European Commission refers Belgium to ECJ on savings deposits ... again
Today, the European Commission decided to refer Belgium to the Court of Justice of the European Union for maintaining discriminatory conditions for the tax exemption of interest received from savings deposits.
The Commission considers that the Belgian tax exemption system applicable to income from savings deposits is contrary to the freedom to provide services (Article 56 TFEU and Article 36 of the Agreement on the European Economic Area). Indeed, it imposes discriminatory conditions for access to the Belgian banking market on ervice providers established in other Member States of the EU or the European Economic Area.
The Commission sent a reasoned opinion to Belgium in July 2023. As the Belgian authorities have not taken any appropriate action to comply, the Commission is referring Belgium to the European Court of Justice (for previous coverage see our article. It is to be noted that the European Court of Justice has confirmed the violation of the freedom to provide services on 8 June 2017 and 27 March 2023 following preliminary ruling procedures.
Background
Article 21, 1st paragraph, 5° of the Belgian Income Tax Code provides for a tax exemption of income from savings of Belgian taxpayers deposited in credit institutions established in Belgium and other Member States of the EU/EEA. The deposits in Belgian credit institutions must meet certain criteria as to the currency in which they are denominated, the conditions and methods of withdrawals and direct debits, and the structure, level and method of calculating their remuneration.
The deposits in foreign credit institutions must meet similar criteria, as laid down by the competent authorities in other Member States of the EU/EEA, where they are established. Article 2 of the Royal Decree implementing the Income Tax Code lays down precise criteria to be met by savings deposits. However, the criteria are extremely restrictive and specific to the context of the Belgian domestic market and in practice foreign savings deposit cannot meet them. Thus, Belgian taxpayers' de facto benefit from the exemption only in respect of income from savings deposits in Belgian credit institutions.
In its decision of 8 June 2017 in a preliminary ruling procedure, the Court of Justice of the EU found that Article 56 TFEU and Article 36 of the EEA Agreement preclude the above national legislation that imposes discriminatory conditions for access to the Belgian banking market on service providers established in other Member States. On 23 June 2022, the discriminatory nature, in practice, of the above conditions was again confirmed by a decision of the Belgian Supreme Court.
Furthermore, in an order of 27 March 2023 in reply to another preliminary ruling procedure (Case C-34/22, VN v. Belgium), the Court of Justice of the European Union confirmed its legal stance on the incompatibility of Belgian legislation with the freedom to provide services.