Reform of statutory pension affects tax deductibility of supplementary pension

What exactly will change?

The premiums you pay to build up a supplementary pension are deductible in your company. To qualify for this deductibility, however, you must take into account the 80% limit. Based on that 80% rule, the statutory pension was always set at 25% of the gross annual salary.

The tax administration has changed this method of calculating the statutory pension in a new Circular 2022/C/33 for individual pension commitment (IPT) and group insurance for self-employed business owners.

New proportional calculation method

As from assessment year 2022, the administration imposes a proportional calculation method. This takes into account, on the one hand, the fact of whether the career years were worked before or after 2021, and, on the other hand, your social security status during those career years.

In short, this amounts to the following breakdown:

• For the career years you worked on a self-employed basis before 2021, the statutory pension is estimated at 25% of the gross annual salary of 2020.
• For the career years you worked on a self-employed basis from 2021 and also for the career years you worked as an employee before 2021, the statutory pension is estimated at 50% of the gross annual salary.

So it is important to take a careful look at and recalculate your 80% limit before the year end. In this way you are assured that you qualify for a full tax deduction of the premium in your company.

Tolerance for assessment years 2022 and 2023

For assessment years 2022 and 2023, the tax administration allows a tolerance. The portion of the premiums that would not be deductible under the new calculation method will not be considered a disallowed expense. In that case, however, you must enter the surplus in an account ‘49 costs to be carried forward’. In this way, the surplus is considered as an advance on the premium you have to pay in 2023.

The tolerance does not apply to contracts with end dates in 2021, 2022, 2023. Nor does it apply to the portion of the premium that concerns a back service you apply during the last five years of the contract.

If you have any questions about the new calculation method or the tolerance, do not hesitate to contact us.