PensioPlus, the Belgian pension fund association, has warned the country’s government against implementing a financial transactions tax (FTT), saying it would undermine its efforts to make the country a prime location for cross-border pension funds.
Other financial services industry bodies have also been warning the Belgian finance minister against supporting the introduction of an FTT – or ‘Tobin’ tax, as it is also known.
A draft of a directive on an EU FTT, which would apply to 10 of the EU’s member states, is being keenly anticipated by industry bodies in the 10 member states negotiating on this, of which Belgium is one.
A statement from the Belgian insurance industry association, Assuralia, suggests it is anticipating a decision from the Belgian finance minister this week.
A spokesperson for the minister, Johan Van Overtveldt, said the government had not yet received the text from the European Commission and would only come up with the timing of a decision after seeing the proposal.
PensioPlus on Friday said applying an FTT would have a “devastating” impact on Belgian pension funds and a net loss for pension fund members.
The “inevitable consequence”, according to a statement from the association, would be that Belgium would lose all “power of attraction” as a destination for cross-border pension funds.
Furthermore, it said, those cross-border pension funds already established in Belgium would be prompted to leave, seeing as neither the Netherlands nor Luxembourg are going to apply the tax.
Agreeing to an FTT could mean Belgium loses its “prime location status” for pan-European pension funds, said PensioPlus.
The government recently announced beneficial administrative and fiscal treatment for cross-border pension funds, its latest move in a drive to position itself as an attractive location for pan-European schemes.
PensioPlus also said that, if pension funds fell under the scope of the FTT directive, an employee member of a workplace pension plan would lose out.
It said scheme members would lose the equivalent of 5-24 months of pension contributions, as these would go toward paying the tax rather than building their pension.
The association said the direct cost to Belgian pension funds would be around €20m on an annual basis but that total costs could be up to 3-4 times as much when indirect costs were taken into account.
Under the EU ‘enhanced cooperation’ procedure being followed for the FTT law-making, a minimum of nine member states must endorse the proposal from the European Commission for it to be taken forward.