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PR(03)39: Infringement proceedings initiated against Liechtenstein and Norway regarding difference of treatment with regard to tax deductions


Yesterday, the EFTA Surveillance Authority sent letters of formal notice to Liechtenstein and Norway, invoking several of the fundamental freedoms of the EEA Agreement.

Liechtenstein and Norway have tax rules that limit the right to deduct donations from the taxable income to cases in which the charitable/non-profit organizations that receive the donations are seated in Liechtenstein/Switzerland or Norway, respectively. The deductible amount is 6000 NOK (approx. 730 €) and 10.000 CHF (approx. 6450 €), respectively. The Norwegian provision lists additional requirements which the recipient organization has to fulfill in order to fall within the scope of the rule.

Article 4 EEA prohibits any discrimination on grounds of nationality. In the context of workers, this principle is further substantiated through Article 28 EEA. EEA law prohibits not only overt nationality discrimination, but also all covert forms of discrimination which, by application of other distinguishing criteria, lead in fact to the same result. National law is to be regarded as indirectly discriminatory where it affects essentially migrant workers or where there is a risk that the rules may operate to the particular detriment of migrant workers. From the Authority’s point of view, the Liechtenstein and Norwegian rules work to the detriment of foreign worker and self-employed people, since these are more likely to wish to donate money to an organization seated abroad. Hence, the Authority concludes that the tax rules give rise to an impermissible difference of treatment within the meaning of Article 28 EEA and – for other migrant persons than workers – within the meaning of Article 4 EEA.

In addition, reference is made to Article 40 EEA, according to which capital (as e.g. donations) shall move freely between the EEA States. The Authority concludes that the Liechtenstein and Norwegian rules are liable to dissuade donations to entities that are established in another EEA State and hence, constitute an obstacle to the movement of capital.

With regard to Liechtenstein, the Authority further points out that the rule can be considered to limit the right to provide services for corresponding charitable entities, seated in another EEA State.

A letter of formal notice is the first stage in the Authority’s formal infringement procedures against a Member State. The Governments of Liechtenstein and Norway are requested to submit their observations within three months.

For further information, please contact Niels Fenger, Director of Legal and Executive Affairs, tel. +(32)(0)2 286 1830.

19 December 2003

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