Relief for overseas pensions

People who contribute to pension schemes located in other EU member states will benefit from tax relief at Irish rates, it was confirmed in the Finance Bill yesterday.

Under the EU Pensions Fund Directive, which member states must implement by September, it will be possible for companies to locate their pension funds in other EU jurisdictions.

Yesterday's measure ensures that employers and employees located in Ireland will receive Irish tax relief, subject to the annual limits, on any contributions made to cross-border pensions, provided the member state concerned has implemented the directive.

Pensions providers located in other EU member states who are managing pension schemes aimed at Irish residents may be required to either operate PAYE on the payments or have a fiscal representative resident in the Republic.

The Finance Bill also establishes that cross-border occupational pension schemes do not have to be established in the form of a trust.

It also allows tax relief at Irish rates in certain circumstances for contributions to cross-border pension plans made by migrant workers who come to live in the Republic but wish to continue contributing to their existing pension plan.

Migrant workers must supply information on their contributions in order to receive the relief.

The Revenue Commissioners have been given powers to obtain information from pension providers located in other EU states, including information on pension payments.