The Program Law of 22 June 2012 (1) introduced a new (tax deductible) social security contribution whereby a rate of 1.5% must be paid by the employer/company if aggregate contributions for the supplementary pension of an employee/company director exceeds 30,000 EUR (indexed). The employer has to pay this special social security contribution in the 4th quarter of each year if the threshold is reached.
From 2013, SIGeDIS (see Laga newsflash of 22 December 2010) will control this special social security contribution because the tax authority has to be notified of the total contributions received by pension institutions from an employer, for each pension commitment.
The special social security contribution in practice
a. As from 1 January 2012 until 1 January 2016
During this first period, the contribution will be due on the amount of employer contributions exceeding 30,000 EUR. This amount will then be modified by indexation. Furthermore, this threshold must be applied per individual employer/company and per individual employee/company director (the 30,000 EUR threshold will not apply to voluntary pension contributions for the self-employed).
In some instances, contributions cannot be individualised. For example, in the framework of collective contributions to sector pension plans the increase of reserves acquired by the beneficiary will be taken into account (theoretical contribution).
b. From 1 January 2016
As of this date, the special social security contribution of 1.5% will no longer be based on contributions exceeding the (indexed) 30,000 EUR threshold but will only be due if the sum of the legal and supplementary pensions exceeds the pension objective (determined every year by the pension administration).
In short:
- Legal pension + supplementary pension > pension objective = special social security contribution is due
Where:
- Legal pension = 50 % of gross salary cap (to be determined every year by the pension administration) x career fraction (career years / 45)
- Pension objective = the basis amount (i.e. the amount of the highest civil servant pension, i.e. 46,882.74 EUR in 2012
