The European Association of Paritarian Institutions (AEIP) has welcomed the European Commission’s Direct Taxation Omnibus proposal, arguing that removing withholding tax barriers could support pension adequacy and the Savings and Investments Union.

The Commission adopted a tax simplification package on 24 June 2026, comprising the Direct Taxation Omnibus and a recast of the Directive on Administrative Cooperation (DAC).

The package is designed to simplify EU tax rules, reduce compliance burdens for businesses and improve the competitiveness of the single market, while maintaining protection against tax fraud, evasion and avoidance.

It is expected to save EU businesses around €8bn annually.

AEIP said the Direct Taxation Omnibus was particularly relevant to pension institutions, as it recognised their role as long-term investors in Europe’s economy.

The proposed amendments to the Parent-Subsidiary Directive would extend withholding tax exemptions on dividends and other profit distributions to pension institutions.

The proposal would also remove the current minimum participation threshold and repeal prior authorisation procedures used to verify exemption conditions at the time of payment.

AEIP argued that removing withholding tax barriers would help pension funds reduce administrative costs, improve investment efficiency and make European capital markets more attractive for long-term pension investors.

The association also noted the proposal was consistent with the objectives of the Savings and Investments Union, stressing that pension institutions must be able to invest across the EU without unnecessary tax frictions if Europe wants to mobilise long-term savings for productive investment.

AEIP executive director, Simone Miotto, said: “Removing withholding tax barriers for pension institutions is not only a tax simplification measure.

“It is a concrete contribution to increasing pension adequacy, long-term investments and strengthening the Savings and Investments Union.

“The Commission proposal rightly recognises the specific role of pension institutions as long-term investors acting in the interest of members and beneficiaries.”

AEIP also welcomed proposed adjustments to the FASTER framework, which are intended to ensure that relief-at-source and quick-refund procedures are available where exemptions are claimed on publicly traded securities.

The association claimed this would be essential for pension funds investing through normal custody chains and financial intermediaries.

However, AEIP raised concerns that key provisions relating to the Parent-Subsidiary Directive would apply only from 1 January 2037.

It warned that such a long delay would significantly weaken the impact of the reform and postpone its benefits for pension institutions and their members.

AEIP also said further clarification is needed to ensure that the exemption can apply effectively where pension institutions invest through collective or pooled investment vehicles.

The association called on the Council of the EU and the European Parliament to support the commission’s approach, arguing that it would help enhance pension adequacy and advance the Savings and Investments Union.

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