Brussels, 6 March 2000
Financial services: Commission sends reasoned opinion to Belgium over discriminatory tax regime
The European Commission has sent a reasoned opinion to Belgium concerning tax rules which restrict income tax reductions for mortgage repayments to loans insured by Belgian-based firms. The reasoned opinion is the second stage of formal infringement procedures under Article 226 of the EC Treaty. In the absence of a satisfactory response within two months following receipt of the reasoned opinion, the Commission may refer Belgium to the Court of Justice.
Belgian legislation (Article 145-1, 3° Code des impôts sur les revenus) allows individuals to pay less income tax based on the amount of repayments of mortgage loans for construction, purchase or improvement of dwellings located in Belgium. However, these tax reductions are conditional on the mortgage loan being insured against death (repayment of amount outstanding should the borrower die) with an insurance company established in Belgium. The Commission considers that this restriction prevents individuals from choosing to insure their mortgage with financial institutions established in other Member States and so acts as an obstacle to the freedom to provide services in violation of Article 49 of the EC Treaty.