Press Release: Direct Taxation: Commission asks 9 Member States for information on discriminatory taxation of dividends and interest paid to foreign pension funds

The European Commission has decided to send requests for information in the form of letters of formal notice to the Czech Republic, Denmark, Spain, Lithuania, the Netherlands, Poland, Portugal, Slovenia and Sweden about their rules under which dividend and/or interest payments to foreign pension funds (outbound payments) may be taxed more heavily than dividend and/or interest payments to domestic pension funds (domestic payments). The Commission doubts whether such higher taxation is compatible with the EC Treaty and with the EEA Agreement, as it may restrict the free movement of capital. The Member States involved are asked to reply within two months. A letter of formal notice is the first step of the infringement procedure of Article 226 of the EC Treaty.