VB issues warning on Dutch VAT (amended)

NETHERLANDS - The Dutch association of industry wide pension funds, VB has said the Dutch government should stop charging pension funds tax on the use of investment management services.

It is understood the Dutch cabinet has decided not to follow the example of Luxembourg, Ireland and Belgium and exempt pension funds from corporation tax on hired investment managers, so VB chairman Willem Noordman said yesterday: "Lets not make the Netherlands unattractive by charging VAT that doesn't exist elsewhere."

Agnes Jongerius, chair of Holland's largest union FNV, alleged "the taxation shows a half-hearted cabinet policy," referring to the country's recent attempt to promote itself as a domicile for pension funds and other financial institutions.

Both Jongerius and Noordman, speaking about the Dutch pension fund industry at the VB's Pensioen Panorama in The Hague yesterday, said the continued taxation would hinder the Netherlands' growth as a centre of financial expertise.

Earlier media reports suggested the Dutch ministry of Finance will reject the European Commission's recent proposal - which needs to be adopted unanimously by the 27 European member states - to exempt pension funds from the tax.

However, a spokeswoman for the ministry told IPE no decision has been made yet.

"The European Commission has drafted a instruction which says pension funds can be seen as collective capital, however this instruction does not yet have any status and is a document following which member states will brainstorm the issue," she said.

According to the ministry, all European member states still need evaluate the directive and make decisions accordingly.

Asked if the ministry had made any decision at all on the matter, the spokeswoman said: "There has been a court case with the court in Breda, which decided that pension funds can be seen as individual capital, so hence that there should be no exemption."

She added: "However, the other party has gone into a high court appeal, and the high court is currently looking at the issue."

The spokeswoman did not expect any decision to be made before next year.