2024-02-23-KPMG_Global-Greece_–_Rules_Changed_to_Encourage_Participation_in_Group_Insurance_Pension_Plans_3页_239kb

Greece Group Insurance Pension Plans Tax Changes Summary

Introduction
Greece's Law 5078/2023 modifies the tax treatment of Group Insurance Pension Plans to encourage participation, making their tax status equal to that of Professional Insurance Funds.

Key Changes

• Contributions made by employers or employees up to 20% of an employee's gross employment income (excluding productivity bonuses) are not taxed.
• Withdrawals are taxed at progressive rates, based on years of participation:
  • Lump-sum payments: 5% for >20 years, 10% for 10-20 years, 15% for 5-10 years, and 20% for ≤5 years.
  • Periodic payments (pensions): Rates are halved, e.g., 2.5%, 5%, 7.5%, and 10% respectively.
• Early redemption or withdrawal incurs a 50% higher tax rate.
• For insured individuals under 55 who stop participation before the 5-year mark, tax rates increase by 5% per year below this threshold.
• These changes apply to contributions and earnings from January 1, 2024 onward, with previously accumulated amounts (through December 31, 2023) taxed under the old regime.

Rationale and Impact
The reforms aim to boost retirement savings by improving tax incentives, enhancing the appeal to both employers and employees. International assignees are affected as contributions reduce taxable income, and guidance may be needed for foreign pension plans. Employers should review their retirement plans to assess potential impacts.

Applicability
Effective from 2024, the law focuses on group pension plans without altering existing defined-benefit schemes.