Brussels, 29/01/2010 (Agence Europe) - On Thursday 28 January, the European Commission asked Greece to comply with a European Court of Justice ruling on the taxation of dividends received by individuals. It also sent reasoned opinions to five other member states vis-à-vis infringement proceedings on tax issues. The countries in question have two months to respond, failing which they may be taken to the European Court of Justice.
Direct taxation. Greece has ignored the ruling issued by the European Court of Justice last year (Case C-406/07) on the taxation of foreign dividends paid to individuals. The Commission has therefore decided to launch new infringement proceedings (under Article 260 of the EU treaty), which may lead to the Greek government being fined. Under Greek legislation, company dividends from companies outside Greece are subject to income tax in Greece, but dividends from Greek companies are not. The Court of Justice argues that Greece has failed to meet its obligations as a member of the EU.
The Commission is requesting that Spain change its rules whereby individuals from abroad subject to Spanish inheritance tax and non-Spanish companies like pension funds and insurance companies have to hire a tax representative in Spain. The same rules do not apply to Spaniards and the Commission says this is discriminatory.
In a separate case, Greece is instructed to change its rules whereby some purchases in Greece are tax deductible for people living in Greece. The rules mean that non-residents who get most of their income from abroad cannot benefit from the same tax incentives as residents, and encourages people living in Greece to purchase goods in Greece. The Commission's arguments are based on the Court of Justice ruling in the Schumaker Case (C-279/93).
The Commission wants Belgium to change its rules whereby higher tax is levied on dividends and interest received by foreign investment funds than on dividends and interest received by funds based in Belgium. Dividends paid by Belgian companies to Belgian investors are exempt from income tax in some conditions but dividends paid out by foreign investment funds are all taxed at either 25% or 15%.
Belgium is also asked to change its tax legislation that is more beneficial for Belgian real estate investment funds. Under Belgian law, dividends paid by Belgian real estate investment funds are income tax-free if the funds invest at least 60% of their assets in real estate in Belgium. The Commission says this is discriminatory and hinders the free movement of capital.
Indirect taxation. The Commission believes that the levying in Spain of a transfer tax on certain contributions of capital, in addition to capital duty, is contrary to the Capital Duty Directive (2008/7/EC). The directive allows capital duty of up to 1% to be levied but no other taxes on increased capital.
The Commission wants Denmark to change its rules on the application of exemption from value added tax (VAT) that it says outstrip the provisions of the EU VAT Directive (2006/112/EC). Denmark does not level VAT on the delivery of goods and services for charities and non-profit making organisation, or for deliveries to second-hand shops.
The Commission wants Portugal to change its annual motor vehicle tax rules. The tax is calculated differently for second-hand cars registered in Portugal depending on whether they were registered before or after 1 July 2007. (M.B./V.L.B/transl.fl)