Many companies offer their executives the opportunity to participate in group insurance retirement plans.

These plans usually provide for the payment of premiums, both by the employer and the employee upon receipt of the sum of the insurance with any profits at the end of the program either in a lump sum or in the form of a monthly pension.

Premiums paid by the employee or the employer on behalf of the employee, under group insurance policies of pension contracts are excluded from the calculation of income from paid work, therefore these amounts are not taxed as salary for the employee at that time.

It is clarified that in case of payments by the employee as part of his salary, the amounts are subject to insurance contributions.

On the contrary, there will be independent taxation at the end of the retirement plan, ie when the employee will receive the insurance from the insurance company either as a lump sum or as a periodic pension. The tax is calculated:

a) at 15% for each periodically paid benefit
b) at 10% for a lump sum payment of up to 40,000 euros / or 15% (with 50% surcharge)
c) to 20% for a lump sum paid benefit in the part exceeding 40,000 euros / or 30% (with 50% surcharge)

The above rates are increased by 50% in case of collection by the beneficiary of an early redemption amount (ie before the expiration of the contract ). Any payment made to an employee in the event of his dismissal or the bankruptcy of the employer is not considered early redemption.

On the contrary, the collection of the insurance, due to the voluntary departure of the employee from the company (if the above conditions are not met) constitutes a case of early redemption.

The aforementioned tax is withheld during the payment of the insurance by the insurance companies (articles 59 and 62 CCA) and no further income tax is due from the beneficiaries for this amount. However, the insurance received is charged with a special solidarity contribution added to the other income of the taxpayer during the settlement of his declaration.

The payment of premiums is a deductible expense for businesses.

The following should be noted from experience and common practice:

• Insurance companies contract with companies in retirement plans and with a small number of executives, eg 3 people.
• The company can offer regular monthly payments (as a percentage of salary or a certain amount per month) but also extraordinary. In most programs the regular payment is set once a year. Extraordinary payment is usually stated in the contract as its maximum value, and the practice is not to exceed 25-30% of the annual salary.
• Early redemptions of part of the insurance are allowed after a certain period of time (example: extraordinary payment to an employee in 2019 of € 10,000 can not be redeemed early by the employee in 2020)