Income Taxation of Foreign Pension Funds in Light of the Free Movement of Capital

According to established ECJ case law, national tax law that treats foreign investment funds, in general, and pension funds, in particular, less favourably than domestic funds may violate the free movement of capital protected under article 63 of the TFEU. The legal systems of individual EU Member States, however, still do not fully take into account the requirements laid down by the ECJ. This article sets out the current status of the relevant case law, focusing on the latest relevant decisions of the ECJ and of some national courts. On this basis, the author explains the requirements under the free movement of capital that pertain to the regulation of income taxation of non-resident funds – in particular pension funds – under the tax laws of EU Member States. Such requirements should, in principle, be implemented into the relevant domestic tax rules to ensure the latter’s conformity with EU law.