Belgium defends pension savings tax perk
30 January 2014
Posted by: Author: Ulrika Lomas
Author: Ulrika Lomas (Tax-News.com)
Responding to a decision by the European Court of Justice (ECJ), Belgian Finance Minister Koen Geens and Pensions Minister Alexander De Croo pledged to find an "appropriate solution" guaranteeing that the pension savings (épargne-pension) tax break be maintained.
In case number C-296/12, the ECJ ruled that certain aspects of Belgian legislation, relating to the tax advantage accorded for contributions paid into a pension savings account, contravene Article 56 of the Treaty on the Functioning of the European Union (TFEU).
In its decision the Court said: "It must be held that, by adopting and maintaining the tax reduction in respect of contributions paid to a savings pension in so far as that reduction is applicable only in respect of payments to institutions and funds established in Belgium, the Kingdom of Belgium has failed to fulfil its obligations under Article 56 TFEU."
Commenting, Belgian Finance Minister Koen Geens announced plans to carry out an in-depth examination of the Court's decision, with a view to finding "an adequate solution" that will allow Belgium to preserve the pension savings tax shelter. Given that the ECJ has not fundamentally called the measure into question, there must be "an appropriate response to the discrimination," as was the case when a similar ruling found Belgium's savings account tax break to be "discriminatory," Finance Minister Geens insisted.
Underscoring the importance of maintaining the regime, Belgian Pensions Minister Alexander De Croo highlighted the fact that the provisions serve to benefit the 2.7 million individuals that currently contribute to a pension savings account. The regime greatly increases pension capital, thereby significantly improving the quality of retirement for pensioners in Belgium, De Croo argued.
Furthermore, Pensions Minister De Croo made clear that international institutions, including the European Commission and the OECD, are constantly emphasizing the importance of supplementary pensions, and the need to promote individual pension savings.
It is therefore vital to find a solution that responds to the judgement, while at the same time maintaining the fiscal measures that encourage pension savings, De Croo ended, stressing the importance for the Belgian economy of freeing up funds for long-term investments.
This article first appeared on tax-news.com.