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European Commission - Press release

Taxation: Commission requests Estonia to amend discriminatory tax rules for non-resident investment funds

Brussels, 16 June 2011 – The European Commission has formally requested Estonia to amend its tax legislation as it discriminates against non-resident investment funds. Under Estonian tax law, domestic investment funds are treated more favourably than comparable investment funds established in other EU Member States or in countries of the European Economic Area (EEA). In practice, it means that resident funds are entitled to get a tax exemption for their real estate income, while comparable funds established in other EU Member States and EEA countries are subject to tax, thus creating a higher tax burden on the latter.

Under EU law, equal treatment should be ensured between comparable domestic and non-resident funds. The Commission therefore considers that Estonia does not comply with EU rules, in particular Articles 56 (freedom to provide services) and 63 (free movement of capital) of the Treaty on the Functioning of the EU (TFUE) and Articles 36 and 40 of the European Economic Area Agreement (EEA). Indeed, the Estonian legislation in question could dissuade citizens from investing in funds established in other EU Member States or in countries of the EEA, thus limiting the freedom of services and capital within the EU. The Commission's request takes the form of a reasoned opinion (second step of EU infringement proceedings). In the absence of a satisfactory response within two months, the Commission may refer Estonia to the EU's Court of Justice.


For the press releases issued on infringement proceedings in the area of taxation or customs see:

For more information on EU infringement procedures, see MEMO/11/408 .

For the most up-to-date general information on the infringement proceedings initiated against Member States, see:

Contacts :

David Boublil (+32 2 296 55 73)

Maud Scelo (+32 2 298 15 21)

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