The European Commission has raised the stakes in its bid to get Sweden to end what it calls “discrimination” against foreign pension funds.
The Commission said it has decided to send a formal request to Sweden to amend its pension tax legislation. It said a proposal by the Swedish government in October to cut the yield tax rate from 27% to 15% for policies taken out with non-Swedish insurers did not go far enough.
“The Commission therefore considers that the Swedish legislation constitutes an obstacle to the freedom to provide services and the free movement of capital guaranteed by the EC Treaty and the EEA Agreement,” the Commission said.
The request is in the form of a so-called reasoned option – the second stage of the infringement procedure under the EC Treaty. The next stage would be the European Court of Justice.
It said: “The main problem is that, under Swedish law, pension contributions that an employer makes on behalf of his employees to foreign pension funds are not tax deductible while contributions paid to domestic funds are.
“This action demonstrates the new Commission’s commitment to continue the work commenced by the previous Commission on the elimination of tax obstacles to the cross-border provision of occupational pensions.”
“The EC is determined to tackle tax discrimination against occupational pension funds of other member states,” said Taxation and Customs Commissioner László Kovács.
He cited the ECJ’s 2003 judgment in the Skandia case as providing “very clear guidance on pension taxation”. He said: “Sweden must bring its law into line with that judgment without delay”.
“It is good to see that Commissioner Kovàcs has taken a bold stance since the beginning of his mandate against discriminatory tax practices,” said Leonardo Sforza, head of research at Hewitt Associates.

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