On November 29, 2006, the Spanish government published a new law on personal income tax, and announced partial modifications to the laws on corporate income tax, non-residents’ income tax and wealth taxes.
The new law, effective January 1, 2007, will have a significant effect on the complementary pension plan system. As a result, it is important to be aware of the latest regulations when designing a new corporate pension scheme or deciding about existing plans.
In particular, the new law changes the tax incentives on funding vehicles, and encourages employees to buy annuities by removing the previous tax deduction on lump sum retirement benefits in most cases.
In addition, tax benefits will be awarded to new group products that encourage long-term savings. These are external group insurance contracts and, as with tax qualified pension plans, contributions will be tax deductible for employees and employers.
The laws involved are complex, and it is important to obtain expert advice in order to ensure full compliance. VidaCaixa, our Network Partner in Spain, will be pleased to provide you with every assistance in these matters.
In particular, the new law changes the tax incentives on funding vehicles, and encourages employees to buy annuities by removing the previous tax deduction on lump sum retirement benefits in most cases.
In addition, tax benefits will be awarded to new group products that encourage long-term savings. These are external group insurance contracts and, as with tax qualified pension plans, contributions will be tax deductible for employees and employers.
The laws involved are complex, and it is important to obtain expert advice in order to ensure full compliance. VidaCaixa, our Network Partner in Spain, will be pleased to provide you with every assistance in these matters.