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23rd Sep 2023

ECJ ruling to prompt pan-European pension schemes

Establishment of a pan-European pension scheme is more likely after a European Court of Justice ruling on Thursday, which states that tax breaks for pension schemes should apply across borders. A worker in any EU state who has a pension scheme in another European country could have the right to continue paying into the scheme without significantly losing tax benefits.

The verdict is believed to be a move towards breaking down the biggest obstacle to a single pan-European pension for workers who move between countries. The ECJ ruled in favour of a doctor who lives in Finland but contributes to pension schemes in Germany. The dual Finnish and German nationality doctor, moved from Germany to Finland and continued to contribute to two German pension schemes.

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  • COURT OF JUSTICE - the verdict is believed to be a move towards breaking down the biggest obstacle to a single pan-European pension for workers who move between countries. (Photo: European Court of Justice)

The Finnish government argued that the contributions should benefit from reduced tax breaks because they had been paid to a foreign scheme. However, the court said that governments should not be "restricting or disallowing [tax breaks] of contributions to voluntary pension schemes paid to pension providers in other member states.

The judgment is likely to be held up as an example for companies that want to offer one corporate pension scheme for all their employees in different EU countries and for workers who start saving for their retirement in one country and want to continue saving in another, writes the Financial Times. Pension campaigners said the ruling could prompt a string of similar cases from other countries.

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