EUROPE – The European Court of Justice’s October 3 judgment in the Danner case has cleared the way for cross-border pensions, says a pensions lawyer at UK firm Eversheds.

“Although it is possible to read the Danner case as applying only to Finnish tax law, the breadth of the rejection of the governments’ arguments indicate that if other cases based on other States restrictions are brought before the ECJ they will receive the same liberating response,” said Harold Lewis, pensions partner at Eversheds.

“When such restrictions have been successfully challenged or voluntarily removed by governments who recognize the inevitable, then the prudential investment and regulatory approach set out in the proposed Directive for cross-border arrangements may become commercially attractive,” Lewis writes, in an article in the Pensions Management Institute’s newsletter.

“We will then have the prospect of pan-European pensions for all. This will not happen overnight but 2005, when the proposed Directive will require implementation, now seems a realistic date for these arrangements to start appearing.

But the view that the Danner judgement will give the green light to a single European market is not unanimously shared. "Contrary to appearances, we believe that the Danner judgement will not assist European mobile workers, and may set back the prospects of a single European market for pension products,” PricewaterhouseCoopers partner Trevor Llanwarne has said.

The Danner verdict had been widely seen as giving impetus to a single market in supplementary pensions. The case involved German-born Rolf Dieter Danner and challenges as contrary to an article of the EC Treaty a Finnish law that taxes pension insurance contributions made in Finland to a foreign institution.

Danner claimed that Finns wishing to contribute to a scheme outside the country do not receive the same treatment as those paying into domestic schemes. The case focused on whether Finnish legislation violated Article 59 of the European Treaty which deals with the freedom of services.