The European Court of Justice has ordered the Netherlands to change the rules governing the current pension system so that people who move to another EU state can take their pensions with them more easily.

The legal battle over the strict Dutch rules on pensions started some 10 years ago, and now the court has ruled the Dutch regulations are not in line with EU rules on the free movement of people and capital.

Under Dutch law, people who want to move their built-up pension capital to another EU land have to pay tax, if the rules for cashing in pensions are more relaxed in that country. Given the Netherlands has strict rules for cashing in a pension early, most people will end up having to pay.

This tax can lead to people not making the decision to move, and so infringe on free movement, the court said in its ruling.

The case against the Netherlands was brought by the European Commission.