CJEU Attorney General’s Opinion in KEVA Case: Assessing Tax Discrimination and Free Movement of Capital within EU Law

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On March 21st, 2024, Attorney General (Collins) to the Court of Justice of the European Union (CJEU) issued his opinion to the CEU in the “KEVA” case (Case C39/23) in favor of the applicant, a Finnish pension institution. The KEVA case deals with withholding tax reclaims by a Finnish pension institution in Sweden (reclaim of Swedish withholding tax on Swedish source investment income earned by the Finnish pension institution) based on the free movement of capital. 

This opinion provides detailed reasoning on the principles of free movement of capital, the comparability of different entities under EU law, and the justification for restrictions on EU freedoms. The final judgment of the CJEU will determine the outcome of the case, taking into account the Advocate General’s opinion, which is influential but not binding. 

The Advocate General’s opinion in Case C-39/23 involves a reference for a preliminary ruling regarding the taxation of dividends received by public pension funds, specifically comparing the treatment of dividends paid to resident versus non-resident public pension funds in Sweden 

The key points

Table of Contents


The case arose from the differential tax treatment between domestic companies’ dividends paid to foreign public pension institutions and those paid to Sweden’s general pension funds (GP funds), which are part of the state and exempt from taxes on such dividends. Finnish public pension institutions, which are similar in function to Sweden’s GP funds but are taxed on dividends received from Swedish companies, challenged this tax discrepancy as a restriction on the free movement of capital under EU law.

Questions Referred

The primary questions posed to the Court of Justice of the European Union were whether the tax discrepancy constitutes a restriction on the free movement of capital prohibited by Article 63 TFEU, whether the situations of the foreign public pension institutions and the Swedish GP funds are objectively comparable, and whether any potential restriction could be justified by overriding reasons in the public interest.

Opinion on Restriction

The Advocate General opined that the difference in tax treatment indeed constitutes a restriction on the free movement of capital, as it likely discourages investments from non-resident pension funds in Sweden. 

Objective comparability

It was argued that for assessing whether a foreign public pension institution is in a situation objectively comparable to that of the Swedish GP funds, factors such as their respective purposes, functions, regulatory frameworks, and organizational characteristics should be considered. The Advocate General suggested that the Finnish pension funds and the Swedish GP funds appear to serve similar public interest purposes, thus they are objectively comparable. 

Purpose and Functions

Both the Finnish pension institutions and the Swedish GP funds serve public interest purposes related to the management and maintenance of their respective national pension systems. They act as buffer funds, managing and stabilizing the funds necessary to ensure the payment of pensions over time. This similarity in core purpose and function is a critical factor suggesting that they could be deemed objectively comparable. 

Regulatory Framework and Organizational Characteristics

The legal and regulatory frameworks governing these entities, as well as their organizational structures, play a crucial role in assessing comparability. Despite potential differences in legal status or specific operational details, the overarching role they play in their respective pension systems suggests a level of comparability. The entities operate under specific laws tailored to their pension management responsibilities, highlighting their integral role in the national pension systems of Sweden and Finland, respectively. 

Tax Exemption and Treatment

The Swedish GP funds are part of the state apparatus and are exempt from paying tax on dividends they receive, a status not extended to the Finnish pension institutions for dividends received from Swedish companies. This discrepancy raises the question of whether these entities are being treated differently despite their similar roles in providing public pension benefits. The Advocate General’s opinion suggests that when considering the aim, purpose, and content of the tax exemption granted to the Swedish State (and by extension, the GP funds), there does not appear to be a justified objective difference in treatment between the domestic and foreign pension institutions based on their intrinsic characteristics or their roles in their respective pension systems. 

The Advocate General proposes that for the Court to assess objective comparability, it must consider the institutions’ respective purposes, functions, the regulatory frameworks governing them, and their organizational characteristics. This approach moves beyond surface-level differences to assess the fundamental nature and role of these entities in their pension systems, arguing that similarities in these fundamental aspects can render the entities objectively comparable for the purposes of EU law on the free movement of capital. Importantly, the Advocate General notes that the assessment of the aims the applicants pursue can be made only in the context of the social security system in which they operate, and not by reference to that of another Member State. 

Conclusions on Objective Comparability

The opinion thus indicates that despite some operational and legal differences, the Finnish pension institutions and the Swedish GP funds might be considered objectively comparable considering their similar purposes and functions within their respective national pension systems. This comparability challenges the differential tax treatment based on nationality or residency and underscores the need for equitable treatment under the EU’s free movement of capital provisions.

Justification for Restriction

The Advocate General considered whether the tax difference could be justified by overriding reasons in the public interest. It was noted that reasons such as administrative convenience or the avoidance of financial loss to the state do not constitute valid justifications for restricting the free movement of capital. 


The Advocate General proposed that the CJEU should find that the tax treatment at issue constitutes a restriction on the free movement of capital that cannot be justified by the reasons advanced by Sweden.  

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