The Old Age Pension Bill adopted by the cabinet on December 3 moves from the present system of taxing pensions by restricting relief on the contributions to one of full relief now and full charge later.
The cabinet has adopted an Old Age Pension Bill proposed by the Ministry of Finance to move from the present system of granting only limited relief for contributions against wide exemption from taxation of pensions, to one of full pension taxation against full contribution relief. The changeover period will be almost 40 years to protect the interests of the existing pensioners and workforce without putting an undue burden on the public finances. The change follows from a Constitutional Court case of 2002 holding taxation of (non-contributory) civil service pensions to be unconstitutional because of the (largely) foregone taxation of pensions paid under the social security scheme. However, the Court gave the government latitude to change the system gradually and gently. Full relief on the contributions will be available by 2025; full taxation on pension incomes will be felt by those retiring in 2040. The tax rules for life assurance policies will be conformed to the new system (similar changeover provisions) and a number of other adjustments - mainly in the interests of employee mobility - are intended. The government has also announced its intention of renegotiating at least the European double tax treaties to allow German taxation of pension incomes if the premiums (contributions) were deducted as German expenses
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Strategic planning is crucial to profitable business growth, but companies typically realise only about 63% of their business strategy's potential financial value because of defects and breakdowns in strategic planning and implementation.
One of the greatest challenges facing employers today is finding and keeping good employees. This article describes some effective employee retention strategies that will help you retain good staff and develop a stable workforce.
The quarterly CFO Survey is firmly established with media and policy makers as the authoritative barometer of UK corporates' sentiment and strategies.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).