What Scope Do Member States Have To Tax Particularly High Special ...

Yesterday, Advocate General Kokott delivered her Opinion in YS (Pensions d’entreprise de personnel cadre) (C-223/19), a case stemming from the request for a preliminary ruling by the Wiener Neustadt Regional Court, Austria (Landesgericht Wiener Neustadt) concerning the interpretation of the anti-discrimination Directives 79/7, 2006/54 , and 2000/78, as well as of Articles 20 and 21 of the Charter.

In essence, the referring court asked the Court of Justice whether national legislation which imposes a tax on particularly high ‘special pensions’ to ensure the financing of pensions is indirectly discriminatory against men, as they are the main beneficiaries of particularly high retirement pensions compared to women, who on average receive significantly lower pensions.

In her Opinion yesterday, Advocate General Kokott advised the Court to rule, firstly, that Article 4 (second paragraph) and Article 5(c) of Directive 2006/54 can, in principle, preclude national provisions which provide for the retention of a contribution for the sustainability of pensions or the absence of a contractual increase in pensions, for recipients of occupational pensions in the form of a direct defined benefit from State-controlled undertakings, where they exceed an amount fixed by law. For this ban to apply,  the percentage of members of the same sex whose pensions exceed that threshold, in relation to the total of that sex, must be substantially higher than the corresponding percentage of members of the other sex, and this must not be amenable of justification on objective grounds unrelated to any discrimination on grounds of sex.

Secondly, Advocate General Kokott suggested the Court rule that Article 2(1) of Directive 2000/78 must be interpreted as meaning that national legislation laying down, for recipients of occupational pensions of a particular nature whose amount exceeds a threshold fixed by law, the withholding of a contribution for the sustainability of pensions or the non-application of the contractual increase in their pension, do not constitute indirect discrimination on grounds of age, if the type of occupational pension at hand is no longer agreed as from a given date, so that beneficiaries of other types of occupational pension, agreed at a later date, are not covered by these provisions.

In the third place, the Opinion suggests the Court adopt the following interpretations of the Charter:

• Article 51(1) means that the legal configuration of occupational pensions falling within the scope of Directives 2006/54 and 2000/78 constitutes an application of EU law if that configuration entails discrimination which must be justified within the meaning of those Directives.
• Article 16 means that a restriction on the employer’s freedom to agree to pay for a worker’s services must be regarded as justified if, in accordance with the principle of proportionality, it is necessary and actually meets an objective in the general interest, such as maintaining the viability of pension systems. The same applies to a limitation on a worker’s right to property, within the meaning of Article 17(1) of the Charter, resulting from the withholding of part of an occupational pension, where that part exceeds a certain threshold and the amount of the contribution to be paid depends on the amount of the pension.
• Article 47 of the Charter does not require the legal order of a Member State to provide for the possibility of bringing an independent action seeking principally to challenge the compliance of national provisions with EU law, provided that other remedies, the rules of which are no less favourable than equivalent national remedies, make it possible to examine such compliance as a preliminary matter.

Read the Opinion here (in French).