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Tax relieves

Supplementary voluntary pension insurance through contributions at employer’s account

Employers use tax relieves on the expenses incurred for supplementary voluntary pension insurance as stipulated in the Corporate Income Taxation Act.

The contributions paid by employers, which are recognized as expense for tax and accounting purposes and are free from mandatory insurance contributions at the account of the insured person and the employer, amount to BGN 60 monthly per employee (as per CITA, art. 213, par. 1). When the contribution exceeds BGN 60, a corporate tax of 10% is paid on the surplus.

Tax relieves for personal contributions

Simultaneously with or independently from insurance through contributions at employer’s account, it is also possible personal contributions to be paid with a view of using tax relieves granted on individual supplementary voluntary pension insurance following the procedures of the Individual Income Taxation Act.

The personal contributions for supplementary voluntary pension insurance at the rate of up to 10% on the monthly or annual tax base are deducted from the tax base before a tax is being levied on individual income. On amounts withdrawal before entitlement to a supplementary pension, only the amounts corresponding to the tax relief used on payment to the Fund shall be subject to taxation. If the person is not a pensioner (or if no insurance event of old age, disability or death has occurred) the amount shall be charged with a final tax in accordance with the Individual Income Taxation Act for year 2011. Accordingly, the amounts for which no tax relief has been used, are not taxable on withdrawal.

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