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D. Gutmann: Tax treatment of pel1sions. A comparative anal:rsis
the tax treatment become TEE. This is the case in Luxembourg, where employees
subscribing to occupational schemes are taxed at a !lat rate of 25%
in the contribution phase. This very originai mie can be explained by the specific
situation of a country which hosts many foreign workers who do not
necessarily intend to spend their old days there. The perspective of a tota! exemption
of pension payment also serves as a tax incentive to establish in Luxembourg,
since it leaves the overall taxation at a level of 25%. The Danish
case is also to be noticed insofar as an g% labour market contribution is
levied on the employee at the time of the contribution (5). The German case
could also be mentioned here, because of the partial application of the TEE
system, but some further details will be given later ono
I! also happens that the EET Mode! will be set apart in favour of an
ETT system. In Italy, for instance, employee's contributions to private
pension funds are tax exempt (6) while the financial returns gained by
private pension institutions are subject to a Il % tax. In Sweden, a 15%
annual yie!d tax is also levi ed on Swedish residents who hold funds or reserves
re!ated to pensions (7). In Switzerland, capitai gains made by second
and third pillar funds on real estate are taxed.
It may thus be observed that the EET system definitely admits important
exceptions. Such a conclusion is not particularly originai if compared
to the Commission's results. It is far more interesting, in retum, to
observe that those countries which are said to comply with the EET Model
often apply other models at the same time.
2') S0111e coul7tries simultaneousl.\' appl." EET and o/her 1Il0deis
As everyone knows, if tax law were simple, there would not be tax
lawyers anymore (8) ... This is why \Ve should express our gratitude to
(5) Denmark also levies an annual capitai gain tax on the fund (15%). See N.
Winther-Sorensen. "Taxation of Cross Border Pension Provision", paper presented at
the EATLP Meeting of Lisbon, lune 2001, p. 2.
(6) This exemption only applies \\-ithin a maximum amount of 12% of the empIoyee's
incorne up 10 a limit of about 5.100 ? (see F. Marchetti and E. Ruggiero, "Taxation of
Pensions in Italy", paper presented at the EATLP Meeting of Lisl:xm, lune 2001, pp. 5-6).
(7) This does not prevent the pension payment to be taxcd as \Veli, thus making
the Swedish system an EIT one.
(8) No \Vorry about this pcrspective: as H. J. Ault put it, "simplification is a complex
problem" (see "Tax simplification from a Comparative Point of View", in lnterl1atiol1al
Studies il1 Taxmioll: [alt' alld EC01lOmics, Liber Amicorum Leif Mutél1 , KJuwer
Lav.: International, Scries on International Taxation, n° 21, 1999, p. 43).
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