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Europe - Germany
Social tax exemption for pension contributions may be extended
On August 8, 2007, the German government approved a proposal to extend the social security tax exemption workers receive for contributions to occupational pension plans. The exemption has been set to expire on December 31, 2008. The draft law must still be approved by the German parliament.
The proposal's aim is to ensure that occupational pension schemes remain an appealing option for retirement planning. Some politicians have opposed continuing the exemption because doing so will have a negative impact on the nation’s state-financed health and retirement schemes.
Under the exemptions, employees can contribute up to a 4 percent of their income to a deferred compensation scheme without facing social security taxes on the funds. Contributions to pension foundations and direct insurance vehicles are among those that qualify for the exemption.
August,
2007
The information included in this report is general information only and should not be relied upon without further review by the appropriate professional advisers. Watson Wyatt is not a law firm or an accounting firm and is not engaged in providing legal, accounting or tax services or advice.
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