09 December 2016

PensionsEurope position paper on the EC's code of Conduct for relief-at-source from the withholding tax procedures

The obstacles with the withholding tax refund processes pose a major barrier to cross-border investments in the EU and to build the CMU. In order to boost the economic growth, PensionsEurope calls to remove all the withholding tax barriers to cross-border investments.

In April 2016 PensionsEurope published a position paper on the withholding tax refund barriers to cross-border investment in the EU. In the paper PensionsEurope provided several examples of the lack of reciprocal recognition of pension funds and problems with withholding tax (WHT) refund processes.

PensionsEurope welcomes all the EC’s upcoming work to remove barriers to cross-border investment that has been mentioned in the EC’s Action Plan on Building a Capital Markets Union:

• Code of Conduct to apply in principle the relief-at-source method and if relief-at-source is not possible to work with one standardized tax reclaim procedure for WHTs within the MSs. The EC aims to start working on it in early 2017;
• Study on discriminatory tax obstacles to cross-border investment by life insurance companies and pension funds. The study will be managed by DG TAXUD and the work should be launched in 2017;
• Where necessary, the EC aims to initiate infringement procedures.

Furthermore, MSs’ expert group has made progress in mapping barriers and exchanging good practices. PensionsEurope welcomes that building on this work, the EC aims to adopt a report by the end of 2016 that will list the barriers identified by the group, identify best practices, and set out a roadmap of proposed actions that MSs would be encouraged to take by 2019 at the latest.

PensionsEurope emphasizes that relief-at-source systems for the withholding tax are the most effective way to promote cross border investment and therefore calls upon the Commission to study the possibilities for a Directive to facilitate this, for amongst others pension funds, in the internal market. Meanwhile, PensionsEurope welcomes the initiative of the Commission to establish relief at source, quick and standardized refund procedures through best practices and a code of conduct. You can find PensionsEurope’s position paper and proposals on the Code of Conduct for withholding tax here.

Position paper

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