European Association of Public Sector Pension Institutions
EAPSPI
Mission: EAPSPI is…
ID: 453224331082-90
Lobbying Activity
Meeting with Tilman Lueder (Head of Unit Financial Stability, Financial Services and Capital Markets Union)
10 Oct 2025 · Occupational pension schemes in Sweden
Response to Review of the VAT rules for financial and insurance services
18 Nov 2020
• EAPSPI supports the initiative of the EU Commission to review relevant VAT rules and see leeways for the clarification of the legal base of VAT exemptions of (public sector) pensions schemes in the EU – but we are clearly against a general abolition of the system of VAT exemptions or relevant VAT exemptions as described as clearly preferable solution of the Commission in the VAT roadmap. We see no need for significant changes to the general system of exemptions as we do not agree with the stated advantages in the Commission’s Roadmap (the advantages of the abolition of exemptions = VAT neutrality and the simplification and legal certainty of VAT rules).
• The VAT exemptions (especially Art. 135 (1) lit. a and lit. g VAT Directive) significantly contribute to the cost effectiveness and the level of old age income via occupational pensions. An abolition of those exemptions would be in our opinion counterproductive as this would be detrimental to the promotion of pensions and capital formation via pensions that is on the EU agenda for the Capital Market Union and the development of pension systems. To achieve the addressed goal of VAT neutrality in order to foster the outsourcing of services in the supply chain (i.e. businesses where high IT investments are needed / fintech) the problem could be solved by a “true” VAT exemption of pension services that enables pension schemes to deduct VAT on purchased services while keeping the VAT exemptions for pension schemes itself.
• With regard to VAT neutrality: If VAT exemptions for financial and insurance services would be abolished in a broad manner to create “VAT neutrality” this would at the end lead to an increase in cost and a reduction in benefits for beneficiaries because the cost decrease under way for purchased preliminary products and services will not outweigh the likely increase due to the abolition of VAT exemptions. A blanket abolition of VAT exemptions would have far-reaching negative consequences that are not addressed in the EU-Com roadmap. If the VAT exemption were to be extensively abolished, pension funds would have considerable negative effects on their contribution side on the one hand and in the area of asset management through investment funds on the other side. The theoretically possible cost savings in the upstream supply chain mentioned in the roadmap will not outweigh the additional costs at the level of the pension scheme, and the transfer of the cost savings is clearly dependent on the market power of the actors involved.
• And with regard to the simplification and reduction of legal uncertainty we think that the legal uncertainty and the mass of relevant EU case law arises mostly from the fact that pension schemes have to qualify under Art. 135 (1) g VAT Directive for special investment funds that focuses on and emphasizes characteristics of investment funds (i.e. risk taking by members) and that leads to a differentiation of exempted pension schemes and to complex case law. To reduce this kind of legal uncertainty and resulting complexity in arrangements a clear and undisputable legal exemption from VAT for pension schemes is needed to avoid the necessary qualification and interpretation of pension schemes under Art. 135 (1) g VAT directive. This would be much more effective than disrupting the system of relevant VAT exemptions in total. This could be easily achieved by extending the current exemption in Art. 135 (1) g VAT directive for special investment funds to all pension schemes and plans.
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