Keywords
Summary

Keywords

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Free movement of persons - Workers - Equal treatment - Freedom to provide services - Restrictions - Free movement of capital - Deductibility from taxable income of certain contributions relating to the insurance of individuals- Deductibility conditional on payment to an organization established in the territory where the tax is levied - Possible justification of the restriction by reason of the need to safeguard the cohesion of the tax system

(EEC Treaty, Arts 48, 59, 67 and 106)

Summary

Legislation of a Member State which makes the deductibility of sickness and invalidity insurance contributions or pension and life assurance contributions conditional on those contributions being paid in that State is contrary to Articles 48 and 59 of the Treaty. However, that condition may be justified by the need to safeguard the cohesion of the applicable tax system.

That need may exist, for example, where the tax system of a Member State is such that the deductibility of the contributions is offset by the taxation of payments made by insurers pursuant to the contracts, and vice versa, and where it would be impossible to ensure that the deductions were offset by subsequent taxation of payments because payments arising from the deductible contributions were made by a foreign insurer established in another country where there would be no certainty of subjecting them to tax.

Such legislation is not incompatible with Articles 67 and 106 of the Treaty.