European Commission Vice-President Valdis Dombrovskis admitted on Thursday (8 June) that full harmonisation across Europe, for the tax regime applied to the upcoming EU-wide personal pension insurance, was “unlikely”.
As part of the capital markets union mid-term review, the Commission announced it would submit a legislative proposal on a pan-European personal pension product by the end of this month.
Dombrovskis told a group of journalists that the intention is to create a framework to enable providers to offer their pension schemes to customers across Europe.
The goal is to correct the “unevenness” of the European market in this field, address the difficulties to switch between products and to facilitate the portability of pension savings and their tax incentives across the bloc.
Dombrovskis explained that the current system is a patchwork of tax legislation applied to pension products.
“It is unlikely that we will reach full harmonisation,” he added.
Tax issues are a highly sensitive topic among member states, and progress on this matter is rare, as national governments need to unanimously agree to coordinate how they raise their revenues.
The new EU-wide personal pension product is part of the legislative package the Commission announced as part of its efforts to improve the capital markets union.
The executive added that it will specify conflict of laws rules for the third party effects of transactions in securities and claims in cross-border contexts in the fourth quarter of 2017.
In early 2018, it will put forward new rules for an EU-wide framework for covered bonds.
The overarching goal of the capital markets union initiative is to increase the funding opportunities for European businesses and consumers and thus reduce the EU’s high dependency on the banking system.
As part of the package, the European Commission also aims at facilitating the development of the emerging sector of digital financial services (FinTech).
Dombrovskis said that the Commission backs an “enabling regulation” for this sector.
The executive’s FinTech task force started working last January and will unveil its preliminary conclusions during the second half of this year.
The European Commission is considering whether to create an EU licensing and passporting framework for FinTech to facilitate its activities for startups across Europe. A proposal may come by the end of this year.
European Commission Vice-President Jyrki Katainen said: "We are now expanding our scope to meet new challenges such as funding sustainable investment and harnessing the potential of FinTech."
Michaela Koller, director general of Insurance Europe, commented: “Insurers welcome the idea of a pan-European Pension Product (PEPP), which aims to help people to provide for their retirement and to boost long-term investments in Europe. But, to achieve this, the Commission must ensure that the PEPP is a true long-term pension product, with minimum investment periods and a decumulation phase."
- End of June: legislative proposal on a Pan-European Personal Pension Product (PEPP).
- End of 2017: Conclusions on an EU licensing and passporting framework for FinTech activities in the fourth quarter of 2017.