17 December 2001

Aspects of the Taxation of Occupational Pensions in the EU

FEE is launching a new survey reviewing aspects of the taxation of occupational pensions in the EU, which identifies the tax obstacles to the free movement of labour and the freedom to provide services within the Union. FEE believes that the development of Pan-European pension institutions recognising the tax principles of individual Member States to be the appropriate way of attaining single market objectives.

Occupational pensions are complex in their detail, as this new FEE survey shows. Something more comprehensive than the Council Directive of 29th June 1998 Council Directive 98/49 on safeguarding the supplementary pension rights of employed and self-employed persons moving within the Community (1998/49/EC) is needed. The Commission has been engaged in discussions with Member States and the pension fund industry. The idea of a centralised European pension institution has been developed by the pension industry and is being sponsored by the Commission COM (2001) 214, Communication from the Commission on the elimination of tax obstacles to the cross-border provision of occupational pensions.

Under the proposed arrangements Member States’ taxation arrangements would continue as at present. The Pan-European institution, would have different national sections dealing with the tax situation in each Member State.

FEE recommends:

– The double taxation inherent in the differing treatment of pensions taxation across the EU should be eliminated by means of double tax treaties
– Contributions to resident qualifying pension schemes by self-employed taxpayers should be tax deductible in all Member States.
– Payment of contributions to pension schemes in other EU states should enjoy the same tax status as contributions to resident pension schemes (the principle of the single market).
– Taxation of pensions in an EU state should be the same regardless of whether the pension arises from a resident or a non-resident source.

Commenting on the study, FEE Former Chairman of the Direct Tax Working Party, Terry Browne, said ‘FEE welcomes the initiative of the Commission in seeking to end discrimination in the pension market and believes the development of Pan-European pension institutions which recognise the tax principles of the individual Member States to be an appropriate way forward’.

Position Paper


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