The European Commission struck hard, on Friday 30 October, when it decided to refer the Netherlands, Belgium, Greece and Poland to the Court of Justice of the European Union over some of their tax practices, which are considered to be contrary to EU rules.
The Netherlands. As regards the Netherlands, the referral submitted by the Commission concerns three different rules in the Dutch cross-border pension tax regime.
First, foreign service providers are required to provide guarantees to the Dutch authorities if pension capital is transferred from the Netherlands to a foreign provider or if foreign providers want to provide services on the Dutch market.
In addition, the Dutch scheme requires former employees to provide guarantees if the pension capital is transferred to a foreign service provider or if they want to buy pension services from a foreign provider.
The Commission also criticises the national legislation which exempts from tax transfers of pension capital to foreign providers by mobile workers employed outside the Netherlands only if the foreign providers assume responsibility for any tax claims or if the taxpayers themselves provide a guarantee.
In the Commission’s view, all these conditions constitute restrictions on the free movement of citizens and workers, freedom of establishment and freedom to provide services and the free movement of capital.
Belgium. Belgium, for its part, is singled out because of its legislation relating to the deductibility of alimony payments from the taxable income of non-residents.
Currently, Belgian legislation does not allow non-residents who receive less than 75% of their worldwide income in Belgium to deduct maintenance payments from their taxable income. This deduction is denied even where the taxpayer does not have significant taxable income in the State of residence, which makes it impossible to deduct maintenance payments from taxable income in the State of residence, the Commission explains.
In the Commission’s view, this refusal therefore penalises non-resident taxpayers who have exercised their right to freedom of movement for workers, because maintenance payments are not deducted from their taxable income either in their State of residence or in Belgium as the State of employment.
The Court of Justice of the EU has already held that such legislation is contrary to the free movement of workers in the judgments in Cases C-169/03 and C-39/10.
Greece. Greece, for its part, is being challenged in relation to its income tax legislation, which, in the Commission’s view, differentiates tax treatment with respect to tax loss recognition between resident taxpayers with enterprises established solely in Greece and resident taxpayers with at least part of their enterprises established in other EU/EEA States.
While both business profits originating domestically and those originating in another EU/EEA state are subject to taxes in Greece, the treatment of losses incurred abroad is limited, explains the Commission, who states that this difference in tax treatment also constitutes a restriction on the freedom of establishment.
Poland. Lastly, the Commission criticises Poland for failing to grant the compulsory exemption from excise duty for imports of ethyl alcohol used in the production of medicines, an exemption provided for by the Directorate on the harmonisation of excise duty structures on alcohol and alcoholic beverages.
The current Polish rules do not provide for any refund of excise duty paid on the importation of ethyl alcohol used in the production of medicines after the excise duty has been paid.
On the same day, the Commission also sent six letters of formal notice (two to Luxembourg, two to Belgium, one to France and one to the United Kingdom) and a reasoned opinion to Spain, also concerning some of their tax practices. (Original version in French by Marion Fontana)