Every supplementary pension capital paid out in Belgium is subject to two withholdings by way of social security contribution: the contribution relating to the legal sickness insurance (3.55 % of the pension capital) and the so called solidarity contribution (2 % of the pension capital). These two withholdings are also carried out on supplementary pension capital paid by Belgian group insurers or Belgian pension funds to people who live abroad and who are not subject to Belgian social security.
However, since 1 May 2010, a new development in EU legislation changes the picture. The new European social security co-ordination Regulation (Regulation 883/2004) came into force stipulating, inter alia, which social security law applies to pensioners. In general, pensioners are subject to the social security of their place of residence. Accordingly, Belgian social security is not applicable to pensioners residing in another Member State of the European Union.
This entails that such pensioners do not have to pay any Belgian social security contribution. Consequently, no sickness insurance contribution and no solidarity contribution can be withheld anymore on a supplementary pension capital paid by a Belgian insurance company or a Belgian pension fund to a pensioner having his place of residence in another EU Member State and being subject to the social security regime of that country.
The Belgian legislation will have to be amended in order to comply with this new development. However, it remains to be seen which point of view the Belgian social security authorities will take until the legislative change occurs: will they take the new EU Regulation into account or not? In case they disregard this new development and as long as Belgian law has not been adapted, Belgian insurance companies and Belgian pension funds will be faced with an uncomfortable dilemma since they will then be confronted with conflicting legal requirements. On the one hand, they will still have to carry out the two withholdings according to Belgian law. On the other hand, European law forbids them to perform these two withholdings in some particular situations. In such cases, pensioners can claim damages from the insurance company or the pension fund when irregular withholdings have been made.
It goes without saying that a prompt amendment of Belgian law is needed in order to secure legal certainty as soon as possible.
