Finnish tax law 'breaches EU rules'
Prospects for pan European pensions have received a lift with publication of a document by the general advocate in the Danner case criticising the relevant Finnish tax law and suggesting it contravenes EU legislation. Publication comes prior to the Judgement in the European Court of Justice (ECJ) on the Danner case involving German-born Rolf Dieter Danner.
The case, which had its first hearing in the ECJ last June, examines whether a restriction in Finnish law, which makes pension insurance contributions made from Finland to a foreign institution taxable, is contrary to an article of the EC treaty.
Since the general advocate is not a judge but rather the equivalent of a European public prosecutor, the opinion is not legally binding. In practice, however, backing Danner is seen as a highly significant development in the case.
Fernand Grulms, director of PECOMA consulting in Luxembourg, says 90% of ECJ verdicts mirror the opinion of the general advocate and subsequently there is a good chance it will rule that this aspect of Finnish law contravenes European legislation. “This announcement will really help promote pan-European pensions,” he says.
Danner’s hearing is seen as a test case by those pushing for pan-European pension funds as inconsistent tax laws in Europe are the greatest hindrance to genuine pan European funds.
Publication of the document followed soon after insurance company Skandia submitted papers to the ECJ challenging Swedish legislation that stipulates employer contributions to insurance-backed pension funds are also only tax exempt if made to locally-domiciled insurance companies.