The European Court of Justice (ECJ) on 18 July 2013 issued a decision in a case concerning Denmark’s exit tax. The case was brought by the European Commission.
At the point where a person leaves Denmark an exit tax is calculated on the person’s portfolio of shares. The exit tax is not collected immediately on the person’s departure from Denmark but is collected as the shares are sold or as dividends or other types of income are paid on the shares.
The ECJ held on 18 July 2013 that by imposing an exit tax in this way when a company transferred assets out of Denmark to another member state, Denmark was not fulfilling its obligations under Article 49 of the Treaty on the Functioning of the European Union (TFEU) and Article 31 of the EEA agreement. These articles prohibit restrictions on the freedom of establishment of nationals of a member state in another member state.
