|
|
Wednesday, 24th April 2024 |
| Obstacles listed to single market |
Back |
| Forum to discuss the tax obstacles to the provision of pan-European pensions hears that test case may be imminent and that multinationals are stepping closer to pan-European pension provision. |
There have been calls for a more coordinated approach to structuring pan-European pensions at a European forum to discuss the tax obstacles that are still preventing cross-border provision.
Anne Maher, chief executive of The Pensions Board participated in the forum to address the tax obstacles to the cross-border provision of occupational pensions and look at the impact of the EU Pensions Directive on European pensions. She reiterated the EU’s call for a coordinated approach, rather than tax harmonisation, in the structuring of pan European Pension Plans.
Maher was the only European Pension Authority representative speaking at the forum, which was also addressed by European investment managers and MEPs Othmar Kara and Piia-Noora Kauppi.
Addressing the issue of tax obstacles on labour mobility Maher said ‘As tax treatment of pensions is different within the 15 EU member states and the same tax relief is usually not allowed on cross-border pension contributions, this situation effectively prevents pan-European pension plans. At this stage 5 million EU citizens are residents of member states other than their state of origin, so cross border issues are significant.’
The Tax Communication from the EU Commission supplements the Proposal for A Pensions Directive and deals with tax aspects of cross-border occupational pension provision on the basis of interpreting of the EC Treaty.
The Tax Communication maintains that national rules denying equal treatment to pension schemes operated by pension institution established in other member states are in breach of the EC Treaty. Such tax obstacles also inhibit the competitiveness of European industries. The Tax Communication moves towards enabling employees of multinationals to belong to the same pension institution wherever employed and multinationals having choice of operating national or pan-European pension arrangements. Member states could, however, maintain their own approach to taxation of pensions for residents of their own states.
According to Maher, ‘the Tax Communication is very important as it does not propose legislation to harmonise pension tax systems, rather a system of perhaps bilateral solutions and an EU wide coordinated approach. The benefits to all are many, as this should deliver cross-border tax relief on cross-border pensions contributions, employers having choice of pension plan location and opening up all new opportunities to pension providers.’
In order to progress pan-European Pension plans, Maher also mentioned the likelihood of a test case regarding existing state tax obstacles being brought before the European Court of Justice. She said ‘a case in the European Court may be the catalyst to move member states to giving the same tax treatment to pension contributions made to institutions in other states, considerable progress has been made towards such a case and it is understood that a case is now imminent. |
|
| Article appeared in the July 2001 issue.
|
|
|
