Commission of the European Communities v Kingdom of Belgium.
Date: 1992-01-28
7 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 life assurance 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 As regards the effectiveness of fiscal control, it is to 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, as in this case, it is necessary, in order correctly to assess the income tax, to take account of those payments (Article 1(1)).
13 It should be noted in that regard that under Article 8(1) of the Directive there is 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 the 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 Belgian tax authorities from requiring the person concerned to provide such proof as they may consider necessary and, where appropriate, from refusing to allow deduction where such proof is not forthcoming.
14 As regards the need to preserve the cohesion of the tax system at issue, it should be noted that there exists a connection under the Belgian rules between the deductibility of contributions and the liability to tax of sums payable by insurers pursuant to pension or life assurance contracts. According to Article 32a of the CIR, cited above, pensions, annuities, capital sums or surrender values payable under life assurance contracts are exempt from tax where there has been no deduction of contributions under Article 54.
15 It follows that, under the Belgian tax system at issue, the loss of revenue resulting from the deduction of life assurance contributions from total taxable income 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.
16 The cohesion of such a tax system, the formulation of which is a matter for the Belgian State, presupposes, therefore, that in the event of that 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.
17 An undertaking by an insurer to pay such tax cannot constitute an adequate safeguard. If the undertaking were not honoured, it would be necessary to enforce it in the Member State in which the insurer is established, and quite apart from the problems encountered by a State in discovering the existence and amount of the payments made by insurers established in another State, there remains the possibility that the recovery of the tax might then be prevented on the grounds of public policy.
18 It would certainly be possible in principle for such an undertaking to be accompanied by the deposit by the insurer of a guarantee, but this would involve the insurer in additional expense which would have to be passed on in the insurance premiums, with the result that the insured, who may moreover be subjected to double taxation on the sums payable under the contracts, would cease to have any interest in maintaining them.
19 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.
20 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 provided for by the rules in question, and that the consequences of any other measure ensuring the recovery by the Belgian State 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.
21 In view of the foregoing, it must be accepted that the contested provisions of Belgian law are justified by the need to safeguard the cohesion of the tax system at issue and, consequently, that they do not infringe Article 48 of the Treaty. This is also the case as regards Article 7 of Regulation No 1612/68.
Infringement of Article 59 of the Treaty
23 However, as the Court has previously held (see, inter alia, the judgment in Case 205/84 Commission v Germany [1986] ECR 3755, 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. As is apparent from the considerations set out above, that is the situation in the present case.