SWEDEN - The European Commission has referred Sweden to the European Court of Justice accused of "discriminating against foreign pension funds".
The Commission yesterday claimed premiums paid by employers for pension insurance taken with insurers established in other EU member states were treated "less favourably" than contributions to Sweden's domestic schemes.
"Under the Swedish tax legislation, premiums paid by employers for occupational pension insurance taken with insurers established in other EU member states or the European Economic Area (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."
It added the legislation "clearly restricted" the possibilities for insurers established elsewhere within the EU or EEA to sell insurance policies in Sweden and dissuaded employers from subscribing to foreign insurance policies.
The taxation of foreign pension insurance premiums as benefits of the employee had made the subscription of foreign policies unattractive because the taxation took place earlier than in cases where the occupational pension insurance had been taken out with Swedish insurers.
It also meant the marginal progressive tax rate applicable to the employee's income was likely to be higher during his/her active working life than it is after retirement, the Commission said.
"The Commission therefore 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."
It concluded that, since the Swedish government had not followed the reasoned opinion issued by the Commission on 25 July 2006, it had decided to refer the case to the European Court of Justice.
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