PensionsEurope promotes good pensions for the people of Europe

CMU and long-term financing

Capital Markets Union

Increasing long term investments in the real European economy is the core policy of the Capital Markets Union (CMU), and this means it is vital that the CMU works for pension funds.

Many pension funds currently encounter barriers in the form of a mismatch between their own long-term investment horizons and the short-term focus of much of the regulatory framework. 

Furthermore, political and regulatory risks are a key source of uncertainty for investors and can undermine pension funds’ willingness to invest.


The obstacles with the withholding tax (WHT) procedures pose a major barrier to cross-border investments in the EU and to build the Capital Markets Union. In order to boost the economic growth in the EU, PensionsEurope calls on the European Commission to remove all the WHT barriers to cross-border investments. This means that the EU Member States shall respect the case-law of the Court of Justice of the European Union, reciprocally and automatically recognize pension funds, and simplify their WHT processes.

A large number of practical problems with the WHT refund processes still exist in spite of the EFTA judgment “Fokus Bank” (2004) and the case law of the Court of Justice of the European Union i.e. “Denkavit” (2006), “Amurta” (2007), “Aberdeen” (2009), and “Santander” (2012). The above-mentioned cases have shown that the WHT practices in many EU Member States are discriminatory with respect to dividends earned by foreign funds, and therefore, contradicting the European law.

The WHT refund processes are complex, expensive, and long-lasting. Often they can last even 10 years and cost half of the expected refunds, as costly tax advice in foreign languages is needed. Since the legal outcomes are uncertain, given that the legal recourse involves several levels of jurisdiction, often pension funds do not assert their justified reclaims. Therefore, PensionsEurope calls on the EU Member States to ensure simple, transparent, and inexpensive WHT refund processes.

PensionsEurope emphasizes that relief-at-source systems for the WHT are the most effective way to promote cross border investment and therefore calls upon the EC to study the possibilities for a Directive to facilitate this, for amongst others pension funds, in the internal market. PensionsEurope adopted in December 2016 a Position Paper on the EC’s Code of Conduct for relief-at-source from the withholding tax procedures.

Meanwhile, the EC’s code of conduct should be ambitious and it should not only list the best practices in different Member States, but it should also contain (i) clear deadlines, (ii) a list of the questions that the authorities are entitled to ask from pension funds (and which not), and (iii) clear procedures how authorities should handle the information in order that procedures are not too long and burdensome for pension funds. Furthermore, Member States should make a strong political commitment to respect the code of conduct.


PensionsEurope supports the Commission’s initiative to develop an EU framework for simple, transparent and standardized securitization.

First and foremost, we believe that a new EU securitization framework should be internationally consistent. Hence, we suggest to align any future EU legislative measure with the Basel Committee/IOSCO recommendations and to harmonize the regulatory definitions of securitizations typologies existing across the EU.

The standardization of definitions, of information disclosure and of performance metrics across the EU could have a positive impact on the development of EU securitization markets, help ease investors’ analysis and increase the comparability of securitization instruments across the EU. The development of high quality securitization should not prevent however the development of other, non-standardized, securitized products.