Occupational funds dispute – Ministry of Labor regarding benefit tax

The reform of the regulatory framework governing professional insurance in Greece has become a serious thorn in the side of the leadership of the Ministry of Labor and the government as a whole, delaying it for many years.

The changes being promoted bear the stamp of Deputy Minister of Labor and Social Insurance Panos Tsakloglou, with criticism primarily of the introduction of a variable tax on professional insurance payments. According to government representatives, the goal of this measure is to develop the institution not on the basis of ephemeral tax benefits, but on the basis of principles, rules, real needs, trusting relationships and high quality service to policyholders.

According to the same officials, while professional funds around the world tend to offer additional monthly income (pensions), in Greece they provide almost exclusively a lump sum, which is a cause for concern. This is because, as they point out, some such funds operate as… a conduit for tax evasion and in the shadow of the rule of law. They propose to give them the opportunity, in accordance with their statutes (signed by ministers and deputy ministers of all governments), to contribute money to professional insurance funds without an annual limit and receive it in a lump sum after a few years, completely free of taxes. For this reason, it was initially proposed to establish a single horizontal tax on lump sum payments of 15% and a correspondingly reduced tax on pensions of 50% (7.5%).

This proposal was perceived by ΤΕΑ (Voluntary Professional Insurance Fund) as a reason for war, since in practice it will lead to results opposite to those assumed by the government, and with the adoption of the law will lead to a reduction in an institution that in our country has not received any special attention. development.

Regarding the main argument that lump-sum benefits provided by ΤΕΑ are not taxed, representatives of the foundations note that lump-sum benefits provided by ΤΕΑ are not taxed because, like social insurance institutions (NPΔΔ and NΠIΔ), they are created by law and are non-profit. It is also argued that the tax burden on social insurance funds in the case of a person receiving a lump sum benefit is not zero, since capital gains (investment income) of social insurance funds are subject to taxation (11%).

The reaction of the unions of employees of Eurobank and Alfa Bank is typical, they call the bill a “time bomb” and “an unfavorable development of events in favor of insurance companies.” They also note that “social security fund insureds risk being trapped in a regime with less favorable conditions than the one they originally chose” and say that the constitutionally protected freedom of employers and employees is violated because the creation of their fund “was preceded by the conclusion of the relevant collective agreement between bank employers and employee unions.”

Following reaction and pressure from ΤΕΑ, as well as companies willing to set up their own fund and hesitant due to the uncertainty surrounding the tax regime, the bill will provide (with the possibility of further changes) that if the money is received in a lump sum, then within the first For 5 years, the tax rate will be 20%, if the collection is made in the period from 6 to 15 years, then the rate will be 15%, and accordingly 10% for insurance from 16 to 25 years and 5% for insurance from 26 and above. If, again, they are received in the form of a pension, they will be taxed at half the rates (10%, 7.5%, 5% and 2.5% respectively). In addition, as part of the rationalization and equalization of procedures, the same tax rates will be applied to group insurance policies, although, according to professional insurance company managers, they belong to different categories.

kathimerini.gr

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