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EU refers Sweden to ECJ over pensions tax

The European Commission decided, on 9 January 2007, to refer Sweden to the European Court of Justice in respect of discriminatory pension tax legislation, which imposes a higher tax burden on contributions to insurers in other member states and in the European Economic Area (EEA), than on contributions to Swedish insurers.

Under the Swedish tax legislation, premiums paid by employers for occupational pension insurance taken with insurers established in other EU Member States or the EEA countries are taxed as salary in the hands of the employee and pension payments are tax exempt; whereas contributions to domestic schemes are exempt and only pension payments are taxed.

The legislation, said the Commission, clearly restricts the possibilities for insurers established elsewhere within the EU or EEA to sell insurance policies in Sweden and dissuades employers from subscribing to foreign insurance policies. It considers that the respective Swedish rules constitute an obstacle to the free movement of persons, the freedom to provide services and the free movement of capital. They are therefore incompatible with the EC Treaty

Since the Swedish Government did not follow the reasoned opinion issued by the Commission on 25 July 2006, the Commission has decided to refer the case to the ECJ.

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