EU takes Sweden to top court over pension funds

BRUSSELS (Reuters) – The European Commission said yesterday it was taking Sweden to the European Court of Justice for discriminating against foreign pension funds to restrict competition in the sector. Premiums paid by Swedish employers into pension funds based in another European Union member state are treated less favorably than premiums paid into a Swedish-based fund, the EU executive body said in a statement. Payments to foreign pension funds are taxed, while contributions to domestic schemes are exempt, it said. «The legislation clearly restricts the possibilities for insurers established elsewhere within the EU… to sell insurance policies in Sweden and dissuades employers from subscribing to foreign insurance policies,» the statement said. The Swedish rules are an obstacle to the free movement of people, a cornerstone of the EU Treaty, and the country failed to follow an earlier request to amend them, the Commission said. Swedish Finance Minister Anders Borg told domestic news agency TT that the country’s system did not break any rules. The Court of Justice, the bloc’s top court, has the power to force Sweden to change its laws and to impose fines. The Commission also gave Portugal a final warning to end tax discrimination against non-Portuguese service companies. Non-resident providers of services are subject to a withholding tax based on their gross income, while domestic providers are taxed only on their net profits after deduction of related costs, the Commission said. «The Commission considers that these rules are incompatible with the EC Treaty, which guarantees the free provision of services,» the EU executive said.

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