Taxation and Accounting

Taxation has a profound impact on occupational retirement provision in Europe. Pension funds are affected by taxation on retirement income, taxation on dividends and interest payments and value added taxation (VAT).

Taxation is mainly a matter of national competence. Cross-border tax regulations and initiatives do also exist. These are closely monitored by PensionsEurope.

Withholding Tax Procedures

PensionsEurope has welcomed the June 2023 European Commission’s proposal for a Faster and Safer Relief of Excess Withholding Taxes (FASTER) as an important piece of the Capital Markets Union (CMU) agenda. As cross-border investors, with 2.4 trillion euros of assets for EEA institutions for occupational retirement provision (IORPs) at the end of 2022, pension funds bear witness to investment barriers and costs within the single market, which ultimately impact negatively pension fund members and beneficiaries. 

Indeed, refund or exemption requests are often an extensive and burdensome process, with different procedures and requirements among Member States. This proposal could foster institutional investment among Member States by improving withholding tax relief procedures, which would allow pension funds to reinvest excess withholding taxes.

Thus, we praise the agreement on FASTER reached on 14 May 2024 at the Council  which will ultimatly benefit pension funds members and beneficiaries. The introduction of EU digital tax residence certificate will address the overreliance on paper-based processes across the EU, while the establishment of fast-track procedures will streamline the existing withholding tax procedures. 


In February 2013, the Commission issued a financial transaction tax proposal (FTT) through the enhanced cooperation instrument following the blockage of the former EU wide FTT proposal. The last discussion among the group of 10 Member States forming the enhanced cooperation schemes took place in first semester 2021 under the portuguese presidency of the Council.

PensionsEurope has repeatedly expressed its strong opposition to the FTT proposal, due to the disproportionate impact of this tax on pension beneficiaries, its indiscriminate application to all transactions and its dissuasive effect on non-EU based investors to enter the European financial market. In the view of PensionsEurope, the FTT does not address major market failures which led to the crisis. Rather, it may reduce market liquidity, increase the costs of financing and could also increase market volatility.

PensionsEurope strongly refuses the introduction of an FTT and invites the enhanced co-operating countries to dismiss the FTT. However, should the tax be introduced, then pension funds and financial institutions managing assets on their behalf should be exempt from its application. Pension beneficiaries, who are already severely affected by the crisis, should not pay for a financial crisis that neither they nor the pension funds caused. 


The Commission consulted early 2021 on a potential initiative to review VAT rules for financial and insurance services. In our answer (of May 2021) to the consultation, PensionsEurope indicates its support to the Commission’s objective to simplify the life of taxpayers operating in the Single Market and we welcome the review of the VAT rules. In general, we believe all pension fund participants should be protected from unnecessary VAT burdens, regardless the character of the schemes as well as the Member States in which the services are being received. The current exemption for special investment funds should be extended to all pension schemes.

Even though the VAT exemption is in place, in some countries, there is a stamp duty (for instance 4%) that is not subject or exempt from VAT and there is no possibility of any deduction. We urge the EC to recommend Member States to exempt (at least) pension schemes from this duty (or decrease their duty to no more than 1%).

Finally, we believe 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 initiative has been put on hold following political and technical problems. 



The International Financial Reporting Standards (IFRS) are a set of international accounting rules that try to harmonise worldwide how a particular transaction or event must be introduced in the annual financial statements of a company. They are issued by the International Accounting Standards Board (IASB), and replace the previous International Accounting Standards (IAS).

Particularly relevant for pension funds is the IAS 26 Accounting and Reporting by Retirement Benefit Plans, which outlines the requirements for the preparation of financial statements of retirement benefit schemes. Also IAS 19 Employee Benefits, revised in 2011, which outlines the accounting requirements of the sponsoring company (not by the funds themselves) of employee benefits, including post-employment benefit plans other than DC plans is relevant. IAS 19 was endorsed by the EU in June 2012, and it’s applicable to annual periods beginning on or after 1 January 2013.

At the IASB level, there are other account standards relevant for pension funds which were discussed, including:  (i) Accounting for macro hedging; (ii) IFRS 17 – Insurance contracts and (iii) the IASB discussion paper on a Review of the Conceptual Framework for Financial Reporting. The application since January 2018 in the EU of IFRS 9 – Financial instruments, is also relevant.

PensionsEurope actively participated in the revision of IAS 19 and will continue to monitor the latest accounting developments both at EU and at international (IASB) level. In this regard, in the beginning of 2019 PensionsEurope provided comments to EFRAG on accounting for pension plans with asset-return promise. We welcome EFRAG’s initiative to provide ideas and approaches for a more meaningful accounting of plans with asset-return promise, as the usual IAS 19 accounting approach does not always support “a true and fair view” on plans’ assets and liabilities. We will continue to closely follow this EFRAG project together with EFRAG’s other current projects through EFRAG Pension Plans Advisory Panel.

PensionsEurope also welcomes the amendments to the IFRS Foundation to enable the creation of a new sustainability standards board under the governance of the Foundation. PensionsEurope believes that broadening the scope of the IFRS to include non-financial / sustainable reporting standards is a step in the right direction both from the perspective of international companies as well as pension funds. Considering that the IFRS sets international accounting and reporting standards, this can ensure comparability in this area between different jurisdictions. Moreover, PensionsEurope also welcomes the elaboration and adoption of the European sustainability reporting standards and EFRAG’s extensive work on key governance and standard-setting matters related to sustainability reporting. PensionsEurope emphasizes the need for consistency between the future IFRS and European Sustainability Reporting Standards.