| PENSIONS | A DOPTION  OF  THE  THIRD  LIFE  DIRECTIVE  in 1992 has led to the creation of a significant cross- border European market in life assurance business. Recent landmark judgments by the European Court of Justice (ECJ) now – at long last –  presage  the  development  of  another  cross-border business for insurers, this time in the field of insured pensions. The dismantling of national tax restrictions is now becoming a reality and is expected to lead to dramatic change in the European pensions landscape. Ramstedt case In a ruling laid down on 26 June 2003, the ECJ deliv- ered a long-awaited judgment on a landmark test case brought by the Swedish insurance company Skandia on behalf of its director, Ola Ramstedt. Instead of the usual Skandia Sweden pension arrangements, Mr Ram- stedt had been offered pension policies from Skandia UK, Skandia Denmark, and Skandia Germany. Unsur- prisingly, the Swedish tax authorities refused deduc- tion for the contributions paid to the foreign pension providers,  deeming  the  policies  to  be  endowment insurance rather than tax-preferred pensions. The case was then referred to the ECJ by the Regeringsrätten (the Supreme Administrative Court in Sweden). Swedish legislation gives tax deductions to employ- ers paying premiums to Swedish insurers, but denies those  benefits  to  employers  paying  premiums  to insurers based in other member states of the European Union (EU). The ECJ ruled unambiguously – after a notably  short  period  of  deliberation  –  that  this  is incompatible with Article 49 (freedom to provide ser- vices) of European Community law. The implications of the ruling extend beyond Sweden, as many other European  countries  currently  apply  similar  tax  dis- criminatory rules that so far have frustrated the estab- lishment of cross-border pensions. Sweden’s  attempted  defence  of  the  case,  on  the grounds of fiscal cohesion of the national system, was considered to be unconvincing. The court held that the need to prevent the reduction of tax revenue is not one of the grounds which would justify a reduction on the freedom to provide services. Member states already have three legitimate ways of safeguarding the taxa- tion of pension benefits received by their residents: u  reporting by the individual taxpayer; Cross-border pensions Gary Boal warns insurers that markets in European cross-border pensions are about to explode. continued on next page   å