Belgium’s council of ministers has approved a bill that will exempt cross-border pension funds from fiscal and administrative levies and said the new law would underline the country’s position as a top location for pan-European schemes.
The draft bill was put forward by the finance minister Johan Van Overtfeldt and approved by the Cabinet on Friday.
It proposes that Belgium’s tax code not apply to second-pillar pensions provided by a Belgium-domiciled pension fund or insurance company to a non-resident as long as there is no further connection to Belgium – for example, no taxable revenue is incurred in Belgium by the work the pension is linked to.
The proposed reform of the tax code would impose an obligation on the pension funds to provide the authorities annually with certain information in relation to the pensions for which the tax exemption was applied.
The measure is applicable as of 1 January 2017.
It is being passed to the council of states, the country’s highest administrative court.
A government statement said Belgium would “confirm its position as the country of first choice for the establishment of pan-European pension funds”.
PensioPlus, the Belgian pension fund association, said it was delighted the government had confirmed it would not be taxing cross-border funds.
“This decision,” it said, “represents an important stimulus for the further development of pension funds and additional pensions in Belgium.”
At present, 15 multinational companies – including Johnson & Johnson, Euroclear, BP and Alcon – have established pan-European pension funds in Belgium, and several other companies are looking to follow suit.
The financial supervisory authority in Belgium recently approved a pan-European pension fund for General Electric.
The European Commission has also decided to set up a cross-border scheme in Belgium for researchers who work in different EU countries.
PensioPlus said many companies were choosing pan-European schemes because they provided a better overview for governance and greater transparency.
“The joint management structure can also contribute to a higher pension through costs-saving and simplified management as a result of benefits of scale,” it said.
Dutch pension funds that have relocated to Belgium in recent months have also argued that supervision in Belgium is more flexible than it is in the Netherlands.