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Eurostat admits difficulty of pensions taxation

EUROPE – The European Union’s statistical office has admitted that the issue of how to treat pension taxation is difficult on both the conceptual and practical level.

“The treatment of taxes raised on pensions is a difficult area, both from a conceptual and practical point of view, which would benefit further work,” Eurostat.

“This work will also need to take account of the review Eurostat is doing on how the different national schemes should be classified in the national accounts.”

The remarks - in the 334-page 2004 edition of ‘Structures of the taxation systems in the European Union’ - follow legal action against EU member states over the pension taxation issue by the European Commission.

Last month the European Commission referred Spain to the European Court of Justice over pension taxation. At issue is the fact that pension contributions paid to non-Spanish funds are not tax deductible – unlike those paid to domestic funds.

The UK is also under threat of being taken to the ECJ over the same issue. Tax discrimination has been seen as a barrier to the provision of pan-European occupational pensions.

“It is unacceptable that some member states still practice tax discrimination against foreign pension funds,” said taxation and internal market commissioner Frits Bolkestein at the time.

But Alan Pickering, the chairman of the European Federation for Retirement Provision, was quoted recently as saying that a “lack of trust” between regulators was more of an obstacle to pan-European pensions than the taxation issue.

Eurostat added that in some EU member states the taxes raised on different type of pensions could not separately be identified from the income tax statistics – which it described as “unfortunate”.

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