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Financial services: Commission decides to request Austria to end tax discrimination on securities

European Commission - IP/00/1203   24/10/2000

Other available languages: FR DE

IP/00/1203

Brussels, 24 October 2000

Financial services: Commission decides to request Austria to end tax discrimination on securities

The European Commission has decided to request Austria to put an end to discrimination against investment funds from other Member States as regards tax exemptions and advantages. The Commission considers that the way in which current tax rules are applied violates EC Treaty rules on the freedom to provide services and the free movement of capital because tax breaks are available only for Austrian investment funds. The Commission request will be made in the form of a reasoned opinion, the second stage of formal infringement procedures under the EC Treaty (Article 226). If there is no reply to the reasoned opinion within two months or the reply is unsatisfactory, the Commission may decide to refer the case to the European Court of Justice.

The infringement procedure was opened following a complaint by the Austrian Association of Investment Funds, the "VAIÖ" (Die Vereinigung ausländischer Investmentgesellschaften in Österreich).

The amended Austrian law of 30 July 1993 on investment funds grants a number of tax exemptions and tax advantages to Austrian investment funds only. This constitutes an obstacle for investment funds from other Member States marketed in Austria.

More specifically, Articles 40 to 42 of this law make a distinction between three categories of investment funds unit-holders:

  • Private unit-holders of investment funds individually investing and subject to income tax in Austria;

  • Private unit-holders of investment funds units commercially investing and subject to income tax in Austria;

  • Corporate unit-holders of investments funds and subject to corporation tax in Austria.

The tax rules applicable to these three categories of taxpayers vary according to the types of revenues or of capital gains coming from Austrian or foreign investment funds.

Two rather similar cases of tax discrimination in the field of stock exchanges led to the opening of infringement procedures in 1998 against France and Italy. After the sending of reasoned opinions in October 1999 (IP/99/755) both countries changed the law provisions at stake at the end of December 1999.

The Commission considers that the measures concerned violate the provisions of the EC Treaty on freedom to provide services and the free movement of capital (Articles 49 and 56). They are thus incompatible with the Internal Market in financial services, the crucial importance of which was stressed by the Cologne and Lisbon European Councils in June 1999 and in March 2000.


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