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UK to OK equal pension tax treatment – PEPGO

EUROPE - The UK is likely to be the next European Union member state to approve equal tax treatment of European pension plans, according to the Pan-European Pension Group, or PEPGO.

PEPGO is currently negotiating with the UK tax authorities over a plan by the UK company AMS to place a senior UK executive in a pension scheme operated by its Dutch subsidiary. The group is a consortium of 20 multinational companies pressing for the harmonisation of European tax rules affecting pensions.

AMS is asking the UK Inland Revenue to grant the same tax privileges as would be given if the executive joined the UK scheme.

Until now PEPGO has assumed that the UK tax authorities would refuse and it planned to test the case in the UK courts and, if necessary in the European Court of Justice.

However, PEPGO spokesman Geoffrey Furlonger said that the recent Skandia case at the ECJ had set a precedent for other member states.

“When we started the idea was not necessarily to get approval but to test in the ECJ. Now we have confirmation of approval in the Skandia case the whole game has moved on and we are actively seeking approval from the UK.”

In June the ECJ rejected Sweden’s treatment of pension taxation in its final ruling in the so-called Skandia case. The case had been brought by Swedish life insurer Försäkringsaktiebolaget Skandia and its Swedish employee Ola Ramstedt.

They took on the Swedish government over the right for employers to claim tax deductions for premiums toward occupational pension plans sold by life assurance companies domiciled in another EU country.

A growing number of European Union member states are likely to drop tax discrimination, Furlonger said. “Germany and Holland don’t discriminate in their legislation. In theory Finland and Sweden will now give approval. Ireland usually follows the UK, so if we get this approval in the AMS case we will achieve a critical mass fairly soon.”

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