Occupational pension plan – Bankinter Empresas II

For the company

Contributions are exempt from personal income tax withholding and are tax deductible for corporation tax.

For employees

The contributions received from the promoter (from the company) have a neutral effect on the personal income tax base, since they are taxed as work-related income not subject to withholding, thus increasing the personal income tax base, but the contributions in turn reduce the income tax base by the same amount.

The employee's own contributions to the plan reduce their personal income tax base.

Contribution limits

The general contribution limit for pension plans and other social benefit schemes  is €1,500 per year. In addition to the above, the tax reduction limit will be either the above limit or 30% of net earnings from work and economic activities, whichever is the lowest amount.

The €1,500 limit will be increased by:

• €8,500 per year if the increase comes from employer or employee contributions to the same social benefit scheme for amounts less than or equal to those shown in the table below, and according to the employer's annual contribution:

  Employer's annual contribution

  Maximum employee contribution

  ≤ 500€

  The result of multiplying the employer's contribution by 2.5

  Between €500,01 and €1,500

  €1,250 plus the result of multiplying the difference between the employer's contribution and €500 by 0.25

  > €1,500

  The result of multiplying the employer's contribution by 1

  A multiplier of 1 is applied when the employee's net yearly earnings from work is more than €60,000 from the employer making the contribution.

• €4,250 per year, provided that this increase is derived from contributions made by self-employed workers or sole traders to simplified employment pension plans for self-employed workers/sole traders, or from contributions made by individual entrepreneurs or professionals to employment pension plans of which they are promoters and unit holders.

The maximum reduction applied for the increases in the two points above will be €8,500 per year.

The amounts contributed by the company resulting from decisions by the worker are considered contributions by the worker for such purposes.

Does it cost my company or my employees anything to adhere to the BK Empresas II Employment Plan?

The formalisation and start-up, in addition to being simple and fast, does not entail any expense for the company or for the employees.

Can I select which employees to include in the Employment Plan?

No, it is not possible. All company employees must be integrated into an employment plan, although it is possible to require a minimum seniority of up to 2 years for employees to access the pension plan. It is also interesting to know that the employer contribution may not be the same for all employees, being able to adjust it according to the criteria of each company: organisation chart, category, seniority, etc.

How much can you contribute to an employment plan?

The maximum joint annual contribution amount (employer and employees) for each employee is €8,500 and the minimum is €50. The employee's contribution will depend on the employer's contribution (see section “contribution limits”).

What taxation do the contributions involve for the company?

Employer contributions are exempt from personal income tax withholding and are tax deductible for corporation tax.

Additionally, up to 10% can be deducted from the full amount of the contributions made to employees if their gross annual remuneration does not exceed €27,000.

What taxation is involved for the employee?

It is necessary to distinguish between the taxation on the contributions made by the employer and those made by the employee themself.

Contributions made by the employer

At the time of receiving them, they are not subject to personal income tax withholding. When filing their tax return, contributions increase the employee's work-related income while they benefit from the reduction applicable to pension plans, so there is a cancelling-out effect.

Contributions made by the worker themself

The contributions they make reduce their personal income tax base. The employee's contribution will depend on the employer's contribution (see “Contribution limits” section). This limit is separate from the individual contribution limit of €1,500 per year.

The maximum reduction for all contributions, both those made by the worker and by the employer, cannot exceed 30% of the net income from work and economic activities received individually in the year.

What happens if an employee leaves the company?

Contributions made by both the company and the worker belong to the latter and, therefore, in the event of leaving the company, the participant's consolidated rights may be transferred to any individual pension plan of the employee's.

When can employees redeem the pension plan?

The contingencies to be covered are retirement, total permanent disability and death. The accumulated capital may be collected in the form of capital, income or a combination of both. Fiscally, the benefits received by the beneficiaries of a pension plan will be integrated into the personal income tax base as income from work.

Who supervises occupational pension plans?

Pension funds are subject to continuous supervision by the Directorate-General for Insurance. In addition, each of the pension funds has its own individualised audit carried out by an independent auditor and, lastly, the pension fund investment portfolio is subject to supervision by the depositary entity.