This paper argues that Value Added Tax (VAT) should be excluded from the 1% cost cap on the Basic Pan-European Personal Pension Product (PEPP). Under current rules, investment firm providers must count VAT within the cap, while insurance-based providers are exempt, creating an uneven playing field. The paper explains that VAT is an external consumption tax, not part of a provider’s discretionary costs, and including it distorts competition across providers and Member States.
LifeGoals recommends that EIOPA clarify the rules so the cap applies only to providers’ own fees (net of VAT), with taxes transparently itemized for consumers. It also proposes classifying digital PEPPs as electronic services, simplifying VAT compliance through the EU’s One-Stop Shop regime. These changes would ensure fairness, support competition, and strengthen the viability of PEPPs as a scalable, cross-border retirement solution.
You can download the full paper here.