personally assume,
in writing, responsibility towards the
State for paying the annual tax on insurance contracts,
interest and fines which may be due in respect of contracts
relating to risks situated in Belgium,

services

— the Kingdom of Belgium has failed to fulfil its obligations
under Articles 18, 39, 43, 49 and 56 of the EC Treaty and
Articles 28, 31, 36 and 40 of the EEE Agreement, and Arti-
cles 4 and 11(2) of Directive 92/96/EEC of 10.11. 1992 (1)
– following the recasting of Articles 5(1) and 53(2) of
Directive 2002/83/EC of 5. 11. 2002. (2)

services for companies established in other Member States. Its
aim, which is to ensure payment of the tax, could be attained
by less stringent means.

The abovementioned national provisions are also contrary to
Article 5 of Directive 2002/83/EC, which provides that authori-
sation obtained in a Member State is valid for the entire Com-
munity and enables the undertaking to carry on business there,
either by virtue of being established there, or by virtue of the
freedom to provide services, and to Article 53(2) of the same
that each Member State must
directive, which provides
authorise insurance undertakings whose headquarters is estab-
lished in its territory to transfer all or part of their portfolios to
a transferee established in the Community.

Pleas in law and main arguments

Freedom of movement for workers and freedom of estab-
lishment

The Belgian tax rules on occupational retirement schemes
contain restrictions on the free movement of services, freedom
of movement for workers and freedom of establishment, and
free movement of capital.

Freedom to provide services

Tax provisions limiting the deductibility of employers' and
personal contributions to occupational retirement schemes to
contributions paid to institutions established in Belgium,
thereby excluding contributions paid to institutions established
outside Belgium, are contrary to the freedom to provide
services.

The provision which states that transfers of capital or surrender
values created through employers' or personal contributions for
supplementary retirement insurance are to be taxable where
made to a pension fund or insurance undertaking established
abroad likewise constitutes an obstacle to the freedom to
provide services for companies established in other Member
States.

The provisions which disallow deduction of employers' contri-
butions or a tax reduction for personal contributions paid to
institutions established in other Member States are also
contrary to the freedom of movement for employed and self-
employed workers which is guaranteed by Articles 39 and 43
EC,
in that workers who have engaged in an occupational
activity in a Member State and joined an occupational retire-
ment scheme in that State and then go to work in Belgium are
unable to benefit from tax advantages for contributions paid in
that other State. However, the income deriving from those
schemes is taxable in Belgium if the persons concerned are
Belgian residents when the income is received.

The free movement of workers and freedom of establishment
are also infringed by the provision under which the transfer of
capital or surrender values created through employers' or
personal contributions to supplementary retirement schemes is
taxable when made to a pension fund or insurance institution
established abroad. It places at a disadvantage employees and
self-employed persons who wish to set up in another Member
State and who, at that time, wish to transfer the said capital or
surrender values.

Free movement of capital

Finally, the general and absolute obligation imposed on foreign
insurance undertakings to appoint a representative residing in
Belgium, who must give a personal undertaking to pay the
annual tax on insurance contracts,
is to be regarded as not
being proportional and as undermining the freedom to provide

Finally, the provisions in question also constitute obstacles to
the free movement of capital, contrary to Article 56 EC and
Article 40 EEE.

5.3.2005

EN

Official Journal of the European Union

C 57/19

Transfers under insurance contracts are to be regarded as
capital movements and any limitation on the deductibility of
employers' contributions and on tax abatements for personal
contributions, whereby only contributions paid to institutions
established in Belgium qualify, constitute discriminatory restric-
tions on the said free movement of capital.

Similarly, the provision which states that the transfer of capital
or surrender values created through employers' or personal
contributions to supplementary retirement schemes is to be
taxable when made to a pension fund or insurance institution
is not the case when the
established abroad, whereas that
transfer is made to an undertaking established in Belgium, is
likewise contrary to the free movement of capital.

(1) Council Directive 92/96/EEC of 10 November 1992 on the coordi-
nation of laws, regulations and administrative provisions relating to
direct
life assurance and amending Directives 79/267/EEC and
90/619/EEC (third life assurance directive), OJ L 360 of 9. 12.
1992, p. 1.

— concerning the computerised reservation systems offered

or in use in Netherlands territory,

— whereby the right is conferred on the United States to
withdraw, curtail or restrict transport rights where the
airline companies specified by the Kingdom of the Neth-
erlands are not in the hands of the latter or of Nether-
lands nationals,

the Kingdom of the Netherlands has failed to fulfil its obliga-
tions under Article 5 of the EC Treaty (now Article 10 EC),
Article 52 of the EC Treaty (now, after amendment, Article
43 EC) and Council Regulations (EEC) Nos 2409/92 (1) of
23 July 1992 on fares and rates for air services, and
2299/89 (2) of 24 July 1989 on a code of conduct for
computerised reservation systems, as amended by Council
Regulation (EEC) No 3089/93 (3) of 29 October 1993;

2. Order the Kingdom of the Netherlands to pay the costs.

(2) Directive 2002/83/EC of

the
Council of 5 November 2002 concerning life assurance, OJ L 345
of 19. 12. 2002, p. 1.

the European Parliament and of

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

(Case C-523/04)

(2005/C 57/34)

(Language of the case: Dutch)

An action against the Kingdom of the Netherlands was brought
before the Court of Justice of the European Communities on
23 December 2004 by the Commission of
the European
Communities, represented by Mikko Huttunen and Wouter
Wils, acting as Agents.

The applicant claims that the Court should:

Pleas in law and main arguments

A. Existence of a new agreement

— The amendments made in 1992 to the 1957 agreement
created the framework for closer cooperation between the
United States and the Kingdom of the Netherlands which
entail appreciable new obligations for that country.

— In light of the 1992 amendments the 1957 agreement was
revised in its entirety. The fact that a number of provisions
of that agreement were not formally amended in 1992 or
only underwent
inessential editorial changes, does not
therefore alter the fact that the obligations flowing from
those provisions were reaffirmed on the occasion of that
review. In such a situation the Member States are not only
not authorised to assume new obligations, but moreover
may not operate such arrangements if they run counter to
Community law.

B. Infringement of an exclusive external competence of
the Community within the meaning of the AETR judg-
ment

1. Declare that, by entering into international arrangements
with the United States of America or, notwithstanding the
review of the agreement on air traffic of 3 April 1957
between the Kingdom of the Netherlands and the United
States of America, enforcing obligations

— concerning the fares of airline companies specified by

the United States on intra-Community routes;

— In 1991 the Netherlands and the United States added an
incorporating the CRS
annex to the 1957 agreement
(computerised reservation systems) principles,
including
those concerning the availability or use of the CRS in Neth-
erlands territory. On review in 1992 of the 1957 agreement
the Netherlands applied that annex. In so doing the Nether-
lands infringed the Community's exclusive external compe-
tence flowing from Regulation No 2299/89.