PGGM, APG call for reform to withholding tax rules

Dutch asset managers APG and PGGM along with lobbying organisation PensionsEurope have called for improvements to the “expensive” procedure to reclaim dividend tax paid in other EU countries.

On its website, PGGM – the asset manager of the €189bn healthcare scheme PFZW – said that it had required special service providers at “significant costs” to reclaim dividend tax.

However, the asset manager was unable to be specific about its refund costs. According a spokesman, the Dutch pensions sector as a whole stood to gain approximately €300m from withheld dividend tax.

He said that all pension funds were affected by the issue, whether they invested directly, in funds or through segregated accounts.

“However, small schemes suffer the most, as costs often outweigh the benefits of reclaiming withholding tax,” the spokesman said.

A spokesman for APG added: “In some member states, reclaiming withholding tax is complicated, and sometimes involves legal procedures.”

Together with PGGM and PensionsEurope, APG has also lobbied for simplified tax procedures.

PGGM’s response was triggered by a meeting organised by the European Commission about a code of conduct – aimed at advancing free movement of capital – for reclaiming withholding tax.

Recently, PensionsEurope also highlighted the issue, calling on the Commission and EU member states to continue reforming withholding tax refund procedures.

Both asset managers and PensionsEurope said that a code of conduct would be a step in the right direction, with PGGM arguing that such a code should lead to a pan-European IT platform for dividend taxes.

The asset managers’ wish list also included the agreement of an accepted fiscal definition of a pension fund. In some European countries, the current lack of such a definition is an obstable for getting the same fiscal treatment as local schemes, which are often exempt from dividend tax.

PensionsEurope has previously argued for tax reform to help promote cross-border investment by pension schemes.

The Dutch Pensions Federation said it hadn’t developed an opinion on the tax dossier yet but it was monitoring the issue.

Reclaiming tax is an issue faced by pension funds across Europe. Last year PensionDanmark received a DKK100m refund after a Danish court found in favour of the fund and several other pension scheme claimants, relating to tax withheld on foreign investments between 2010 and 2014.