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EC pensions tax latest: Commission to act this Wednesday

The European Commission today confirmed that it will be taking action on pensions tax infringement procedures against EU Member States this Wednesday (Dec 17th), in what could be the clearest signal yet that it is deadly serious about prosecuting Member States en masse for non compliance.

The announcement could potentially involve legal proceedings in the European Court of Justice (ECJ) against Italy, Belgium, Spain, France, Portugal, the UK and Ireland.

However, press spokesman for EC Commissioner Frits Bolkestein, Jonathan Todd declined to comment on what would appear in the document, noting that it was a question of ‘wait and see’ until Wednesday.

In July this year, the Commission announced it was taking Denmark to the ECJ over pension tax discrimination, as well as starting infringement procedures against the UK and Ireland.

And earlier in the year, in February, the Commission said it had sent letters of formal notice to Italy, Belgium, Spain, France and Portugal – the first stage of the formal infringement process.

Standard EC procedure is that a ‘formal notice’ is first sent to a Member State informing it that it could be infringing EU treaty.

Following this, Member States receive a ‘Reasoned Opinion’ noting that an actual breach of the Treaty of Rome has occurred. At this stage the process becomes public knowledge.
Member States are then usually allowed two months to react before formal legal proceedings are brought.

The two-month grace period for the seven remaining Member States (ex Denmark) has now technically passed. If the Commission has not received a satisfactory explanation from a Member State, then the case is usually referred directly to the ECJ.

Earlier this year, Commissioner Bolkestein made clear his determination to act against countries discriminating on tax for pensions: "The Commission is determined to stamp out tax discrimination against foreign pension funds."
"We have already warned Member States that we regard such discrimination as illegal, and the Court of Justice has endorsed the Commission's position."


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