Complementary pension tax breaks, pension funds

11 Jan

Posted by ReD as the 2007 Budget , News , FN

Tax incentives

To encourage € ™ s accession to the forms of complementary pensions, the new regulations came into force from 1st January 2007, provides significant tax advantages.

Taxation of contributions:
The contributions paid to supplementary pension, excluding severance pay, are fully deductible from total income, personal income tax up to a maximum of Euro 5,164.67. ² This usually results in a savings (in terms of lower taxes paid) equal to € ™ most high tax rate applied to the total income of the worker. For example, assuming that, for workers who pay the supplementary pension contributions equal to 500 Euro € ™ s rate of personal income tax more high is 29%, the actual cost to the employee will be equal to 355 Euros, with a tax savings equal to 145 Euro.
For the purposes € ™ s application of the maximum deduction must be calculated and also any payments from the employer and © contributions to taxable and tax-dependent.

Taxation of returns:
Returns, ie positive gains achieved as a result of the financial management of resources, are subject to substitute tax € ™ € ™ s 11%. This rate is more than that to the low yields achieved by other forms of investment.

Taxation of benefits, and advance purchase:
Pension benefits paid in lump sums and pension income are taxable only to the extent that it is not already been subject to taxation during the accumulation phase (excluding therefore not deducted the contributions and earnings already taxed).
Part of taxable pension benefits paid in any form is taxed at 15%, which decreased by 0.30% for each year of participation following the fifteenth. The maximum reduction is 6% which, however, after 35 years of participation applies € ™ s rate of 9%.
These rates are particularly favorable when compared to those for the TFR left the company. The TFR is in fact taxed, in general, with € ™ s application € ™ s average rate of taxation of the employee. Currently € ™ s most low income tax rate is 23% for incomes up to 26,000 Euros, so the rate applied to the TFR € ™ left the company shall not be less than 23%.
Although the sums received by way of anticipation and redemption are only taxed for the portion not already deducted from income or taxed.
Advances received support for health care costs and the sums received by way of redemption when in employment, mobility, redundancy gains, disability and death, are taxed at 15%, which decreased by 0.30% per year participation following the fifteenth. The maximum reduction is equal to 6% which, however, after 35 years of participation applies € ™ s rate of 9%.
Advances received for other reasons (purchase and renovation of the first home for other needs of work and © the purchase for reasons other than those described above to the extent allowed by statutes and regulations) are taxed in a fixed rate of 23 %.
In all cases, the determination € ™ s seniority required for discount rate of 0.30% will be taken into account all the years of participation in forms of complementary pensions that have not been redeemed.