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EU Commission Orders Sweden To Amend Pension Tax Legislation

by Ulrika Lomas, Tax-News.com, Brussels

28 December 2004


The European Commission has taken the Swedish government to task over its tax legislation with regard to pensions, which the EU says unfairly discriminates against foreign funds.

Under Swedish law, pension contributions that an employer makes on behalf of employees to foreign pension funds are not tax deductible, while contributions paid to domestic funds are deductible.

“The European Commission is determined to tackle tax discrimination against occupational pension funds of other Member States," commented Taxation and Customs Commissioner László Kovács.

Specifically, the Commission has identified three areas in which Swedish legislation discriminates against foreign funds: the non-decutibility of insurance premiums; a higher rate of tax on yields; and more burdensome regulatory requirements.

"The Court of Justice has in its judgement in the Skandia case provided very clear guidance on pension taxation and Sweden must bring its law into line with that judgement without delay,” added Kovács.

The formal request that the Swedish legislation is amended represents the second stage in the Commission’s infringement proceedings.


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