EC demands cross-border pension change

The EC has formally requested the UK to amend legislation that in certain circumstances denies deductibility of contributions paid to pension funds established outside the country.

If no satisfactory response is received within two months the commission may decide to refer the matter to the European Court of Justice.

It concerns income tax rules that deny workers based in the UK the right to deduct contributions paid to pension funds established elsewhere in the EU or in the European economic area (EEA).

UK legislation denies such deductibility if an overseas pensions fund does not provide certain information. For example: the date the pension is due to start and the capital value of the pension to the UK tax authorities.

The EC believes that the UK should allow tax relief on all pension contributions paid by resident taxpayers to funds established in other EU and EEA member...