Varma’s mission is to implement statutory earnings-related pension provision. Carrying out this task requires that Varma invests pension assets profitably and securely. Our principle is to avoid double taxation on investment returns. Double taxation would lead to a lower return on investments and therefore contradict the ultimate objective of the investment operations and create pressure to raise pension contributions. Avoiding double taxation is also a basic principle of international tax regulation. In terms of our earnings-related pension system, it is important that capital gains and dividend and interest income obtained from abroad can be used to the fullest extent possible to cover statutory earnings-related pension security in Finland.
Varma is committed to acting in compliance with tax laws and regulations and rejects actions that, instead of business targets, aim to secure tax advantages contrary to the intention of the legislature. Varma does not engage in aggressive tax planning, nor does it partake in investment structures whose purpose is to avoid reporting obligations or make the beneficial owner of the income unidentifiable.
Varma closely monitors, e.g. the EU list of non-cooperative jurisdictions (i.e. the EU’s blacklist), and Varma does not invest in countries that are on the list or in investees situated in low tax rate countries for tax reasons. Our task is to invest pension assets profitably and securely. Considering the scope of Varma’s investment operations, this means that investments are made through larger and known funds which may also be situated in low tax rate countries. We do not make this choice for tax reasons, but instead for the options that are offered internationally to institutional investors. Varma’s approach is also that the tax domicile of the funds commits to an exchange of tax information between authorities. We also require that the fund management companies used by Varma take care of reporting and the payment of taxes in the countries in which business activities are pursued. International tax regulation and automatic exchange of information provide governments with better conditions for collecting taxes. In its investments, Varma complies with the tax laws and international tax rules of the investment country in question. In the absence of clear guidance by tax laws or rules, Varma’s leading principles are prudence and tax transparency.
Varma closely monitors changes in international tax regulation, as well as the development of standards and recommendations related to tax sustainability reporting. International tax development projects, such as the OECD’s Base Erosion and Profit Shifting (BEPS) project, combats tax avoidance and increases transparency and the automatic exchange of information in taxation. These provide governments with better conditions for collecting corporate taxes. Various standards and recommendations related to tax sustainability reporting, such as the Global Reporting Initiative (GRI) and Principles for Responsible Investment (PRI), support the development of sustainable tax reporting practices. Varma supports projects that aim to promote both international tax regulation and global reporting standards and also encourages its investee companies to comply with such regulations in their own operations.