Direct tax: Commission acts against Germany over legislation concerning the pension-savings grant
European Commission - IP/06/32 13/01/2006
Brussels, 13 January 2006
The European Commission has sent Germany a formal request to amend its legislation on the pensions savings grant that is available to individuals in order to encourage them to make provision for their old age. The Commission considers that the unequal treatment of residents and non residents by certain aspects of this legislation is contrary to the EC Treaty provisions on the free movement of workers and persons. The request is in the form of a Reasoned Opinion under Article 226(1) of the EC Treaty. If Germany does not reply satisfactorily to the reasoned opinion the Commission may refer the matter to the Court.
The German pensions savings grant (the "Altersvorsorgezulage") provided for in Sections 79 to 99 of the Income Tax Act (the Einkommensteuergesetz or EStG) is designed to encourage individuals to make their own capital-based provision for their old age (“Riester-Rente”) and to complement the social security pension. However, there are three restrictions on the availability of this grant which are not in conformity with EU law:
Commission takes the view that, through these rules, the Federal Republic of
Germany has infringed Article 12 of the EC Treaty that prohibits discrimination
on grounds of nationality; Article 18 that allows free movement of EU citizens;
Article 39 of the EC Treaty that provides for the free movement of workers;
and Article 7 of Regulation No 1612/68 that requires a national of a Member
State who works in another Member State to be given the same social and tax
advantages as national workers in that other Member State.