PENSION FUNDS AND LIFE INSURANCE COMPANIES: WHERE ARE WE AT?

Pension funds and life insurance companies still unfairly taxed, with only few of them knowing their rights

Over the past 2 years, the European Commission has started infringement procedures in several countries, including Belgium and France, arguing that their levying of withholding tax on investment income received by foreign insurance companies has resulted in an unequal treatment of these companies. The Commission could file cases with the European Court of Justice (ECJ) in the event that these States fail to amend their respective legislation or provide satisfactory explanations which is still not the case as of today.

The European Commission's view

The aim of the European Commission is to challenge any sources of probable discriminatory tax treatments (i.e. infringement of the free movement of capital - Article 63 of the TFEU and Article 40 of the EEA Agreement), categorized as follows:

tax exemption benefits for residents,

taxation on net basis for residents and

withholding tax imposed on non-residents.

Globe Refund's view

There is evidence that many EU countries still impose unfairly high administration tax burdens on non-residents due to unclear legislation and have various tax administrative practices.

Both pension funds and life insurers require a thorough understanding of the potential for reclaims in EU countries and a robust strategy for filing their claims.

We encourage them to understand their rights regarding the WHT, thus enabling themselves to take appropriate action to protect their clients from overtaxation.