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News

Pension premiums paid outside Belgium are tax deductible


Date:
20 January 2007

The Belgian Parliament has finally complied with European Community Law in respect of cross border occupational pensions (Law of 27 December 2006, Belgian State Gazette 28 December 2006).

Indeed, with effect from income tax year 2007 (calendar year 2006) Belgium lifts the ban on the tax deduction of the employers’ contributions paid to a pension organism established outside Belgium. This means that if an employer contributes to a pension institution established in another Member State of the European Economic Area (i.e. the 27 Member States of the European Union as well as Norway, Iceland and Liechtenstein), the contributions are tax deductible within the conditions mentioned in article 59 I.T.C. 1992 (in particular the 80 %-rule)

The same rule applies to the tax credit an employee is entitled to in respect of his personal contributions to a non Belgian pension institution.

This modification makes it easier to second employees (temporally or permanently) to another EEA Member State; they can maintain and continue to build up their occupational pension in one Member State. It also offers opportunities for your company to look for the best conditions on the European market for the funding of your occupational pension plan.

On another tack, the parliament has also taken the opportunity to limit the effect of the ‘exit tax’. Article 364bis I.T.C. 1992 provides that the cross border transfer of the pension capital is deemed to have been paid out on the day before the taxpayer takes up residence abroad. The effect of this ‘exit tax is limited to taxpayers taking up residence outside the European Economical Area unless a double tax treaty applies.

Also since income tax year 2007, the pension capital or pension reserves can be transferred to another pension fund, insurance company or pension institution located in another Member State of the European Economical Area, without incurring any tax liability (article 364ter, 1ste paragraph I.T.C. 1992).

We would be pleased to discuss these issues with you and to examine whether these important modifications offer planning or tax optimisation opportunities to your company in respect of your occupational pension plans.


 

 

 

Vandendijk & Partners - Advocaten - Avocats - International Tax Law
rue Edith Cavell 66 - B-1180 Brussels - Tel +32 (0)2 343 33 45 - Fax +32 (0)2 343 41 45


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