Spain condemned for taxing foreign pensions
9 July 2004, BRUSSELS — Spain has been condemned by the European Commission for illegally discriminating against foreign pension funds, it was reported Friday.
9 July 2004
BRUSSELS — Spain has been condemned by the European Commission for illegally discriminating against foreign pension funds, it was reported Friday.
The Spanish government claims foreign funds, as opposed to funds paid in Spain, are not tax deductible.
Madrid was forced to accept it has been flouting European law and pledged to change pension laws by next year.
But the EC says regulations should be changed before 2005.
Under Spanish law, employees pension contributions are not taxed while those made by the employer are.
However, if the employer is making contributions to a fund in another country, they are obliged – at present – to pay tax.
The ruling has huge implications for many of the 2.6 million foreigners who are living in Spain who may be contributing the pension schemes in their own countries.
The EC brought a similar case against Britain for discriminating for tax purposes between one type of pension and another.
Brussels claims this is unfair and infringes European law.
[Copyright EFE with Expatica]
Subject: Spanish news