The Netherlands II: Taxation of cross-border transfers of pension capital (Case C-360/22 European Commission v. The Netherlands)

Pensions are not only of interest to the elderly but also for young people. In order to have an appropriate pension benefit after retirement against a reasonable price, one should start as early as possible with accumulating pension rights. However, it is not always easy to do so in cross-border situations. An anecdote to illustrate follows. One of Eric’s sons is living and working in Copenhagen. He is a Dutch national. He started working in Denmark after graduating in the Netherlands. In the context of his employment with his Danish employer, the question of participating in a Danish pension scheme came up. He was advised not to join the pension scheme, inter alia, because transferring such a scheme to another country, if he were to leave Denmark was considered too complicated and not beneficial for either Eric’s son or his Danish employer. They decided not to join the Danish pension scheme. Eric’s son must find his own alternative to ensure that after retirement he receives sufficient pension benefits to provide for his old age.
The connection with the pending case discussed in this chapter is the alleged taxation of cross-border transfers of pension capital from the Netherlands to other EU and EEA Member States. The European Commission initiated an infringement proceeding against the Netherlands, claiming that the Dutch system is inconsistent with EU and EEA law. The European Commission thinks that the Dutch legislation concerning the transfer of a supplementary pension capital accumulated via an employer is incompatible with the freedom of movement of workers, services and capital.
This chapter has been structured as follows. The authors firstly present the relevant national pension and tax laws. Subsequently, the European Commission’s pleas in law and main arguments are described. In this section, more historical background of the case are provided. Thereafter, the authors comment on the issue raised. In this respect, the following aspects are discussed:
1. Is a disadvantage involved in this case?.
2. If there is a disadvantage, does this disadvantage constitute an obstacle or a restriction/a discrimination?
3. What is/are the aim(s) of the Dutch non-redemption/limited redemption rules?
4. If the situations of 12 Member States are comparable to the situation of the Netherlands, and the Dutch rules constitute a discrimination/restriction, is there a rule of reason for the different treatment?
a. Is there one (or more) overriding reason(s) in the public interest justifying the different treatment?
b. Is the different treatment capable of fulfilling the aim(s) of the Dutch pension law and tax law rules?
c. Is the different treatment proportional, considering the aim(s) of the Dutch pension law and tax law rules?
These comments are not given in isolation, rather they are based on benchmarks which are developed in the next section. The contribution is closed by summarising the authors’ main conclusions.