EC Targets 'Discriminatory' Belgian Pension Rules

by Ulrika Lomas, Tax-News.com, Brussels

01 December 2010

The European Commission (EC) has recently referred Belgium to the European (EU) Court of Justice for only allowing tax relief on pension savings paid to Belgian institutions or, in the case of collective pension savings, only those invested in Belgian funds.

According to the Commission, these measures contravene EU rules on the freedom to provide services and the free movement of capital as laid down in articles 56 and 63 of the Treaty on the Functioning of the European Union (TFUE). Although the Commission had sent a reasoned opinion to Belgium in March 2010, Belgium failed to comply with EU law within the deadline.

Under Belgian income tax law, payments to individual pension accounts, collective pension accounts and insured savings only qualify for tax relief if they are paid in Belgium. Belgian authorities claim that this restriction is necessary to protect the security of the sums paid by the pension savers.

However, the Commission considers this restriction to be disproportionate and discriminatory. EU legislation on mutual assistance and on life insurance should be sufficient to ensure that Belgians benefit from the same level of security whether they invest in domestic or foreign funds. It believes that the Belgian legislation acts as a deterrent to Belgian taxpayers accessing pension funds in other member states and therefore goes against the fundamental EU principles of the freedom to provide services and the free movement of capital.

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