Case C-224/02

Heikki Antero Pusa

v

Osuuspankkien Keskinäinen Vakuutusyhtiö

(Reference for a preliminary ruling from the Korkein oikeus)

(Citizenship of the Union – Article 18 EC – Right to move freely and to reside in the Member States – Attachment of remuneration – Detailed rules)

Summary of the Judgment

Citizenship of the European Union – Right to move and reside freely in the territory of the Member States – National legislation calculating the attachable part of a pension by deducting from that pension the national tax prepayment levied in that State – Failure to take account of the tax which the holder of such a pension must pay on it in the Member State where he resides – Not permissible – National legislation requiring the debtor to prove that the tax has in fact been paid in the other Member State before it can be taken into account – Whether permissible – Conditions

(Art. 18 EC)

Community law in principle precludes legislation of a Member State under which the attachable part of a pension paid at regular intervals in that State to a debtor is calculated by deducting from that pension the income tax prepayment levied in that State, while the tax which the holder of such a pension must pay on it subsequently in the Member State where he resides is not taken into account at all for the purposes of calculating the attachable portion of that pension.

On the other hand, Community law does not preclude such national legislation if it provides for tax to be taken into account, where taking the tax into account is made subject to the condition that the debtor prove that he has in fact paid or is required to pay within a given period a specified amount as income tax in the Member State where he resides. However, that is only the case to the extent that, first, the right of the debtor concerned to have tax taken into account is clear from that legislation; secondly, the detailed rules for taking tax into account are such as to guarantee to the interested party the right to obtain an annual adjustment of the attachable portion of his pension to the same extent as if such a tax had been deducted at source in the Member State which enacted that legislation; and, thirdly, those detailed rules do not have the effect of making it impossible or excessively difficult to exercise that right.

(see paras 35, 48, operative part 1-2)

JUDGMENT OF THE COURT (Fifth Chamber) 29 April 2004 (1)

(Citizenship of the Union – Article 18 EC – Right to move freely and to reside in the Member States – Attachment of remuneration – Detailed rules)

In Case C-224/02,

REFERENCE to the Court under Article 234 EC by the Korkein oikeus (Finland) for a preliminary ruling in the proceedings pending before that court between

and

on the interpretation of Article 18 EC,

THE COURT (Fifth Chamber),,

composed of: P. Jann, acting as President of the Fifth Chamber, C.W.A. Timmermans, A. Rosas, A. La Pergola (Rapporteur) and S. von Bahr, Judges,

Advocate General: F.G. Jacobs,

after considering the written observations submitted on behalf of:

after hearing the oral observations of the Finnish Government, represented by T. Pynnä, acting as Agent, and of the Commission, represented by C. O'Reilly and P. Aalto, at the hearing on 25 September 2003,

after hearing the Opinion of the Advocate General at the sitting on 20 November 2003,

gives the following

‘Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in this Treaty and by the measures adopted to give it effect.’

‘Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited’.

‘If remuneration paid at fixed intervals is attached, there shall however always be excluded from attachment at least as much as the debtor is regarded, as defined by regulation, as requiring until the following payment date for his own subsistence and that of his spouse and his and his spouse’s children and adoptive children dependent on him [“the protected part”].’

‘Where the debtor’s ability to pay is substantially reduced because of illness, unemployment or other special reason, the part of remuneration excluded from attachment may be determined, until further notice or with respect to the wage instalments due for a specified period, at a higher level than the exclusion from attachment under the provisions of Paragraph 6. The basis of that determination shall be set out in the attachment document or in a document drawn up under a special procedure for the purpose of making such a determination. …’

‘… pensions and other similar benefits resulting from past employment are taxable only in the Contracting State in which the recipient of the benefit lives.’

‘Does Article 18 EC or any other rule of Community law preclude national legislation under which, in an attachment carried out for the purpose of enforcing a judgment concerning a money debt, that part of the pension payable at regular intervals to the debtor which the attachment may concern is determined by deducting from the pension the income tax prepayment levied in the Member State in question, whereas the income tax which a debtor resident in another Member State is obliged to pay in his State of residence is not taken into account as a deduction, so that the attachable part is greater in the latter case in being determined on the basis of the gross and not the net amount of the pension?’

On those grounds,

THE COURT (Fifth Chamber),

in answer to the question referred to it by the Korkein oikeus by decision of 14 June 2002, hereby rules:

Jann

Timmermans

Rosas

La Pergola

von Bahr

Delivered in open court in Luxembourg on 29 April 2004.

R. Grass

V. Skouris

Registrar

President