Supplementary pension plan (group insurance)

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Social security treatment

Limited NSSO contributions
Employee Taxation

Favourable taxation
Employer deductibility

Deductible

Worker Taxations Description

a) The contributions paid by the employer to the insurer do not constitute a taxable benefit for the employee.

b) The contributions paid to the insurance company by the affiliated employees entitle them to a tax reduction at the “reduced average rate” of 30% provided that the following conditions are met:

they are deducted by the company from the (net) remuneration;
they are paid to an insurer in the European Economic Area (EEA);
they are paid in execution of a group insurance policy that complies with the regulations in force;
the 80% limit is complied with (according to this rule, the premiums paid in the group insurance must not result in statutory and supplementary pensions, expressed as annual annuities, exceeding 80% of the employee's last normal gross annual remuneration).

c) Most Belgian pension plans provide for the payment of a lump sum. Pension capital paid in this way is taxed at a separate rate (plus additional communal taxes). The tax treatment of such pension capital can be summarised as follows:

the tax base is equal to the capital less the RIZIV deduction and the solidarity deduction;
the profit distribution is exempt from taxes;
the separate rate (20%, 18%, 16.5% or 10%) depends on when the capital is paid and how it was financed.

Employer Deductibility Description

a) Contributions paid by the employer in execution of a group insurance scheme constitute deductible professional expenses. This deduction is subject to certain conditions being met, the main ones being as follows:

the insurer is established in the European Economic Area (EEA);
the benefits must comply with the 80% limit (if the limit is exceeded, the balance of the premiums is not deductible as professional expenses);
contributions must be paid under a group insurance scheme that complies with the regulations in force;
the pension data must be correctly entered into DB2P (database storing data relating to second pillar pensions).

b) It should nevertheless be noted that a tax of 4.4% is payable on the premiums paid by the employer to the insurance company under the group insurance scheme. If the pension plan provides, in addition to life cover, other risk cover (benefits in the event of death and/or disability), three conditions must be met in order to benefit from the 4.4% tax:

the pension plan must not be discriminatory;
no exclusion may result from a medical examination;
the cover must be managed on a differentiated basis (which means that it must be possible to clearly indicate which premium applies to which part of the plan).

If these conditions are not met, a tax of 9.25% will be applied.