The European Federation for Retirement Provision and accountants PricewaterhouseCoopers have lodged complaints with the European Commission against 18 EU member states for infringing the free movement of capital.
The EFRP and PWC’s EU Direct Tax Group have asked the Commission to start proceedings because they say member states tax foreign pension funds more heavily than domestic schemes. “The 26 complaints establish that pension schemes from abroad are discriminated against because of higher withholding tax on dividends and interest,” they add.
The EFRP said in April it planned to make a formal complaint to the Commission over discriminatory pension taxation.
Together with the complaints, the players have submitted a comprehensive study by PWC of the different tax systems applicable to investment returns of pension funds within the non-compliant member states, and the consequences under European law.
The EFRP and PWC are targeting Austria, the Czech Republic, France, Germany, Lithuania, Poland, Portugal and Slovenia for infringements of both dividend and interest taxation.
Denmark, Estonia, Finland, Hungary, Italy, Latvia, the Netherlands, Spain and Sweden are accused of violating EU law on only dividend taxation. The UK is targeted for infringement of interest taxation.
Both complainants are positive on the outcome. “Recent case law indicates that the European Court of Justice is likely to rule in favour of EU taxpayers, who have suffered discriminatory tax treatment under the laws of member states,” they say.
“The infringement procedures should result in legislative amendments aimed at equal taxation of domestic and foreign pension funds.”

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