The new regulations for pension agreements for self-employed persons without a company (hereinafter referred to as CPTI/POZ) will come into force on 1 July 2018 . We would like to clarify a number of key points in the new regulations for you.
Until now, self-employed natural persons without a company could make use of only the Pension Libre Complémentaire pour Indépendants/Vrij Aanvullend Pensioen voor Zelfstandigen (Voluntary supplementary pension for the self-employed) (hereinafter referred to as PLCI/VAPZ) to build up a second pillar pension, whereas self-employed persons with a company could make use of individual pension agreements (EIP/IPT) in addition to the PLCI/VAPZ.
The CPTI/POZ will now meet the demand for the introduction of a scheme similar to the EIPT/IPT for the first-mentioned category of self-employed.
The CPTI/POZ is aimed at self-employed natural persons without a company, and covers the following categories:
- those who operated a one-man business or are in the liberal professions, their business being their primary or secondary occupation (except for starters in a secondary occupation) on the condition that they pay at least the social contributions for a self-employed person’s primary occupation; and
- assisting spouses or partners with maxi-status.
The regulations allow self-employed natural persons to build up a supplementary second pension pillar.
These are the most important features:
- The self-employed may decide for themselves how much supplementary pension is to be built up, but within the limits of the 80% rule. This 80% rule has its own specific definition. So, when assessing the 80% rule, the income in the previous three calendar years will be taken into account (instead of the last gross annual income as in the application of the 80% rule for, for example, the EIPT/IPT or other pension plans).
- It will be possible to insure extra cover for such factors as incapacity to work, waiver of premium, and death (after an accident).
- Provision may be made for obtaining an advance for financing a mortgage for the acquisition of property.
- A premium tax of 4.4% will be charged on the annual premiums. The premiums also give rise to a 30% income tax reduction, subject to the 80% rule being respected.
- On the capital that is paid out on retirement or death, a NIHDI contribution of 3.55% and a solidarity contribution of between 0% and 2% (if the pension capital ≥ EUR 24,789.35) will be charged. After deduction of the above contributions, the capital will be subject to 10% tax (plus municipal tax).
From a (para)fiscal point of view, the PLCI/VAPZ will be more beneficial than the CPTI/POZ. Nevertheless, the CPTI/POZ can be a valuable supplement to the PLCI/VAPZ.
The table summarises the most important differences.
The CPTI/POZ has lost a great deal of strength relative to the EIPT/IPT as a result of the application of the 80% calculation on the average professional income over the previous three calendar years and the limitation of the back service possibilities to the career years from 01/01/2018. Because of this, the CPTI/POZ will represent added value only for the higher-earning self-employed persons (non-executives) with a reference income above EUR 75,000. For them, this new vehicle comes only fourth in the tax hierarchy, after the PLCI/VAPZ, ‘normal’ pension saving, and classic long-term saving.