Pension plan – March

Finally, the General Management of Taxes (DGT) has issued a binding answer to the question raised by the maximum reduction limits in the tax base of the Tax for contributions to pension plans, and similar instruments.

The general opinion in the industry is that the answer is not understandable enough, adding instead more confusion. But for us, it is clear enough as it considers the following points:

• – As business contributions, only the contributions of the promoter of the pension plan.
• – The limit of 2,000€ x year is the sum of the contributions made by the taxpayer and the contributions of the promoter.
• – The maximum limit of 10,000€ x year will be if the taxpayer does not make contributions.

Therefore, the new limit of 2,000€ x year is the sum of the contributions to private pension plans and occupational pension plans as a participant (previously 8,000€ x year).

The promoter’s annual contributions of 8,000€ do not change.

What’s really new is the fact that, if the taxpayer does not contribute with 2,000€ x year, the promoter’s contribution can reach up to 10,000€ x year.

Furthermore, we cannot forget the tax limit of 30% of net income from work. The 30% limit will be effective for net incomes of less than 33,333.33€ x year and contributions of 10,000€ x year.

It will be necessary to study individually those occupational pension plans whose contributions from the promoter are conditioned on the contributions of the workers. There will always be a solution with excess insurance contracts.

Jaume Quibus

The actuary and economist Jaume Quibus holds a master’s degree in Financial Economics and Accounting, a degree in Actuarial and Financial Sciences, a degree in Economic and Business Studies from the University of Barcelona and has completed the Management Development Programme at the IESE Business School of the University of Navarra. He is a full member of the following associations: the Catalan Actuarial Association, the Spanish Actuarial Association, the Catalan Economists Association, the International Actuarial Association, the Catalan Association of Accounting and Management and also a member of the IESE Business School Alumni. He was a founding partner in 1998 of the actuarial company Quibus, and is corporate member number 6 in the Catalan Actuarial Association.