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D. GWl1lann: Tax treatme11l 01' pensions. A comparative analysis
It may happen, however, that some domestic systems do not comply
with this mode!. In particular, some countries restrict the deductibility of
the contributions. This is the case in Germany, for example, where the deduction
is limited to a maximum amount, the rest being treated as taxable
income (4 l. In Sweden, the contribution is also partly deductible, but the
remaining part of the contribution gives rise to a tax credit for the individuai.
It must also be mentioned that several countries do not allow a full
deductibility of contributions made by non-residents, which may be explained
by the specific regime applying to their income. In Portugal, for instance,
the non-deductibility of compulsory contributions to the Portuguese
social security system for non-residents must be connected to the principle
according to which income deriving from the exercise of an activity is taxed
at source at a flat rate of 25% without any deductions or allowances.
To dose this first section of the paper, it may be stated that the differences
between the European tax systems do not affect a generaI tendency
towards uniformity. It is ali the more interesting to come to such
a conclusion as the second and third "pillars" of the tax treatment of pensions
are subject to many more differences. It is therefore necessary to
focus more thoroughly on occupational pension schemes and personal
pension provisions.
II - Occupational pension schemes and personal pension provisions
A - Generai observations
Occupational pension schemes and personal provisions share some
basic features throughout Europe. Ali of them are private, funded and
voluntary. This latter aspect is of importance: il means that there is no
obligation in principle to subscribe to a pension scheme other than the
national one, unless a collective agreement between sodal partners provides
for such an obligation.
The diversity of domestic systems nevertheless appears at first glance,
when considering the actors of the system. Obviously, ali countries have
the same contributors, namely employers and employees. AIso, it may
happen everywhere that an employer decides to adopt in-house measures
for his employees and be the main manager of the pension scheme. He
may also require a bank or an insurance company to be involved in the
(4) Accordingly, the taxable proportion during the saving phase wiU not give rise
to supplementar:v taxation during the paying-out phase.
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