PensionsEurope has welcomed the European Commission’s (EC) consultation on withholding taxes (WHT) but has stressed the need for a European Union (EU) tax register of recognised pension institutions.

In response to the EC’s consultation, the association said it supports the EC’s mandate for removing all barriers to the completion of the Capital Markets Union (CMU) – particularly in the field of simplifying taxation.

“We warmly welcome that several EU countries have already introduced (or are planning to introduce) enhanced procedures to make WHT procedures more efficient, and we strongly agree with the commission that there is a need for EU action to make WHT refund/relief procedures more efficient. The high added value of an action at EU level would be that there would be an EU wide harmonized framework in place and no more fragmented WHT systems across the EU,” PensionsEurope wrote.

From a pension fund perspective, the association noted that it has long stated that relief at source is the best practice for pension funds. However, it said that there are also many other recent WHT proposals which the EC should thoroughly consider.

“PensionsEurope has proposed to the commission to establish an EU tax register of recognised pension institutions in order that member states can reciprocally and automatically recognise pension institutions.

“Furthermore, in many countries pension institutions invest cross border via specialised investments funds and/or vehicles to increase the economies of scale, and it is important to ensure a tax-neutral treatment of these investment structures as well. Finally, PensionsEurope believes that establishing a cross-border investment-friendly tax environment in the EU not only requires removing unfair tax treatment but also introducing tax incentives,” the association noted.

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