COVID-19: circular 2020/C/153 regarding the application of the 80% threshold
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On 11 December, FPS Finance published a new circular providing more clarification on how to interpret the 80% threshold in this COVID year.
You can find the relevant circular below and also here.
Below we give our interpretation of this circular (update: 16 December 2020)
According to our interpretation, the application of this circular comes down to the following. Suppose your company is allowed to pay a premium of 8.000 euro into IPT (an individual pension commitment funded by your company) for financial year 2020, in accordance with the 80% threshold based on a last normal gross annual salary, where this annual salary is not COVID-adjusted.
Suppose that in 2020 the company director did not award themselves any remuneration for 3 months, in order to benefit from the bridging right in the context of COVID-19.
In that case, the 8.000 euro premium may actually be paid into the company director's IPT policy in 2020.
Subsequently, 2.000 euro (1/4 of the premium, namely 3 months without remuneration out of 12 months) is transferred to the next financial year.
Finally. If in 2021 your company can, for example, pay a premium of 9.000 euro into IPT in accordance with the 80% threshold, then the premium would need to be capped, taking into account the portion of premium carried over from 2020. In 2021 the maximum premium that can be paid would then be 7.000 euro.
This information will be updated if necessary.
Questions about your own situation?
This article is general information. Your adviser will look at what it means for you.