Hanns-Martin Bachmann v Belgian State.
Date: 1992-01-28
9 However, it should be noted that workers who have carried on an occupation in one Member State and who are subsequently employed, or seek employment, in another Member State will normally have concluded their pension and life assurance contracts or invalidity and sickness insurance contracts with insurers established in the first State. It follows that there is a risk that the provisions in question may operate to the particular detriment of those workers who are, as a general rule, nationals of other Member States.
11 That argument cannot be accepted. It is normally nationals of other Member States who, after working in Belgium, return to their State of origin, where the sums payable by the insurers are liable to tax, and who are therefore prevented from deducting their contributions for income tax purposes without receiving the corresponding benefit of exemption from tax on the sums payable by the insurers. Whilst this situation results from the absence of harmonization of the fiscal laws of the Member States, such harmonization cannot constitute a condition precedent to the application of Article 48 of the Treaty.
14 The Belgian, German, Netherlands and Danish governments consider that provisions such as those referred to by the national court are in any event justified in the public interest.
15 The German Government observes in that regard that as far as pensions and life assurance are concerned, as well as sickness and invalidity insurance, the case-law of the Court indicates that Member States may make the conclusion of insurance contracts with an insurer based in another Member State conditional on a system of authorization, in order to protect consumers in their capacity as policy-holders and insured persons (see the judgment in Case 205/84 Commission v Germany [1986] ECR 3755, paragraph 49). If Member States are not obliged to allow the conclusion of insurance contracts which do not fulfil that condition, neither are they obliged to grant any tax advantages in relation to such contracts.
16 The Court is unable to accept that argument. Whilst in the absence of Community harmonization measures Member States are able, with a view to ensuring the protection, as consumers, of insured persons and policy-holders, to make the conclusion of certain insurance contracts conditional upon the insurer being officially approved, no such public interest may be invoked as a ground for refusing to recognize the existence of insurance contracts concluded with insurers established in another Member State at the time when the policy-holder was resident there.
18 As regards the effectiveness of fiscal controls, it should be observed that 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 (Official Journal 1977 L 336, p. 15, hereinafter referred to as "the Directive") may be invoked by a Member State in order to check whether payments have been made in another Member State where it is necessary, as in the main proceedings in this case, for those payments to be taken into account in order correctly to assess the income tax payable (Article 1(1) ).
20 It should be noted in that regard that Article 8(1) of the Directive imposes no obligation on the tax authorities of Member States to collaborate where their laws or administrative practices prevent the competent authorities from carrying out enquiries or from collecting or using information for those States' own purposes. However, the inability to request such collaboration cannot justify the non-deductibility of insurance contributions. There is nothing to prevent the tax authorities concerned from demanding from the person involved such proof as they consider necessary and, where appropriate, from refusing to allow deduction where such proof is not forthcoming.
21 As regards the need to preserve the cohesion of the tax system, the Court held, in its judgment delivered today in Case C-300/90 Commission v Belgium, that there exists under the Belgian rules a connection between the deductibility of contributions and the liability to tax of sums payable by the insurers under pension and life assurance contracts. According to Article 32a of the CIR, cited above, pensions, annuities, capital sums or surrender values under life assurance contracts are exempt from tax where there has been no deduction of contributions under Article 54.
22 It follows that in such a tax system the loss of revenue resulting from the deduction of life assurance contributions from total taxable income - which includes pensions and insurance payable in the event of death - is offset by the taxation of pensions, annuities or capital sums payable by the insurers. Where such contributions have not been deducted, those sums are exempt from tax.
23 The cohesion of such a tax system, the formulation of which is a matter for each Member State, therefore presupposes that, in the event of a State being obliged to allow the deduction of life assurance contributions paid in another Member State, it should be able to tax sums payable by insurers.
26 It is true that bilateral conventions exist between certain Member States, allowing the deduction for tax purposes of contributions paid in a contracting State other than that in which the advantage is granted, and recognizing the power of a single State to tax sums payable by insurers under the contracts concluded with them. However, such a solution is possible only by means of such conventions or by the adoption by the Council of the necessary coordination or harmonization measures.
27 It follows that, as Community law stands at present, it is not possible to ensure the cohesion of such a tax system by means of measures which are less restrictive than those at issue in the main proceedings, and that the consequences of any other measure ensuring the recovery by the State concerned of the tax due under its legislation on sums payable by insurers pursuant to the contracts concluded with them would ultimately be similar to those resulting from the non-deductibility of contributions.
28 In the light of the foregoing, it must be recognized that, in the field of pensions and life assurance, provisions such as those contained in the Belgian legislation at issue are justified by the need to ensure the cohesion of the tax system of which they form part, and that such provisions are not, therefore, contrary to Article 48 of the Treaty.
31 It is to be noted that provisions such as those contained in the Belgian legislation at issue constitute a restriction on freedom to provide services. Provisions requiring an insurer to be established in a Member State as a condition of the eligibility of insured persons to benefit from certain tax deductions in that State operate to deter those seeking insurance from approaching insurers established in another Member State, and thus constitute a restriction of the latter' s freedom to provide services.
32 However, as the Court has previously held (see the judgment in Commission v Germany, referred to above, paragraph 52), the requirement of an establishment is compatible with Article 59 of the Treaty where it constitutes a condition which is indispensable to the achievement of the public-interest objective pursued.
34 Provisions such as those contained in Article 54 of the CIR are not incompatible with Articles 67 and 106 of the Treaty. It need merely be observed in that regard, first, that Article 67 does not prohibit restrictions which do not relate to the movement of capital but which result indirectly from restrictions on other fundamental freedoms, and, secondly, that provisions such as those at issue before the national court preclude neither the payment of insurance contributions to insurers established in another Member State nor their payment in the currency of the Member State in which the insurer is established.