Brussels, 4 July 2006
Direct tax: Commission decides to refer Germany to the Court over legislation concerning the pension-savings grant (so called "Riester-Rente")
The European Commission decided to refer Germany to the European Court of Justice for not amending its legislation on the pensions-savings grant (Altersvorsorgezulage, so called Riester-Rente). A pecuniary advantage is given to persons building up a supplementary pension under the condition that they are fully liable to income tax in Germany. The Commission considers that the unequal treatment of residents and non-residents is contrary to the Treaty provisions on the free movement of workers and persons. Germany has not changed its legislation despite the Commission's formal request, in the form of a Reasoned Opinion, of 19.12.05 (IP/06/32).
"I fully support Member States to implement social policies aiming at encouraging individuals building up supplementary pension schemes" said László Kovács, the European Commissioner for Taxation and Customs Union. "However, Member States should do so in a non discriminatory way, thus complying with the free movement of workers and persons".
According to the German "Riester- Rente" legislation, a pecuniary advantage is given to encourage individuals to make their own capital-based provision for their old age and to complement their social security pension.
The grant is paid in cash to the pension institution with which the individual has concluded an old age pension contract. Its size depends on the pension contributions paid.
In the opinion of the Commission, three elements of the Riester-Rente are not in conformity with the EU legislation, in particular with Articles 12, 18 and 39 of the EC Treaty and Article 7 of Regulation No 1612/68:
Since the German Government did not follow the reasoned opinion issued by the Commission on 19 December 2005, the Commission has decided to refer the case to the European Court of Justice.
Commission case's reference number is: 2003/2067