Brussels, 24 November 2010
The European Commission has today decided to refer Denmark, The Netherlands and Spain to the EU's Court of Justice for their provisions which impose an exit tax on businesses which cease to be tax residents in these countries. The Commission considers these provisions to be incompatible with the freedom of establishment as laid down in Article 49 of the Treaty on the Functioning of the European Union (TFUE). The Commission had sent a reasoned opinion – the second stage of an infringement procedure - to these three countries in March 2010 (IP/10/299). As they failed to comply with EU law, the Commission has today decided to take the cases to the EU's Court of Justice.
Under national tax law in Denmark, The Netherlands and Spain, a business is taxed on its unrealised capital gains if it changes its residence, moves its permanent establishment or transfers its assets to another Member State. However, comparable domestic operations are not taxed for unrealised capital gains that may arise.
The Commission considers that such taxation serves as a discriminatory penalty on companies wishing to leave these countries or to transfer assets abroad. The rules in question are likely to dissuade companies from exercising their right of freedom of establishment and therefore constitute a restriction to the freedom of establishment as laid down in Article 49 of the TFUE.
For the press releases issued on infringement proceedings in the area of taxation or customs see:
For the most up-to-date general information on the infringement proceedings initiated against Member States, see: http://ec.europa.eu/community_law/index_en.htm
For more information on EU infringement procedures, see MEMO/10/605